Dow 116,200? It isn’t as crazy as it sounds

The wildest prediction in market history is coming true, slowly.

With the Dow Jones Industrial Average, Standard & Poor’s 500 and Nasdaq 100 having all set record highs again this week – and comfortably on a pace for a third straight calendar year of double-digit gains – investor confidence is rising again.

It’s not just the American Association of Individual Investors Sentiment Survey, which has seen bullish sentiment well above its historical average for the better part of the last two months; it’s that betting odds for the Standard & Poor’s 500 to finish 2025 above 7,000 have surged.

Kalshi, a CFTC-market-regulated prediction market platform, shows that a range of 7,000 to 7,199 now carries a 27% probability, making it the most bet-on range.

Dow Jones Industrial Average: Average annual price return by decade (1950–2025)

• 1950s (1950–1959):14.1% (Post-WWII boom)
• 1960s (1960–1969):2.6%
• 1970s (1970–1979):2.1% (A “lost decade” impacted by high inflation)
• 1980s (1980–1989):13.3% (Major bull market)
• 1990s (1990–1999):15.9% (The best annualized return due to the tech boom)
• 2000s (2000–2009):0.6% (Lackluster performance because of the dot-com bust and the 2008 Financial Crisis)
• 2010s (2010–2019):11% (Post-crisis recovery and extended bull market)
• 2020s (2020-2024): 9.2%
  Source: SlickCharts

Nearly one-third of the Dow Jones Industrial Average predictions on IBKR Forecast Trader have the benchmark finishing the first quarter of 2026 north of 50,000. Given that the Dow currently stands roughly 5% away from that milestone, you can’t blame investors for feeling confident.

But with the Dow at record levels and approaching a big round number, it’s time to revisit the wildest, most daring stock market forecast ever made, 30 years ago this week, by a mostly forgotten mutual fund pioneer named Bill Berger.

A seemingly crazy Dow Jones prediction was made 30 years ago

In a world where most prognosticators will tell you “how much” or “when” but won’t give you both those data points, Berger made a prediction that — when used in a headline — still sends investors for a tizzy: Dow 116,200.

Berger made his forecast four years before Kevin Hassett, the current director of the National Economic Council, and James Glassman published “Dow 36,000: The New Strategy for Profiting From the Rise of the Coming Rise in the Stock Market.”

That book was hailed as a sign that the Internet bubble was about to burst (it did, five months later); it projected that the Dow would hit the magic number by 2004 at the latest, and when it missed – the DJIA didn’t reach 36,000 until November 2021 – the book was pilloried as “the most spectacularly wrong investing book ever.”

With both history and hunch working against it, you could be forgiven for thinking that Dow 116,200 is a sick joke, that its mere mention is a sign that the market is topping out.

However, I was there, having been an organizer for the first Society of American Business Editors & Writers Conference on Personal Finance, held in Boston at the end of October 1995, a time when the Dow Jones Industrial Average was hovering around 4,500.

First, Berger made fun of forecasting, giving attendees a piece from the supermarket tabloid Weekly World News, which suggested that you could “Tell Your Future in a Pizza,” with suggestions on how to read your next “crustal ball.” (No, I’m not kidding.)

Then he dropped the real bombshell, a fully formed forecast.

He said the Dow would reach 116,200 in the fall of 2040, 45 years later.

Why the Dow Jones 116,200 target is on pace to pan out

The reason to keep Berger’s forecast alive – I have revisited it periodically ever since – is because that zany prediction is a beacon of sanity when markets get nutty.

Berger conjured his number simply, without needing the so-called “crustal” ball.

At the time of that speech, he’d spent 45 years in the investment business; he started in 1950, when the Dow was below 200.

Mathematically, he saw the Dow’s future reflecting its past; repeating the growth he’d lived through would push the benchmark to 116,200 over the next 45 years.

Berger, a septuagenarian, wryly suggested that if he was wrong, people would come find him to discuss it.

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He died a few years later (the Berger Funds were merged into Janus Funds a few years after that), but no one need dig up Berger to have a chat; two-thirds of the way to his deadline, the forecast is spot on.

Berger couldn’t have foreseen the Internet bubble, the Great Financial Crisis, the Covid Pandemic, the artificial intelligence boom or anything else that has moved the market, but his math is irrefutable.

Morningstar calculated that hitting the target from 1995 levels would have required an annualized gain of roughly 7.35% over the 45 years.

With the Dow now standing at roughly 47,500, an annualized gain of about 6.75% over the next 15 years will make Berger’s pick a winner.

Not so fast – there’s still a lot of time between now and 2040

Rob Arnott, founding chairman of Research Affiliates, said in an interview on “Money Life with Chuck Jaffe” this week that Berger is “in the ballpark.” However, he said that lofty current valuations could make it hard to complete the task, noting that his firm has a 10-year outlook for the Dow Jones Industrial Average to see annual average gains closer to 3.5%.

“Could [116 ,200] happen, absolutely,” Arnott said. “Is it likely to happen? I think it’s going to fall short, but I think it’ll fall short by a small enough margin that it’ll still be the greatest forecast in history.”

Investors focus way too much on the day-to-day, the reactions to an earnings report, a Fed announcement, a new government policy, when their real mission is to capture the market’s trend over a lifetime, to get the kind of returns Berger lived through in the first 45 years of his career and saw continuing for the next 45.

What happens next week, month, quarter, year, or half-decade isn’t too important to someone who takes a lifetime view of investing and who doesn’t react to those short-term results.

For most of the last 30 years, Dow 116,200 was unimaginable. Now that you can foresee it, the important thing is investing to get there.

“There’s not an investor who has been alive for the last 60 years or more who hasn’t seen the market rise over their lifetimes,” Berger said in that 1995 speech. That period included a chunk of the Great Depression. “So I don’t know exactly where the market is going over the next five or six decades, but I know it will be up.”