Customer Reviews

Dow 40,000: Strategies for Profiting from the Greatest Bull Market in History

5 star:		(2)
4 star:		(1)
3 star:		(2)
2 star:		(1)
1 star:		(6)

 

 

With the Dow heading rapidly below 8000 this book's predictions are really looking great. We only need a 500% gain to get to the levels expected, so that's good...

Way to go David Elias you moron.

The author was careful to point out that his firm does buy and sell the stocks he discusses. On an emotional level, I wanted to believe that the stocks would keep going up.

But my experience to date suggests there are a number of fundamental flaws with the author's reasoning.

1. There is no guarantee the foreign markets will create expected returns.

A. The fundamental problems that drove the Asian financial crisis are still with us. The currency and trade deficit problem has now mushroomed into a budget deficit and debt repayment problem.

B. Deflationary pressures continue worldwide. Rising debt in Asia, Latin America, the US Bubble, China, Japan and Russia. Apparently, these economic fundamentals are irrelevant to US corporations expanding market share, margins, or debt paying ability.

C. The solutions to the 1980s Latin American debt crisis are now coming undone. Ecuador recently defaulted on its speculative Brady Bonds. Venezuela, Argentina, Brazil, and Columbia are going down a slipper slope of debt default, and additional financial crisis.

D. What is to say these factors will not similarly affect the US in a mother of all bear markets?

2. Stock valuations

A. The author admits the stocks are overvalued.

B. Why buy overvalued stocks unless he was convinced that there were more fools that would buy? Sounds like gambling, not investing.

3. The author seems to believe that 9% growth rates are normal.

A. However, after checking the record back to 1800, I was not convinced with the author's assertion that populations changes resulted in stock price changes.

B. The author does not provide this data in his book--I consider this the major weakness in the author's thesis...for his argument that the Dow will reach 40,000 rests on the assertion that population changes will create a demand for stock.

C. And the author does not discuss the costs of creating more wealth. Where's the discussion of deflation and rising debt? Not there. Seemingly unimportant.

Summary

A. Even if the author is wrong, who's really going to make a point of asking for their money back in 2016? Distant forecasts, no accountability. A pipe dream. Nostradamas would be proud.

B. Dow 40,000 may happen by 2016, but it's sure going to be interesting to see how many land mines we as a world economy end of walking through.

C. I think it was a nice gesture for him to donate the proceeds to charitable organizations. Hopefully Elias won't need the money if the mother of all bear markets arrives.

Rating: I was going to give the book a 1-star, but my dog enjoyed the cover. Hence, my rating is skewed by the canine salivation index (CSI).

I've got an alternate title: 'Don't Confuse a Bull Market with Brains'

This book discusses some of the major trends occurring in the world likely to affect stock values and gives some good investing advice. However, it is generally written in the form of opinions without much data, parts are choppily written, and there is very little discussion of non-US markets. About the only reasoning behind the Dow 40,000 prediction given is that if stocks maintain their historical 9-11% average annual gains, the Dow will reach 40,000 by 2016. I preferred reading "The Roaring 2000s" by Harry Dent and "Boomernomics" by William Sterling and Stephen Waite, which give more detailed data on some of the trends.

I'm glad I only payed 99 cents for this and was able to unload it here for a minor loss. Spend your money on books that will hep your current trading.

Yes, this book actually recommends Worldcom (among a host of other lesser losers). It's interesting as a historical relic of the irrationally exuberant nonsense that pervaded in the late 90s. It should have been called Dow 4,000.

I really didn't like the premise of this book very much, that stocks would continue to grow at about the historical rate of 9 percent or higher. The title reflects the author's forecast that the Dow will reach 40,000 on or before 2016. Although a lot of reasons are given (6 chapters worth), I found myself unconvinced one way or the other. I mainly felt that I didn't care what the Dow does in 2016. I don't plan to buy the Dow stocks. I don't plan to buy the Dogs of the Dow (those that have the highest dividend yield at the beginning of each year). I don't even think the level of the Dow tells me very much about the market.

If you do care about where the Dow will be in the future, the arguments relate to the historical growth rate of the Dow, the growth of foreign economies stimulating demand for U.S. exports, the need for more privatized investing for Baby Boomer retirements, the need for the government to spend less money when the Boomers retire, the recent tendency to have lower inflation and interest rates, and the likelihood that technology will drive up productivity.

Of course, to really know what the Dow will do, you need to forecast which stocks will be in the Dow Jones Industrial Average. Every time one of them gets into trouble or is acquired, a new, faster growing company is added. That's a major source of the growth of the Dow.

In the second part of the book, the author builds investment strategies. These are basically all rest on the observation that the change in the price of a stock has been 31 percent from the market, 12 percent from the industry you are in, 37 percent from the industry segment you are in, and 20 percent from which company you are. That analysis is accurate to this point.

The author then concludes that the top sectors through 2016 will be Capital Goods Technology stocks (computers and software companies), Health Care, and Financial Services. Concentrated portfolios of a few large cap stocks are then suggested as a way to outperform the market.

If you have read any of my other reviews of investment books, you will know that hardly anyone ever outperforms the market . . . even for 5 years. It is ridiculous to provide these portfolios and suggest that people buy them. If they work out, it will mostly be by chance.

If you want some good investment ideas for stock market investing, I suggest you read John Bogle's Common Sense on Mutual Funds. If you really want to try to beat the market based on the sector analysis approach, ChangeWave Investing is the book for you.

If you use this book as a background primer on economic issues in global business, it will serve as a stimulant to your thinking. If you use it as an investing guide, I fear for your money.

Read more about investing methods, banish your stalled thinking, and find an investment style that fits your personal preferences for being active or inactive, at risk or little at risk, and volatile or relatively nonvolatile.

- or paperweight. Might be good for squashing a cockroach. The pages could be torn out and used to light your fireplace. Lots of good uses yet for this one!

As is typical of the Keynesians, this thing is so off base that it is almost incomprehensible if it were not so predictable and sad for investors. Do not waste your time listening to the Federal Reserve worshipers or the Keynesians anymore. Go for sound money, real not fiat currency, and precious metals.

In this book, Elias relates finance to the changing demographics of America and the rest of the world. His predictions about the future global economy are based on solid research and historical comparison. He focuses on Blue chip investing and gives Solid low-mid level risk advice. He actually gives recommendations on specific companies. His diversified portfolios allow for investors to invest using his advice with some freedom. This is the best book on the market and investing I have ever read. A must read for newcomers and veterans.