Wednesday, November 27

Dow 20,000, here we come

Dow 20,000, here we come
| By Michael sincere, MarketWatch

The a bubble, people make on pop market big profits alone. So far lacks the mania. Dow 20,000 is not only feasible, but reasonable when we go.

The Dow Jones industrial average ($INDU) Watch top 16,000, many investors hope, that this market in a bubble, (so can wise buy shares at lower prices if it slams). But we have a long way to go.

Right now, missing the most important part of a bubble - mania. We need intoxicated investors a buying frenzy over the top speculation and a get-rich-quick mentality. A bubble without a mania is like a sundae without a cherry. We can make it better.

Although it is possible, a bubble without a mania, this madman of Meltups help historians confirm that it was a true bubble. Meltups make feel rich, before you go broke (be sure to save your information so that you can remember, how much could have, would have, and would have if you had sold in a timely manner).

There are some signs of exuberance. Investment funds bring much more cash, some money managers have Miss fear, the expected Christmas rally (and their in the end bonuses), the VIX ($VIX) remains complacent in the area at noon and investors intelligent sentiment survey is more than 50 percent optimistic.

This is a good place to start - but nothing like a true bubble. In the old days, readings off the charts at 80 percent were bullish mood. We can make it better.

If this were a traditional bubble, I would always excavator, cab driver, and my hairdresser has tips from the supermarket (he tells me that nobody will give tips, either him).

Investors appear as bubbles with excitement, because the market more than doubled, uninterested. You are not to buy to buy shares in 1999, or houses, such as in the year 2007. In fact, I don't know what they are buying. After this 401(k) accounts are finally back to even, to investors on the plate and push this market much, much higher.

After we recently for the first time broken, 16,000 people by CNBC put on their party hats - but you do not is still seen. To this, we need the real, a small parabolic action.

Dow 20,000 has a beautiful sound. In fact, Dow 20,000 is not only feasible, but also reasonable (we can Yes, 25 percent in six months). It can also the bull market juices boost, if someone wrote a book, Dow 20,000 (note to publishers: the title is available).

If you want to see a real bubble in action, take a look at China. Hong Kong's Hang Seng index was to 20,000 in July; It is now approximately 24,000 (nearly 20 percent hit the US market in four months). On some days rallies of Hang Seng 5 percent to 7 percent (the 1,000 points on the Dow). On a normal day may be the Hang Seng by 3 per cent. In China they know how bubbles to do (and like all bubbles, it will not end well).

Our so-called bubble is boring in comparison to China. With the helium, that it will the Fed is pumping into the economy in the right direction, but not fast or high enough. We need to catch up, so I wonder if the Fed can do more. Not downsized's boost the bond buying quantitative easing, how about for $100 billion a month? That would keep interest rates low and inspire the stock market.

The only problem: QE is similar to investing in Penny Stocks. Easy to buy, but hard to sell. I have no idea, as Janet Yellen, to stop this experiment, after she is fed Chairman, but when it it will continue, a fire under the stock market really. Perhaps we will then have the euphoria, which sorely lacks. It would be a short, but random-walk on Dow 50,000.

Stop talking about bubbles

My colleagues financial market authors: Please stop writing about bubbles. How can we have a bubble, if you write about it to keep?

The whole idea is that a bubble of secret until after it opens. Do you think they announced that there was a bubble, when the Dutch tulips were trading? 1929 Nobody wanted to Jinx the market and bubbles to discuss, and if so, would you recommend a good psychiatrist. In 1999, dot-com investors thought shares would continue for all eternity. And in 2007 that most people thought it was a real estate bubble. At this time it seemed natural for real estate prices in double and triple rooms within a year.

Those were the years of the bubble, and we can do it again if we try.

In the event that someone mistook my attempt with humor for reality, allow me to redeem myself. Here is some serious advice from financier Bernard Baruch. Asked how he made so much money in the stock market, he replied: "by selling too soon."

Conclusion: only you can decide whether the potential reward is the potential value. The market for perfection is traded and no one not even perfect, Mr. market (if you think it is really different this time).

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