Investing

DJIA 2013: Best Targets Imply More Than 11% Gain to 14,590 (AA, BAC, CVX, GE, HD, HPQ, INTC, JPM, MMM, UTX, KO, MCD, MRK, PFE, MSFT, PG, T, VZ, UNH, WMT, XOM)

As each new year arrives, 24/7 Wall St. looks at each of the 30 Dow Jones Industrial Average components and assigns a forward value for the Dow based on a mixed methodology. We have actually come within about 1% for each of the peak projection of the DJIA in past three years using this methodology. We are not just looking for individual stocks to buy in 2013. We use consensus price targets from Wall St. analysts and we use an equal weighting of the components rather than the price-weighting used to calculate the DJIA.

Predicting the forward value of indexes and the stock market often feels like a game of horseshoes, or a bit like throwing hand grenades, because being close enough is generally all that matters. The blended DJIA price target peak for 2013, using the 24/7 Wall St. methodology is 14,590, or a gain of 11.34%.

This may sound to investors as though it is wildly bullish, but the projected peak gain in 2012 was almost 12% as well. It seems a bit odd to just skip over the entire year with a mathematical outlook. The fiscal cliff debate of 2012, the coming debt ceiling debate and the possibility of a recession in the United States all come into play. Here is the history of this peak DJIA calculation since the recovery of the recession:

  • In 2012, the peak of 13,661.87 in the DJIA, compared to the same projection of 13,678 we used.
  • In 2011, the methodology called for a blended peak consensus of 13,042.06. While the DJIA closed 2011 up 5.5% at 12,217.56 for the year, the peak 2011 DJIA price was 12,928.50.
  • In 2010, the methodology called for a target of 11,455, and the DJIA closed out at 11,577.51 for the year.

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