One such lofty projection comes from financial advisor and author David Elias, who believes that the Dow's collection of blue chips are poised to reach unprecedented levels, hitting 40,000 by the year 2016. It's heady stuff, to be sure, but not, as Elias carefully documents, if a record-setting bull market continues its mad charge into the new millennium. Formed in May 1896, the Dow took 76 years to reach the 1,000 plateau. After striking 4,000 in 1995, the market has required less than one year for each new 1,000-point milestone, touching 10,000 in March 1999. The Dow needs 9 percent annual growth to hit 40,000 in 2016, but how can the economy sustain this growth? Elias believes that forces such as direct foreign investment, domestic savings, and cooperative central-banking policies will drive this vigorous market, as will the dynamics of the New Economy, which allows for the coexistence of high economic growth, low interest rates, and low inflation. Elias describes the changing economic landscape as "unlike any seen in the twentieth century. In fact, the New Economy idea is heavily contingent on continued global growth and capitalization. New and expanding markets are opening their doors to the world, and investors will profit."
After building his case for the Dow's ascent--which includes a lucid study of classical and contemporary economic concepts--Elias looks at massive opportunities for new-millennium investors. He lists his criteria for investing in a company: seasoned management, experience in the global marketplace, brand-name recognition, a frontrunner position of in a specific industry, and financial strength to weather turbulence. Finally, Elias offers 12 sample portfolios, drawing from three sectors that he believes will lead the marketplace: technology, financial services, and health care. His "Rip Van Winkle" portfolio--one that an investor can buy and ignore for a year--includes Merck & Co., Citigroup Inc., and AT&T Corp. Of course, as with individual stocks themselves, it's impossible to predict what new levels the Dow will reach, but by book's end, 40,000 looks attainable. --Rob McDonald