The Dow Jones Industrial Average (the Dow) is currently right around the 29,000 mark.  It only has to rise a few percentage points to go over the 30,000 mark.  This could happen next week for all we know, as it will only take a couple of big up days on Wall Street.

I was originally going to title this post “Will the Dow Hit 30,000?”  But the obvious answer to that question is yes.  The Dow will hit 30,000.  It is just a question of when.  Will it be this year or a decade from now?

Unless there are drastic structural changes, particularly in regards to monetary policy, then the Dow will eventually hit 100,000.  It will eventually hit one million.  It is mostly a question of when, which is a question of how fast the Federal Reserve will create new money out of thin air.

I have no idea if the Dow will hit 30,000 this year.  If I knew for sure, I would be in the futures market getting wealthy.  My best guess is that it will hit this mark because it is so close already.

Here is one thing that I would bet on strongly.  I don’t think the Dow will hit 30,000 in the year 2021 for the first time. If the Dow is above 30,000 next year, it will be because it already surpassed that mark and the bull market in stocks has continued.

If the Dow fails to hit 30,000 this year, it isn’t going to do it next year.  That’s because the great correction will have already started.

Stocks are practically going parabolic at this point.  That means it has to significantly slow down, or stop, or reverse.  You can’t just keep going up at 20 to 30 percent per year unless there is a very valid reason, such as extreme monetary inflation.  Individual stocks can do this for a long while because of profitability and the potential for future growth, but this isn’t going to happen with the broad market.

This near-parabolic bull run could last longer.  I may be writing a post soon about whether the Nasdaq will hit the 10,000 mark.  I will be sure to reference this post.

I have said that writing about this major run up in stocks will be a major theme in 2020.  The stock market is largely symbolic of the overall economy.  I think the average American is already struggling and not greatly benefitting from the bull market in stocks.  This is the same as the mid 2000s.  But the sense of struggle isn’t the same as the major fear that was present in late 2008.

When stocks crash, so goes the economy.  Maybe stocks are an exaggerated version of the economy right now, but there is still a correlation.  It’s not even necessarily that one causes the other.  But you know that a major downturn in stocks will likely be coupled with a recession.  You could also say that a recession will likely be coupled with a downturn in stocks.

The Trump Economy

I keep hearing some hardcore Trump supporters touting our amazing economy.  I almost feel embarrassed for them when they are talking.  Some of these people are quite sympathetic to the free market, so it makes it especially hard to hear.

Do they not understand economics or anything about the artificial boom/ bust cycle in today’s world of central banking?  Do they not understand that we live in a world of YouTube?  These embarrassing comments can be played over and over again in millions of households across America after the so-called Trump economy collapses.

They can praise the cut in corporate taxes, and rightly so, but I see little else where we should give credit to Trump and the Republicans.  Maybe some minor regulations have been cut, but I don’t see this as significant enough to drive the economy.  What I see is a hike in tariffs and massive federal spending.

Anyway, most of this is driven more by monetary policy than fiscal policy.  The Federal Reserve controls far more than does Trump. I think Trump may sense this. He has been very critical of Powell and the Fed.  He wants a strong economy for his reelection.  He also wants someone for him to blame when things go bad.

There is going to be a crash, regardless of what the Fed does at this point.  It is a question of when.  I don’t use the word “crash” lightly.  Our lives will go on.  We will still have our great division of labor society. We will still have high living standards compared to a century ago.  But the correction, while necessary, will be tough.  The major crash will happen in stocks, but most everyone will be impacted in some way.

If the Dow blows past 30,000, then the correction will just be that much greater.  The longer it goes, the harder it falls.

For reference, the Dow hit a low of 6,547 in early 2009.  If it went to that now, it would be a loss of almost 80%.  I hope you aren’t basing future plans on long-term capital gains for stocks.