Investors love seeing the stock market hit new highs. It’s impressive enough for the Dow Jones industrial average to have hit 28,000 and for the S&P 500 to have hit 3,100. Now think about all the fears of the trade war, slower earnings, a Federal Reserve that was acting too slow, and then all those flat-out wrong predictions of an imminent recession. No one likes to hear “I told ya so,” and this is one of those instances when a model should have said that to yours truly.

At the start of each year, 24/7 Wall St. issues an implied Dow forecast of a peak value to be seen in the coming year, and that also gets stretched over into the S&P 500. The model issued on the first day of 2019 showed how the Dow could reach 28,000 before the end of 2019. The Dow hit the elusive 28,000 on Friday, November 15, with a close of 28,004.89, and the S&P 500 posted an even more impressive rise with nearly a 24-point gain to close at 3,120.46.

The model had to overcome some serious challenges. If the trade war woes felt like a problem in 2019, the meltdown in the fourth quarter of 2018 felt like a far more serious blow in comparison. The Dow index closed at 23,327.46, for a 5.6% loss in 2018, after 2017 brought Dow gains of 25% and more than 19% on the S&P 500. An alternative calculation for the Dow, represented by the so-called Diamonds ETF (DIA), in an effort to include the ever-important dividends, lost 8.5% in December alone, and that wrecked the year to make for a 3.7% loss in 2018.

The Dow 28,000 outlook at the start of 2019 was the first time in many years when the methodology felt as though it was very much against what was the market volatility and expected headwinds in the markets and economy at the time. Still, the model lived up to what models are supposed to do: ignore the noise of the day and focus on where the market will go rather than worry about where it is and about the theme of any specific day.

When the model was run heading into the end of 2018 and at the start of 2019, it felt next to impossible to believe. The stock market had just come off the worst quarter it had seen in quite some time, and things felt like they were poised to look worse rather than better. In the end, it turns out that Federal Reserve Chair Jerome Powell’s tardiness on ending rate hikes and slowness to start cutting rates aggressively enough had a lot to do with the equation. By the end of summer of 2019, every media outlet was prematurely boasting that the next recession was upon us. On that mark, the media headlines were sensationalized and were just wrong. It turns out that reporters and editors are not so great at evaluating the big economic picture rather than focusing individual talking points.

It is still too soon to issue formal 2020 forecasts, and this never-ending election cycle is going to play a role, regardless of whether any of us like it. That said, there actually is a clear path for the Dow to hit 30,000 as soon as early 2020, if only a few things come to fruition. There does not even have to be a big recovery in the global growth picture.

The Dow uses an antiquated share price-weighted calculation and not a market-cap basis, or even a modified market cap basis, to determine its value. In reality, that means that of the 30 stocks that make up the Dow, the bottom 10 make up only about 15% of the index while the top two stocks account for 13% (and the top three account for 22%). It is critical to keep in mind that a rise to 30,000 on the Dow would only imply a gain of about 7.1%. The median Dow dividend is roughly 2.5%, handily above the 30-year and 10-year Treasury yields.

All things considered, here is how Dow 28,000 can quite easily become Dow 30,000 (and then some). Consensus analyst data is from Refinitiv and index weightings are from IndexArb.com.

Apple Inc. (NASDAQ: AAPL) is the largest stock in the world, with a $1.19 trillion market cap, but its $265.00 share price gives it only a number three spot on the Dow with a 6.4% weighting. Apple shares have broken out to higher highs, and any news of a truce with China will remove an incredible overhang that still may not be factored in. On top of the Apple TV efforts, 2020 is expected to have yet another big iPhone refresh cycle, and Apple has been rumored for years now to be ready to expand its line of product offerings that will help grow its ecosystem of add-on services and recurring revenues.

Boeing Co. (NYSE: BA), despite all the problems around the 737 Max crashes and grounding, is still the most important of all 30 stocks in the Dow, with a 9% weighting. Boeing merely needs progress at the start of 2019 and a relaunch of the 737 Max at some point, and then it’s back and off to the races. With a share price of almost $372, Boeing has underperformed, but it’s still up 15% year to date. Its high of $446 that was seen earlier in the year is still 20% above the current price, and some analysts, ahead of cutting expectations, had laid out a path for how Boeing could rise to $500 or even $600.

Goldman Sachs Group Inc. (NYSE: GS) is the fifth-highest weight in the Dow at 5.3%, based on its shares back up to around $220. Even though it’s up over 31% year to date, it was nearly a $270 stock at the start of 2018, and some analysts believed it was heading to $300 before scandals and problems hit at the same time as trading revenues and net interest compression were hitting. And Goldman Sachs has been somewhat aggressively targeting its next customer acquisition move with the launch of Marcus for retail banking and personal finance moves. If the yield curve cooperates, and if further economic deterioration doesn’t bleed into more trading losses (and lower management fees), then Goldman Sachs could be looking at closer to a $250 share price without much of an argument.

International Business Machines Corp. (NYSE: IBM) may be up 18% so far in 2019, but that has interested the value investing community more than the growth investing community, with its valuation of 10 times expected 2020 earnings. The Red Hat acquisition did not translate into any great post-earnings gains, and it is still down almost 40% from its peak in 2013. Even no change in strategy and the announcement of a new CEO (or her “early retirement”) would likely send IBM shares higher. Still, IBM is only the 14th largest Dow stock, with a 3.25% weighting. At $133.50 share, it has a 52-week range of $195.94 to $152.95 and a consensus target price of $148.11.

Johnson & Johnson (NYSE: JNJ) has been held down by asbestos in talcum powder lawsuits and by its role in the opioid crisis. The company is aggressively fighting on both fronts, with the claim that it doesn’t really have asbestos in talcum powder. And it had a very small role in the opioid crisis, relatively speaking, versus peers. Any resolutions on either front could send its shares higher, but with a 3.2% weighting, it has to rally a lot for its contribution to add much to the Dow’s gains.

3M Co. (NYSE: MMM) is a conglomerate that has lost its way with a lack of clarity on where the real problems are. Its CEO is still relatively new, and 3M has had its share of woes from Asia and has found itself in the midst of an environmental problem that its shareholders just are not used to. It also has developed a serious issue in meeting earnings expectations. At nearly $172 a share, 3M is up from a 52-week low of $150.58, even though its shares are still down almost 10% year to date. 3M is down from a 52-week high of $219.75, and it was a $250 stock at the very start of 2018. 3M is the eighth highest weighting on the Dow at 4.16%.

McDonald’s Corp. (NYSE: MCD) was most recently in the news over firing its CEO for an improper relationship. The reality is that the investing community was treating the stock as though its large shareholder return plan, gearing its menu and taking the all-day breakfast option were all priced in. At $193.97 a share, McDonald’s still carries a 4.7% weighting, even after having fallen from a peak of $221.93. If the new CEO can further develop the move using automation and some artificial intelligence that already has started, perhaps a move further into meat alternatives might add more to its margins. Analysts still have a consensus target price of $221.89.

Nike Inc. (NYSE: NKE) has only a 2.25% weighting, and all that has to happen is a marginal international gain and for it to hold off competition from Under Armour, Adidas and some of the cheaper apparel and footwear lines. It may sound easy enough, but 2019 was somewhat of a recovery year, and its shares were up 25% year to date.

UnitedHealth Group Inc. (NYSE: UNH) has the second-highest weighting in the Dow at 6.5%, and it has greatly underperformed, with an 8% year-to-date gain. All that it needs to hear is that Medicare-for-All just isn’t mathematically possible or faces a constitutional fight to the point it would need a new constitutional amendment. Think of everything else it has endured up to this point, and anything resembling that is likely a victory for the largest private insurer for corporate and enterprise health insurance plans.

Many other issues could also play a role in getting the Dow up to 30,000 and beyond. Much of the Dow is still not participating in the great gains of 2019. Here are just a few issues to consider.

Caterpillar Inc. (NYSE: CAT) may still be up 14% so far in 2019, but it has yet to feel any serious recovery in its key growth markets of Asia and South America. Any boost at all will send its 52-week highs even higher.

Chevron Corp. (NYSE: CVX) and Exxon Mobil Corp. (NYSE: XOM) have underperformed on almost all metrics as Dow members. If oil production keeps drifting lower in 2020, and if the demand increases only a tad more, then the scales could be tipped back in their favor. The two oil and gas giants have a combined 4.6% weighting.

Cisco Systems Inc. (NASDAQ: CSCO) is a mere 1.1% weight in the Dow, so even a miraculous recovery would hardly move the needle.

Merck & Co. Inc. (NYSE: MRK) and Pfizer Inc. (NYSE: PFE) have both underperformed in 2019. Merck was up 11% and Pfizer was last seen down about 14%. What if the drug pricing fears don’t occur, and what if Medicare-for-All proves to be unconstitutional or just cannot make it through? Pfizer is the lowest weighting of all Dow stocks with a 0.9% weighting, but it is dirt cheap at only about 12 times earnings, and it would have to rise 25% or so before all-time highs were an issue again.

Verizon Communications Inc. (NYSE: VZ) has done very little with a mere 6% return in 2019, but the company has not leveraged itself in the same manner as AT&T with game-changing acquisitions. It has a 4.2% yield that may be heading even higher and at 12 times earnings there is still a lot of room for value investors to want to chase its safe dividend yield.

Walgreens Boots Alliance Inc. (NASDAQ: WBA) has been a serial disappointment, but even a marginal improvement (or that elusive low-probability buyout rumor) would potentially take its 1.5% weighting up closer to 2%. Still, that hardly moves the needle for the Dow.

Some firms have even started issuing their preliminary 2020 outlook for the S&P 500. The new Credit Suisse target for the S&P 500 is 3,425, which comes with almost 10% in implied upside for stocks.

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