WITH UNIVERSAL PERSONAL ACCOUNTS EVERYONE WILL REAP THE 7% SOLUTION:

LAST July, when the Dow Jones industrial average was still stuck below 12,900 and investors were seeking safety in bonds, Seth J. Masters made a startling argument.

Mr. Masters, the chief investment officer of Bernstein Global Wealth Management, said that people were so traumatized by the financial crisis that they were seriously underestimating the stock market. In fact, the chances were quite good that by the end of the decade, the Dow would rise more than 7,000 points and reach 20,000, he said.

In some important ways, he said, stocks at that moment had become safer than bonds. "This argument may seem provocative," he told me back then. "But that's only because market conditions are so unusual, and so many people have become so pessimistic."

Last week, Mr. Masters made essentially the same argument, but it sounded much less provocative.

The basis for Berger's forecast was simple. By 1995, he'd been in the investment business for 45 years, and had seen the Dow go from below 200 to just over 4,300. Mathematically, Berger saw the Dow's future as reflecting what had happened in the past, thus moving it from 1995 levels to 116,200 in 45 years.

Using easy, round numbers, the Dow needed roughly 16.5 years to triple from the time of Berger's prediction, crossing 13,000 early in 2012.

Using the Rule of 115 -- a rough measure of how long it takes for something to triple based on a constant return -- that's a gain of roughly 7% per year.

If that rate of return holds for the future -- and it's smack in the middle of the 6% to 8% long-term range that many market observers believe is realistic -- then the Dow would triple twice more over the next 32 years.

If that happens, the Dow will cross 116,200 sometime in 2045, a bit after Berger's time frame but not wildly off base, especially when considering that the forecast would have made investors break out in hysterics had it been made, say, any time after 2000.

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