Dorfman Value Investments founder John Dorfman likely triggered plenty of smirks when he boldly predicted four-and-a-half years ago that the Dow Jones industrial average would hit 25,000 in 2017. However, investor optimism about a booming U.S. economy and the potential for a massive corporate tax cut pushed the Dow higher by another 140 points on Monday, putting it within striking distance of 25,000.
At the time Dorfman made his bullish call in 2013, the Dow was trading just under 14,500. However, over the past four-and-a-half years, the U.S. stock market has climbed steadily higher, and the Dow has gained roughly 10,000 points during the incredible run.
As it turns out, Dorfman missed his bold prediction by less than a week. The Dow breached the 25,000 barrier on Jan. 4, 2018.
“We’ve had 12 years of subpar growth,” Dorfman said on CNBC in March 2013. “We’ve had 12 years of up and down with little net progress in the markets, and people have forgotten what a strong economy and what a secular bull market look like.”
As wild as the bull market ride has been, the general consensus on Wall Street is that the Dow may not stop at 25,000. Morgan Stanley recently predicted the Standard & Poor’s 500 index will hit 2,750 in 2018, another 2.2 percent gain from current levels. Goldman Sachs is even more bullish, predicting 2,850 for the S&P 500 next year, another 5.9 percent gain.
“Our ‘rational exuberance’ rests on a combination of above-trend U.S. and global economic growth, low albeit slowly rising interest rates and profit growth aided by corporate tax reform likely to be adopted by early next year,” Goldman Sachs analyst David Kostin says.
As for Dorfman, he’s still bullish on U.S. stocks as well.
“My best guess for 2018 is…
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