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TMFDeej (99.47)

Thr Great Depression Ahead Update

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June 03, 2009 – Comments (4) | RELATED TICKERS: DE , NT

As I have mentioned in the past, I am not a big fan of technical analysis.  Furthermore, I take anything that someone who in 2006 predicted that the Dow was headed to 40,000 with a HUGE grain of salt.  Having said that, I often like to read the thoughts of people who have extreme views because there frequently is some element of truth buried in their thoughts.  This is why I decided to check out Harry Dent's new book The Great Depression Ahead several months ago. 

One element of the book that I found particularly interesting is the demographic trends that Dent cited.  I strongly believe that the wave of Baby Boomers passing their peak spending years will act as a dramatic headwind for the economy for years to come.

While I think that the U.S. economy is headed for a long aka several year period of slower growth than we have become accustomed to over the past decade, I am more optimistic than Dent.  Anyhow, Dent periodically provides updates to The Great Depression Ahead for free, mainly I suppose to promote the book and newsletter.  I thought that some of my friends here at CAPS would find it interesting, so I pasted the latest one above.  Enjoy and I'd love to hear your thoughts on Dent.

Deej

4 Comments – Post Your Own

#1) On June 03, 2009 at 7:09 AM, dudemonkey (58.51) wrote:

I read that book also.  I'm with you.  I think that Dent is directionally correct but is off in magnitude.  I see that here on CAPS, too, as a lot of people seem to have fairly extreme predictions.

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#2) On June 03, 2009 at 7:58 AM, alstry (35.76) wrote:

Just curious...what basis do you set your outlook for slow growth.  Is it the fact that millions of jobs are going to be lost going forward.  Millions of homes foreclosed.  Hundreds of thousands of stores closed and business going bankrupt.  Or do you base slow growth on the likely tens of millions of wage cuts at private industry and government resulting in stories like this one from the WSJ:

Mr. Araya, 38 years old, lost his job in 2007 as a crude oil trader on the New York Mercantile Exchange. After visiting dozens of headhunters with no luck, he applied in August 2008 to be a host at the Palm to support his wife, two young daughters and mortgage payments. His salary has plunged from $200,000 to $25,000.

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#3) On June 03, 2009 at 8:21 AM, abitare (99.44) wrote:

FYI-Dent makes heavy use of charts, cycles, and trends apart from his demographic theories in predicting short and intermediate term economic and stock cycles. In his 2006 work, Dent predicted, “The Dow hitting 40,000 by the end of the decade, the NASDAQ advancing at least ten times from its October 2001 lows to around 13,500, and potentially as high as 20,000 by 2009…The Great Boom resurging into its final and strongest stage in 2007, and even more fully in 2008, lasting until late 2009 to early 2010.” ... Of course, those who read The Roaring 2000s, Dent's 1999 masterpiece, should soon be buying each of us a turkey with all the fixin's. According to the book, only a year remains before the Dow breaks 40,000 and the Nasdaq hits 20,000, at which time we'll simply amplify our fortunes by shorting stocks in the coming depression. We can’t underestimate how big this final move up will be before the depression kicks in, since The Dow and Nasdaq are currently quite a bit lower than they were back in 1999 when The Roaring 2000s was published."

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#4) On June 03, 2009 at 10:17 AM, TMFDeej (99.47) wrote:

I completely agree, abitare .  Dent is a little kooky for my taste and I take everything that he says with a HUGE grain of salt.  Furthermore, I am not a big fan of charting or TA at all. 

Dent's predictions usually prove to be correct in direction but very wrong in scale.  I suppose that predicting Dow 40,000 and a Great Depression sells a lot more books than much smaller moves :).

Deej

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