DJIA One Million...

Brad De Long delong at econ.Berkeley.EDU
Thu Feb 25 10:20:33 PST 1999


Courtesy of DENNIS_CLAXTON at fragomen.com
>
> Bubble psychology
> By David Dreman
>
> THE DOW IS HEADED for 1,000,000.
> That's what investors expect,
> although they probably don't
> know they expect it.
>
> Just how unreasonable are
> investor expectations? Try this:
> A recent survey by the Institute
> of Psychology & Markets in
> Jersey City, N.J. (of which I am a
> director) found that the average
> mutual fund investor expects an
> 18.1% annual return on his
> capital over the next ten years.
> To achieve this return, the Dow
> Jones industrial average would
> have to rise to 42,000 in ten
> years, assuming the dividend
> yield stays put at 1.7%. At the
> same pace, the Dow would climb
> to 1,000,000 in 31 years.
>
> [......]
>



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