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TMFBro (< 20)

Dow 36,000, Here We Come!

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March 03, 2011 – Comments (4) | RELATED TICKERS: DIA , SPY

James Glassman, co-author of the infamous Dow 36,000, is out with a new book (Saftey Net) and a Wall Street Journal op-ed

Regarding Dow 36,000, Glassman writes in the WSJ article: "I was wrong." 

As he points out, the Dow is just 20% above where it was when the book came out in September of 1999. 

He writes that he was wrong about how much the world would change (e.g., America's decline relative to countries like China and India) and about how much riskier the world would become. 

His advice for investors now: 

"Perhaps I'm wrong about the world being a riskier place. But even if I am, this is still a time for investors to proceed with caution. They can protect themselves against the worst by ratcheting down the proportion of stocks they own compared with bonds, and by buying hedges such as 'bear funds,' whose prices go up if the market goes down.... Fear, or simply a need for cash, triumphs, and people sell before stocks bounce back. I've gotten tired of telling investors to buckle up and hang on. Instead, I am urging them to adopt a more cautious strategy than the conventional financial wisdom—or 'Dow 36,000'—would dictate."

So Glassman is recommending that you sell stocks to buy bonds. 

Does anyone else have the urge to consider this a contrary indicator?

 

Robert Brokamp, CFP®, is the senior advisor for the Fool's Rule Your Retirement service.

4 Comments – Post Your Own

#1) On March 03, 2011 at 2:03 PM, Melaschasm (57.59) wrote:

Yes.  It is very typical of Wall Street to tell people to buy stocks at market highs (1999) and sell at market lows (2009-2011).

 

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#2) On March 03, 2011 at 2:22 PM, leohaas (31.24) wrote:

Roger Lowenstein has an interesting take on this:

"A real safety net isn’t to be found in a preference for any class of assets over another but, rather, in the discipline of bottom-up security analysis -- a timeless rather than a trendy approach that urges looking for underpriced securities wherever they reside. It requires real labor, of the sort that cannot be reduced to boldface headings.

Glassman likens his experience and in some ways his approach to that of Buffett, but don’t be fooled. Buffett does not rewrite his investment philosophy with every passing decade."

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#3) On March 03, 2011 at 3:02 PM, chk999 (99.97) wrote:

Buying bonds when the interest rate is very low and going to go higher is suicide.

Are you sure Glassman isn't working for Cobra Command? 

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#4) On March 31, 2011 at 6:42 PM, topsecret10 (< 20) wrote:

Dow 36,000   LOL !!!!!!!!!!!!!!!       !!!!!!!!!!!

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