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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