1 | Jon
January 4, 2010 at 3:58 pm

Not too long ago, I read a book by Dent that claimed the Dow would go to 20,000. He’s certainly into predicting extremes, so eventually, perhaps, he’ll get it right.

3 | Jay
January 28, 2010 at 6:53 pm

“If Dent is right, apparently other market participants (who have collectively decided that the Dow should be at about 10,300) must be brain-dead.”

I’m not sure if Dent is correct or not, but this kind of reasoning is suspect. The Nikkei was once at 40,000 and the Nasdaq was at 5,000 ten years ago. Oil was $147 a mere 18 months ago and crashed all the way to $36 in a matter of months. Which view was the brain-dead one?

Mr. Market doesn’t always get it right. I think that, at least, would be an obvious lesson to draw from this crisis.

5 | Jay
January 29, 2010 at 1:26 pm

Thanks for the reply, I am familiar with the EMH. Again, I don’t know if Dent will be correct, but I think he’s generally been right about the direction of markets, which is consistent with his theory that longer term cycles are easier to understand than are shorter term ones. Dent said that there would be a recovery due to massive government stimulus after the first leg down (with the Dow going to between 10,000-11,000), but the second leg down would take us to the levels you mentioned above. For the record, Dent merely confirms my own biases (I’d been waiting for a crash far longer than he had)–I actually didn’t know anything about him prior to a few months ago.

Given your views on efficient markets, I would assume you disagree with the massive monetary and fiscal stimuli undertaken by governments around the world, correct? We can only be postponing an inevitable adjustment in the economy, I would assume would be the view of the Chicago School. Had the US government not stepped in with $4.4 trillion of support to various markets, do you think we’d be closer to 3,800 than 10,000? Why was this unprecedented level of support for the market necessary?

9 | Robert Douglass
February 19, 2010 at 6:37 pm

Gee, I am REALLY exasperated. Even with the lessons from the immediate past of Nasdaq 5k+ in 2000 and $mil tract homes in 2005, we are still supposed to believe in the collective wisdom of the masses to rationally value assets.

No sir. They are brain dead, as are you apparently.

11 | Robert Douglass
March 10, 2010 at 7:15 pm

I did not say that I believe one man is consistently smarter than the market.

I said the comment you made that “all the other participants who collectively think the market should be at 10,300 must be brain dead” so therefore anyone who thinks otherwise must be wrong is a patently false idea that the examples I just gave should have proven to you in and of themselves.

Do you not remember the absurd comments of Greenspan? ” the collective wisdom of the market says NASD belongs at 5k, who are we to argue”

Do you not remember the stupid notion to justify $1m tract homes to unqualified buyers that “houses never go down in value”

Dow 3800 may or may not be wrong. Nobody knows. Thats one mans forecast. My point is that the masses could be braindead about valuing the market at 10,300. Just because the participants have driven it there doesn’t make it ridiculous for one man to suggest it doesn’t belong there.

Thats what i was saying…………but you are not listening.

13 | Bob
March 18, 2010 at 2:31 am

I got out of the market in Sept 2008, after reading some Dent material. At the time, the brain trust that you imply who knows where the market ‘should be’ was neck deep in wall street bullSh*t. They where brain dead then, and did not see ‘it’ in 08, and so why would you suggest they will see it now. Or will ever see it.
To your article and other comments, if the Dow did not go 20,000 as he predicted and/or if it does not go down to 3800 is completely missing his point. The fact is, it’s completely overvalued now, and anyone really paying attention has to see this. Will it go down to… 3,800, 5,000, 6,000 I don’t know – whatever – the point is , it’s not sustainable at current levels and the ONLY people saying it is, are people on Wall street. (think 08 , same people). Demographics or common sense , take your pick. The market currently makes no sense at all when you look at main street. It’s all smoke and mirrors now. Good luck to you.

15 | John
April 21, 2010 at 3:22 pm

The fact that there are people buying this book is one of my greatest comforts in being invested in this market. Dent and Rogers and all the other writers and tv personalities don’t make their money from investing or managing others investments. If they did they wouldn’t be doing what they are doing. Instead they play on the fear and greed of the public by turning up the “noise”. I would be upset if I got out in Sept 2008 and missed the entire recovery. Maybe Harry will share some of the profits from his book to help make you whole. The reality is that the worst fears and greatest expectations are rarely realized. And that is whythose that stay properly allocated based on risk tolerance win the game in the long run.

17 | Eric
May 7, 2010 at 10:41 pm

Touche’ John, asset allocations should be adjusted to reflect increased volatility, investement horizon, and sometimes outright fear. To your point, market timers statistically don’t do as well as those who’s asset allocation is appropriate and understood and who are willing to undergo a “gut check” every once in a while.

That said, sometimes we must act on a hunch. Case in point, I took 60% of my total invested funds a month ago into cash because I’d made off like a bandit through a 60% recovery from Dow 6600. I think we are in the likley on the cusp of a substantial correction, if not secular bear (Dent is more so, but on the same bearish side) and will likely jump back after we get back down. Look at the VIX and yesterdays 1000pt intraday drop! Investors are really jumpy!! Just where I will get back in I’m not sure yet.

Dent is not a prophet. But he does understand and describe macro trends quite well. He’s just one source to read to come to your own decided approach.

Lastly, contrarian isn’t always bad, nor is it always profitable. Oh yah, never say “always!”

19 | James Nybeck
May 10, 2010 at 6:35 am

Response to the comments under “Profit from Harry Dents prediction?, Think Again”: I am familiar with Harry Dents predictions, his demographic theory is basically sound. He is not great at timing his predictions, but but he has been generally correct. For example, approximately five years before the DOW hit 10,000 in the 90’s he predicted a DOW of 10,000, and the DOW did hit 10,000 the very year he said it would, this based on birth rates and basically the baby boomers going through their peak spending years driving consumer spending. Now as to the comment above, “apparently other market participants (who have collectively decided that the Dow should be at about 10,300). Note the date of the comment Jan 2 2010, Dent predicted the beginning of the decline to start by mid 2010, and I know because I used subscribe to his monthly newsletter. The markets are very dynamic and each trading day unfolds a clearer picture for each leg of the markets direction. Things change, like Dents prediction of DOW 35,000 which after the huge Jan 2008 sell-off had to be re-assessed because his prediction was based on a percentage increase from the current levels at the time. Granted I think Dent used a multiplication factor that was too large a magnitude, but the entire rally from March 2009 to now has been led by bank stocks whose profits have been dubious. The banks received bailout money from the Federal Reserve at zero percent, and I believe they lent the money back to the Fed at 5%, and then made money from trading vehicles like the commodities. The banks certainly didn’t make money from lending, or not much, and then were allowed to pass all their bad debt to the US tax payer, now nice. Well, I think we all saw the weakness that is in the markets last week on May 6th with the markets sell-off of 1000 DOW points with a follow through sell-off the following day. Note the bear market rally from Mar 2009 to today which could very well be over. Oh and by the way does anyone know anything about Elliottwave theory, if the count is correct we are starting wave 3, the first wave of which was 17 months from the peak of 14,000 either in Oct or Nov of 2007 to Mar 2009 and now wave 2 a 13+ month bear market rally from Mar 2009 to today, and then now could start the next wave 3. For those of you that don’t know in Elliott Wave theory wave 3 is always the longest wave with the largest momentum, and this next wave could be the biggest downdraft in 80 years.

21 | Bob
May 11, 2010 at 2:12 am

Dear John

First …I am not a real player in the market or an avid investor… so with that in mind … but , you are saying you would be up upset if you got out of the market at it’s highest point in history and avoided a 50 % – 60 % drop in your assets. What ? Lets do some simple math . In simple, general, indexed terms … if you have $100.00 and the market goes down by 50% , you have $50.00. yes ? If that $50.00 goes up 60 % ( recent rally ) you have $80.00 yes ? But… I still have my $100.00 which is now actually $105.00… and I should be upset ? What ?
The market is still well below it’s highs last time I looked. The market is only up 60 % depending on where you start counting from… go back another year … And… if the market is essentially a zero sum game, there has to be a lot of losers for those that saw 60 % gains.

The REAL noise is not coming from Dent , Schiff and the others like them, that’s just the truth you hear, and it hurts. The noise is coming from the main street media and self interested brokers etc. , talking up the market to sell stocks and to get new ‘average’ investors back in …which for the most part, are staying away .

Some one please explain to me how the market is where is it is when …. unemployment is 9.9 % . Actual number more like 17 %. Housing prices still falling , Option Arm and Alt A mortgages starting to reset and foreclosures increasing again . Half the population currently underwater in their mortgage . Fannie and Freddie asking for Billions more in bailouts today after an Xmas Eve stealthy piece of legislation was passed to give them no limits. A lot of the wealth of Americans stripped away, while debt levels remain way too high. HFT ( high frequency trading ) commonly done in milliseconds, skimming off transactions and effecting and influencing markets like we have never seen before. (Think last Thursday). Trillion dollar bailout ( bandaide ) in Europe just to keep things ‘floating’ along. The fiscal equation is still not sustainable in Europe or America. Banks of computers controlling the market and reacting to every nuance. But …Ignoring some, then over reacting to others.
Explain how any of this makes sense for a market to rally like never before in history . What is the rally based on . It can’t be the numbers. Add Dent’s demographics to the picture and how much more do you need to see the bullshit and disconnect between Wall St. and Main street. Like I said, common sense or demographics, take your pick, the market is synthetic and is plainly and simpley disconnected from reality . Good Luck to you.

23 | Brian
June 16, 2010 at 3:22 am

I made the mistake of subscribing to a couple stock investor newsletters many years ago. One consequence of that action is I have been included in the mailing lists that are sold or exchanged by these advice peddlers ever since. So I have been receiving unsolicited sample newsletters from all kinds of stock advisors. Dent is not alone in predicting extremes, I have seen it from many others. One thing these guys all have in common is their predictions NEVER come to pass. When I see these sorts of predictions and analyses for sale, I always wonder why the authors want to clue the rest of us in? Can you imagine the money you could make profiting from this knowledge if you were certain it was right? The potential profits are much greater if you keep this knowledge private or sell it only to a small number of select wealthy investors. Suppose by some magic you were told for certain where the major market indices would be a year from now. Would you be very selective about who you shared this info with, or would you publish a book to let anyone willing to buy the book know? I submit you would only do the latter if you were unsure of the accuracy of the information.

Harry Dent is selling an hypothesis for which he gathered data to support. When you read his thesis it sounds very convincing. But the same is true for every Tom, Dick, and Harry who has sent me a newsletter claiming an insight that everyone else has missed. They are all selling a story, and it matters not whether it is true, it only matters whether they can convince you to buy the story and/or a subscription to receive continuing updates on the story. They make their money by convincing you they have insight to which you must purchase access. There are millions of suckers out there, so if they are wrong and you get burned or disillusioned, they don’t care because they can come back again with another story which they can sell to a whole new set of suckers.

Having said that, I believe the worst is still yet to come. All kinds of “bubbles” still remain in the US financial landscape. Until these bubbles are popped and healed, a crisis will ever loom on our horizon. The long term effects of a crash like 2008/09 do not materialize for some time afterwards. You would expect the rebound we’ve had and you would also expect another leg down, followed by a lot of pain for a long time. With all the economic stimulus from the Federal Reserve and the US gov’t, there is still no sign of significant inflation. That is the single biggest indicator of how bad things really are.

25 | John
June 24, 2010 at 10:04 pm

I have seen criticism of Dent’s specific numbers (40000 high, 3800 low) from different sources, including here, but I’ve not seen any solid criticism of his basic predictions of the direction of the market/economy (e.g., Depression is a normal, healthy, but painful part of a 60-80 yr demographic driven cycle, and we’re headed into one). The only real criticism of his theory is that it is exactly that … a theory. I’ve never seen anyone suggest reasons his theory is incorrect.

I don’t know. I pickup up Dent’s book in May, and ended up moving ~700K into cash. So far, I’m not sorry I made that move. I don’t plan to try to short the market, like your client, but I do think I’ll sit out for a little while longer to see what happens.

27 | Paul
July 2, 2010 at 12:39 am

I enjoyed all of these posts. Regarding Dent and Prechter – while their timing might be off, their logic over the years has not been. I saw the response above that Prechter’s ‘timing newsletter’ has underperformed since 1997. Take a look at where the market bottomed last year – all the way back at 1996 levels. No Precher was not wrong. Exactly the factors he argued would bring the economy down eventually did. What he did was underestimate how far momentum can carry a market. However, common sense says that momentum driven by massive debt can only end one way. Prechter was right on.

What I’ve learned from reading Prechter and Dent is to take their arguments very seriously – just use my own judgment for when to shift assets. I’m sticking with Dent’s and Prechter’s underlying logic. However, It’s up to me to decide the right time make the necessary investment choices.

29 | George
August 4, 2010 at 12:34 am

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.

35 | George
August 9, 2010 at 11:05 pm

I understand that short term market timers aren’t concerned much about Dent and wouldn’t hold his opinions highly. Judging his method based upon the ‘DENT’ etf performance tho isn’t likey to be an effective measure of the method in this Bush/Cheney depression era going forward, as ‘DENT’ etf only started in Sept 09 and is about the same price now as then — according to what I understand it seeks to minimize variance (risk) through diversity and doesn’t simply trade the S&P.

Dent’s method isn’t geared to short term market timers. His trend projections have been proven fairly accurate over the past 20 years when considered over a 2-3 year time frame. On shorter time scales he is wrong quite freqently. But for his major forecast trends, the 2000-2001 peak, the 2006-7 peak, and 2008-2010 initial crash, all were all forecast years in advance. Whether he’s correct about about the next 3 years, time will tell. Dent’s method appears to me to be geared for those interested in investing for the long haul & is geared for those with a steady head & perserverence.

Short term market timing on the other hand is geared for those seeking quick thrills and excitement. It certainly isn’t for the faint of heart. A short termer will pull out of the market on a moment’s notice, the first sign of bad news. Of course sometimes the news is only slightly bad, or the bad news is seemingly balanced by some good news, and the short termer won’t notice what is happening as the market slowly leaks, riding the market to the bottom. Either that or the short term market timer takes a bath when the market takes a 1000 point dive in 2 hours as happened last month. And the next time this type of event happens, the markets may close for a week or more before they open again. There may be few buyers for the short termer to sell to. Who knows what the markets will open at? Of course the market may go up 1000 points too — in 2 hours.

Like I say, I have no idea whether DENT is correct or not. It seems to me that if you believe just two of his charts he presents about the US popuation: his data showing average personal expenditures vs age, and number of individuals vs their age (immigration adjusted) — well, it would be hard to argue that those companies who get most of their revenue and profits selling goods and services to US residents over the next 15 years may be in for a world of trouble. C’est le vie.

37 | Mike
August 14, 2010 at 2:19 pm

I have really enjoyed reading all of the comments dating back to January 2010. I am not a stock market investor like most of you. I develop and own commercial real estate. I have read all of Harry Dent’s books. The first one I read was in 1993. While I do not believe anyone is ever 100% correct, I liked Dent’s theory and decided to structure part of my real estate portfolio such that I starting selling parts of it in 2005, 2006, 2007 and early 2008. My friends in the real estate business thought I was crazy at the time. I sold based on Dent’s predictions. I was able to sell out of a good portion of my portfolio, pay capital gains taxes, pay off debt and stockpile cash. I am a VERY happy man today thanks in part to Dent. Dent was not 100% correct but his theory for real estate has been a lot more right than wrong.

39 | Moss Strohem
September 15, 2010 at 8:44 am

To the top…

Wow – lively thread.

Chris Kellum/#32, I think you channeled me with your post. Although I don’t day-trade, I am a position trader and occasionally latch on to something I can pay long term gains on. I can not agree more with your remarks about the reality of the market. Too many can’t recognize the disconnect. BTW, I was mentored by a CMT in LA but I am also a Wyckoff student. That curriculum transformed my thinking. I built my business around risk-management, appropriate hedging techniques and have never been afraid to sell, but I always give my names a chance to stay in a portfolio.

I don’t need to swing for the fences. I will always be happy for my accounts taking 90% of a market’s advance and only giving up 60% of its declines and will do so with a turnover of (usually) less than 80%. Clients sleep well at night with that. Going full cash or full long is a portfolio relative strength killer, not to mention the havoc it wreaks on a client’s psyche.

With respect to Dent, one of my AE’s in the firm I was the principal of was a Dent disciple. Until around 2002, that is (the 3rd quarter, to be exact). It was at that time that he realized that not having a controllable PROCESS for managing risk was a recipe for disaster no matter the “long term” forecasts. Dent makes solid assumptions about the impact of demographics and they are plausible… long term, but how many of us here really have 70 years and unlimited capital to be able to “actualize” a couple of these super-cycles?

While it’s not apparent due to the parabolic rise of the markets well into 2000, I’ll contend that the bear was coming out of hibernation in late 1997. Mania kept him out of sight. Astronomical forecasts made easy sense – all we needed were 7.2% returns for ten years to double the index values, but–by gawd–12% returns are normal and to be EXPECTED!! (Sarcasm intended.)

I about soiled myself when I heard real estate speculators saying the same thing in 2006… that 12% returns in THAT market are to be “expected”. Lemmings… …

As the author was trying to point out, Dent is brilliant. The author also has noted that the true value of the market is exactly where it is right now. It is where the buyers and sellers last met.

On that note, does anyone really think Warren Buffet added all that alpha to his holding company in the 80’s and 90’s by buying and holding blue-chips? Think again please. He had trading desks around the country putting huge positions on with margin around the core positions that remained constant in the annual reports.

Rukuyser?!? He was an S&P Futures mad genius… trading around a core of treasuries.

Jimmy Rogers? He can’t even be compared to Dent, he is too much better. Remember this… he WAS the catalyst within Soros. Soros was the connection to the “secret people”. (There’s also an unknown reason he is no left Quantum, and I can only guess as to what it is. I think I have a pretty good sense even if it is only second hand.) As for Rogers general themes, I think they have worked out quite well.

The difference between them and Dent and the general populace?? These guys either know the market or hire those who do.

The moment you are held out as a “professional”, you are held to a standard that’s only as good as your last recommendation. Problem is – the one’s scrutinizing you have not had the ability to see how things are managed on a daily basis (unless it is an audited account), so things are either judged out of context or or with old information. I can tell you to “BUY XYZ limit 45.67”, but unless you do exactly as I do every step of the way, your results will vary.

MS… currently 80% long, stops in place and looking to get more invested (as of this post) – and not caring whether the price-capped DOW is 25,000 or 2,500. It matters not.

41 | armchair investor
October 11, 2010 at 4:27 am

I read Harry Dent’s books over a decade ago. I thought he made good sense. My only problem is that I got too old to act on things I read in a book. Shortly after 2001 I developed my own asset allocation plan and stuck with it. The classic plan that worked for me is not market timing, but dollar cost averaging and rebalancing once per year. I put my own equations on whether Dent is right or wrong. I’m not 100% in agreement with anyone. But by golly, I just want to explain that I met a ten year financial goal early by one day.

There are about 12 weeks left for Harry Dent’s predictions to come true. About three weeks left of a historical bad month. If the GD does not happen this month, it probably won’t happen by the end of the year. I pity the people who are betting everything they have on Harry Dent.

43 | Ron Knaus
January 22, 2011 at 9:38 pm

Dent is a turd that needs to be flushed.

45 | Tom
July 15, 2011 at 7:35 pm

All I know is I should have bought shares in Apple Computer in 2000 as I wanted to do, but didn’t have the cash to do it. A person is always counseled not to invest in only one company, diversify etc. But I knew Steve Jobs and his gifts, knowledge of the industry, and his attitudes about keeping the family jewels, and buying then (2000) made very good sense, and nothing would stop Jobs from taking Apple back into a money maker. I just knew it, but what I didn’t know was the eventual scale of it’s growth. I simply believed the company would approximately double in value every year. And I was right, it has nearly done so ever since, up or down the industry. Had I invested $100 in Apple stock in 2000, I’d have a quarter million today. I haven’t done the math but I expect I’m close to accurate.

Actually, I only want to know the general trend of events and markets over the next few years. My guess is the economy will have recovered fully and be moving ahead at a respectable pace by 2017. I said that aloud in 2008. It just felt right. That’s because I figured the market “crashes” once every ten years or so and takes another decade to recover before it takes off again. The only difference now is I believe in general we will have run out of bubbles by now and growth overall will remain the same in the long term. The spikes up and down mean nothing to me, I can feel the crashes coming shortly, especially when I start hearing “unlimited” “perpetual” and “inevitable.” You simply sell while things are going up and not try to guess the day the hour and the minute. Buy low when things seem to be headed lower for a stretch. Pretty simple advice, it seems to me. Anyone with half a brain should be able to figure this out, and if they can’t they will lose a lot of money over time. It ain’t rocket science.

47 | douglas
July 24, 2011 at 4:50 am

Michael I am not much at investment success. I have managed to accumulate some wealth through the tsp plan at work. The G fund has saved me a lot of money over the last 3 years or so. I saw the S fund was on the increase up until about June 2011 so I tried it for 2 weeks and lost about 5G’s. Bad decision so I will stay in G now until retirement. I received an e mail about Dent’s plan and it all sounded good. I could pull my money out of tsp, as I am over 591/2, but after reading this blog I have changed my mind. I am getting to old to gamble again. I have tried commodities that were supposed to be computer generated short and long transactions and lost about 10G’s. It seems someone is always trying to sell a get rich scheme. For that matter I have never been to Vegas maybe that would make about as much sense as some of these marketing schemes that are supposed to gain wealth. The only wealth of any substantial amount seems to be going to the authors and brokers.

49 | Ron Carpenter
August 18, 2011 at 5:09 pm

Much of what I hear and see on TV is useless information. At the beginning of every show they encourage long term investing, then for the next 29 minutes they talk about the minute to minute influences on the market today. That’s not long term, but it makes a more interesting TV program than months of reporting “hang in there”.

There is a lot of volatility (fear v greed) in the market today. In early 2008 I got spooked and went to cash (fear). March 19, 2009 I got back in as much as possible (greed). That seems a long time to sit out, but I didn’t know where to go, so I just waited. On 3-19-09 I couldn’t say it was the bottom, but for my circumstance I had effectively doubled my share holdings, up or down. Even if the market went down, I was still double in shares. It went up, I did well. Since then I have tapered out to a 75% cash position to lock in some profits.

Intrigued by the ups and downs, re-entries since then have been a wash. So, I adopted a new strategy, for me. It goes back to my retailing days. Instead of putting a years worth of money in retail inventory, and waiting to sell off the merchandise (buy and hold), why not put a month’s worth of product on the shelf, when it’s gone, re-invest the capital and capture the profit. Use an inventory management system to replenish the inventory where needed.

In the market, I buy a smaller amount of stock that is under stress, set a sell limit that fits both the potential of the stock and my goals, then capture the profit and re-invest the capital. If I recycle 10k in this manner, 10-12 times a year, then I have the annual earnings of 100-120K, while the bulk of my nestegg is safe. If the market dips, little is at risk, and usually the next bounce will clear the objective. Only time is lost. If it goes according to plan, I move on to the next objective. This is probably not a new approach, but for me it is a new adaptation of another idea.

In sports terms, it’s base hit baseball. More games are won with base hits than home runs, but the game winning home run alaways gets the headline. The guys selling gold, silver, and tip sheets are reaching for the homerun.

Demographics will play a role in our future. Waiting for our government to face the hard realities of this situation is a waste of time. They can’t find one thing to actually reduce in their budget, nor can they agree on an effective tax strategy. So for all of us, we’re on our own.

If Dent is right we are damaged by being in equities. If we are in cash and Dent is wrong then we are sitting on the bench while the real players are winning the game. So, for me, the limited game is where I’m at. If Dent is right, my cash position will be useful. If not, I’m still growing my nestegg, but with a lot more work than simply riding the tide. It is true a rising tide lifts all ships. Equally true, low tide can leave you high and dry.

As a closing thought, it is MY OPINION that much of the financial meltdown can be attributed to the masses of people delegating their investments to other people. Those other people take that capital and persue their own intrests with it. Leveraging and laying off risks. Selling billion $ blocks of shaky mortgages. Earning commissions, transaction fees, and bonuses for themselves. Informed individuals would not deal in this manner.

Instead of learning what goes on within their investments people just handed the money over to fund managers, bankers, brokers, & 401K plans. All of these have an important place in investing. But, had the institutional investors known as much about their financial business as they know about “American Idol” we would have never had the bubbles in the first place, the money would have been elsewhere.

53 | Ron Carpenter
August 26, 2011 at 1:09 am

The real answer for our economy is to take a world view. Presently, most manufacturing is done roboticly so labor is much less an issue than the 20th century.

If you are the CEO an international company and you need more capacity, you will look at opportunities around the world that offer logisitic, labor force, resources, and most of all a better return on investment.

Better ROI attracts investment capital, that finances new ideas into the products that eventually make it to the masses. When is the last time a Venture Capitalist was in the US headlines?

Reagan is often cretited with the longest peacetime expansion of the US economy in history. Maybe so. At that time the people that put his economic package together also made certain USA had the lowest corporate tax rates in the world.

Today, USA has the highest corp rate and the government wants more. Additonally, an investor then has to pay capital gains on the earnings distributed.

In other countries it is much easier to afford a rate of return to the investor because of tax rates and little regulatory interference.

What if the US Government lowered or eliminated corporate tax and lowered capital gains tax to the lowest in the world. Would they not pick up the revenue from millions of American people working in Mercedes, Mitsiubishi, Siemens, and other foreign company plants built here? Income tax revenues would climb while unemployment expense shrink. That makes a tremendous swing in where the cashflow is going and coming from. Further, we would be creating wealth here.

The service economy is a wonderful thing. It does things we cannot do ourselves. What is the intrinsic value of a haircut, or the meal brought to your table, or last years tax return. They are all of value, neccesary, and enjoyable. But the long term value of last years tax return is not much, a haircut is gone in about a month, and food is a daily thing.

Wealth is created by adding value to things that last. By the dictionary it is : Land, improvements to Land, Natural resources, Value added through manufacturing, and intellectual property.
All of us can’t own a gold mine or the mineral rights to an oil field. Not many will write a classic screen play or string of hit songs. Value added through manufacturing is available to all of us. But our government has arranged the tax codes and various compliance agencies to discourage manufucaturing.

There have been 2 or 3 of the steps removed from the economic ladder that Americans climb. Not every student is college material. Some are more suited for mechanical things. There isn’t much of a ladder for them. My opinion is we will have a much healthier economic picture when everyone is included in the portrait. Some creating wealth building things, some managing it, and some providing sevices we all need.

55 | Giliano Gatta
September 15, 2011 at 4:47 pm

Dear Sir:I cannot know if Mr.Dent is wright or wrong,but on my experience following the predictions of these super-experts cause realdisasters.Martin Weiss called silver a dead duck in 2001,with silver at 4.He called Royal Gold a short in 2000,just to say three years after that he has been the first in discovering the stock.All experts called a crash in 2009 and the market boomed.But these guys always win:the have the cushion of their subscriptions,without paying subscribers for their stupidities.Sincerely iuliano Gatta

57 | Ron Carpenter
September 15, 2011 at 6:42 pm

Anything that can happen, must happen. If you wait long enough all predictions, up or down, will happen.

61 | Matt Blackman, CMT
September 22, 2011 at 11:41 pm

I agree with Tom Kane. Dismissing Dent’s predictions, some of which have not come to fruition, is throwing the baby out with the bathwater. I saw him speak last week at the MoneyShow and spoke to him for a while after his talk. His demographic theory has a solid foundation and it is pretty hard dismiss his contention that demographics lead markets. But like all cycles, they don’t come and go right on schedule, they are more general trends than specific timing recommendations.

I may be barking up the wrong tree on this forum since I am a technical analyst and trader but his forecasts are eerily similar to those of some very well known and respected Elliott Wave practitioners I follow as well as by the works of George Lindsay whose counts indicate that given the current pattern which he called 3 Peaks and Domed House, the Dow has much lower to go.

Another of Dent’s points is a valid one – those who bought and held tge SPX or Dow in 1999 -2000 are looking at negative returns in inflation adjusted terms. I, for one, find it very unappealing to hold something for that long while paying fees to loss money.

Matt Blackman, CMT
Host TradeSystemGuru.com

63 | John g.
September 27, 2011 at 12:23 pm

Where were all the “experts” who knock Dent back in 2008 right before the crash? They were out telling us to “diversify.” If they didn’t see it coming then, why should I believe that the crooks on Wall Street whose job it is to sell, sell, sell, would see it coming now? And if they did, do you honestly believe they would tell you to stop buying what they sell (stocks and mutual funds?)

67 | B Lindgren
December 26, 2011 at 2:12 am

what is new – – nothing posted here in over 2 months………….

69 | Jeff
December 30, 2011 at 12:04 pm

I am a frequent watcher of Nightly Business Report. Harry Dent was the leadoff speaker last night. What irritated me was the deference shown to him by the host and also that he was not challenged regarding any of his prior predictions or his methodology.

I am considering writing to NBR about this.

71 | ernest
January 16, 2012 at 9:42 pm

Many good comments, thank you all for your insights. Most of this stuff is over my head but I have come to the conclusion after reading many economy-related news and advise for several years, that not too many of us are making any money in the market. The inside traders, Bernie Madoffs, politicians, bailed-out bankers, etc, etc., . are the real winners of the Wall Street Casino. At least Vegas offers drinks on the house for your losses.

73 | jerome
March 1, 2012 at 9:03 pm

You can listen to who ever you want but if you get back to the basis and listen to what is fair and what is not, how economy was designed over the age you will certainly get to the conclusion that something is wrong today.
I am not the only one believing it, look around get in the streets in any streets in all streets look at the people (not only in Manhattan or Beverly Hills) read the news go and see yourself Greeks, Spanish, … the employed in the US the US debts, the unfunded wars, what politicians tell you over and over …
and what can you expect from this ! Certainly nothing great so how the dow could make it on the long term.
Look at the market index the day of Pearl Harbor or Dunkerque it was UP !

75 | The Primitivist
July 16, 2012 at 12:02 pm

Interesting author, blog item and comments. I think Dent’s opinions (for that’s what they are, whether he or others call them ‘predictions’ or not) are a valid addition to the future-watcher’s arsenal. Of course, no one should read anything uncritically, without asking oneself “why is he writing about this?”, “what has he misrepresented?”, “what has he undervalued?”, “what has he missed out?”, “how has the world changed since this was written?”, etc.

85 | slowpoke
April 2, 2013 at 6:02 pm

I may not be as exalted an expert as the venerable Mr. Dent, but it seems to me that predicting where the Dow will be, based on a loose interpretation of an incomplete formation in the S&P chart is pretty ridiculous. throw up a comparison of the S&P, the Dow, Nasdaq, and any other index you can think of and you’ll see that the “dreaded triple top” in the S&P is a complete coincidence, since the two dips that make it happen are reproduced in every index but the tops aren’t. As for the fundamentals, everyone always likes to talk gloom and doom. It makes the bottom lines seem better when they do better than expected. Underpromise and overdeliver is always a winning strategy.

87 | Mark timer
April 19, 2013 at 9:23 pm

I like dent he makes you think about would of should of . Us his info and all others make your mind up not with just one persons input ,us them all . I’m sure he right about the Dow taking a big dump. But Big Ben will try to not let this happen. If deflation happens and I think it might ,that is when it’s over for us . Just like I did in the 1930s

91 | Dan
January 6, 2014 at 3:58 pm

You make some good points but seem to be mistaken about how the pricing of the stock market works. The simplest way to say it is to parrot Benjamin Graham and Warren Buffett. Over the short term, the market is a voting machine. But over the long term, it’s a weighing machine. Whether people see the true value of the market today or not, if it’s based on nothing, then eventually the market will crash. I’m not responding to Dent here, only to your analysis that if no one but Dent today realizes the worth of stocks, they will stay up forever. Read The Great Crash and you’ll see lots of similar comments in the 1920’s — if only we all believe, then it will keep soaring! Sorry — if only it worked that way. Magic money machine.

93 | Mark S
January 10, 2014 at 2:12 am

Dent is a total snake oil salesman… this is the same guy who predicted dow 40,000 and nasdaq 20,000.. Every couple years he sells another book!!!

95 | Kaye
February 13, 2014 at 7:59 am

I sure hope my bank investors are researching and critically thinking like all of you. I am actively watching this thread. Thanks for sharing everyone!