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October 31, 2006

You Can't Make This Stuff Up

James Glassman, the prescient author of Dow 36,000, is standing by his argument:

Glassman, 59, defends ``Dow 36,000's'' original premise as well. The prediction -- that the Dow would triple by 2005 -- is still valid, he says, although he's pushed the deadline out to 2021.
Investors who bought the Dow's 30 stocks in October 1999, when the book was published, waited more than four years to pull even. From the bull market peak reached four months after it came out to the bear market low of Oct. 9, 2002, the average lost 38 percent.

I think Galbraith had it right:

If all else fails, immortality can always be assured by spectacular error.

October 31, 2006 | Permalink


I predict that the Democrats will win the presidency in 2008 or 2012. If not, well, my prediction is still valid -- they'll win by 2028 for sure.

Posted by: Hamilton Lovecraft | Oct 31, 2006 6:11:11 PM

I originally had hoped to become a billionaire by 40. Circumstances entirely unforeseeable have forced me to extend the target age to 912.

My original premise stands.

Posted by: Matt | Oct 31, 2006 6:21:46 PM

Glassman's next book, Jam Tomorrow!, is set for release in 2007.

Posted by: pseudonymous in nc | Oct 31, 2006 6:24:42 PM

I predict that in the year 3000, Glassman's head-in-a-jar will still be predicting that the Dow will hit 36,000...but the target date will have been moved back to 3017.

Posted by: Tom Hilton | Oct 31, 2006 6:34:30 PM

I plan on living forever. So far so good.

Posted by: Sam L. | Oct 31, 2006 7:51:30 PM

Or as I put it, Zombie thinking never dies, it rises from the grave and keeps eating brains. I simply love the fact that the whole thing was based on an undergraduate-level dividend-arithmetic error. I would sympathize, I would, if it had happened on a term paper.

Posted by: wcw | Oct 31, 2006 8:10:54 PM

Well, with 2% inflation and 2% reinvested earnings per year, the Dow doubles every eighteen years even if the corporations in it don't manage to exploit any additional market opportunities from growing population and growing incomes. If the market had been fairly valued back in 1999, you would then have expected Dow 36000 by... 2024 without any revaluation or falling interest rate or falling risk premium effects at all.

Posted by: Bradford DeLong | Oct 31, 2006 9:25:27 PM

James Glassman is so farsighted that none of his predictions have yet come true.

Posted by: Trotsky's Biographer | Oct 31, 2006 10:46:57 PM

Wow, he sounds like those "man induced global warming" folks and he did not even invent the internet.

Posted by: Guy Montag | Oct 31, 2006 11:04:26 PM

Wow, Montag's cooking up orange pie again. Or was that more of his 'comedy'?

Posted by: pseudonymous in nc | Oct 31, 2006 11:36:10 PM

If all else fails, immortality can always be assured by spectacular error.

Worked for Bush.

Posted by: craigie | Nov 1, 2006 2:05:04 AM

I just cannot believe this. Isn't a prediction with a defined end date by definition invalid is the date has passed and the prediction not come true?

If I say I've done my chores today, and in fact I haven't, can then I say my claim was still valid, but applies to 2021?

Since the statement in the article isn't a direct quote, I'd *love* to know exactly how Glassman tried to put forward this claim in a way he thought wouldn't inspire derisive laughter.

Posted by: Warren Terra | Nov 1, 2006 3:35:18 AM

I don't konw which is funnier - the fact that he's insisting it's still a valid prediction when the term has been so radically changed, or the fact that he's insisting it's a meaningful prediction, when as Brad says the Dow would have nearly tripled by then under the most pessimistic of scenarios short of nuclear war.

Posted by: Ginger Yellow | Nov 1, 2006 6:14:34 AM

To a rough approximation (ignoring weightings and other adjustments) the Dow tripling between 1999 and 2021 would mean a non-inflation-adjusted Dow growth rate of about 5%. There are tax-exempt bonds that will pretty much do that for you.

Posted by: paul | Nov 1, 2006 12:42:04 PM

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