The best ever market forecast may keep you calm for 2023

From a stock market and investment perspective, 2022 was terrible. Depending on whose projections and forecasts you believe, the new year could be worse.

It’s times like these that I like to revisit what I consider to be the greatest and wildest stock market prediction of all time, one that seems to be coming true, even if it’s still a long way off the finish line.

It goes like this: Dow 116,200.

It’s not my prediction. It was created by Bill Berger, founder of the Berger Funds, which merged with the Janus Funds in 2002. And if it sounds completely far-fetched with a Dow Jones Industrial Average of about 33,000 and a decline of about 8.5% for 2022, remember that Berger made his forecast in 1995 with an index hovering around 4,500.

He said the Dow would hit its 45-year target, in the fall of 2040.

The reason for keeping Berger’s prediction alive, which I’ve been doing on a mission ever since I heard his speech in Boston at the first Society of American Business Editors and Writers Conference on Personal Finance, is because in crazy times like these, that crazy prediction could help keep you healthy.

That’s because as impossible as Dow 116,200 sounds, it’s perfectly realistic for the next 18 years.

Berger simply guessed his number. By the time of that speech, he had worked in investments for 45 years; when he started, the Dow was below 200.

Mathematically, he saw the future of the Dows as a reflection of the past; repeating the growth he had experienced would bring the benchmark to 116,200 over the next 45 years.

Berger, a seventy-year-old at the time, wryly suggested that if he turned out to be wrong, people would come looking for him to talk about it; he died a few years later.

As lofty as Berger’s number was (and is), Morningstar calculates that reaching the goal would have required annual gains of about 7.35% over 45 years.

When the Dow peaked on Jan. 4, 2022, necessary gains had fallen to 6.33% year-over-year.

As of Dec. 1, after a year of market trouble, Morningstar calculates that hitting 116,200 by Fall 2040 will yield a 7.07% annualized gain, which feels like a safe bet. Few observers believe that the market will yield less in the next two decades.

So the disappointments of 2022 have not derailed long-term investors any more than the biggest market forecast ever.

Keep that in mind with what the market dishes up next, because while things could get ugly, you can be pretty sure I’ll keep betting on the Dow to be close to 116,200 by the end of 2040.

I’ll be a seventy-year-old myself by then, and one thing I won’t be doing at that point is writing this column.

Today marks the end of my career as a syndicated columnist. My work went into syndication, meaning it was picked up by newspapers across the country in early 1995 when I was a personal finance and mutual fund columnist at The Boston Globe. It has remained in syndication ever since without missing a single week.

My job doesn’t change much, just where to find me. My weekday podcast on all things finance, Money Life with Chuck Jaffe, will continue, and I’ll be taking my columns to MarketWatch.com, where I worked for about 15 years after I left the Globe.

My work there will be more focused on investments and financial opinion and less on personal finance.

And as much as I’d love it if you follow me there and listen to the show (moneylifeshow. com), it is more important to me that you continue to read this paper and support quality journalism in your community.

My success story is largely due to newspapers like The Seattle Times, which bought my column years ago, chose me over better-known names from major syndicates because they liked the tone and tenor of my work, and because they stuck with me for years when most newspapers cut out every bit of content that wasn’t local, even if that left a void in areas like personal finance.

Since my youngest daughter is getting married this week, she was less than a year old when I joined The Globe.

I want to thank you, the devoted readers who stuck with me for so long, who set me straight when I needed it, and sent me an Attaboy or an Amen, brother when you felt I hit your chord.

I recently received a letter from a young man who said that his father introduced him to my work as a teenager, and that he now followed some of my advice as he started his own family. I’m not sure I’ve ever received more praise.

I hope you’ve kept reading all these years, because my work has helped you. Thank you for taking me in and spending some time with me. It has been an honor and a privilege for me.

Please remain wary of high-quality, well-informed financial journalism. Stay on your toes and watch out for conflicts of interest, misguided concepts, and bad actors. Stay safe; be good.

And remember, when the market goes down and everything looks bleak, there’s still Dow 116,200 to look forward to.