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253 of 271 people found the following review helpful:
4.0 out of 5 stars
An interesting book and a worthy read, January 21, 2009
This review is from: The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History (Hardcover)
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The specifics of Dent's thesis are more than covered in other reviews, so I'll focus on considerations that someone might want to know when trying to decide whether to buy the book or follow its advice.
First off, the book is fairly "readable." Although Dent uses charts and graphs frequently (indeed, his methodology is to study past demographic trends to ascertain long term stock market performance), he presents his conclusions in an easy-to-follow format.
Secondly, Dent does an excellent job supporting his central thesis that demographic trends can affect economic cycles. His book provides a well-thought out argument that the US, and indeed, the world economy is going to continue to decline as the result of the deflation of three bubbles, the stock market, real estate, and commodities.
Thirdly, it appears Dent has previously made several significant contrarian predictions that have proven correct, perhaps most notably the collapse of the Japanese stock market in the late 1980's and the tech bubble of the early 2000s. While Dent's predictions aren't always 100% accurate, they do appear to often hit near the mark (with the exception of his prediction that the Dow would hit 40,000, and probably a few others that I am unaware of).
One thing that I find interesting is that, using demographics, Dent not only predicts economic cycles, he explains WHY the economy behaves as it does. In this regard, I find that Dent's use of charts and past cycles is more persuasive that many other authors who simply identify patterns and make predictions based upon them (think of the Superbowl winner predictions, skirt length, or what have you).
The major downside to the book, to me, are the fairly constant adds for "free e-mail updates" - do these e-mails include solicitations to buy Dent's newsletter? I don't know, but I sometimes felt like the book was a teaser to sell more stuff to me. I also felt that Dent's free confession of mis-calling Dow 40,000 cut a couple ways - I appreciated his candor, but his post-facto rationales at points led me to wonder what might be missing from his current book. He's certainly had his share of misses, and it brings to mind the old saying that "even a broken clock is right twice a day."
Anyone considering this book might also want to review behavioral finance - the notion of "availability error" (viewing current events through superficially similar previous events) and "confirmation bias" (we observe events that confirm our hypotheses). Behavioral psychologists note that the use of so-called judgmental heuristics (shortcuts to manage large amount of information) can make assessments of market odds difficult. I can't say whether Dent's predictions suffer from any of these flaws, but readers may wish to consider books like Taleb's "The Black Swan" (one key point being humans see patterns where there are none), Paulos' "A Mathematician Plays the Stock Market" (overview of behavioral psychology) or even Dreman's "Contrarian Investment Strategies: the Next Generation" (extensive discussion of pattern-seeking) before committing their assets as suggested in Dent's book. This is not to criticize the book itself, but simply to suggest that as with anything that purports to predict the future, readers should go in with their eyes open.
I can't say that I'd follow Dent's stategies for investing, but the book at least made me think about how demographics could affect the economy. For that, I'd say its a decent read.
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218 of 233 people found the following review helpful:
3.0 out of 5 stars
Cycles on Top of Cycles on Top of Cycles . . . That Appear to Be Heading DOWN, January 8, 2009
This review is from: The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History (Hardcover)
The main reason to read The Great Depression Ahead is to see the most persuasive case that can be made for an extended economic decline in the United States and other developed countries. After understanding that case, you'll be in a better position to make decisions that will leave you better off regardless if the economy recovers quickly or keeps sliding down for several years (as it did in the early 1930s). Mr. Dent is better than most forecasters for this purpose because he provides lots of documentation for why he develops the scenario forecasts that he does.
What's the essence of the case he's making?
1. Developed countries are facing many years when there will be declining numbers of people in their peak spending years.
2. A multi-decade commodity price cycle is about to peak to be followed by lower prices.
3. The burst bubble in real estate will be with us for some time, and prices will fall further and longer than most people expect.
4. There are no new innovations waiting in the wings to drive economic growth forward.
He takes that scenario and develops investing, business, and personal financial planning solutions over the next century.
The essence of the advice is to play it safe for now by being in short-term Treasuries and to later switch into Treasury bonds after interest rates rise a lot (expecting that the bond prices will soar as the yields once again fall to near zero). If you can sell your house now, sell it and rent. If you can sell your business now, do it. Otherwise, play it safe, hunker down, and wait for competitors to disappear.
Economic forecasts are notoriously wrong. In fact, some forecasters "predict" the opposite of the consensus. Financial forecasts are even worse.
Mr. Dent is famous for vastly overestimating how much the stock market would climb in the 2000s period. In this book he explains what he missed (commodity and real estate inflation coupled with unsettled world conditions due to terrorism and the U.S. trying to stamp out terrorism is unlikely places like Iraq).
He repeats and updates all the graphs you saw in earlier books and adds some new ones. He has so many cycles that I wasn't quite sure how he puts them all together. He offers free updates on this book's forecasts via an address on his Web site.
I'm pretty pessimistic about the economy and the financial markets over the next 18 months, but I can see that Mr. Dent is much more pessimistic than I am. He wrote this book before the U.S. and other governments began spending over $10 trillion to prop up the economy. As we saw in the second quarter of 2008, the government can spend enough to prop up the economy for a few months. There seems to be a will by government leaders to spend another $10-20 trillion in this cause. Since you and I will pay the bill, I can see why they are enthusiastic. Otherwise, everyone will want to kick them out of office as the economy sags and stays down.
Don't take the book seriously. Learn from the assumptions, keep your eyes open, retain lots of cash in safe places, and look for terrific bargains.
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548 of 595 people found the following review helpful:
1.0 out of 5 stars
Give the guy a break?? Give me a break!!!, January 17, 2009
This review is from: The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History (Hardcover)
1st, Harry Dent is NOT an economist, he works with demographics. 2nd, in his last book "The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2006-2010" he predicted the Dow to be 40,000 in 2009. You call that spot on?? Is that just a finer detail?? Was 2006 the start of the Greatest Boom in History as the title indicates? Harry Dent is very good at putting quotes in books and his newsletters that he can draw on as being right no matter what happens much like a psychic reading. When he has made big calls to the extent of making it the title of a book, he was dead wrong. Both AIM and Mass Mutual once had mutual funds based on the Dent philosophy and were sub-managed by him. Both have gone bust as being some of the worst performing mutual funds in recent history. If you followed his investment advise over the last 5 years you would be flat broke by now.
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