(TheStreet) -- People do a lot of top down analysis at this time of the year, trying to figure out how much the Dow and the S&P could go up--or down--in the coming year. That's not my style. As someone who is a stock picker, I like a bottoms up approach, analyzing each Dow component to come up with what I think the most visible index will deliver in 2011.
Here's my annual analysis, case by case, that adds up to a target of 13,365 for the Dow Jones next year -- a 16% gain from current levels and a bountiful return -- based on a prognostication of the performance of the individual members of the venerable index.
Although I am a bottoms up guy, as a backdrop I am presuming a resumption of decent U.S. growth courtesy of the Fed -- call it 3% to 4% -- continued worldwide growth, a stable to slight decline in the dollar and a decent rise in rates (30-year Treasury bond going to 4.8%) as befitting a return to economic health.
Still, I don't want to overplay the macro hand. I am seeing these terrific gains on the Dow from the players within, not the trends outside. Here's how I get to my 13,365 target. (more)
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