Butcher & Stringer Strategist Predicts Surge in Dow Jones Average
Wallace, Anise, American Banker
NEW YORK -- The chairman of the investment policy committee at Butcher & Singer Inc. is predicting that the Dow Jones industrial average could rise to between 1500 and 1700 by next July.
"I an not predicting an across-the-board bull market move," Thom Brown wrote in his latest market strategy letter. "But it is becoming increasingly clear that the preconditions are in place for an upward explosion in the prices of a relatively narrow list of equity issues."
The Dow Jones average closed at 1,226.26 Tuesday.
Mr. Brown believes there are two major factors behind the potential bull market. On the economic side, he sees lower interest rates, lower oil prices, lower inflation, slower economic growth, and continued unstable conditions in the international and domestic debt areas. "I ascribe a high inevitability rating to most, if not all, of these factors," he said.
Along with the economic changes, Mr. Brown mentioned changes in the securities markets that have resulted in a "shrinking supply of institutionally acceptable common stocks." Mr. Brown attributed the buying surge in August to a "scarcity factor" of acceptable stocks for investment managers that are fiduciaries.
Since 1980, he pointed out, the dollar value of new stock issues has totaled $117. …