TMFBro (< 20)

Dow 36,000, Here We Come!

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.