How far can the stock market go based on artificial liquidity in the hands of the hedge funds?
Sam Adelton
Apr. 28, 2007

If history is any guide to the future, the stock market is going the same way it went before, many times. There is one difference though. A six thousand old cycle that started first topped out two thousand years back with the Roman civilization is topping out. The stock market can actually continue doing this crazy move upwards against total bad economic backdrop for many more years. The larger the cycle, longer it takes for the parabola to curve out and start moving downwards.

The sensible thing in that situation is to avoid the market and try to make money in other financial instruments. Can Dow go to 20,000? Yes, it can even go to 200,000. It depends upon how much money they can print and distribute in the hands of a few. But in that case dollar will drop and gold will rise. That is exactly what is happening now. The stock market will finally topple. But since it is the last final stage, it will create divergence and negative technical factors like never seen before.

The dividend tax rule enacted a few years back is responsible for the mega bubble. The Dow Jones Industrial Average with comparatively thick dividends has become tax-free bonds. The big name stocks are more of bond play. But guess what happens when bonds default on interest payments? That is exactly what the fate of Dow is.

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The dividend tax rule enacted a few years back is responsible for the mega bubble. The big name stocks are more of bond play. But guess what happens when bonds default on interest payments? That is exactly what the fate of Dow is.
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