Mr Market … Apparently you aren’t familiar w/the specifics of Dent’s book (The coming depression). If you aren’t inclined to read the book, Dent provides audio mp3 files you (and others) can listen to summarizing his demographic projections on the economy & markets on his web site in the “downloads” section. I suggest you become better informed of Dent’s theory before further commenting.
In 2008, Dent proposed two scenarios for the short term Dow between then and the end of 2012. Scenerio #1 is the one he now thinks most likely, in which the federal gov’t stimulous is massive and effective (which it of course was, although some think it should have been even larger, & yes, in the fall of 2008, he forecast the federal gov’t would likely implement a massive stimulus, which it did).
In case #1, going forward from the fall of 2008, Dent projected the Dow to initially fall (which it did to reach a low in the 6000’s in March 2009, as Dent said, due the credit crunch) , then to ride a bear market rally (due to the stimulous) & reach about 11,500 in the late 2009 to late 2010 timeframe. This bear rally for the most part he projected being due to the effect of the stimulus (which it is well on the way to doing, as the Dow is in the mid-10,000’s at this date.)
Dent predicts going forward from here, that after the stimulous runs out (in late 2010) , the Dow tops out in the mid-11,000’s, and then the Dow will retreat, and reach new lows (compared to March 2009) in the 2011-2012 timeframe.
Your critique of Dent seems to be based on a lot of handwaving and straw man arguments. Dent’s past performance all the way back to the early 1990’s has been excellent on his long term calls on the long term direction and timing of the market (2000 market peak, 2007 market peak, 2007 real estate bubble), but has missed the mark on the actual level of market peaks and valleys, generally considerably overestimating the levels of the peaks. I believe in his book (the one published for that time period) he initially predicted 36,000 for the 2006-2007 Dow peak, but as 2007 approached his group noted the market’s divergence from his model and revised his forecast to 18,000 as I recall. The market peaked in the timeframe he projected, but peaked at the Dow in the mid 14,000’s instead of the 18,000’s.
Your critique of Dent may have some merit, especially in his short term forecasts, for example anyone may refer to an investment index that his firm seems to be involved in “DENT” which has underperformed the market. I certainly wouldn’t suggest the market will peak or valley at the exact time period he says, and I wouldn’t necessarily believed the peaks and valley’s will be at the levels he projects. But his past performance shows he’s able to forecast important market peaks and valleys and their time periods over the course of time frame of projections running as long as a decade.
Your objection to his long term forecast is specious and entirely un-scientific. For example, you ask “Can we profit if Dent is right?”. Then you fail to address your own question.
Of course it is possible to profit if Dent is correct. Profiting from Dent’s projection (if he is correct) is very simple through various combinations of shorting, inverse index funds, and put options, depending upon one’s risk tolerance. He also offers projections on emerging markets, real estate, and commodities, and one could easily profit on these also (again, pnly if he is correct).
To imply that since the market is currently priced above 10,000, it must be high for a reason and therefore isn’t likely to go down (as Dent suggests) is a ridiculous statement simply on the base of it. If a scientist were to present such a silly argument at a scientific conference they’d be laughed off the stage.
I personally am not carrying water for Mr Dent, and have no idea whether Dent will be proved correct or not. But your critiques on Dent’s & others’ forecasts and the methods are only worthwhile if your own method of critique is scientific, critical, and unbiased.