In his annual letter released this weekend, Warren Buffett had a little fun with numbers when he calculated where the Dow would have to close at the end of this century in order to match the 5.3% annualized return it had during the 20th century. Based on his calculations, with an annualized return of 5.3%, the Dow would finish off the century at 2,000,000! Suddenly Dow 36,000 seems like small potatoes. Along that line of reasoning, in the table below we list where the Dow would have to close out the century in order to reach certain levels of annualized returns (on a price basis). With many investors seeking average annual returns of 10%, the Dow would have to close out the century at 158,437,353.
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