Prophets Profit

Looking for financial freedom? Want a job that allows you to constantly make mistakes and still make millions of dollars. You need to consider a career in financial prophecy. Yes, anyone can become an investing prophet if you follow a simple path. Let me take you back in time to illustrate:

The year is 1990 and the Dow Jones 30 Industrials is trading just over 2500.

Three years later the Dow has gained about 1000 points and “business consultant” Harry S. Dent Jr. writes his best-selling bookThe Great Boom Ahead. Incredibly, in the years after his “landmark” book, the stock markets soars to unheard of levels. Dent is hailed as a “visionary” for his uncannily accurate predictions. His book becomes a “best-seller.”

By 1998, the Dow has soared to over 9,000 and Dent, now referred to as a “futurist” and “guru,” publishes his next prognosticative piece, The Roaring 2000s, in which he paints a wildly optimistic picture of the first decade of the new millennium. Dent even predicts that the Dow could rise to as much as 35,000 over the next 10 years (2000-2010).

The Roaring 2000s sells so well that he quickly follows up with a sequel entitled The Roaring 2000s Investor - Strategies for the Life You Want. With the Dow trading in the 11,000 range, Dent - who, according to the books back cover who has an “uncanny ability to see the economic future” - encourages investors to invest heavily in stocks for the next 8 years (2000-2008).

Fast forward one year to September of 2001. The Dow has plummeted to about 8200. Still a long way from 35,000. Yet, there is still hope, by March of 2002 it managed to climb back to 10600 (a level it would not reach again until 2004).

The market languished and, for some strange reason, Harry went into hiding. We didn’t see another book from Dent until 2006 when he decided to try publishing his rosy outlook one more time in The Great Bubble Boom. This time Dent predicted the Dow would rise to 20,000 by 2010 (well below his previous prediction of 35,000 in The Roaring 2000s, but still well above the Dow’s 2006 range of 11,000 to 12,000).

As we now know, Dent missed his mark by a wide margin, as the Dow plunged to 6,600 by 2008, just about 13,000 points shy of Dents prediction and the Dow’s lowest level in 13 years.

Since setting his stopped clock on “optimism time” didn’t work, Dent turned the hands 180 degrees to full on pessimism and publishedThe Great Depression Ahead in late 2009.  In this gloomy tome, Dent predicted that a great depression would grip the globe sometime between 2010 and 2012.

While subsequent economic conditions weren’t great, the Dow did manage to claw its way back from its 2009 low of 6600 (when the book was published) to well over 12,000 by April 2011.

The fact that it’s almost 2012 and we haven’t had the predicted depression hasn’t fazed our Harry - no siree. As before, he is doubling down. His new book The Great Crash Ahead will be available, in bookstores everywhere, September 20th. Will Harry finally get it right for the first time since 1998? Well, even a stopped clock tells the right time twice a day.

One would think that after such a poor track record, Dent would have given up making public pronouncements and would have slunk back into the relative obscurity of overpriced mutual fund management (did I forget to mention he also advices actively managed mutual funds?). He could also follow in the footsteps of other mistaken gurus, selling do-it-yourself wealth building kits on late night TV (oh, never mind, he has done that, too). Well, apparently you can’t keep a dedicated “futurist” down, even one that’s consistently wrong.