Dow 100,000

Dow 100,000

Here at ILAF we are an optimistic crew, and whether you are smarting from the 2025 stock market rally or simply riding a tsunami of schadenfreude, it is poignant to consider what the future may hold.

As described in the 2025 Stock Trader's Almanac: The fifth year of almost every decade is the best in terms of stock market performance, as is the 1st year of a new presidency. If Santa Claus comes to the rescue again this year, whatever results 2025 brings might be the best of the decade. But like an old curmudgeon, we at ILAF are not satisfied with simply average returns, or even the best, we dream of stellar, euphoria-inducing returns. Read on dear investor.

Assuming several economic events break our way and AI can deliver the productivity boost it is capable of doing, ILAF predicts...wait for it...Dow 100,000 in 5 years (say Christmas of 2030.)

Dow 100,000 in 5 years assumes a 15% return per year for the next five years. As we all know, linear returns are a fallacy. Developed by the big ETFs and fund companies to convince people the stock market can be tamed and silo'd into discrete linear patterns, linear returns are the original "fake news." Day-to-day, week-to-week, and month-to-month movements CANNOT somehow be converted from a Four-dimensional marketplace into a glossy Two-dimensional marketing brochure. It don't work that way.

How it does work is daily chaos derived from fear and greed trying to maximize return while taking as little risk (allegedly, see 2007-2009) as possible to do it. That 15% annual growth rate can be had, and double the Dow to 100,000 if we can significantly improve productivity, while somehow keeping unemployment under 5%, inflation tame around 3%, and real wage growth exceeding inflation. Big "ifs," but the likely scenario to reach Dow 100,000 may not be what investors suspect.

My theory is that "this time around" AI is going to replace entire job sectors, and as robots improve their dexterity almost every industry that has a "touch" component is vulnerable. California should lead America, if not the world, again...but for all the wrong reasons. California is a great example of where the fusion of AI and robots should have an increasing immediate impact (and a lasting one at that) because of the extreme difficulty in both having a business in the state and even more dangerous having employees.

Look to where there are poor incentives to do business, and there is where AI and robotics will flourish. Keep an eye on places with a heavy labor union presence. Onerous taxes. And lots of lawyers. AI and robot adoption will help transform heavily regulated industries with high plaintiff-cost to productivity darlings. Coastal America looks ripe for massive productivity surges, and given their existing high population densities the Al and robot utility spikes will translate directly to the bottom line of corporations, and possibly even local, state, and federal government.

In the next five years it will be more important than ever to be an OWNER of AI and robotic assets, which for many of us that means owning shares of companies immersed in the sectors. As an owner you should be able to ride the wave of increasing profits, increasing dividends, and sector share ownership. Woe to those who do not own a piece of the action...the downside of all this productivity increase almost assuredly will be job loss.

It is hard to believe AI and robots will INCREASE the numbers of jobs, or increase real wages. At some level (think control or ownership) they might, but for the vast population AI and robots will not be creating jobs, they will be eliminating jobs and lowering the collective standard of living...save for those who are owners of the tech.

Dow 100,000 has a good probability of happening within 5 years, but there is also a good possibility of significant societal changes to effect the stock market doubling. As usual, buy or create assets.