S&P 500 Approaching Smalltime's Call of 2220, Dow 7% Away from 20,000

The major indexes are marching toward the levels we anticipated way back in 2014. Why and how did I make such a prediction? First I considered that the sell off in '08-'09 took the markets to extreme lows and left companies sorely undervalued. Second, I looked at the Institute for Supply Management's manufacturing index and saw that '08-'09 produced the longest factory slowdown since the end of WWII and the third longest factory downturn in 75 years. I also considered interest rates on the 10 year treasury note reaching historic lows around 1.5%. The rates are low because the population of America, and the developed world, is aged and all managed portfolios are heavy in fixed income. The fact is older people invest in bonds to preserve the capital that they have accumulated over their lifetimes. The baby boomer generation is set to pass on that accumulated wealth to the tune of 59 trillion dollars over the next 20 years with that money flowing to a generation who is younger and more risk averse than the boomers. This to me means that stocks could go to levels that would seem absurd today, like the S&P 500 at 4500 by the year 2020, which I think will happen. These and other factors I mentioned in earlier posts are what has driven the market to these levels and what will continue to drive markets for the next several years. Wal-Mart and Target are among several large companies that have given raises across the board to lower wage workers. Those raises will not be saved, but will be spent driving corporate profits higher and expanding P/E multiples in the marketplace.