Market Maven: Dow Could Pass 15,000 in '07
There's been a lot of speculation in the market lately that we've come so far so fast a correction is inevitable. But not according to our "market maven" -- Hennessey Funds President Neil Hennessey. On "Power Lunch," he said the Dow could jump as much as 20% next year, surpassing 15,000 on the upside.
Hennessey says both the Dow and the S&P 500 are undervalued, by about 4% and 8%, respectively, judging by each index’s price-to-sales ratios. The U.S. economy is experiencing historically low inflation, interest rates and unemployment, and despite slowing earnings companies are still seeing increases of 10% to 15%.
Invest in small-caps, mid-caps or large-caps – it doesn’t matter, says Hennessey. The market is selling for 15 to 16 times next year’s earnings when historically it sells for 21. “There’s a tremendous amount of value out there,” he says.