IMHO, i believe the following will occur over the next few years in financial markets:
- The US market will grind down (ie,. one step up, two steps down). I wouldn't buy the Dow until it's well below 5,000.
- The USD will start a prolonged downtrend that will last many years.
Under this scenario, not only will investing in selecting US companies when the Dow's at 8,000 result in significant loses in USD, but it will also result in even larger loses in Aussie dollars as it appreciates relative to the USD.
IMHO, you're best bet is to have/do the following:
- have ZERO personal debt - have a significant exposure to gold - have a minimum 20% cash - have limited property/equities exposure (<30%)
... any equity exposure should have low PE's, and have a business based in Australia. (now is the WRONG time to be buying a business with any overseas exposure)
All the above is only my view.
I haven't answered your orginal question, because i believe your assertion of buying Dow stocks at 8,000 is wrong.
Please understand that i am relatively young (<25). I have read alot about past market conditions, behaviour, etc... however, i've only been active in the market for approx 8 years.
