Customer Reviews

The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History

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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.

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.

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.

This is not a book for the ages, i.e. this book will not be read at all ten years from now. But even as for reading it in the present, this book pretends to be an exhaustive summary of today's illness rather than what it actually is: amongst other things, a play to get scared folk, wannabe financiers and wannabe real-estate types to shell out the cash to subscribe to Harry Dent's newsletter.

The only positive about this book is that if you are completely ignorant, then this book has some information. But it is precisely these people that are easy to lead down the wrong path. The information about demographics is illustrative and makes sense, if you can separate it from the claims and propaganda that surround it. And finally, none of this book will be new at all to those who are interested in such things, the information all being available.

This book is shilled by plenty of financial people, a head of a Federal Reserve bank and even a governor. To counter such power, let me critique it chapter by chapter:
Prologue - Sounds very reasonable. Makes the case for everything being explained by an analysis of a lot of 'cycles' in history, and the process of Dent's continuing evolution of his research methods.
1.The Great Crash of late 2009-2010 - A full chapter of forecasts without any explanation why. Many of them sound reasonable, but it slowly starts to stretch your belief.
2.The Fundamental Trends that drive our economy - Contains the two cycles that make sense, a demographic cycle and a technology cycle. However, the combination of the two cycles at the end of the chapter seems wrong.
3.New Geopolitical, Commodity and Recurring cycles - Is he dreaming? This chapter seems fantastical. A civilization cycle every 5000 years?? A terrorist cycle every 8-9 years (based on 1993 WTC and 9/11, and therefore 2010!)??? Or, is that some kind of warning?
4.The Greatest Bubble ever in real estate - This seems to be his area of expertise. Combines demographics to make sense in different real estate categories.
5.Echo boomers continue to move - This chapter on migration makes sense ONLY given existing assumptions. But what if Americans cannot as many cars as they have in the past? What if oil reaches new peaks? These fundamentals will change migration trends.
6.Changing Global Demographic trends - This might be new to many people, but if you're aware of this already, again there's nothing new. There is an investigation of many individual countries across the world.
7.The Clustering of Risks and Returns - Seems designed to intimidate and seems out of place in a supposedly non-technical book. A clustering of various mathematical concepts and didn't seem to have any connection (at least to me, and I don't think I'm dumb), and the chapter ends by stating, out of the blue, that conventional investing strategies won't work.
8.Investment, Business and Life Strategies for the great winter - This chapter has his investing ideas. Invest in bonds; How to invest each year from now on; and what to do with your business, education and healthcare in the coming years.
9.Political and Social impacts of the Great Depression - This chapter makes sense and ends with forecasts that might or might not be true.

All in all, this book sounds like a wishlist of what Dent wants to come true. But is it reliable? He states that inflation cannot happen, but what if it does. Will you lose your money? Wolves like these among the sheep make this book dangerous, which is why the book insert has the 'Read this at your Own Risk' disclaimer. Ultimately, the topic he is addressing is a very complex topic which needs time and effort to be understood. But there is a mass market for instant comprehension that Dent is trying to satisfy. All said and done, in the Great Depression, the financial sector will collapse from being 15% of the US economy to less than 5%, and people like Dent have to find ways and means to survive. What better than coming up with a mass-market bestseller to enrich oneself and continue doing so.

I can't believe this guy is back again. Just recently, I happened to see "Roaring 2000s" still sitting in my bookcase, laughed hard, and threw it in the trash. I read it back in 1999 because it was on all the bestsellers list. Everyone was talking about the Y2K and was grasping for anything that will shine a light on what's to come. It was an interesting read, but most of his predictions did NOT come true. He said the technology of the 21st century is like the auto industry in the early 20th century, so invest in the internet and the technology now. I thank the starts I didn't have any money back then to follow his advice. Not that I expected all his predictions to come true, no one has a crystal ball. But, Harry Dent is way off. (Dow never reached 35,000 in 2008, not 25,000, not even 15,000.) He is brilliant at making money for sure- he seems know what people want to hear at the moment and writes a book about it with an eye-catching cover, after the trend had already begun. Then He exaggerates it to seem like he is ahead of the curve. Duh, US has been in recession for over a year by the time this book comes out.

Please do not reward someone who's feeding on your fear. If you read his previous books, you'd know that he built his wealth by selling books and not by investing.

Harry Dent has a fairly consistent record: he is nearly always wrong-- that is until he changes his mind; then he claims that, actually, he was right. He did guess right once during the boom years of the nineties, invented a plausible demographic driven explanation, but then reality kicked in. Every book he's written since 1999 has been a fantasy and not one of the uplifting sort. The bright side is that had you followed his advice the past nine years, 2009 wouldn't seem so bad since your retirement account would have long since tanked. Amazing that he keeps getting book deals, though. Maybe he should write a book about how he manages that.

I read Harry S. Dent's "Roaring 2000s" when I was still drinking the cool-aid from these Wall Street cheerleaders. This guy is nothing but dead wrong. He didn't see the collapse in the housing markets or the derivatives WMDs. All he saw and used was population statistic extrapolation to help sell his books and promote his speeches. Now this Johnny-come-lately is joining the bears and contrarians who have been warning about what's happening since 2000 or earlier?!?

If you want to read a trend forecaster who studies the trends without bias and whose forecasts actually hit the mark, try Gerald Celente of the Trends Research Institute.

I love how Dent is now touting how to prosper in the depression - His last book "The Next Great Bubble Boom" made promise after promise that failed to deliver - I was even suckered into spending over 150 bucks for his monthly newsletter and he was dead wrong.

Want examples?

December 2005 newsletter - "Last Chance to Buy!"

We have seen the first sign of a peak in oil prices with the break
below $62 to just below $60. But we still need to see oil break con-
clusively below $58 and gold below $458 to confirm that inflation
fears and the commodity bubbles are over for now and that the mar-
kets can make a more sustainable strong advance. But the next
advance will likely accelerate before that occurs.

Oil went to 140 - Gold went to over 1,000

How about THIS beauty from the same newsletter:

In addition to high end condos in New York suddenly
falling and the flattening in overall home prices in South
Florida, home equity lending has also flattened in
response to rising short and long term rates since July as
we show in Chart 3. We think this is the beginning of the
end of the housing price bubble that we have been fore-
casting would deflate suddenly, but not crash overall into
2006.

Not only did the housing boom ESCALATE and lending didn't "flatten", it went through the roof! And guess what crashed in the fall of 2008?

I love the conclusion - remember, this was Dent touting the next big BOOM at the beginning of 2006

Summary Recommendations: In our extended April
and May issues we were warning that oil prices were
approaching a peak in the summer and that home prices
would start to slow by the fall, with energy and home-
building stocks correcting substantially and then lag.
That has already begun with the recent falls in oil prices
and the slowing in equity lending and house buying. We
continue to recommend buying stocks in the small cap
growth, technology, health care, biotech, financial servic-
es (investment-oriented) and Asian sectors on any weak-
ness just ahead and being as fully invested as your risk
tolerance allows.

There's a sucker born every minute I guess.

Dent's last book ("The Bubble Boom" - 2004) predicted a DOW at 40,000 by 2009, a prediction he held for at least four years.

Dent's methodology is easily dragged off course - he trolls through data searching for past patterns and cycles (he cites some cycles running 5,000 or so years), and expects them to continue - despite major changes such as the rise of globalism, the decline of energy supplies, massive immigration into the U.S., global warming, growing water shortages in the southwestern U.S., the current market collapse and likely inflation to follow, etc. Dent does try to incorporate some changes - eg. aging societies, a predicted drop in world trade resulting from high unemployment, but even those factors are difficult to predict long-term.

G.E., under Jack Welch, stopped its tradition of detailed forecasting because he saw that even the best results were highly inaccurate. Instead, G.E. focused on fast recognition of new realities and fast reaction to them. Similarly, Dent should find something else to do.

I too read Harry's prior book, The Roaring 2000s, in which he claimed that the year 2009 would be the apex year in the greatest boom period in history with the DOW reaching unimaginable highs. Well, I was younger and more naive then. I've since learned that NO ONE can predict the stock market.
Fool me once, Harry, shame on you. Fool me twice, it ain't gonna happen.