OUT OF LEFT FIELD
TALK ABOUT BUM ADVICE!
"Hey, Berman, come in off that ledge, will you?
Hassett and Glassman swear the Dow is going to
shoot right up to 36,000 as soon as it bottoms out!"
These Bozos predicted
the Dow would hit 36,000
By STAN ISAACS
The few times I dipped into austere journals like Fortune, Business Week and Barrons I invariably seemed to read glowing reports about lucky guys and gals who struck it rich on Wall Street. I looked on with wonder and, I admit, with some envy,
In the spirit of easy money was a book published in 1999 that I think deserves a little attention now that the world financial markets are quaking. The book is: Dow 36,000 by Kevin Hassett and James Glassman. At a time that the Dow Jones industrial average stood a little above 10,000, they predicted that the Dow would sooner or later--with emphasis on sooner, it seemed--reach 36,000.
Here is the full title and tease on the cover of their 1999 book: They called it The new strategy for profiting from the coming rise in the stock market.
That was followed by these lures to the avarice in all of us:
* Why the Dow is still poised to zoom.
* Why the financial establishment is wrong.
* A radically new way to determine what stocks are really worth.
* Why stocks are actually less risky than bonds.
* How to build a maximizing portfolio and invest without fear.
I suppose in those heady days there was something comforting about the cocksuredness of comments like these:
\On Page Three: Throughout the 1980s and 1990s, as the Dow Jones industrial average rose from below 800 to above 11,000, Wall Street analysts and financial journalists warned that stocks were dangerously overvalued and that investors had been caught up in an insane euphoria. They were wrong. Stocks were undervalued then and they are undervalued now. Tomorrow stock prices could immediately double, triple, or even quadruple and still not be too expensive.
On Page Ninety: We cant know for sure whether the PRP (Perfectly Reasonable Price) for the Dow is 27,000 or 54,000 anyone who claims that the market is too high today is viewing history from an outdated and flawed perspective.
On Page 143, Its time to move from principle to practice--from telling you why stocks have soared in recent years and why they will soon double, triple and quadruple to telling you how to build in an investment plan to exploit the Dow 36,000 Theory and reap the profits of the historic rise in the market thats ahead .soon, prices will rise to where they will be perfectly reasonable-around 36,000 on the Dow Jones industrial average.
There is more of this, but reading it all now makes me think that better advice once was offered by Woody Allen when he said, Dont invest any money with any brokerage firm in which one of the partners is named Frenchy.
Messrs Hassett and Glassman had to lay low on the big talk for a time because not long after the book was published, the market plunged 3,000 points over the course of two years. The dot.com bubble burst, burying thousands of Web ventures and billions of investor dollars.
And now we have the current meltdown. The market, which reached a high of 14,164 on Oct. 9, 2007, has been plunging ever since, devastatingly so in the last two months, and went below 9,000 a year to the day later for the first time in five years.
For all of that, the quick-riches guys have not suffered much from their Dow 36,000 idiocy. Hassett became a senior fellow at the American Enterprise Institute, a reactionary think tank. And Glassman went on to become an executive at The New Republic and Atlantic Monthly among other publications and is regularly published in The Washington Post.
Nor does Hassett seem to be embarrassed by his colossal misreading of the market. Among other keen points he has made of late was to quote a report by a University of North Carolina at Greensboro professor who found that a temporary one percentage point increase in the unemployment rate leads to an 0.5 to 0.6 per cent reduction in the mortality rate, or about 14,000 fewer deaths per year.
And Hassett blames the current world-wide debacle on the Democrats not reigning in the Fannie May and Freddie Mac mortgage lenders. In the face of the widespread collapses over and beyond the mortgage market now, his pronunciamentos are worthy of a classic line by the sports sage, Stanley Woodward: It would be like blaming the Johnstown flood on a leaky faucet in Altoona.
It would be irrelevant to aim shots at these sitting ducks at this time except for one thing: Hassett was a financial adviser to George Bush. And he is a senior economic adviser right now to Sen. John (The fundamentals of the economy are strong) McCain.
©2008 by Stan Isaacs. The Stan Isaacs caricature is ©2001 by Jim Hummel. The illustration is from IMSI's Master Clips Collection, 1895 Francisco Blvd. E., San Rafael, CA, 94901-5506, USA. This column first posted Oct. 13, 2008.
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