Major U.S. Indices Will Go to All-Time Highs in 2016: Current Correction Underway will be Short-Lived

Michael Markowski  |

The current correction that is underway for the U.S. and the stock markets of other developed countries is not signaling an economic collapse or recession that is similar to 2008. I believe that the lows that were made by the S&P 500, Dow 30 Industrials and NASDAQ composite indices at the market opening on Monday August 24th will prove to be the lows for the next several years. I consider the greater than 10% decline that the three major indices experienced from their recent all-time highs to be a healthy and needed correction. The correction that has been underway since last week is not a precursor to another global crash and recession of the magnitude experienced in 2008, for two reasons:

1) The two previous severe and swift crashes in 1929 and 2008 were preceded by excessive speculation by the public, which is not in evidence today. The crash of 1929 occurred at the end of a decade that was appropriately named the Roaring Twenties. The decade beginning in 1920 was fraught with massive securities fraud attributable to investing having been first introduced to the public in the late 1800s, and the significant returns and dynasty wealth generated for individuals from 1880 to 1920. By 1920 investing had become ubiquitous. The more recent crash of 2008 was caused by excess speculation in real estate precipitated by the most rampant mortgage fraud throughout the history of the United States.

2) The second and more important reason is the current lack of complacency; complacency was the other ingredient that caused the stock-market crashes of 1929 and 2008. The longer the period between crashes (79 years from 1929 to 2008), the more complacent investors become. The logic is simple: If a crash can be remembered, an investor will always have cash reserved to prepare for the next crash and will therefore never become complacent.

The sentiment readings in the table below for the three previous weeks before the combined 1,000-point decline of the Dow Industrials on the 20th and 21st of August is a perfect example. The table depicts the results from the most recent weekly sentiment survey that was taken by the American Association of Individual Investors (AAII). There were more individual investors who predicted that the market would go down (33.3%) or stay the same (39.9%) than predicted that the market would go up (26.8%). Based on 73% of those questioned by the survey who were fully prepared for a crash, the complacency rate was very low. Because of such a low complacency rate, it is unlikely that there will be another crash that rivals 1929’s and 2008’s any time soon or in the lifetimes of everyone who was at an age of 20 or above when the last crash occurred in 2008.

AAII Individual Investor Sentiment

Readings for Last Three Weeks


Week 8/21/15

Week 8/14/15

Week 8/7/15













Absent a severe and swift market crash the likelihood that the U.S. economy will go into a recession is low. The U.S. economy has recently been growing and adding jobs. The unemployment rate is at its lowest since 2008.

The recent decline of the U.S. major indices — including the S&P 500, Dow 30 Industrials, and NASDAQ — was instigated by the slowing of China’s economic growth rate. In response, the Chinese central bank (PBOC) devalued its Yuan currency by 2%. The August 11, 2015 devaluation resulted in the Chinese economy being more competitive against all the world’s economies. The announcement sent shock waves throughout the world’s stock markets.

The U.S. stock market indices are best positioned to withstand China’s devaluation for two reasons:

  • The U.S. is the world’s safe haven for non-US investors.The U.S. Dollar is the world’s largest reserve currency, and the U.S. economy is significantly stronger than the economies of Europe and Japan, which have the world’s second and third largest reserve currencies, respectively. As a result of the appreciation of the U.S. Dollar against both the Euro and the Yen over the last two years, the U.S. Dollar is the exclusive currency into which non-U.S. investors are transferring their monies. For more details on the U.S. Dollar’s competitive advantage over the Euro and the Yen, see my May 2013 article “Put a Fork in the Bear”.
  • Dividend yields on large global U.S. companies. The vast majority of all of the companies in the Dow Jones Industrial composite and the S&P 500 indices pay cash dividends and regularly increase them. There are several U.S. companies, including Apple, that have better and bigger Balance Sheets than a majority of all the world’s countries. The shares of these global U.S. companies are the preferred investments by non-U.S. investors.

The competitive advantage that the U.S. Dollar has over all other currencies is unlikely to end soon. China’s recent devaluation of its Yuan will exacerbate the destabilization of all of the world’s currencies, except the U.S. Dollar, the Swiss Franc and the British Pound Sterling. The devaluing of the Chinese currency will result in devaluations of all Asian currencies including the Japanese Yen and the South Korean Won.

Even though the U.S. markets and the shares of U.S. companies are best positioned for the future, damage was inflicted from the recent significant decline of the Dow Industrials, S&P 500 and NASDAQ composite indices. It will take months for the major U.S. indices to form the price bases that they will need to pierce their 2015 all-time highs.

Based on the my experiences with all of the market crashes that have occurred since my career in the capital markets began in 1977, I believe that the probability is 90% that the intraday lows for the Dow Industrials (15370.33), S&P 500 (1867.01) and NASDAQ (4292.14) that were made on Monday August 24th will be their lows for 2015. I am currently predicting that the three major U.S. indices will go to new all-time highs in 2016.

China’s devaluation of its currency has certainly wreaked havoc on the
stock markets of all of the world’s other developed and emerging countries. I predict that all of the stock markets of the US and all of the world’s other developed countries will recover fully and hit new annual highs in 2016, 2017, 2018 and 2019. I am also predicting that the stock markets of the emerging countries including the BRIC countries of Brazil, China, India and Russia will remain volatile and will underperform for the rest of the decade. My rationale is based on the transition of the global economy from industrial to digital, which began in 1996. The digital economy began to grow exponentially with the introduction of the Smart-, or Web-enabled phones in 2007. The base of global online consumers will grow from 1.3 billion at the end of 2007 to 4.5 billion in 2018 according to Ericsson’s projections. The primary beneficiaries of this staggering increase in global online consumers will be the world’s largest companies that are domiciled in the world’s developed countries.

The global companies best positioned to capitalize and which I am recommending are in the table below.

Share Prices of Companies Well Positioned
for Digital Economy Growth


Price 8-25-2015

52-Wk High 2015

52-Wk Low 2015

Facebook (FB)




Google (GOOG)




Amazon (AMZN)




LinkedIn (LNKD)




Priceline (PCLN)




Walt Disney (DIS)




Netflix (NFLX)





The exponential growth potential that I have envisioned for the digital economy over the next five years was the rationale behind the establishment of the Dynasty Wealth Investing community in 2014. I am projecting that there will be at least 1,000 new public and private companies that will emerge and appreciate by 10-to-100 times from 2015 to the end of the decade. Dynasty Wealth is focused on identifying these companies and producing ongoing research on them for its investor users and members.

Based on the emergence of the hyper-growth digital economy, I am predicting the following for the stock markets of developed countries:

  • U.S. Stock indices Dow Jones Industrials to go to 30000.0, S&P 500 to 5000.0 and NASDAQ to 10000.0 by 2019.
  • Major Stock indices for all developed countries including Japan, South Korea, Germany, France, Canada and Italy to double by 2019.

The following are my predictions for the other asset classes:

  • Gold — Most recently the price has rallied after falling to a new multi-year low earlier in 2015. The rally was due to gold’s being considered as a safe haven during economic crises or during periods of significant stock-market volatility. Gold will go to new multi-year lows in 2016 and 2017, and to below $1,000 by 2018.
  • U.S. Dollar/Euro — The U.S. Dollar will be at parity with the Euro by the end of 2016, and will go to a premium in 2017. See my report “Put a Fork in the Bear”, May 2013.
  • U.S. Dollar/Yen — The exchange rate of the U.S. Dollar will increase from 124 to 160 Yen, a new 25-year high by 2020. Devaluation of the Renminbi by China will accelerate weakness of the Yen versus the U.S. Dollar in as much as Japan will have to remain competitive.
  • Petroleum — Oil will not get back to $60 per barrel until 2020 at the earliest because the strong U.S. Dollar will keep oil prices low.
  • Agricultural commodities — Corn, beans and grains will continue in their bear markets until at least 2020 because they are all priced in U.S. Dollars.

About the Author

Mr. Markowski was a columnist for Equities Magazine between 2004 and 2010. He is renowned for predicting the collapse of Lehman, Bear Stearns and Merrill Lynch in his September of 2007 column entitled “Have Wall Street’s Brokers been Pigging Out?” a year before the 2008 crash.

On October 8, 2008, which was after Lehman had filed for bankruptcy

Mr. Markowski in his blog entitled “LOOK OUT BELOW” stated, “The bottom line is that I expect that the stock market will continue in its free fall.” The S&P 500 traded as high as 1021.06 on October 8th and declined to as low as 672.88 on March 9, 2009, which represented a 33% decrease.

In his 2013 articles: “Put a Fork in the Bear” and “SEC’s Lifting of 1933 Non-Solicitation Ban Will Lift Markets 100% Higher”, Mr. Markowski made the following predictions:

2013 Predictions

Date of

Accuracy of

Gold to decline to new annual lows for 5 consecutive years (2013, 2014, 2015, 2016 & 2017)

Dec 2013

Gold fell to new annual lows in 2013, 2014 & 2015.

Oil to fall from $95 to $50 per barrel in 2014

May 2013

Oil fell to $49 per barrel in December 2014.

S&P 500 to increase to new all-time highs for 5 consecutive years (2013, 2014, 2015, 2016 & 2017)

Dec 2013

S&P 500 hit new all-time highs in 2013, 2014 & 2015.

U.S. Dollar to go to multi-year highs versus both the Yen and Euro

May 2013

U.S. Dollar rose to new multi-year highs versus both the Yen and Euro in 2014 & 2015

Agricultural commodities to fall to new multi-year lows

May 2013

Corn and soybeans, inter alia, declined to new lows in 2013 & 2014.

About Dynasty Wealth Investing

Dynasty Wealth Investing is an exclusive investing community, which was co-founded by Mr. Markowski. He is predicting that the decade ending 2020 will be recorded by historians as having been the best ever for investors to build dynasty wealth of 10-to-100 times investment from a diversified portfolio. The 6 minute video below explains the types of industries and companies which have the potential to increase by 100% per year and 10 to 100 times in value within five years.

Dynasty Wealth Investing’s specialty is to identify emerging companies, which are First Movers and Disruptors such as UBER and Airbnb, etc., which have the potential to get to multi-billion dollar valuations quickly. The 4 minute video below is about disruptors and how $10,000 invested into UBER in 2010 is now valued for over $100 million.

A 3 ½ minute video about First Movers and an offer for a Free 60-Day Membership to the Dynasty Wealth Investing Community is available at

Additional information about Michael Markowski and his predictions is available at

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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