DOW Hits 30,000...What A Ride It Has Been

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.

Neil reminded people at the DOW was on its way to 30,000 when he spoke a year ago at the Hennessy Funds 12th annual market outlook. I thought he was out of his mind because, the Dow is price-weighted, consists of only 30 stocks and the #1 stock in the DOW at the time was Boeing.

2019 was a very bad year for Boeing which another Boeing 787 Max plane crashed. An Ethiopian Airlines crashed killing 149 passengers and eight crew members on board shortly after takeoff earlier this year. Then less than six months earlier to the Ethiopian Airline crash, a Lion Air Boeing 737 MAX 8 plunged into the Java Sea shortly after taking off from Jakarta in October, killing all 189 people on board.

And then prior to the end of 2019, Boeing announced that it will suspend production of the 737 MAX in January 2020.

And I didn't even get to COVID-19 yet. In February 2020, the DOW was within 500 points of DOW 30,000.

Chinese reported 349 new cases one particular day, the lowest daily number of infections recorded by China in weeks. However, at least 2,126 people were announced dead and over 75,000 worldwide were infected.

There was a headline that the Holland America Line Westerdam cruise ship which had roughly 2,000 passengers and crew aboard and once was stranded at sea because Japan wouldn’t let them dock in the country. Fears of COVID-19 has prompted four different countries to deny them entry despite no one on board being diagnosed with COVID-19.

General Tedros Adhanom Ghebreyesus, Director of World Health Organization said the window of opportunity to contain the virus is closing and that we needed to act quickly before that window closes.

Fed Powell cut interest rates by half a percentage point, an emergency move designed to bolster the U.S. economy amid risks posed by the coronavirus outbreak.

President Trump signed the CARES Act, a $2 trillion stimulus package meant to give a jolt to the economy due to COVID-19. But in the months that proceeded, we all witnessed a K-shaped recovery where the stay at home stocks flourished, while the rest of equity markets faltered.

Then this months, Pfizer said its coronavirus vaccine shows it is more than 90% effective. Pfizer said that the vaccine, made with German partner BioNTech, had an efficacy rate higher than 90% at seven days after the second dose. Also, Moderna said its COVID-19 vaccine appears to be 94.5% effective. The news is on the heels Pfizer Inc. announcing its own COVID-19 vaccine appearing to be similarly effective. Despite the wave of new COVID-19 cases and deaths, these results are encouraging as it shows promise of things potentially getting back to normal sometime next year.

The stock market is a discount mechanism. According to Investopedia, discounting mechanism operates on the premise that the stock market essentially discounts, or takes into consideration, all available information including present and potential future events.

Biden wins the Election, Trump finally gives in and allows the transition to begin in order to protect whatever brand he has remaining, Janet Yellen is poised to become Treasury secretary in a Biden cabinet and so the DOW hit 30,000 today.

It's been a crazy 12 months, I think it's going to remain crazy for at least another 12 months.

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