Posted on 11/03/2004 4:12:45 PM PST by SierraWasp
Dow 40,000, Nasdaq 20,000 by 2009; Harry Dent predicts a 'New Millionaire Economy'
By Paul B. Farrell, CBS.MarketWatch.com Last Update: 9:25 PM ET Nov. 2, 2004
ARROYO GRANDE, Calif. (CBS.MW) -- You want some optimism? Well folks, after a flatlining market and the brutal, negative election campaign we've been dragged through, America desperately needs some optimism. And here it is. Harry Dent's latest predictions: Dow 40,000, Nasdaq 20,000 by 2009.
In many ways, the wars in Iraq and Afghanistan and the war on terror were no match for the divisive domestic "war" for the American presidency. It's been absolute torture. So thank goodness for Dent's optimism. The guy's a breath of fresh air.
In fact, Dent wins our annual Super-Optimist Award. He's the No. 1 cheerleader for America's stock market. You will love reading the predictions in his new book, "The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2005-2009."
Actually Dent's more than a super-optimist, he's America's ultimate contrarian. So what if his archrival Robert Prechter is predicting a 100-year bear? So what if SmartMoney just reconfirmed the conventional wisdom of Buffett, Bogle and Gross, who are forecasting single-digit returns through 2009? So what if InvestmentNews is telling professional advisers that insider activity is so negative it's now the "canary in the coal mine" signaling that "it's time to sell stocks?"
And so what if Dent's late-nineties books, like "The Great Boom Ahead" and "The Roaring 2000s," were way off the mark and probably resulted in investors hanging on too long as the bear market wiped out $8 trillion of stock market value between 2000 and 2002.
Even bigger than late 1990's boom!
You gotta love his chutzpa: Now he says that correction was right on schedule and we are still on track for Dow 40,000 by 2009. Nothing gets in the way of his optimism: "We are seeing another very strong bull market unfolding from the bottom" of the correction, and "2005 is going to be very strong." Indeed, things are even "better than the 1990's!"
In a 1997 Mutual Funds magazine feature Dent was pitted against super-bear Prechter. Dent predicted 21,000 by 2008. A couple years later he predicted Dow 41,000 by 2008.
Okay, maybe that seems a tad improbable, given 2004's flat market. But at least he isn't as over the top as Dan Kadlec's 1999 book, "Dow 100,000," which Kadlec said was reachable by 2020 with a mere 11.1 percent annual growth.
Irrational exuberance or rational optimism?
But fact or fantasy? You decide. As always, Dent's conclusions are based on some simple assumptions about demographic trends, his area of expertise.
Fortunately, the guy's both entertaining as a futurist and analytically overloaded with tons of demographic, economic, monetary and market numbers. This time his forecasts boil down to five major trends propelling America from 2005 to 2009:
The third and final bubble of a bull that started in the early 1980s. We're about to see the "greatest bull market and technology bubble of the last two centuries." The technology revolution regenerated: "We are on the brink of the tech revolution's second phase, as new technologies move fully into the mainstream and a new generation hits the peak of its spending and productivity cycle."
The "decade hangover cycle:" Corporations are just now wrapping up the consolidation phase following the late '90s bubble that lead to the 2000-2002 correction. America is now ripe for a "rapid emergence of new technologies" that will drive a new phase of economic boom.
The 80-year technology cycle. Dent is also predicting a rapid assimilation of new technologies similar to the 1920s. A new phase of the 1990s technology revolution will continue spreading low-cost versions to the masses.
Baby boomers move into high gear. Dent expects the "incredible earning, spending and productivity cycle of the massive baby boom generation" to continue driving the whole world as the "unprecedented economic boom of the past 25 years" races to a frenzied peak in 2009 ... before another bust.
These five trends will drive the boom to Dow 40,000 by 2009, creating what Dent calls "The New Millionaire Economy," a time of such great prosperity you can expect a 50 percent increase in the number of American millionaires. How's that for optimism and opportunity, my fellow Americans!
Play the market to win ... then get out
What's your best strategy? How do you play to win? For savvy, active investors he's got some aggressive market-timing strategies. But you really don't have to play market-timing games that'll increase your risks. Instead, Dent tells investors to make their bets based on a familiar 1990s kind of market assumption ... that a rising tide lifts all boats.
His core strategy is a basic asset-allocation strategy, nothing really extraordinary: Just stick with a well-diversified, buy-and-hold portfolio for the long-term, one that'll float you up as the market rises to Dow 40,000, perhaps even putting you among all the "New Millionaires" that he sees coming by 2009.
Fortunately his strategy also protects you if his optimistic predictions don't play out and the market continues flatlining, or worse yet, does a Prechter flip-flop and crashes.
Whatever you do, remember Dent's a macroeconomist, a mega-demographer and an optimistic futurist. Guy's like him get paid to see the world through rose-colored glasses. They thrive on broad sweeping long-term projections, forecasts and predictions.
You an optimist, pessimist, or flatliner?
And even with all his warts, Dent's vision of the market is most welcome after this insane, destructive election war. I applaud his optimism.
But, irrational exuberance aside, how serious should we take Dent's predictions of a Dow 40,000 by 2009? Or do you put more faith in Prechter's 100-year bear market prediction, with the Dow dropping below 1000? See previous Paul B. Farrell.
Which are you: A Harry Dent-optimist, or a Bob Prechter-pessimist? Or maybe something in between, a market flat-liner? What do you think? Send us an email!
The DJ is up ove 100 just today!
P.S. and oil futures are down another $0.51/bbl today!
Babylon (Iraq) will be a glorious place.
Den-- He predicted a 100,000 Dow Jones prior to the burst of the Internet Bubble in The Roaring 90's....
The Roaring 2000's....
An analysis of the history of technology shows that technological change is exponential, contrary to the common-sense "intuitive linear" view. So we won't experience 100 years of progress in the 21st century -- it will be more like 20,000 years of progress (at today's rate). The "returns," such as chip speed and cost-effectiveness, also increase exponentially. There's even exponential growth in the rate of exponential growth. Within a few decades, machine intelligence will surpass human intelligence, leading to The Singularity -- technological change so rapid and profound it represents a rupture in the fabric of human history. The implications include the merger of biological and nonbiological intelligence, immortal software-based humans, and ultra-high levels of intelligence that expand outward in the universe at the speed of light.
I hope not.... there is no way the company's could increase thier value in 5 years to justify that market valuation.
I'm happy to see an overall annual return in the 5-6% range which is close the the historical norm.
It's already happened. You haven't spoken with a Dem lately, have you...?
OK. Let's not get carried away. According to MOST economists, some real successful ones, we are most likely in middle of bear cycle, interrupted by cyclical BULL markets, also known as Sucker's Rallys (Current market being one of those Sucker Rallies).
So, Get out of the market when Nasdaq is around 2,300 or at least put very tight STOP LOSS orders.
High OIL prices, DEFICITS, and growing PERSONAL Debts, are going to put a hurt on us, towards the end of next year, especially as interest rates continue to rise.
Jim Rogers is a Smart Man and he shares this view as well.
In couple of years, we should have another one of these Sucker Rallies, so Don't miss it.
Here are few symbols to LOOK at if you want to take advantage of the TAIL END of current rally:
FUR
CMGI
ADCT
SPIL
CNXT
NT
LU
HOFF
CTGI
ENCY
etc....
Hopefully the Senate RINO's won't get in his way.
WOOOPEEEE ANOTHER BUBBLE ECONOMY TO GO CRAZY AND THEN CRASH AND BURN!!!
Calm down folks, the economy can only grow so fast and the stock market can't outgrow the economy for long - it's tied to profits, bottomline.
This is a wild and silly prediction.
The stock market will double - in due course of time - when the economy doubles.
Sounds like a guy trying to sell books. What has he ever done that anyone should listen to him?
Only in America! The Franco/Germanic Euro-Socialists can neither do this, or participate in anything like this! They, like our Democrats, can only be envious!!!
America is truly an exceptional nation, not just a "SuperPower!"
As Eve said to Adam... "Better stand back, honey... We don't know how big this thing is gonna get!"
My australian shepard has better common sense than the looney left.
But when all's said and done, nothing changes in the financial markets. They will do what they always have, like a shark and his prey, the markets must move to live. Every 20 years or so there will be an unrecognizable bubble and people will make lots of money and then lose it all. Twenty years is a generation and people invest money for a reason: someday they will need that money. If the markets are at the bottom when they need it weeelll..SOL.
Dent is the eternal optimist. What did he do to protect all those retirees who lost fortunes in '00, '01, '02?
Dow 40,000? Maybe, who would have thought 3,000 in the early nineties would triple in less than ten years.
Funny you should post this...about 6 months ago I found an old tape of a Brian Lamb interview with James Glassman, author of Dow 35000 (or 36000?) from august, 1999. According to Glassman's cogent analysis, we were due to hit 35000 in 5 years...that is, August, 2004. He was off a bit.
Exactly. Quadrupling by 2009 is unlikely, but productivity growth has been very strong the last few years. It's possible we're starting to enter the knee of the Singularity growth curve.
That requires discipline to sell before the high is reached and buying before the bottom is reached. Sounds crazy, but it's true.
It's all about confidence and the power of positive thinking. That's what I so despise about Dems and EnvironMentalists! They drag all of society and it's economic potential down with Commonistic GovernMental parasitism!!! (to say nothing of analysis paralysis)
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