I don’t actually follow the Dow well enough to say. I do follow the S&P 500. The S&P 500 is superior to me for three reasons. First, 500 is much more representative of the market as a whole than 30. Second, market cap weighted is better than price weighted. Third, analysts spend more time looking at the S&P 500, so the S&P is more likely to reflect the consequences of their thoughts.

I expect that the S&P will move from its current position at 1166 back down to 700. I think there’s a reasonable chance it moves through that point. That’s asking for a 40% off sale at some point in the future (Dow 6,500). Of course, if the Fed does manage to juice the money circulating in the economy, inflation will adjust those numbers upwards in nominal terms.

Now, should it get there? I’m not really sure how to answer that. I mean, why should my valuation matter more than anyone else’s? If other people are willing to pay more for a good, even a good as ethereal as a stock, they should be able to buy it. My valuation is based on two things. First, I suspect accounting fraud is more rampant than many believe. This fraud always has the effect of making things seem more valuable than after the fraud is exposed (nobody cooks their books to look cheaper). Gimmicks may be adding $150 billion in cash to S&P500 companies. Fraud could be adding a similar number. I think several of our large financial institutions are the walking dead, and large enough perturbations may be enough to topple them. Second, this bull market from the bottom still has many of the technical indicators of a bear market rally. Those don’t usually end well. It’s not unusual for bear market periods to establish new lows a year or so after their initial lows. That’s true in both the US and elsewhere.

I’d also like to point out that I’m a price taker. My buys and sells do not measurably impact the S&P 500. That’s not true for all market participants.