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


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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: 9.1 x 6.1 x 0.9 inches
  • Shipping Weight: 15.2 ounces
  • Average Customer Review: 2.5 out of 5 stars  See all reviews (87 customer reviews)
  • Amazon Best Sellers Rank: #1,209,299 in Books (See Top 100 in Books)

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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Customer Reviews

Hasn't happened yet.
Thomas Mongle
Second, while stocks are risky in the short term, investors should buy and hold, and not try to time the market.
qqqq
Glad i gots money and you don't.
Marty Epstein

Most Helpful Customer Reviews

150 of 156 people found the following review helpful By A Customer on November 6, 2002
Format: 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?).
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90 of 93 people found the following review helpful By Kenneth Umbach on July 28, 2002
Format: 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.
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94 of 100 people found the following review helpful By B. Lovian on April 27, 2005
Format: 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.
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29 of 30 people found the following review helpful By Flal on September 30, 2008
Format: Hardcover
Talk about hindsight. This book should be a collectors item for it's laughable prediction. Hilarious stuff. The only thing funnier is one of the author's is Mcain's ecnomic advidor. ho ho he he
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40 of 44 people found the following review helpful By A Customer on November 7, 2002
Format: Paperback
As an addendum to my previous review, where I wrote that one reason I got out of the market was this book, let me add that before I get back into the market I'm waiting for "Dow 36" by Glassman and Hassett.
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20 of 20 people found the following review helpful By David Rose on April 23, 2009
Format: Paperback
What a strange place to find a typo misprint! But overall, surely this book is too pessimistic. Times may be hard, but it doesn't seem likely that the Dow will really fall as low as 3,600. If it doesn't, that will surely be the time to buy! Great comedy, anyhow.
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24 of 25 people found the following review helpful By Annyong Bluth on January 17, 2012
Format: Paperback
I used the pages of this book to line the base of our two-month-old Rottweiler puppy's cage. I was struck by the moisture and odor-absorbing power of its pages. These super-absorbent sheets really took to canine urine and feces. And, at 1 penny for 294 pages, Dow 36,000 was such a steal! Highly recommended!
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51 of 58 people found the following review helpful By Dean Baker on August 3, 2000
Format: Hardcover
I remember learning arithmetic in second grade, apparently the authors of this book do not. It takes no more than some very basic arithmetic to refute the book's central claim. To set the scene, the book claims that stocks are no more risky than government bonds, therefore on average they should provide the same return. Let's accept this one for a moment and run the numbers.
I can get a government bond that will pay me 4.0 percent interest above the rate of inflation, as measured by the consumer price index (CPI). Keep in mind, this is an absolute iron-clad guarantee. If the government does not collapse, I have a return of 4.0 percent above the rate of inflation, each and every year that I hold this bond. If bonds and stocks are equally risky, then stocks should be able to provide me with the same rate of return. Is this possible with a 36,000 Dow?
At 36,000, the ratio of share prices to after-tax corporate earnings will be somewhat over 100 to 1. We can round down to 100 to 1 to keep things simple. Firms typically pay out 50-60 percent of their profits either as dividends or share buybacks, which for purposes of this discussion are identical. This means that the return from dividends is 0.6 percent annually (60 percent of 1 percent).
To provide the same return as my inflation indexed government bond, the rest of my 4.0 percent return would have to come in the form of capital gains. In other words, the stock price would have to increase by 3.4 percent a year, above the rate of inflation. Is this possible?
The answer to this depends on how fast corporate profits grow. Most projections assume that corporate profits grow at the same rate as the economy. According to the Social Security trustees projections, this is expected to be about 1.
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