Innovation Set to Spur New Roarin’ 20s-Style Market

innovation of the Roarin' 20s, stock market trajectory, Sheaff Brock

Innovation Set to Spur New Roarin’ 20s-Style Market

The stock market is a forward-looking animal, explains Sheaff Brock Managing Director Dave Gilreath, yet signs indicate that clues to what lies ahead may be found in our Roarin’ 20s’ USA past.

There is a very real potential for the Dow Jones Industrial Average to hit 50,000 by the year 2027, Gilreath states. That’s because the decade of the 2020s, like the decade of the 1920s, will be marked by both disruption and innovation.

“Confidence in the recovery is growing rapidly,” writes Matt Egan of CNN Business, quoting a number of economists:

  • Goldman Sachs—“The US economy will grow at the fastest clip in more than three decades.”
  • Mark Zandi of Moody’s Analytics—The U.S. economy will return to full employment by next spring.
  • Jefferies—“Explosive income growth is likely to propel US GDP 6.4% higher this year and nearly 5% next year.”
  • J.P Morgan analysts—“The current trajectory of COVID-19 cases and vaccinations implies that the global pandemic could be as good as over in just a couple of months.”

Just prior to the onset of the 1920s, 50 million people had died of Spanish Flu. There was a global recession, and Prohibition had been imposed. Still, out of a combination of pent-up demand and human innovation, there ensued a decade in which the stock market rose eightfold.

Sheaff Brock history of the Dow Jones, showing potential market trajectory to 50,000

Today, one hundred years later, we find ourselves at the brink of a similar period of innovation. With interest rates low and pent-up demand following the pandemic, plus the efficiency and adaptability of U.S. companies, our economy is poised to break barriers, building on and expanding developments in:

  • blockchain technology
  • robotics
  • human genome research
  • artificial intelligence
  • nuclear power

In fact, the tsunami of innovation has already begun. “Shared mobility, advanced plastic recycling, and protein production are going to be key to future prosperity,” writes Mike Scott in Forbes. “From robotic surgery to self-driving cars, 5G will be critical to advances in the internet of things.”

Lux Research has compiled an even more specific list of 20 innovation areas with the combined potential to create a second “roarin’” decade, transforming our lives—and the economy, including:

  • bioinformatics and biofertilizers
  • commercial vehicle automation
  • hydrogen fuel cells
  • omics technologies

In large part due to human innovation, the market has doubled five times over the past 39 years, with one double every seven or eight years, Gilreath reminds investors. Isn’t it possible, even likely, he asks, for that to happen again?

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