The short message of ‘Super Boom: Why the Dow will hit 38,820 and how you can profit from it’ by Jeffrey A. Hirsch (www.wiley.com) is that the peak will be reached by 2025, following a decade of wars in Iraq and Afghanistan.
Inflation effect
The author takes up the question, ‘What makes the market range bound during wartime and rise during peacetime?’ and says the answer is inflation. “The government empties the treasury during a war. It also focuses on foreign issues rather than domestic concerns and the economy. The result is a sustained rise in inflation. Only after the economy settles down and Washington refocuses on domestic issues will the stock market soar to new highs,” he reasons.
One of the four tenets of wartime markets that Hirsch lays down is, ‘The war machine props up the market.’ After the initial shock of a new war, the market forms a floor near the pre-war low, he explains. “The combination of government spending, investor bargain hunting, and good old American pride help insulate the market from breaching that pre-war low.”
BRIC boom
The next boom may actually be sparked in the BRIC nations, viz. Brazil, Russia, India, and China, as they have the money, the young and ambitious populations, and the inflation necessary to spark invention, the author foresees. The rest of Asia and the Middle East, Latin America, as well as Africa are fountains of growth as well, he adds.
Stating, for instance, that as government initiatives make investments in alternative energy and off-the-grid solutions become more cost-effective, innovation is bound to materialise, Hirsch predicts that outfitting the planet could generate a boom. “Bringing our infrastructure of highways and byways, transportation, communication, and power transmission into the twenty-first century would be a boon for the job market and help fuel a boom.”
As for biotech, his view is optimistic because of all the health issues and enormous costs that exist. “No other field has the potential to impact the world in the way that medical technology does. Cures as opposed to treatments for diseases such as cancer, AIDS, heart disease, or diabetes would change the lives of countless people around the world, create jobs, and generate commerce.”
Bullish read, though 2025 may seem far away.
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