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Dow One Million?

Sigma Investment Counselors

September 22, 2017

Warren Buffett, speaking at an event to mark the 100th anniversary of Forbes magazine, suggested that the Dow Jones Industrial Average (DJIA) would be “over 1 million” in 100 years.

One million may look like a big number, and it is, but it only assumes a compound average annual return of approximately 4%.  Considering that the S&P 500 average return over the last one hundred years has approximated 10%, perhaps Mr. Buffett is being a bit conservative.  Note that the S&P 500 and the DJIA are not identical.  The DJIA 25 year return has been slightly more than 10%.

Going further, Mr. Buffett said, “being short America has been a loser’s game.  I predict it will continue to be a loser’s game.”

Investors should note that long-term results do not reflect the short-term market swings.  Investors would be well advised to consult with their advisor(s) and develop a strategy that is designed to capitalize on longer term market trends while providing some protection during market fluctuations.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA®

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