comments on Book: "The Next Great Bubble Boom"

[Khern]

Could anyone make comments on this book. I just read it, and it makes an interesting case for demographic driven markets, a massive new bubble from 07-09, and a great depression level crash afterwards.

I am not an investor yet, but I've been reading a few books to try and get an idea of various economic entities.

-John

[tek]

Who is the author and what are his credentials/market experience? Why will there be a boom in 07-09 and a crash after?

[Khern]

I hesitated to give the case myself, hoping that I could get comments from people who had read the book, fearing that a brief explanation would not do it justice.

Anyway, it was written by Harry S. Dent, Jr, president of the Harry S. Dent foundation. From the dust jacket: "In his first book, "The Great Boom Ahead", published in 1992, he stood virtually alone in predicting the unanticipated boom of the 90's. He has since authored two bestselling books, " The Roaring 2000's and The roaring 2000's investor. A Harvard MBA, Fortune 100 consultant, new venture founder and investorm, and noted speaker, ..."

The argument put forth is that human life cycles, and subsequent spending habits, tend to be very predictable and drive markets in a very fundamental way. It says that young populations produce innovation and that technology bubbles(The last being 80 years ago) see multiple peaks as they fund infrastructure for radically new technology. The book says that we are about to see the last part of out present technology bubble that was started years ago by the boomers. The book also says that a drop in boomer spending as they move out of prime spending ages by 2010 will cause a significant problem. Of course everyone expects problems from the aging population, but look to SS/medicare costs, and possibly forced 401 withdrawals starting with the first boomers around 2016, rather than a spendings drop that will start earlier.

There are many more details, and a _lot_ of charts up to and including one of the past 3000 of human population growth...

I think the argument is compelling, but difficult to completely verify. Still if the Market hits 35000-40000 that is predicted by 2010, and the small caps start going down(predicted to fall first), (And I actually have any money in stocks), I'll probably trust that the book is correct and jump ship. Unless of course, I hear very good reasons to ignore these signs.

-John

[Dan Mezick]

Dent looks at demographic trends and projects them roughly one generation into the future to "predict" likely market trends. He bases these predictions on the fact that people on the whole do behave pretty much the same, in terms of consumption, at each stage of adult life. Dent has a long-term, 'fundamental' approach.

He was alone in 1992 predicting a massive spike in stocks.

Down markets tend to deliver alot of price action in a compressed timeframe. This is one big way that properties of downtrends differ from those of uptrends. Downtrend dynamics are not the mirror-reverse of uptend dynamics.

This historical chart of the NASDAQ100 provides some context from the recent past. 4 years of uptrend erased on 1 year of downtrend. Those who shorted with good entry points did very well for themselves. It does not look like it now, but back then, to actually short that market was an intense psychological challenge.

Trading on Dent's current analysis of likely future (down)trends is more difficult than trading on his 1992 (up)trend advice.

http://www.zealllc.com/graphs/ZealG180.gif

[GeorgeF]

There are some reviews on the net:
http://www.retireearlyhomepage.com/hdent.html
http://www.amazon.com/exec/obidos/tg/detail/-/0743222997/ref=pd_sxp_f/002-9884469-5209609?v=glance&s=books

The large cap growth boom does not seem to have occured, Dow 41,000?

[Khern]

I'm not sure I understand. Dent is now predicting a strong uptrend, before a crash in 2010.

-John

[Khern]

Thanks for the links. They were helpful.

-John