Back during the tech boom of the 2000s, there was a saying going around that the market would be carried by internet firms so far that the Dow Jones Industrial Average would go from 10,000 to 30,000 in the span of a few years. Of course, the subsequent bust crushed that dream. But here we are, roughly ten years later, this time on the very real verge of hitting the mythical 30,000 benchmark. Now, a question remains: how long can we keep it up?
For a very long time, we’ve taken growth for granted. We’ve assumed that the stock market always goes up, and that GDP ought to always be positive; primarily because it historically been that way. However, history is a pretty bad way to predict the future. By logical terms, at some point the stock market will start going down. At some point, GDP will dip into negative growth. Things, in general, cannot grow forever.
Or at least that’s what we think. Perhaps, by some measure, the economy cannot be restricted by our previous scientific measures; perhaps the stock market really does continue to go up, and companies and firms perpetually innovate and find new methods of making their profits go sky high. Perhaps human ingenuity is more than we could have ever expected it to be.
In my article The Machine Learning Revolution, I mentioned that the time period in between major technological solutions has been getting shorter and shorter. I ended on the thought exercise of us going too fast. Could our inherent lust for the Dow 30,000 — and 50,000, and 100,000 after that — lead us to innovation that is inherently unscalable? Previous methods of imperfect innovation have lead to the climate change crisis of today, which we are currently unsure if we’ll escape alive. Is this a perpetuity of us continuing to chase after economic growth milestones?
I’ll end on one more point, and that is that the future is unequally distributed. The US — and the Dow — will likely eventually peak and go flat or negative. However, there are other places in the world, such as China and India, where rapid growth is just starting; and there are still other places such as Africa where growth hasn’t even begun. So while we might look at a US portfolio and say that the end may be in sight, the world portfolio is much more resilient. Perhaps 30,000 is just a small stepping stone after all.
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