Customer Reviews

Dow 100,000: Fact or Fiction

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I must confess that I am an avid reader of economics, so I feel that I know whereof I speak: DOW 100,000 is simply superb. Not only is it immediately apparent how thoughtful Chuck Kadlec is, but he possesses that all-too-rare quality among economists of readablity- his is a vision and message that is readily graspable by the typical investor. And in these uncertain, turn-of-century times, that is a god-send. While it certainly doesn't hurt that his outlook is optimistic, he isn't Pollyannaish. He spends ample time discussing the risks to his outlook.

He's fun to read because it is as if he is thinking out loud. His contentions lead logically one to the other, and when you're finished with the book, you are not left struggling to remember what he thinks will happen- and why- you are left with a very logical, compelling construct.

Kadlec thinks that the Dow will reach 100,000- which to many is certainly a mind-boggling number. He argues that this is achievable by 2020 if the Dow simply advances by an annual average of 11.1%. He demonstrates that this rate of advance is eminently reasonable by tracing the Dow track record all the way back to 1926. He points out that if correct policies are in place, it is perfectly reasonable to expect this to happen. Then he goes on to examine five historical forces that are currently in play that, when combined with wise policy, virtually assure that it will happen. These forces include some things we tend to take for granted in this country- such as freedom- as well as some things we are still trying to understand- such as the meaning and magnitude of the on-going technology revolution.

Anyway, for students of the market and the forces that shape it, for investment advisors, for investors, this book is a great read. It provides you with a sound foundation on which to build. It poses and goes a long way toward answering the many questions we are all wrestling with as we approach the turn of the century. I really, really liked this one.

I highly recommend Dow 100,000 Fact or Fiction by Charles W. Kadlec. This well-researched work clearly and concisley maps out a blueprint for a period of unprecedented economic prosperity.

In a nutshell, Kadlec points to numerous wealth-creating domestic and global trends which should continue to strengthen during the next century. These demographic, economic, and political forces are explained in a common sense approach that both the novice and seasoned investor could appreciate and, more importantly, apply to their investment decisions. While the title surely provides ammunition for the bears among us, Kadlec deflects the ammunition by not taking a pollyanna approach. The risks to achieving prosperity are clearly defined and explained.

Finally, Kadlec includes practical strategies for creating and maintaining wealth during this unique period. Kadlec's vision of the future is predicated on the escalation of individual freedom and choice. Reading this book will provide excellent preparation in order to take advantage of this exciting new era.

Dow 100,000: Fact or Fiction is clear and simple, but never simplistic. Unlike many books on this topic, Kadlec offers thoughtful analysis, not opinion or hyperbole. This is a work grounded in a careful look at history and an understanding of the demographic, social, economic and political forces that alter policy and affect prosperity and stock market returns.

Kadlec begins with the insight that there almost no average years, but that the S&P 500's long run average return of 11.5 % is a homogenization of good times and bad times. He then goes on to answer the question of what determines whether we experience good times or bad times. The 30s and 70s, for example, reflect an accumulation of bad policies and the destruction of financial wealth and prosperity. The 80s and 90s are a period of excellent policies.

Kadlec is not a full-time permanent optimist. He has identified five forces that, if they continue to result in good policies, will propel us to a Dow 100,000. Importantly, however, he has also identified six pitfalls, areas from which policy errors could be made. If these errors occur, not only would prosperity not expand, we could in fact lose it altogether. As a professional money manager, I look forward to hearing more from him.

The correct title for Kadlec's supplyside nonsense is "Dow 100,000:Fiction".The introduction to this book also contains the wild prediction made by Acampora that the Dow would reach 18,500 by 2006 ,as well as the unsupported claim by Ibbotson that the Dow would reach 120,000 by 2025.Many copies of this book of fiction now sell for a penny.Even at a penny it is overpriced.It is based on the standard supplyside confusion of being unable to differentiate between physical investment in durable goods(spending on plants,factories,equipment,machinery,inventories and stocks of finished and unfinished goods,raw materials)which does lead to solid economic growth in gross domestic product(gdp) and hence increased actual and expected profits,followed by increases in stock prices and speculation in financial assets based on phony corporate accounting statements of faked past profitability that creates a phony prosperity.It would be much wiser for a potential book buyer to purchase Kindleberger's Manias,Panics,and Crashes(3rd edition,1996) or Shiller's Irrational Exuberance(2000).The best short treatment is still J M Keynes's chapter 12 in The General Theory of Employment,Interest and Money(1936).Anyone who had already digested Keynes's analysis would have easily seen the giant holes in Kadlec's argument.Given that the most accurate predictor of future stock market growth is growth in gdp,Kadlec's claim that stock market valuations could grow at 11% per year from 1999-2020 would require continuous gdp growth over the period 2000-2020 of 7-8% per year.This is not only an economic impossibility(except for supplysiders and libertarians)but a mathematical impossibility for any first world economy.This book is a case study of literally dozens of failed forecasts based on supplyside economic"theory".

Charles W. Kadlec's "Dow 100,000 Fact or Fiction" is must reading for any serious investor today. I have read many "how to" books over my thirty-eight years of investing, but none painted such a clear picture of the economic circumstances which surround our investment decisions. Kadlec's book is the AAA guide to investing. It gives you not only a clear road map to your financial destination, but it also points out what detours and speed traps may appear along the way. Kadlec is an economist and Chief Investment Strategist of Seligman Advisors, Inc., yet he writes this book in simple language that every investor will find easy to follow, regardless of age or experience. His discussions of our economic history give real meaning to the events of our more recent past and the challenges of the present. For example, Kadlec's references to the Smoot-Hawley tariffs, which led to the stock market crash of 1929 and the Great Depression, provide a clear understanding of our trade relationships today and how important they are to achieving "The Great Prosperity" which is the theme of his book. This book is more than an economic treatise; it is also a political study, since politics and economics are inevitably entwined. Not only will the reader learn how to invest, but, by implication, how to cast his or her ballot to insure "The Great Prosperity." In today's world of day trading, undue emphasis on quarterly earnings, and the resultant high volatility of stock prices, Dow 100,000 Fact or Fiction provides a clear picture of the long term direction of the world economy and where the Dow should logically be in the year 2020. Is it a certainty? No, and Kadlec points out the potential problems as well. But no investor with a long term financial plan should attempt to navigate through it without this book.

Thank you Mr. Kadlec. You have produced clarity where there was confusion. For the first time, in one book, I have seen the relationship between economic policy - tax policy, monetary policy and trade policy - and prosperity for citizens like me. You also clarify the connection between the trends in these areas and my own financial planning and investments. This has always been a complete mystery.

I now see new steps to take as a voter in support of policies that foster prosperity. I also see how to participate more fully in the development of strategies to improve my family's financial future.

In particular I appreciate your recommendation to think in terms of time horizons. The question often posed to me by financial planners - "Are you a conservative or aggressive investor?" - was always puzzling. I always wondered what was the right answer. Now I see this was the wrong question. I must consider the time to reach each of my family's financial goals to develop a clear and sound strategy. In doing this I am forced to look in longer time horizons and not get caught in short-term thinking or decisions about whether I am aggressive or conservative.

I also appreciate having the "signposts" to watch - to judge how the how the news today could affect my financial situation tomorrow. With these tools in hand I am more confident about navigating my financial future.

The title at first struck me as hyperbole but the reading whisked away that impression very soon. This is a very well written book and understandable by anyone. Shrug off that negative thinking and stay with the powerful trend now carrying the economy and the stock market! The politicians could screw it up as could some external forces but overall the future looks positive. People around the world are becoming more free and thus able to act more productively. Falling tax rates will be a boon. It's takes courage to ignore the gloomsters and Mr. Kadlec provides plenty of information to bolster your confidence.

I wonder how the authors of this misleading piece of pap feel now? Frighteningly, they're probably still convinced that they're right. Unfortunately many small investors were suckered into believing that money could grow on trees by this and similar pieces of nonsense, and have now seen savings and pensions annihilated.

The amazon.com blurb above has some revealing lines - stocks 'only' need to grow by 11.1% a year in value for the next 20 years for the Dow to reach 100,000. 'Only' 11.1%/year!!!!! Outstripping real growth in the economy by 'only' 5 to 1!!!! Give me a break.

Baby boomers want to have a prosperous retirement? OK, I'm sure they do, but that doesn't mean they can create real value where none exists by rushing lemming like into the stockmarket. Or the housing market, for that matter.

People love to think they can get rich just by magic, but that's not the way the world works. There'll always be a sucker who'll fall for the latest get rich quick scheme. Unfortunately books like this encourage people to fall for them in their thousands.

How smug I feel to have kept my savings in cash for the past few years!

Dutch Tulips! Dutch Tulips!

Any book that suggests the Dow may reach 100,000 in the coming decades might well be dismissed by those who see the market's only 1/10 of that level today and who've seen the market plunge 17% in the two months ending March 2000. But that would be a mistake, because this excellent book explains, in essential terms, why markets rise AND why they fall.

Kadlec demonstrates that the stock market rises in a context of sound money, low marginal tax rates, minimal regulation and free trade. That's a healthy policy mix. In a succinct and convincing manner, Kadlec summarizes the history of how the market is affected by such a policy mix. He cites and presents abundant evidence without overwhelming the reader. Although Kadlec is an optimist, he's no perpetual bull. For he also shows how a punitive policy mix can cause market plunges of the kind we've seen recently. A major component of bad policy is Fed rate hikes.

This book is a rare treat because it's written with a deep knowledge and appreciation of supply-side economics and with focused attention on the actual market impact of policies that are either consistent or inconsistent with supply-side premises and policies.

Kadlec explains how we can have rapid growth without inflation, a combination seen, for years, as "mysterious" and "unsustainable" by non-supply-siders. And Kadlec performs an invaluable service for investors when he questions the prevailing myth of market irrationality and "bubbles." Markets fall, he suggests, not because participants suddenly become irrational, but because they're burdened with irrational policies.

There exist a few good books on supply-side economics. And many more books exist on the stock market, some good, but most bad. This is the only book written in the past decade that combines and integrates both supply-side economics and market performance. Since supply-side economics explains the economic-financial world better than other schools of economics (Keynesian and Monetarist) and since supply-siders tend to have a better track record assessing the markets, no investor should pass up this opportunity to absorb Kadlec's fascinating analyses and insights. Since investors need to know how policy affects their portfolios, for good OR ill, they need this book.

Whoops, were did the market go? People will say and believe anything when the economy is booming, but what now? We are on the brink of a recession, and people like this have their tails between their legs. Dow 100,000: Fact or Fiction, I think the answer to that question is the only certainty in these economic conditions.