Stupidity like it's 1999

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Here Comes Dow 36000! … Or Not

Well, that tireless troll James K. Glassman has once again decided to shake the blogosphere into a frenzy by resurfacing with his Dow 36000 call.

If you’ll recall, he published a book with Kevin A. Hassett entitled Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market.

It was written and published in 1999/2000 — just in time to be proven wrong by two separate asset bubbles as the dot-com crash obliterated his target in the short-term and the financial crisis plunged the Dow to under 7000 briefly in March 2009.

But like a broken watch wishing and hoping to eventually be right, Glassman has resurfaced with his 36000 target now that the Dow is making a new “record high.”

(Aside: It’s not a record that’s adjusted for inflation … as I talked about with Charles Sizemore recently, it’s not even above the 2000 high, let alone the 2007 high)

You can read Glassman’s full take here on Bloomberg, via an article with the headline “Dow 36,000 is attainable again” … even though you have to keep in mind that the headline is misleading and stupid. The syntax makes you think that Dow 36k was ALREADY attained, which is wholly untrue.

And furthermore, hasn’t Dow 36,000 always been theoretically attainable — the way that Dow 1000 is theoretically attainable and a manned mission to Pluto is theoretically attainable, too, given enough time and luck and unexpected outside interference like alien contact?

But I digress. As for Glassman, his reasoning includes these quotes:

  • “Today, the far edge of [a three- to five-year time frame for this 36k target] is clearly in reach. From its low of 6,547 on March 9, 2009, the Dow has risen 117 percent. Another 117 percent in four years would put it at 31,022, just 16 percentage points shy of the magic number.”
  • “One way stocks could jump to 36,000 quickly would be for fears to subside and P/E ratios to rise. Assume that earnings yields fall to 5 percent. That would mean P/E ratios would go to 20, a boost of 50 percent in stock prices, assuming constant earnings.”
  • “Four percent [GDP growth] is attainable, but I’d settle for 3 percent. Get there quickly, and we’ll get to Dow 36,000 quickly, too.”

In other words, we have to see a continued bull market run akin to the sharp rebound from Depression-era panic coupled with P/E expansion to a very rich level of 20 and GDP expansion at a very rich rate of 4%.

No biggie.

Again, the full text is here at “Dow 36,000 is attainable again.”

Read it if you want a laugh … and because it’s proof of irrational exuberance that is part of every top and inflection point. This is a good contrarian sign and a good way to get page views … but a poor substitute for investing and market commentary.

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Jeff Reeves is the editor of and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at or follow him on Twitter via @JeffReevesIP.

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