This week Warren Buffett made headlines by predicting the Dow Jones Industrial Average will surpass one million in 100 years. Given that the Dow is at 22359 at the close of Thursday, one million sounds like a big number however as Buffett said, “The Dow will be over a million and that is not a ridiculous forecast at all if you do the math.” I agree 100% and in fact, Buffett is likely conservative in his one million prediction.

It would take a 3.9% annual gain for the Dow to hit one million in 100 years. That's actually well below the long-term average returns from the stock market. For example, the S&P 500 has returned 6.7% annually over the last 50 years. If the Dow could replicate that return, then the Dow would actually top the one million mark in less than 60 years and at the end of 100 years, it could surpass 14 million!

Sure it won't be a straight line up every year but we are optimistic about America's prospects. While others worry about North Korea, valuations, trades wars and terrorism, we remain bullish for stocks in the short-term. The global economy continues to strengthen and interest rates are still near historic lows. Given the choice of long-bond yielding nothing in Europe and Japan, most investors will find stocks much more attractive and should provide an upward bias for the stock market.

While neither Buffett nor I will bear witness to his one million prediction in 2117, perhaps my daughter will and can point back to this blog post when it happens.

“Warren Buffett – Caricature” by DonkeyHotey is licensed under CC BY 2.0

By Chris Wang