24/7 Wall St.

The stock market gains of well over 20% for the Dow Jones Industrial Average and the S&P 500 Index have been a capstone of a multiyear bull market for stocks. That does not mean that stocks cannot or will not continue their rise in 2014 (or beyond). Now that the bull market has taken the DJIA above 16,000, 24/7 Wall St. wanted to recognize a man who predicted almost two years ago, back in January of 2012, that the DJIA would rise to 16,000.

Don Hays of the Hays Advisory made that prediction. The move took a bit longer than he originally expected, but timing often comes sooner or later for such monumental calls. This was also a very bold call way back when the DJIA was around 12,500. Hays was among the most bullish of strategists at the time, so we wanted to see what his outlook for stocks happens to be now.

Responding to our outlook inquiry, Hays said:

We have been very optimistic for quite a while since we see a great combination of the three factors (Monetary, Psychology, and Valuation) that we consider the only factors that give you any chance of fighting off your natural bias, your natural fear at the low points of Bull Markets when there are so many reasons to be afraid.

What is perhaps the most important issue in the Hays outlook is a very strong infrastructure for this bull market. And better yet, Hays believes that stocks are breaking out of the 15-year evolution period when the United States and the world make major changes in their outlooks and political direction.

Hays noted:

It is hard to read this now from the news, but the evolution is clear if you really look at the progression of commodity prices, the slow evolution of the Arab Spring, the new energy independence of the U.S. and most important the evolution of the Technology Revolution that is greatly enhancing productivity (and earnings — and eventually growth).

His new outlook is for the price-to-earnings (P/E) ratio of the S&P 500 Index to move up to 17 times forward earnings for 2014, as the public gradually starts to get more optimistic about growth. The forward expectations by 2014’s end should be somewhere in the range of $128 per share, and that takes the S&P 500 target up to 2,178, versus close to 1,800 today. In short, Hays is looking for stocks to gain another 20% again over the next year.