Stock-market

How this guy ever got published is a lesson in itself!
I read this book back in 2000 before the crash and agreed with
some of his reasoning as to the mechanics and ideas which would be implemented in the New Millenium, but disagreed with his
belief that there would be such great prosperity,as history ALWAYS repeats itself.
But alas, no one wants a pessimist. Then he came out with the "Roaring 2000's Investor", which again was creative and showed brilliance, but proved to by flawed on many levels. Now he has another book slated to come out

"The Greatest Bull Market in History: 2003-2008: Investment, Business and Life Strategies - For the Great Boom Ahead and the Great Bust to Follow"

If his past predictions are any indication, this title itself is already filled with hindsight and error. I can tell you there will be no sustainable bull market on any of the indexes for at least the next decade.

I must admit I would like to speak with this guy. With a few real life experiences under his belt he may really hit the target, but so far the best title for a book would be "The Roaring 2000's: How to prosper by making the best seller list by publishing books that make people believe you have the answers."

Lession #1: Don't put dates in the titles of your books that try to predict the future"

In response to the previous reviewer's contention that Dent has correctly called the current correction in the stock market, one must take into context the assumptions Dent made, many or all of which have proved thoroughly incorrect: Dent assumed the following from the premises of the book and recent newsletters that: (1) Asia would stablize and Hong Kong stocks would be a buy at 14,500 (Hong Kong stocks now 7,000!); (2) small stocks would outperform large cap stocks in 1998 (they are in a bear market); and (3) inflation, economic growth, and corporate profits would accelerate throughout 1998 resulting in a summertime correction in stocks from an overheated economy (the exact opposite is true as GDP growth is slowing, corporate profits are collapsing, and inflation is headed to 0%).

Dent has made the classic mistake of extrapolating the recent and now flagging economic boom safely into the future based on data going back only to the post-WW II period. Dent seems to assume that the growth period of the 1950s-1990s is self-contained, having no antecedent. Namely, Dent does not take into account the demographic forces that began in the population boom of the 1870s to the early-1890s, which culminated in the great productivity and consumer boom of the then global economy of the 1920s. The peak in the population boom in 1893 or so gave rise to the boom and subsequent global debt liquidation panic and bust of the Great Depression that peaked some 40 years later. Today, the population boom of the late-1930s to the late-1950s and early-1960s (1961?) and the associated forces of demographic maturation threaten to cut short Dent's anticipated boom ten years earlier than he expects (1958-61 plus 35-40 years brings us to 1993-1998 boom peak and possible global economic decline to bottom somewhere in the first years of the next decade).

Given that Dent's currect forecast derives its bases from his previous work "The Great Boom Ahead...", the following previous analysis is instructive:

While Dent provides an interesting analysis based on the demographic forces that have driven economic growth, he misses on at least a couple of points.

First, he defines the baby boom generation as having begun with Americans born between 1946 and 1964, an arbitrary choice at best. Persons born in the middle- and late-1930s and early-1940s had ostensibly the same life course and spending patterns as individuals born in the next decade or more. That is, these individuals married in their 20s, bought homes, appliances, and autos and had children in similar numbers. A person born in 1938-39 would have entered the workforce in the early 1960s and, had the person gone to college, he or she would have graduated and would have also entered the workforce in the 1960s. Where I find no fault with his argument that individuals born in the 1940s and early- to mid-1950s are baby boomers, I do contend that he extends the generation too far forward. Second, I argue that anyone who cannot remember the death of JFK, did not vote in a presidential election until after 1976, and who entered the workforce during or after the recession/depression of 1980-1982 is NOT a baby boomer by Dent's demographically-based definition. These so called "baby busters" earn significantly lower inflation-adjusted entry- and mid-level wages and salaries; they pay significantly higher payroll taxes than boomers in their career- and household-forming years; and they are subjected to a completely different occupational structure lacking in promotional opportunities and the prospects of a consistently increasing future earnings stream from employment. Furthermore, busters are marrying later and significantly more debt burdened at an earlier age than their generational predecessors, thus unable to spend at the same rate as boomers. If one were to then assume that the boomer generation "actually" began in the late-1930s and the early-1940s, then the oldest members of this cohort have already begun to, or within the next couple of years, begin to take their Social Security checks (age 62 as the vast majority do), begin IRA/401K distributions, or at least reallocate assets to reduce risk. This could account for an additional 8-10 million individuals (4 million households), of which approximately 3-4 million are direct or indirect owners of stock and bond mutual funds, whom Dent has chosen to ignore. Also, based on his analysis, Dent predicted that the Dow would peak at around 8500 in 2007! Little did he realize in 1993 with the Dow at 3300 that his forecast would be off by a mere 10 years, as the Dow closed at 8300 earlier this year (1997). According to one of his recent newsletters (October 1997), he predicts a Dow 21,500 by 2008 (when the first of his boomer cohort born in 1946 turns 62). Talk about revising a forecast! A 250% revision! What changed?! With older boomers cashing out in the next few years (2000-03) and busters lacking the incomes and job security to sustain the boomer-led consumer boom, Dent's accurately anticipated boom of the 1990s and 2000s may be a total bust by 2001-2002.

I think the basic assumption about the impact of the baby boomers is correct, but where Harry went wrong is that he encapsulated the "message" by focusing exclusively on the sharemarket. If he had said that assets, viz average share prices and average property values, will quadruple by 2008, then he will probably be right. Unfortunately he said words to the effect that the Dow Jones will go from 10,000 to 40,000 by 2008. What he didn't properly explain was that in some years real estate will go up, and down, likewise the share market. Together, over the period 2000 - 2008, the combined value will quadruple. His thesis is correct; it was the catchphase that was wrong.