Dow 36,000 resurrected

I have always felt that the authors of Dow 36,000 were over-optimistic when they wrote the book. I think that they -- or at least James Glassman -- remain over-optimistic today. Glassman is now trying to dispel the notion that they had been over-optimistic by claiming that the book was "not a prognostication".

Dow 36,000 Lives!
Five years ago, economist Kevin Hassett and I wrote a book called Dow 36,000. The book made the bestseller lists and won accolades... For some, however, the book became an object of derision because...the Dow hasn't actually risen to 36,000 yet.

This is a good time to review the case we made in the book -- a case in which Kevin and I still strongly believe. Dow 36,000 was not a prognostication. Sure, the Dow will hit 36,000 and probably, eventually, 360,000. But I don't know exactly when, and I don't believe investing is a game of forecasting what's going to happen tomorrow or next year...

Brad DeLong, in referring to the above article, attempts to set the record straight.

And Today's Winners of the Mendacity Sweepstakes Are...
The authors of Dow 36000: The New Strategy for Profiting from the Coming Rise in the Stock Market pretend, once again, that their book did not say what it said...

However, those of us unlucky enough to own Dow 36000: The New Strategy for Profiting from the Coming Rise in the Stock Market can go to our bookshelves, pull it down, and read that "the Dow should rise to 36000 immediately"--i.e., in October, 1999. But Hassett and Glassman say, they are going to be cautious and conservative. They are not going to forecast that the Dow will rise to 36000 tomorrow, but instead they "believe the rise will take some time, perhaps three to five years..." (p. 18).

Valuing the stock market is always a tricky exercise because although the mathematical equation that determines the value is simple enough, the variables that go into the equation are difficult to estimate. And to make things worse, small errors lead to large discrepancies in valuation.

The authors' main guilt, in my opinion, is not in forecasting the Dow at 36,000, but in the misleading over-confidence that they displayed in making their forecast.