Tuesday, May 18, 2010

Why Dow 5000 Is Still 'Very Likely': Strategist

Last week, David Hefty, chief executive of Cornerstone Wealth Management, warned investors of a sudden market “freefall,” sending the Dow below 5,000. But James Hardesty, president, market strategist and chief economist at Hardesty Capital Management said there is still “much strength” in the economy and expects to end the year higher. They returned to CNBC Monday to share their insights.

“The Dow 5,000 piece is very likely—that’s not even the extreme low,” Hefty told CNBC. “It only takes a few hedge funds to get that margin call."

"When they start to sell—and the fact that everyone’s on pins and needles—that’s where the freefall starts to take place, like oil back in 2008," he said.

"When you look at the fact that we have $17 trillion of leverage inside the financial system and when you look at debt around the world, our financial system has more debt than anything else." Read more

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