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Dow to Hit 20,000 By End of 2012?

Monday, 6 Jun 2011 | 6:28 PM ET

I have heard people rant and rave and bellow
That we`re done and we might as well be dead,
But I`m only a cockeyed optimist
And I can`t get it into my head.
- Rodgers & Hammerstein's South Pacific

Top Wall Street strategist James Altucher is either a cockeyed optimist or he’s onto something.

It may sound like pie in the sky at first but Altucher, who’s managing director at the hedge fund Formula Capital and the author of several books on investing, honestly believes the Dow could skyrocket by the end of next year.

He thinks the recent sell-off is nothing more than a minor pullback, and that the Street is about to key into 3 catalysts that he expects could turbo-charge the Dow sending it to 20,000 within the next 18 months.

- #1: QE2 Has Yet To Really Start
- #2: Unemployment Stabilizes
- #3 Dow Stocks Are Cheap

Essentially Altucher argues that the stock market is over-sold and under-appreciated. "Stocks are just dirt cheap," he says.

"Take Apple ," he says. "The company has $65 bilion in cash, no debt and trades for just 12 times earnings. It's a company with almost 100% earnigns growth. It should be trading at 2 or 3 times the level its trading at now."

And it's not just Apple. Altucher says many of the Dow 30 are trading at historical discounts to their book value.

"We have some of the biggest market cap weighted companies in the world that are trading for about 8 times forward earnings. Companies like Intel, Microsoft , Google, and Exxon .

Dow to Hit 20K by End of 2012?
James Altucher, Formula Capital, discusses three catalysts that will drive the Dow to 20,000.

These are companies that could easily double," he adds.

But it's not just the price of stocks.

Also Altucher says the benefits of QE2 have yet to trickle into the economy. "It takes quite some time to get into the hands of the American consumer - typically 6-18 months. That means we probably haven't seen $1 yet from QE2. We won't see it until late 2011 and 2012."

He's even bullish on jobs. "Temp workers are being hired at an all time high and lay-offs are at an all-time low. What happens next? Full-time employees are hired."

And when these catalysts come together he thinks it's up and away. "We could very easily see a 50% move higher. The S&P 500 is going to double and the Dow is going follow," he says.

We know many of you will scoff at Altucher's outlook and call it unrealistic. But we often bring you the extreme bear case - so why not the extreme bull case. And like the song says, what's wrong being stuck like a dope - with a thing called hope.

What do you think? We want to know!

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Trader disclosure: On June 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Weiss owns (TWM); Weiss owns (SDS); Weiss owns (JPM); Weiss owns (QCOM); Weiss owns (COP); Weiss owns (DVN); Weiss owns (HK); Weiss owns (AKAM); Weiss owns (BRCM); Weiss owns (HBAN); Weiss is short (SHAW); Weiss is short (SLR); Weiss is short (SWLT); Weiss is short (X); Najarian Owns (ACI); Najarian Owns (AAPL); Najarian Owns (GE); Najarian Owns (C); Najarian Owns (MS); Najarian Owns (MSFT); Adami owns (AGU); Adami owns (C); Adami owns (INTC); Adami owns (GS); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Terranova owns (XOM); Terranova owns (KSS); Terranova owns (CVI); Terranova owns (OXY); Terranova owns (TM); Terranova owns (BJ); Terranova owns (DIS); Terranova owns (PFE); Terranova owns (V); Terranova owns (HPQ); Terranova owns (FLX); Terranova owns (JPM); Terranova owns (MCD); Terranova owns (PEP); Terranova owns (VRTS); Terranova is short (DELL)

Brian Kelly
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Amelia Bourdeaux
**No Disclosures

Dan Nathan
** No Disclosures on (WYNN)

James Altucher
**No Disclosures

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