Stock Traders Almanac Predicts Dow Jones to 38,820 by 2025

What’s setting us up for a super rally? Editor-in-Chief Jeffrey Hirsch of the Stock Trader’s Almanac says that the bear market in stocks that started in 2000 has about 7 more years to unfurl, and then we will experience a “super boom” in stocks. So in 2017, expect a super boom in stock prices to commence which willd drive the Dow to 38,820 by 2025, a 500% gain from the 2009 lows.

Using historical past rates of return Hirsch calculates a 7-8% annual gain to get us to 38,820, which from our own studies, is the long run rate of return on assets for the wealthiest families. Peace first and foremost will drive the boom, says Hirsch, so if we end the wars in Iraq and Afghanistan, then like the ending of WWII and Vietnam we usually see a peace dividend in stock prices. During this time we will also see inflation due to government spending, and more technology breakthroughs that drive up stock prices.

However, our editors ask “who can say what the bottom point of the bear market will be if there are more years to go?” Secondly, we don’t think there will be a peace dividend because there is no pent up consumer demand and the military is unlikely to downsize. Technology, thirdly, has caused us to lose jobs rather than create them. Maybe it will come true, but not for any of the reasons cited. They no longer apply to the current environment.

Discussing the upcoming election, “This is the sweet spot of the four-year [Presidential] cycle,” said Hirsch in a recent interview. “All sectors look attractive – it’s a bullish time of year.”

As detailed in The Stock Trader’s Almanac:

Since 1950, the six months from Nov. 1-April 30 have produced “reliable returns with reduced risk” vs. the six months from May 1-Oct. 30.
Since 1934, the Dow is up an average of 3.1% from midterm election day to year end and up 25.7% from midterm election day until the high of the following year.
All September gains in midterm election years – like September 2010 — have occurred after the lows of the year have been in place.