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Next Stop: Dow 25,224

By Brian Hicks
Thursday, May 31st, 2007

And Get a Piece of this $20 Trillion Investment

Dear Reader,

I'm about to make the most extreme market prediction of my entire career.

And if I'm right, I'll go down as a legend . . . and many of you will make life-changing fortunes.

But if I'm wrong, I'll be burned in effigy. And those of you who follow my advice will lose your shirts.

There's no two ways about it--it'll be feast or famine.

However, I should tell you that I'm eating my own cooking. In other words, I've rearranged my entire portfolio to enjoy the twelve-course dinner that's coming.

That's because if my prediction pans out, I could walk away with a minimum of $10 million inside of six years.

Here's how I came to this extreme prediction.

It started last September, when I had a conversation with my colleague, Steve Christ.

I trust Steve's market outlook.

We're both Baltimore boys, which means we know lacrosse isn't a reference to a city in Wisconsin . . . and our idea of fine dining is a fried bologna sandwich (with French's mustard) and a bag of Utz potato chips, washed down with an ice-cold Natty Boh.

But we also have that unique, Baltimore-Mencken skepticism running through our veins.

So whenever I have a screwball opinion about the market or a stock, I go to Steve first for his thoughts.

Well, Steve and I were analyzing a historical chart of the Dow, and what we saw shocked us.

"You see that? The right side of the W is completing," I told Steve.

He agreed, "Yeah, I see that. We're about to break out to new highs."

We both got our pencils and calculators out and started crunching the numbers.

My price target was mathematically and technically sound. It was also absurd on its face.

Based on the double bottom that started forming in the Dow in 2001, I came up with a price target of about 16,500.

Dow Jones Industrial Average

At the time, the Dow was trading around 11,600.

I could tell Steve wanted to disagree with me.

But he didn't have a choice. He had to go against his natural resistance to hyperbole.

His calculation was the same as mine. It was around 16,500 too--a gain of 42%.

Time frame?

Steve took a more measured, skeptical approach. The Dow would reach 16,500 in five years . . . about the same length of time it took for the double bottom to fully form.

But I was pretty aggressive: I said the Dow would do it 18 to 24 months.

So far, so good.

Yesterday the Dow closed at a record of 13,633. And the Dow did this on a day when the US GDP for the first quarter was revised downward--from 1.3% to 0.6%. The slowest growth since 2002!

Not to mention that gas prices are at record levels.

Everything says the market should tank. But it's not tanking. The market sees something on the horizon that has it in a good mood.

What is it?

A booming China? Booming globalization? A new tech revolution spawned by iPods, online video and Web 2.0? Or is it the fact that Bush is a lame-duck prez?

Well, it's all of that, plus more.

In fact, whenever I tell people of my bullish stance, they immediately think I'm talking about technology. Since technology was the core driver in the last major bull market in the US, that's the typical response I get.

Tech will play a major role, of course. But this bull market will be driven by an investment surge in infrastructure of necessities. Namely, energy.

Check this out...

According to the 2006 World Energy Outlook released by the International Energy Agency (IEA):

"...oil demand will go up from the 2005 level of 84 million barrels per day (mbd) to 99 mbd by 2015 and 116 mbd by 2030 if the world continues on its current unsustainable path of energy consumption.

From 1980 to 2004 total world primary energy demand grew by 54%, and to 2030 it is projected to grow at much the same rate. Electricity growth is even stronger.

To quench the world's thirst for energy, projections call for a cumulative investment in energy-supply infrastructure of over $20 trillion in real terms over the next 25 years - substantially more than was previously estimated."

Because of this, I've now decided to make an even more aggressive market prediction. If you thought Dow 16,500 by 2008 was shocking, the prediction I'm making now will surely send you over the edge.

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Birth of a Bull

"Uh, if anybody is interested, the Dow just hit 4,000."

That's what I heard over the intercom at the Agora Financial offices.

I won't tell you which editor uttered those words, but if you ever heard him speak at a conference, he sounds just like Chewbacca from Star Wars.

Bubble Schmubble

On August 26, 1994, I started my investment career on the ground floor with Agora Financial. When I entered the Agora office that summer, which was situated exactly between the historic Shot Tower and the Baltimore housing projects, every editor in there was calling the Dow a bubble.

"Dow 4,000? That's absurd. We're going back to 1,000. Maybe even lower."

That's what I heard over and over again from the likes of Adrian Day, Doug Casey, Jim Davidson and Bill Bonner.

In fact, in November of 1994, I was tapped by those very market "gurus" to write a report. Called "Beating the Bear," it was a guide on how to survive the coming collapse in the stock market. Every editor contributed strategies to protect investors from the inevitable crash.

Like I said, this was November 1994, and the Dow was trading around 3,700.

By the time the report was published in February, the Dow had broken above 4,000.

By July . . . 4700.

And by December 1995, anybody who implemented the strategies advocated in "Beating the Bear" lost their shirts as the Dow reached 5,200--a gain of 1,500 points, or 40%.

We all know what happened next. The Dow--as well as the rest of the market--went into a historic five-year frenzy until it reached its intraday peak of 11,908 on January 14, 2000.

Between 1995 and 1999, the Dow averaged 23% gains each year.

But the interesting part of that historic move was this: During the entire way up, the perpetual bears and doom-and-gloomers continued their blather about how the market couldn't go higher.

But it did.

Investors who accepted the market for what it was--a bull--made fortunes. Those who stuck to the bear mantra sat on the sidelines watching the game play out.

Well, I'm here to tell you that it's about to do it all over again. And I want you to participate in it.

By 2011, I think the Dow will reach levels between 25,224 and 30,440.

There, I said it. No going back now.

The difference between the two levels is this.

During the bull market of 1982-1999, the Dow averaged gains of 13.5% annually.

Using a 13.5% annual growth rate as my assumption, I come up with these targets for the Dow over the next five years:

2007 . . . . . . . . . . . . . . . . . . 15,200

2008 . . . . . . . . . . . . . . . . . . 17,252

2009 . . . . . . . . . . . . . . . . . . 19,581

2010 . . . . . . . . . . . . . . . . . . 22,224

2011 . . . . . . . . . . . . . . . . . . 25,224

But if the Dow averages annual gains of 23.2% over the next five years, those targets increase substantially, and the Dow hits 30,440 by 2011.

As you read this, the Dow is trading at an all-time record high. And the S&P 500, the Dow Transports, the Dow Utilities, and the Russell 2000 are all of breaking to new record highs.

Ladies and gentlemen, we're in a new bull market.

It's time to prepare your portfolios for it.

Enjoy, my friend,

Brian Hicks Signature

Brian Hicks




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