Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market [Paperback]

James K. Glassman (Author), Kevin A. Hassett (Author)

Book Description

Publication Date: November 14, 2000

"Every stock owner should read this book."
-- Allan H. Meltzer, professor of political economy, Carnegie Mellon University

* A radically new way to determine what stocks are really worth
* Why the Dow is still poised to zoom
* Why the financial establishment is wrong
* Why stocks are actually less risky than bonds
* How to build a maximizing portfolio and invest without fear

"One of the hottest business books around. . . . It has wonderfully clear explanations of financial theory [and] excellent advice on general investing approaches."
-- Allan Sloan, Newsweek

"It may sound like headline-grabbing sensationalism, but the scholarly and punctilious authors make a persuasive case . . . the book is highly readable and witty."
-- Arthur M. Louis, San Francisco Chronicle

"Dow 36,000 is a provocative and well-written treatise that cannot be dismissed. . . ."
-- Burton G. Malkiel, Wall Street Journal

"Dow 36,000: Everything you know about stocks is wrong."
-- Jim Jubak, Worth magazine

Editorial Reviews

Amazon.com Review

Most books that predict a sky-high stock market make their forecast either by extrapolating the trend line of the market's recent past or by looking at the demographics of the baby boom and the vast amounts of retirement funds chasing stocks. In Dow 36,000, James Glassman and Kevin Hassett see a bright future for stocks, but rather than looking at external factors, the two base their prediction on the intrinsic value of equities and their ability to generate cash.

At the heart of Glassman and Hassett's argument is the idea that stocks have been undervalued for decades and that, for the next few years, investors can expect a dramatic one-time upward adjustment in stock prices. Why? While Wall Street has focused on valuation measures such as P/E ratios, it has virtually ignored how stocks can work as cash engines (the good ones, at least). The authors cite example after example of the growth in dividend income for stocks and how it has consistently beaten the annual payouts of long-term Treasury bonds. One example they cite is Exxon, which you could have bought in 1977 for about $6 when it was paying a dividend of 37 cents, or about 6 percent a share. Twenty years later, the dividend had grown to $1.63 or 27 percent of your initial $6 investment. Compare two $1,000 investments over 20 years in Exxon and 7.5 percent Treasury bonds: payments from the T-bonds would amount to $1,500; the Exxon dividends would add up to $3,585--not to mention that shares in Exxon went from $6 to $61 during that same period. To get to their target of 36,000, the authors project dividend growth of the 30 stocks that make up the Dow and apply a valuation measure that they call PRP ("perfectly reasonable price"). Many will dismiss this kind of thinking as wishful, but they're probably the same Chicken Littles who have been calling the market overpriced for years (think back to January 1993, when the Dow was hovering around 3,300).

In addition to making their case for undervalued stocks, the authors toss off some good investment advice about stock picking, portfolio allocation, and buying mutual funds, and they go to great pains not to bulldoze readers with investing and economic jargon. As you might expect, Glassman, an investing columnist for the Washington Post, and Hassett, a former senior economist with the Federal Reserve, are firmly in the buy-and-hold camp, and make the case for working with a full-service broker as a check against churning, something that's all too easy to do when trading over the Internet. This book is sure to rile some, but no matter where you think stock prices are headed, Dow 36,000 is a provocative read that belongs on the bookshelf of any thoughtful investor. Who knows? We may come to think of these guys as value investors on steroids. --Harry C. Edwards --This text refers to an out of print or unavailable edition of this title.

From Publishers Weekly

The only thing missing from this half-time speech of an investment book is an exhortation to buy stocks for the Gipper. Despite the sensationalist title, Glassman, a syndicated columnist, and Hassett, a scholar at the American Enterprise Institute who used to be an economist at the Federal Reserve, argue only the classic case for investing in stocks: that over long periods of time stocks have always outperformed alternative investments. But no motivational device is spared to make this case more strongly than it has ever been made before. Experienced investors will wince at the simplification and overstatement as the authors, in their effort to obliterate the arguments of anyone who has ever suggested that stock prices might actually fall, brush aside considerations like risk, dividend yields and price-earnings ratios. These and all other objections are downed out by the drumbeat of Dow 36,000! How do they arrive at this number? In several different ways, none of which is described in detail. Over long periods of time the Dow goes up, with inflation if nothing else. In the last two decades, it has been rising at a rate that makes it triple every seven years. So predicting that the Dow will triple eventually is not saying much. The key question for investors is, will it triple fast enough to make stocks an attractive investment? Here the authors fall into confusion, suggesting, in the space of seven pages, that it could happen in three years or 10 years. This last prediction implies that the stock market will actually do worse in the next decade than it has in the previous two. Agent, Rafe Sagalyn. First serial to the Atlantic Monthly; BOMC alternate selection; Money Book Club main selection; 5-city author tour.
Copyright 1999 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.

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Product Details

• Paperback: 294 pages
• Publisher: Three Rivers Press; 1st Pbk. Ed edition (November 14, 2000)
• Language: English
• ISBN-10: 0609806998
• ISBN-13: 978-0609806999
• Product Dimensions: 8.9 x 6.1 x 0.9 inches
• Shipping Weight: 15.2 ounces
• Average Customer Review: 2.5 out of 5 stars  See all reviews (82 customer reviews)
• Amazon Best Sellers Rank: #1,013,803 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

125 of 131 people found the following review helpful:

1.0 out of 5 stars Authors that later lie about their message., November 6, 2002

By A Customer

This review is from: Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market (Paperback)

This book was one of the reasons I got completely out of the stock market in late '99 early 2000. When I read this pustulous piece of putrescent puffery I just knew I had to get out. THANK YOU KEVIN AND JAMES!!!!!

I come to write this review because just for a lark I thought I'd search the internet for Glassman, see what he's pushing today, so I can get out of it for my own safety.

In writing this review I treat the authors' late-90s media appearances and book-related articles all as one whole.

Hassett and Glassman are out there now (Nov 2002) writing (paraphrased) "we never wrote the DOW would be at 36000 soon".

I read the book in fact in winter 99/00 along with some of their articles, and did catch a few of their TV appearances. They definitely did write either in the book or one of the accompanying pieces (Washington Post or The Atlantic) that stocks are in a 'one-time surge' and everyone must GET IN NOW.

Their media appearances were even worse...

"GET IN NOW!!!
DON'T MISS THIS ONCE IN A LIFETIME OPPORTUNITY!!!!
YOU'RE FOOLS IF YOU DON'T
MORTGAGE YOUR HOUSE TO BUY STOCK!!"

They used to remind me of that Joe Piscopo SNL salesman character (you remember, the frenzied salesman, "WE MUST BE INSANE!!! OUR PRICES ARE SO LOW WE'LL GO OUT OF BUSINESS YESTERDAY!!!!").

And they are completely unrepentant. I just read a Glassman article (Wash Post - why the ...are they still giving this unrepentant, lying moron/clown a stage?) claiming he was right all along and 36000 is STILL the DOW's fair value. Claiming that Siegel's research supported G&H's conclusions (Siegel, who currently seems bullish said they misconstrued his research. Interesting word, misconstued - is Siegel saying G&H are liars, idiots, or some combination thereof?). Claiming that all investors everywhere should still be fully invested in the stock market for the long term.

Something a lot of the other reviews are not pointing out is that G&H had ideological motives for pushing stocks (Glassman was once publisher of a right wing magazine, I forget which one). Both G&H were[1] republicans and both felt that the more people own stock the more conservative they become, in an attempt to protect their assets.

[1] I don't know their current predilictions.

81 of 84 people found the following review helpful:

3.0 out of 5 stars Three stars for humor, July 28, 2002

By 

Kenneth Umbach (California USA) - See all my reviews
(REAL NAME)   

This review is from: Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market (Paperback)

Dow 36,000 elicits (or did from me) plenty of laughs. It would have taken a couple of academics to produce such a relentlessly wrongheaded book.

The key errors are twofold, in my opinion. First, the authors exhibit precisely that of which they accuse those who differed with them: they think they are smarter than the market. They feel (or felt -- maybe they have wised up by now) that right at that moment (mid-1999) the Dow should have been three hundred percent higher than it was at the time and that the proper PE ratio was 100. Nevermind that market history refuted that position, and nevermind that we have seen such claims before and they proved false. (The authors strain credulity in their attempts to show otherwise.)

Second, the authors assumed that earnings growth (which they apparently took to be real) would continue ad infinitum at a steady upward incline AND that dividend growth would take a similar path. Well, the intervening years have proven both assumptions to be completely false. They made a pro forma nod toward ups and downs in the market, but ignored the meaning and impact of those ups and downs.

More fundamentally, perhaps, the authors' relentless (albeit I think somewhat disingenuous) insistence on the long run (20 years plus) ignores the reality that (1) many big players in the market are NOT waiting out 20 years, but rather play for short term advantage and (2) many people -- those who actually have to live off their investments -- must sell from time to time to cover expenses, and CANNOT simply wait out gut-wrenching market drops.

The most ludicrous advice in the book is, in effect, that investors SHOULD fall in love with their stocks -- which is the most fundamental error of all, and one that has victimized countless investors. Their term is to form a personal relationship with their stocks, but the meaning is the same: fall in love with them and hold on for dear life no matter what signals the market is sending. That worked out *real* well for bagholders of Worldcom, Enron, Sun Microsystems, and at this point, it appears, even Automatic Data Processing, one of their favorites.

This is not to say that patience is a bad thing, but only that blind devotion to a stock even through badly damaged fundamentals and the intrusion of important new information is insane.

Now, in mid-2002, much of this book elicits guffaws -- but the strength of the laughter is inversely proportional, I suspect, to how badly burned one was by following the authors' loopy advice.

79 of 85 people found the following review helpful:

1.0 out of 5 stars Absurd, April 27, 2005

By 

B. Lovian "blovian" (United States) - See all my reviews

This review is from: Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market (Hardcover)

James Glassman should apologize for his stupidity, his arrogance, and this book, which lured in a whole lot of amateur investors just as the stock market was about to go bust.