Neil Hennessy is founder and chief investment officer of Hennessey Advisors Inc., a $6.6 billion publicly traded investment management company that offers 14 mutual funds to the public. November 2013, when the Dow stood at 16,000 he predicted the DOW would hit 20,000 within the next five years and in 2017 the DOW hit 20,000. When the DOW hit 20,000 in 2017, Neil said the DOW is on its way to 30,000. In mid-February of this year, the DOW came within 500 points of hitting 30,000. Then COVID-19 said it was “showtime.”
In mid-March, Neil Hennessy of Hennessy Funds tells the Wall Street Journal. "Once we have it under control or it peaks, subsides, whatever, then the market will be back on its legs." But he didn’t give a time table or a price target this time around. Smart man as COVID-19 has become the X-factor.
However, Paul Schatz recently raised the stake and said the DOW could reach 30,000 next year and 40,000 by 2023. I will be honest, I can’t even fathom 40,000, that’s like saying Bitcoin will hit 50,000 to me.
The Dow Jones Industrial Average DJIA, -1.58% could reach 30,000 next year before soaring to 40,000 by 2023 once the U.S. clears the “massive hurdle” of the coronavirus pandemic, according to one strategist.
Paul Schatz, the president of Heritage Capital, made the call in a first quarter note to clients, as he said the U.S. economy would recover over the longer term.
“To bet against the U.S. economy and consumer over the long-term is a loser’s game,” Schatz said in a first quarter note to clients.
Schatz said that COVID-19 would resurface in the fall but that America would be ready this time — with tests, ventilators and medical equipment — buying time until a vaccine emerges in early 2021.
He saw a recovery in the third or fourth quarter with “back to back strong quarter of GDP growth” regaining between 50% and 80% of what was lost, while the rest would take longer as small businesses are unable to reopen and employees lose their jobs.
As of today, all 50 states are now partially opened. Meanwhile, according to John Hopkins University, at least 17 states showed an upward trend in average daily cases, a rise of at least 10%, over the previous seven days.
However, on a positive note, the number of COVID-19 deaths in New York City was 105 yesterday. At one point the number of deaths in New York City was at 800. Now the challenge for New York City and the rest of America is how to open up the economy and manage the inevitable uptick in COVID-19 case. At this point it’s a race against time.
Moody’s Analytics chief economist Mark Zandi said businesses in hard-hit sectors like restaurants and hotels are falling behind on their bills, signaling they could be “close to the breaking point.” Its why Fed Powell emphasized to the Senate Banking Committee yesterday that more monetary stimulus is needed quickly.
Yesterday, the Dow dropped nearly 400 points after a report questioned Moderna’s positive preliminary data on their COVID-19 vaccine. Yet, this morning, the DOW is back up…400 points. JJ Kinahan, chief market strategist at TD Ameritrade, told CNBC last week that markets were trading on optimism instead of reality, warning that the two may collide in mid-June.
The DOW is just 30 out of thousands of stocks. Furthermore, the index is price-weighted and does not account for changes in market capitalization as other popular indices do. A price-weighted average is used to give higher-priced stocks more influence in an index.
In 2018, Apple became the first $1 trillion company by market cap. It was the Buffett Effect that push Apple to reach that milestone before Amazon when he announced he bought an additional 75 million shares in Apple. Buffett later went on CNBC and stated he wanted to buy the entire company. To even have a chance at a DOW 40,000, Apple would have to be at least a $2 trillion market cap company. And even that that milestone, would need help from Microsoft and other tech and non-tech companies.
But what doesn't help is when during a cabinet meeting, President Donald Trump was asked if he would wear a mask when visiting the Ford Motor Company factory on Thursday and he responds that he hasn't even thought about it. If this attitude is the attitude that the Masses are taking as the economy opens back up, we won't even see 30,000 anytime soon as COVID-19 will claim victory for many, many more months.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.