Stock seer sees no reason Dow won't continue steady growth (Has he been hitting the bong again?)

Like most of us last week, Christopher Channer gave passing attention to the Dow Jones industrial average exceeding 12,000, and then went on to other concerns. But the crossing of that threshold prompted me to seek his counsel because of his credentials as a Dow diviner. Channer correctly predicted when the Dow would first top 10,000, which happened in 1999. A lot of people got that right as a short-term call, but Channer's judgment was in another league. He made his prediction in June 1990 in an interview with the late Edwin Darby that ran in the Sun-Times, nearly nine years ahead of the fact. At the time, it was so bullish as to strike some as daft; in June 1990, the Dow was around 2,800.

The obvious question was when the Dow would cross the next meaningful marker of 20,000. Channer, who used to work for the old Chicago Corp. and then for Morgan Stanley, is a cautious man and had to be coaxed into an answer. But he's also confident in himself, having ditched life in big firms to found Channer Investment Management in Inverness, a two-person boutique.

So he gave one, but here's a shameless preface to keep you reading. He doesn't have the rip-roaring outlook of 16 years ago, but believes in the steady profit performance of American companies. Channer is 60, and the years have taught him not to play with sectors. "Look at only those companies that have shown the best 10-year financial growth, and only if their stock prices come to you," he said. Channer mentioned Walgreen as an example, but he otherwise stays away from stock picks for mass consumption.

He said that while the market is due for a correction, he's happy that there was little euphoria over Dow 12,000. That would be like a mother measuring her 12-year-old son and being surprised that he's taller than ever. "The conditions are right, so the index will grow," he said.

Now to the prediction: He calls Dow 20,000 as occurring eight years hence, October 2014. If he's right, he's projecting steady but historically average returns in the index over that period.

http://www.suntimes.com/business/roeder/105368,CST-FIN-curious22.article