Prediction: Dow 40,000!
I got you, didn’t I?
This headline is a classic propaganda technique. The Nazis called it the “big lie.”
Extreme predictions are more widely accepted. It seems counter-intuitive, but the more outrageous the prediction, especially financial predictions, the more likely it is that these predictions will be accepted.
There are a few reasons for this.
To begin with, outrageous predictions draw more attention, so they are easily distributed. In other words, the big lie is the viral lie.
Second, people who make wild predictions are often believed because of their extreme view. Who would risk their credibility on such wild estimates? You would need inside information to make such a bold assessment.
Extreme predictions tend to follow trends.
It was just a few years ago that Dow 36,000 was one extreme prediction that gained acceptance. This happened during a Bull market. Now, those same ideas are widely discounted. But, several Elliot Wave theorists have made predictions recently of Dow 1,000.
Is Dow 1000 impossible?
No. Nothing’s impossible. However, Dow 12,000 is more likely than Dow 1000. Dow 8,000 is more likely than Dow 1,000. But, for the human mind that swings between extremes, such tame, but probable estimates would gain neither traction nor credibility.
And, by the way, we will hit Dow 40,000.
I just didn’t say when.