Customer Reviews

The Roaring 2000s Investor: Strategies for the Life You Want

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We are seeing (and enjoying) similar macro-economic effects of the baby boomers in Singapore. However, as is typical with our far-sighted Government, we are now beginning to be actually worried about the "baby-bust"; if at the current birth rate (below replacement), we would be facing a declining population after 2020 or so.

What Harry Dent puts forth makes sense - that baby-boomers drive economic growth. (It is only but one of many factors.) He admits that he came around to this population demographics reason for economic cycles not necessarily from pre-conceived ideas. Of course now that he has taken a stand he has to defend it for the sake of his professional reputation.

According to the author, the American economy may slow down after about 2008. What does that mean to the investor? Lighten up on US equities? Overweight the other countries that are going into the baby-boom driven phase of their economies?

Remember that his view is but one of many. As a matter of balance I would recommend a read of Krugman's "The Return of Depression Economics".

As my publisher loves to say, you have to connect the dots for people. That is precisely what Dent has done in this sequal to The Roaring 2000's. Specifically, he shows how how large and small cap stocks have fared in various demographic environments, and then concludes that it is big stocks until 2008 in the U.S. He further elucidates on foreign stocks by showing the demographic pattern by country, to give guidance on where to go for international diversification. Thailand, Korea, Hong Kong, and China all look very interesting here. You also get a sense of where to go in Europe (avoid France). Dent also provides his own philosophy about investing, get some help and keep it simple. Those who want to be day traders will be quite upset with this book, but for most people this is good advice. He also reminds us to rotate our holdings among the faster growing sectors of the S&P 500 to beat the benchmark. I would need to see more years of evidence to conclude that the argument is rock sound in this book, but it certainly adds a totally different perspective to the continuing issues of asset allocation. I see relatively little potential harm in the advice, as long as you stay flexible and run out of stocks should the scenarios not be developing as Dent forecasts. I know of few things that can be accurately forecast solely from demographics, so I remain skeptical about an investment approach totally based on it. I am equally skeptial of an investment approach that ignores demographics. The book is well worth your while, and you will enjoy the things you learn. If you have never read Dent before, you can start with this book and be all right. If you have read lots of Dent, the benefit is in the new details.

I have read most of the books Harry Dent has authored. If you have never read Harry Dent's books you may love this book. For those of us looking for new knowledge, it was not to be had in this book. The reason why is frightening. Harry Dent pandered to the brokerage community who pays him royally to speak to them. There is no specific advice because the brokerage community wants to pick the stocks. Harry could have easily told us how to invest on our own with great tech and financial stocks, and index spiders offered on the AMEX. Unless Harry's next book declares on the cover that he is giving specific information, I will never buy another book authored by Harry Dent. We already know how long to invest in U.S. stocks, and when to invest more in Asia and other countries. Harry told us that two books ago.

On the cover of The Roaring 2000s Investor is an endorsement from Barron's that reads "if you're worried that the bull market is about to peter out, you might want to talk to Harry S. Dent."

Then again, you may not.

Published in 1999 just months before the bull market peak, Harry Dent, a self-described "economic futurist," was forecasting all sorts of fabulous things, including Dow 44,000 by 2008.

(Unfortunately, even if the Dow quadruples over the next six years, we still won't get there.)

On the very first page he insists that the bull market - merely weeks from the end - is fully intact and "we are seeing a vindication of the very fundamentals of baby boom earning and spending that I have been forecasting."

I highlight these remarks not because Harry Dent was wrong. (In the investment forecasting business, everyone is served a helping of humble crow from time to time.) It's just that Harry Dent was wrong in the most spectacular ways. In fact, as I perused the book I couldn't help but chuckle every other page or so. And ultimately I was left wondering why I didn't reach for a Harry Dent book from time to time rather than settling for James Thurber or P.G. Wodehouse.

Just listen to some of these zingers:

"Your best strategy is to bet on the predictable spending and saving trends of this massive generation which will combine to drive the stock market up until 2007 or 2008."

Whoops.

"Many countries will continue to boom even after the United States and many other countries falter after 2009."

2009? Economists consistently fail to correctly forecast even the year ahead. Our futurist was no exception.

"The technology revolution will favor internet-oriented companies."

No, the internet index would decline a breathtaking 81% in the two years following his book's publication.

"We could see the Dow first go as low as 10,000 to 15,000 during the down phase of the generation cycle into 2020 to 2023."

Here is a man - with a straight face - who presumes to tell us now what the market will do between 2020 and 2023. I may as well predict scattered showers at your 4th of July picnic in 2012.

But he goes right on making similar pronouncements. "Argentina should see moderate growth into 2015 and then stronger growth into 2025."

No, Argentina was about to suffer a complete financial collapse followed by rioting and social anarchy.

"We are entering the beginning of an 80-year cycle of mass customization, a cycle that will continue over the next 500 years or so."

Whatever you say, Harry. After a few pages, Mr. Dent begins to sound like a man who's forgotten to take his medication. And yet his books have sold hundreds of thousands of copies. (To people interested in investing now in the colonization of space, I presume.)

Some day Mr. Dent may learn that the key to investment success is not pretending to know things that can't be known, but rather understanding and controlling the things that can.

But then, that practical, common sense message won't sell thousands of books. And I'll bet that's one thing Mr. Dent does understand.

As an investment professional who constantly reviews risk management techniques with clients and financial consultants, I find this book to be incredibly insightful, practical, and user friendly. Mr. Dent's predictions in the 1980's were right on the mark, and I fully anticipate his forecast for the early 2000's to be just as accurate.

As a financial professional, I am acutely aware of Harry Dent and his `new' economic analysis framework. In The Roaring 2000s Investor, Harry makes his case for demographic driven financial markets: the Baby boomers, who are now reaching their peak spending years, will drive the market onward and upward for the better part of this decade (2000-2009). He goes on to identify his strategies for:

1. Outperforming the stock market; 2. Identifying which sectors should perform best in the coming decade; 3. Selecting a competent financial advisor;

What I found most useful was the common sense, logical approach Harry takes when presenting his case. Truly, real wealth is built not by aggressive trading but through the identification of long-term trends and investing accordingly. Harry also makes a strong case for a number of sectors that should outperform during the baby boomers reign. Other tidbits I found useful include:

1. The use of long-term data to drive nearer term investment results; 2. The use of different portfolio strategies for different times of your life; 3. The risk of modest portfolio underperformance; 4. Why today's hot stocks and funds become tomorrow's dogs.

I cannot guarantee you that following Harry's recommendations will make you "the Millionaire next Door." However, as a one-time Wall Street professional, I believe he will give you enough perspective on upcoming demographic trends to give you a realistic chance of realizing financial independence.

Side note: I have also read Harry's prior book, The Roaring 2000s. The 2000's Investor is a certain reiteration of Harry's economic views and analysis previously laid out in The Roaring 2000s, which was published in 1999 (one year prior to the 2000s Investor). The themes are the same but I believe Harry gives us more application in this newest version. Therefore, read this book and spare yourself the time of the other.

Harry S. Dent is an optimistic visionary that uses simple techniques to explain historical data and how it relates to potential future events. He mistrusts modern economists ,who he believes are over-analytical, and contrives a simple plan to assist all laymen (or the "average Joe" like myself). There is a bit of fluff regarding tax planning and obtaining a financial advisor which is more suitable for those with substantial capital (not in that group, YET). Read this book and start a mutual fund with some of your savings and have faith and prosper! I personally have started a global technology fund, if any of you were interested.

In late 1999 the stock market was in a hey day. I would walk into work in the morning and my supervisor would say to me, "Ron, your stock is already up three points!" Then I came across this book by Harry Dent, and I showed it to some co-workers. At the time, this book seemed to be a revelation to us.
In the early 90s, Harry Dent predicted that in the late 90s, the stock market would hit 10,000, and we would have low inflation and low unemployment. That indeed happended, so it seemed reasonable to listen to his further prognostications. In this book, he predicts that the DOw would hit 40,000 in the year 2007, followed by a sharp bear market that would last for about 10 years.
What was his basis for predicting this? Well, lets call it the "birthrate theory." Harry Dent took a chart of birthrates, shifted it by about 44 years, and saw that this chart had a strong correlation with the ups and downs of the economy and the stock market. Why shift the birth rate chart 44 years? Because that is the age by and large where people reach their peak in earning and spending. They have reached maximum productivity--they are old enough to have learned what needs learning, and young enough before the natural decline of aging. So basically, when the group of those around 44 years old increases, so goes the theory, the stock market and the economy goes up, and when the group of those around 44 years old decreases, the market and economy is in decline. Thus that "baby boom generation" when they entered their 40s, fueled the market and economic surge of the 80s and 90s. An interesting point to be made concerning Dent's interpretaion of this data is that while people conventioanlly start the "baby boom generation" from 1945, Dent starts it a couple of years earlier, and I do think he is right, the increase in birthrates started earlier than 1945.
One objection to Dent's theory that has been made--by Dr. Shiller who wrote "Irrational Exuberance"--is that why did not this demographic birthrate theory affect other asset classes, like real estate. A reply to this objection from the basis of the birthrate theory is that it has but in a different way--that since people buy homes generally when they are in thier 20s and 30s, then you should shift the bithrate chart around 30 years for real estate. And this seems to be confirmed by the experience of the 1970s, when real estates values went up when the baby boom generation was in the 20s and 30s.
A devasting objection to Dent's theory, however, is that is has been for all intents and purposes been falsified. For the market to reach 40,000 in the year 2007 from this point today, the market would have TO HAVE AN ANNUAL RATE OF RETURN OF AT LEAST 25 PERCENT FOR THE NEXT FIVE YEARS. The odds of that happening are astronomical and has no precedent in stock market history.
Dent had a chart showing the rates of return of the market by decade. He pointed out that while there has been two consecutive decades of above average market returns (for example, the 50s and 60s, and the 80s and 90s) there has never been THREE CONSECUTIVE decades of above average returns--but the exeception would be this time. Dent should have stuck with the decade analysis.
So it looks like that the period of 2000-2010 will be a decade of below average returns for the stock market, comparable to the 30s and the 70s.
This book has some value in that it can get one to think in broader historical terms about the markets. Part of the title of this review/essay is "but there is hope." As the decade analysis of the market shows, bear markets do not last forever, though they may last a decade, and then they are followed by bull markets. SO perhaps around the year 2010 a new bull market will begin and it would be a good time to be invested.
If one is interested in good investment advice, I have been following Bob Brinker lately. He has a radio show about investing heard on stations around the country. In early 2000 he told his listeners to get out of the NASDAQ and the market; Brinker was right in calling the top. He has not yet gone back into the market--thus avoiding terrible declines for his followers. Mr. Brinker, against the academic view, thinks he can "time" the market, and believes that one can make money on rallies in the general bear makret. He has not, at this time, yet given a signal when this "counter-cyclical" rally in the bear market will occur. Stay tuned.

Harry Dent's latest is rather a poor sequel. He brushes over issues covered in his prior books and sheds a bit more light on the international investment arena.

One chapter turned out quite preachy where Dent, while describing the importance of having the financial freedom to do the things we like, preaches forever on the goodness of giving. And to top it all off, Dent presents and pretends to prove the statement that changes in tax laws have no effect on the desire to innovate! Skip this book and buy one of his prior ones instead!

I read this book back in 2000 before the crash and agreed with
some of his reasoning as to the mechanics and ideas which would be implemented in the New Millenium, but disagreed with his
belief that there would be such great prosperity,as history ALWAYS repeats itself.
But alas, no one wants a pessimist. Then he came out with the "Roaring 2000's Investor", which again was creative and showed brilliance, but proved to by flawed on many levels. Now he has another book slated to come out

"The Greatest Bull Market in History: 2003-2008: Investment, Business and Life Strategies - For the Great Boom Ahead and the Great Bust to Follow"

If his past predictions are any indication, this title itself is already filled with hindsight and error. I can tell you there will be no sustainable bull market on any of the indexes for at least the next decade.

I must admit I would like to speak with this guy. With a few real life experiences under his belt he may really hit the target, but so far the best title for a book would be "The Roaring 2000's: How to prosper by making the best seller list by publishing books that make people believe you have the answers."

Lession #1: Don't put dates in the titles of your books that try to predict the future"