As I was driving to work a few days ago, this was the question asked by the host to Dr. Jeremy Siegel, a professor of Finance at Wharton.
Let me rephrase the question: Which will occur, Dow 20,000 or a correction?
The answer: Yes, both will occur.
I don’t know when each will occur or in what order and it really should not matter to a long-term investor.
A market correction is defined as a decrease of at least 10%. These happen often and should be viewed as a common occurrence.
The Dow Jones Industrial Average (DJIA), a collection of 30 large US stocks, is now in the range of 17-18,000. It is not a matter of if the DJIA will reach 20,000, but when that will occur.
The key as an investor is that you must have some of your funds invested in the market, to benefit from the inevitable increases that will occur over time. As economies expand and companies adapt and grow, this will lead not only to Dow 20,000, but the Dow will eventually reach 25,000 and 30,000.
The DJIA reaching 25,000 or 30,000 may seem improbable to you, but in 1980 it was at 825 and in 1999 the Dow crossed 10,000.
Be patient and well diversified and you will reap the benefits.