Tags: Masters | Dow | 20 | 000 | decade

Bernstein’s Masters: Dow Likely Headed for 20,000 by 2020

By Dan Weil   |   Tuesday, 24 Jul 2012 08:41 AM

Stock prices were essentially flat in the decade through 2009, but the next 10 years will turn out a lot better, according to Seth Masters, chief investment officer of Asset Allocation and Bernstein Global Wealth Management.

He sees the Dow Jones Industrial Average reaching 20,000 within five to 10 years. That represents a 58 percent gain from recent levels.

“This argument may seem provocative,” Masters told The New York Times. “But that’s only because market conditions are so unusual, and so many people have become so pessimistic.”

He – and plenty of other experts – says the United States, Europe and emerging markets will ultimately recover from their woes.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

“People are acting as though the world is going to end,” Masters said. “It might end, but we think it won’t, and we think that’s no way to live your life.”

With bond yields at record lows and stock prices undervalued, equities are set to outperform bonds over the next 10 to 20 years, Masters stated.

He anticipates 8 percent annual returns for a diversified portfolio of global stocks for the next decade compared with 2 percent for 10-year Treasurys.

For the very short term, though, stock market sentiment looks bearish.

“Investors are on edge,” Russ Koesterich, global chief investment strategist for the iShares unit of BlackRock Inc., told Bloomberg. “Chinese growth has slowed. It’s not clear that the existing firewalls in Europe are large enough. We knew the Spanish regional governments had debt. The question is how bad is it?”

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.



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