Here comes Barron's Cover

(If nothing bad happening,)

Even by conservative measures, the Dow Jones Industrials could top 15,000 in two years. Dow 17,000 is a 50-50 bet.

This is the cover story of Barron's, which I thought was a serious investment magazine. This illustrates why I don't feel comfortable. Couple numbers here, Dow historical peak was 14100 in Oct 2007. It spent 84 years to be at 13K. If that article is correct, we need 1000 point each year for 2012 and 2013. How many years in Dow history has gain over 1000? Other than 09-10, I found 2004 and 2007 marked as real estate bubble (05-06 being side way years), and the famous 1996-2000 internet bubble that almost tripled Dow Index. That's it. Dow 17K will require 2K gains back to back. Annual return over 2K happened twice in history, that's 2004 and 2009.
We had epic rally or recover from bottom since 2009. Dow gained 2000 points in 2009 and  2010, 700 points in 2011.  Bear in mind, that was sitting on the top of the biggest loss ever 2008 with a loss of 4650. So even with the huge recovery, we still shy of the peak.  In other words, other than the Y2K bubble, 09-10 was the only years with back to back greater than 1000 gains. If you follow econ news, we had 2 QE and TARP and all kinds of money pumping to get us there. In my opinion this is called money illusion. With record low Treasury return, record low mortgage rate, record high federal money, what can we do, other than just Buy The F..king Dip.

Am I too bearish? I will say I am not bearish at all. I just think the market needs correction. Dumb money needs to be wiped out. Once everything cools off, I will be a happy investor again.

Anyway, here is the link to the Barron's.

To make things even more interesting, the author thinks 17K target is conservative, because he also said

How high? The strongest annual rebound post-World War II was 28.7%, in the two years ended 1980. Grow the Dow 26.2% -- again, subtracting 2.5 percentage points for dividends -- and you get 20,120.

If not too conservative, his target is 20K by applying the growth rate of 26.2%from 1980 which was the all time high in history. I guess 1 big thing he forgot is the real economy growth. For the 2 year period ended in 1980, US GDP growth was 21.5% nominal (check data here), which is a good support to the 26% gain in the stock market. (Let's just forget the double digit inflation for both years.) Where we at now? Average consensus says 2% each year for the next 2 years. 2% growth with 26% equity return? Life is great.

Obama is speaking at Wisconsin now when I am typing. If I catch him correctly, he just said,

I don't want America to be a nation that is primarily known for financial speculation, and racking up debt buying stuff from other nations.

I will say this guy got elected for reasons. If you want to understand a little bit of economy, ask the President but not some economist / magazine seller trying hard to manipulate demand supply curve by throwing out stupid numbers.
God bless America.