So the Dow hit 10,000 again yesterday. It’s just a number, so we won’t dwell on it.
What we will talk about is whether we’re better off now than the last time we were at 10,000 (last year). We’ll also Foolishly hypothesize about which companies will prosper if we hit 15,000. And which will prosper if we drop to 5,000.
Without further ado, let’s see what three of our analysts had to say.
The Dow was around 10,000 a year ago, went down below 7,000, and just recovered to around 10,000. After bailouts and stimulus efforts, how much better off (if at all) are we today than last year?
Rick Munarriz: We're a lot better in nearly every sense. Consumers see the light at the end of the tunnel. Analyst estimates are inching higher again. Companies have also taken dramatic steps to improve their bottom lines over the past year. 2009 will be remembered as the year in which even Microsoft
Matt Koppenheffer: How much better off are we? Well that's a loaded question if ever I've heard one. On the one hand, consumers have backed off the ledge that they were on this time last year -- which means they just may buy that flat-screen TV they've been eyeing at Best Buy. Businesses have also become a little less jittery, giving hope to everyone from transportation companies like CSX to technology providers like Oracle.
But on the other hand, if JPMorgan Chase's earnings were any sign, there's still little that's really changed in banking -- a major contributor to getting us into such a massive mess. And don't even get me started on what happens if the government pulls out the cash IV that it's been providing.
Morgan Housel: There are two ways to answer that question. First, it's indisputable that credit markets are more stable now than last October. Things like LIBOR and the TED spread were just off the charts last year, and today are back down to levels that would be considered normal in any healthy year.
But a lot of those improvements are thanks to policies that are both temporary and experimental, so no one really knows what the final outcome will be. Will excess bank reserves turn into excessive, speculative lending? Could happen. Will temper tantrums return when the Federal Reserve's emergency programs like TALF, or the purchasing of mortgage-backed securities, end? They certainly could.
So while we are better off than we were this time last year, I'd say it's premature to write the financial crisis' obituary just yet. It's easy to look healed when you cover up your wounds.
Give me one stock that would survive if we hit Dow 5,000 and one that would thrive if we hit Dow 15,000.
Rick Munarriz: I am going to get laughed out of this roundtable, but I think Sirius XM Radio
If the Dow hits 5,000, I'll go with Netflix
Matt Koppenheffer: Health-care reform be damned. Johnson & Johnson
Morgan Housel: When the world was coming to an end earlier this year, I looked at my Philip Morris International
As for Dow 15,000, getting there within the next few years could probably only be done through rampant inflation or a dramatic revival of consumer spending. Both I'd say are improbable, but if consumer spending really springs back, niche consumer discretionary companies that are extremely well run, like Coach
We’ve given you our opinions. Let the discussion begin in the comments section below!
This roundtable article was compiled by Anand Chokkavelu, who owns shares of Intuitive Surgical, Philip Morris International, Sirius XM, and Microsoft. Intuitive Surgical is a Motley Fool Rule Breakers selection. Best Buy, Coach, and Netflix are Motley Fool Stock Advisor picks. Best Buy, Dell, and Microsoft are Motley Fool Inside Value selections. Johnson & Johnson is a Motley Fool Income Investor recommendation. Philip Morris International is a Motley Fool Global Gains pick. The Fool owns shares of Best Buy and Oracle.The Motley Fool has a disclosure policy.