Customer Reviews

The Next Great Bubble Boom: How to Profit from the Greatest Boom in History, 2005-2009

5 star:		(17)
4 star:		(8)
3 star:		(8)
2 star:		(7)
1 star:		(25)

 

 

I can't dispute any predictions of the stock market, because nobody can know for sure until after the fact.

But I am really amazed at the shameless spinning by Harry Dent in his latest book about his past predictions. He makes it sound like he foresaw the crash of 2000-2002. But in fact, his previous book, The Roaring 2000s, published in late 1990's, made all sorts of bullish predictions that were totally 100% wrong in retrospect. When reading that book back in 1999, you'd get the urge of going all out to buy NASDAQ. In fact, his lucky streak of winning predictions for 1990s prompted the creation of the mutual fund AIM Dent Demographic Trends in late 1990s/2000 and of which Harry Dent is an adviser -- that fund underperformed S&P500 by a wide margin, not to mention that S&P500 was itself miserable for the past 5 years already. [...]

Now, I'd still respect Harry Dent if he had said in this latest book, "My predictions were wrong for the first half decade of 2000's, but I think the big trend will resume for the second half of the decade." But instead, he shamelessly spins his miserable track record of the past 5 years!

This much waited book by now a famous economic forecaster pretty much repeats what he has stated in his previous works. The economy and the stock market will boom from now until around 2010. Then they will falter badly from 2010-2025 with 15%+ unemployement, deflation, bad housing market, and massive social problems. His advice is simple, invest heavily into the stock market until 2009 and bail. Homeowners should also sell their homes around 2009 and rent until 2013 when the housing prices should bottom. Business owners should also sell their high flying businesses around 2009.

Harry Dent's economic model has proven to be accurate. Although he tries to incorporate other statistical methdologies to backup his forecasts, Harry's main tool is still his demographical analysis. Based on the fact that spending patterns differ considerably based on age, Harry has done a great job of charting the future based on economic impact of domestic consumption based on demographical changes.

Here are what I thought were the flaws:

1)Harry makes little attempt to counter his own arguments. For example, Harry does not fully address the impact of the current 3%+ productivity growth. Also, the impact of the rise and the changes in the use of IT is not addressed fully. Harry dismisses these two trends as a mere side effects of demographics and technological progress. He apparently believes neither will change the outcome of the demographic economic cycle.

2)Harry does not fully address the impact of exports. Harry fully acknowledges that domestic consumption in Asia and South America will continue to increase well into 2020. Can the rise of US exports to these regions offset the lack of domestic consumption from 2010-2025? Harry doesn't make this clear.

Here is yet another book in which Harry Dent tries to cash in on his ridiculous demographic theories. Before investing any money on Harry Dent's advice, readers should do themselves a favor and investigate the history of the "Dent demographic trends fund". In June of 1999, Harry became a mutual fund advisor. It did okay for all of six months, then lost 70% of its value. It regained some ground in the last two years, but is still down substantially from its inception. Just a few weeks ago, the fund was quietly merged into another and the Dent name removed. It probably wouldn't be good for book sales if Harry's name was still attached to a losing mutual fund.

The charts and data may be of use, but people need to reach their own conclusions.

Law of probability: Enough people flipping a coin enough times, and, at some point, someone will seem to have the uncanny ability to call heads or tails correctly-- some may even take credit (and write books) about how they had some extra foresight in having predicted the outcome.

In the 90's Harry Dent did. He shrewdly touted his "skills" at having called the market by extrapolating from the spending/saving/investing patterns of the consumption-driven baby boom bulge. Prescient genius? More like an educated (and lucky) guesser-- probability-based and confirmation-biased coin flips being what they are.

Even so, his much hyped demographic-based system did work for a while, then crashed-- along with the market-- when the decade turned. In the "Roaring 2000's"-- which came out near the top of the bubble-- he bullishly advised investors to jump into equities-- advice that if followed at that time, no doubt led to severe fiscal injury.

Apparently the last four years have just been a hiccup, because here Mr. Dent is again, back with his same old spiel, along with post hoc explanations about how he actually saw it all coming and that his demographically-driven boom may not have happened exactly as he predicted the last time around, but will untimately be correct nonetheless.

According to Mr. Dent, the demographic stars are properly realigned, and we can once again get ready for boom-times through the rest of the decade. As before, his data driven arguments seem compellingly rational, but, unfortunately, the markets are not.

Harry Dent, can bring out all the demographic tea leaves he wants, but tea leaves are all they are; and all he really is, is a marketer trying to sell books (he even lent his name to the AIM Dent Demographic Trends Fund, which has followed his investment strategy since 1999 and is down almost 35% since inception as a result: UNDER-performing the entire market-- as well the fund's benchmarks).

Wishful thinking aside, there is no way to beat the market, and Mr. Dent doesn't know its future any better than you do. Diversify your portfolio, allocate your assets, and keep your debts low. That's all that works, or that has ever worked. Some people may guess right, but chances are, it won't be you. "Systems" may work in the short term, but to paraphrase Keynes: "in the long run, they're all dead." Save your money and your time and skip "The Next Great Bubble Boom."

I'll give it 3 stars for now. We'll see in 5-10 years what happens.

I think Dent has some good ideas so it's not a total bomb of a book, but too often it seems to me he is stretching and convuluting statistics to fit his model instead of remaining objectively scientific. And some of what he says is just down right misleading, even if technically accurate.

On page 200 he is trying to show that a ten year time span is not enough to over come a large bust in the market. He says that if you had purchased stocks in 1929 you would have had to wait 24 years to break even. But the fact of the matter is people don't buy stocks like that. Hardly anyone would have just bought at ONE point in time, at the PEAK of the market in 1929. People buy a little here, a little there. For instance, if someone started buying in 1929 and put a little bit in per month (dollar cost averaging) they would be buying stock at low prices as well as high prices. Done this way, it would have taken 5 years instead of 24 to break even.

So Dent uses the fact that supports his point instead of being objective.

One more example is the chart on page 175. He changed the notion of small stock out performance during the time frame 1975 - 1983 to 1958 - 1983 just to support his theory. Using that time frame matches what he's trying to show. One can use a variety of different time frames in this example but he choose one because it supports his theory, not because it's objective.

So, I think the book is worth reading and getting a few tidbits out of, but to follow it blindly - whoa is you! I just wish he was more scientifically objective. It is WAY to easy to twist statistics to support a theory. Try it yourself -- see how easy it is!

So Mr. Dent has another book out, eh? The same guy who put a book out five years ago saying BUY NOW just as the Nasdaq was reaching 5000. Anybody who listened to this guy five years ago surely has a big DENT in his portfolio... or rather, a CRATER. If someone truly knew the secret to attaining market-beating returns, guess what? It would be A SECRET... and he certainly wouldn't be sharing it with you.

Mr. Dent has presented an extremely over-simplifying scenario for the next decade. Sure, demographics matter. But so do trade deficits, current account deficits, Southeast Asia exported inflation, the increased third world demand for commodities (including oil), under-funded corporate pension plans, S&P one-time charges to earnings that seem to happen every year, under-funded social security programs, tax law changes, fourth-world animosity/risk... the list just goes on and on.

Investors should take a few university-level statistics courses. 99.9% of the people with market-beating returns have done it through pure random chance... (or "blind luck"). But... of course, these market-beaters think it's due to their own "genius".

Mr. Dent knows he can't beat the market so he writes a book and makes his money by taking yours. He figures there are enough simple-minded people out there who will once again provide him with a `best seller'!

It does provide humor, however, to watch these carny hucksters at work, these sellers of pet rocks...

This book offers powerful analysis of financial behavior versus age, which has been Mr. Dent's focus going back into the early 90s. Extensive and detailed stock market and economic projections are made based on his Spending Wave model. Unfortunately, however, a major change in his Spending Wave model from prior publications is not explained, makes no sense, and appears intellectually dishonest.

Dent's Spending Wave aggregates demographics of domestic births and immigration, and correlates the resulting number of 49 year-olds with the stock market. To present this model, a chart with historical data for the Dow Jones Industrial average, adjusted for inflation, is superimposed on the spending wave. The resulting chart makes a convincing presentation of the power of the Spending Wave to project the stock market.

Unfortunately, a glaring problem shows up in this version of Mr. Dent's Spending Wave chart: HE HAS CHANGED THE SCALE ON THE VERTICAL AXIS FOR THE DOW FROM LINEAR TO LOG!! In past books, he showed the correlation between the Spending Wave and the stock market on a conventional linear graph, as a one-to-one correlation (for example, on page 39 of "The Roaring 2000s" and page 35 of "The Great Boom Ahead"). Now, without any explanation, he has changed the model to a log/exponential relationship. As a result of shifting to a log model, the peak of the spending wave now corresponds to Dow 40,000 instead of 21,500. Which is it Mr. Dent, a log model or a linear model? Why did you change it?

I have been a believer in Mr. Dent's work, so I am very disappointed that he would publish such a dramatic change without any explanation. I also hate to dampen the optimism of his new, more bullish stock market projections, or distract from the powerful, important material on the impact of demographics on our economy. But changing a model from linear to log is no small thing. Long term stock market charts often use a log axis so the relative performance over time can easily be compared by looking at the slope of the plot - this makes sense. To apply a log function to relate the stock market to demographics makes no sense. I challenge Mr. Dent to regain my respect by publishing a justification of his Spending Wave model log change here or on his web site.

If only I could express how much time and optimism I wasted after reading this book...

The fact is that the forecasts are wildly out of sync with reality, Dent's methods are proving to be nearly useless and market risks are actually on the INCREASE as I write this review.

Dent did not predict the real estate boom, he did not predict the commodity boom, he did not predict the 2000 bear market, he did not predict the dollar loss against the Euro... the list goes on. When he gets a prediction wrong, he just adds another "cycle" to his forecasts... the stock market turned to goo after 2000? "oh, well we discovered the 10 year stock cycle, and this PROVES that stocks should have gone down"... the Dow didn't go to 14,000 (as predicted in this book)? "Oh, we forgot about the commodity super-cycle". How many other 'cycles' does Dent not know about?

After reading this book a couple years ago, I'm sad to say I subscribed to his newsletter at around $400-500 /year, and while their knowledge of economic fundamentals was clearly solid, I can't say I made any money from his insights, or that his insights were any better than what I'd read on the Internet for free.

I'd recommend you take this book (along with everything else) with a grain of salt, and learn from a lesson that sinks in only after you've blown money... no one knows the future, especially Dent.

The author of this book claims that a very intense bull market would start by late 2004 at the latest and extend until around 2010. He bases these predictions by using demographics, and wave theory. The demographics are favorable until 2009 but the wave theory he uses has proven to be very unreliable in the past. The problem with wave theory is that two analyst can come to completely different predictions for what position on the wave we are. For example, Robert Prechter("Conquer the crash"), who Harry Dent praises in this book, is predicting that we are still in a severe bear market. This is the opposite of what Harry Dent believes. Since the market is down for 2005 so far, the bull market needs to start pretty soon. I guess Mr. Dent did not count on the rapid rise in the price of oil or the continuing rapid rise in health care costs. We are more likely to be in a bull market for commodities than for stocks. High commodity prices are cutting into the profits of most corporations. Health care costs are hurting many of the big companies that Harry Dent recommends that you invest in. Pension costs are another problem for large companies. Another problem Harry doesn't address in how incomes are growing slower than inflation. Then there is the problem of intense competition from China and other Asian countries. US profits would be much higher without this competition, so for Harry to ignore it is the biggest flaw in his book. He is right about spending in the US is near an all time high due to the demographics, but much of the spending is going to foreign companies. This is why our trade deficit is around $500 billion a year and getting worse. So we have demographics keeping the economy going, and all of the above problems dragging down stocks.
There is much information in this book that is useful, however I would recommend that you not follow his primary recomendation, which is to invest in large cap U.S. stocks until 2009 or 2010. It is possible that US large cap stocks will do well by 2010, but it is also possible that they will be much lower.

the last book written by Harry Dent has some insightful demographic information that should in theory support his recommendations. Unfortunatly, he was 100% wrong on his last book's recommendations that you shouldn't buy the spin and his self proclaimed success. Maybe 3 out of the last 4 cylces is pretty good in his mind(since he seems to forget the bubble), but he missed the biggest bear market since '73-74 and cost his readers millions. Save your money on this one.