Chapter 3 American Boom: Collapse Before 2009

Among the popular economists in America, Harry S. Dent is not the most prominent one, but he is probably the most daring and unconventional one.In his recently published book "The Next Big Bubble," he declared, "Our research strongly suggests that the stock market will reach its highest point in our generation's lifetime in 2009, and then enter the The Great Crash continues until 2023". During this period of time, his forecast on the US economy and stock market has caused quite a commotion in North America. Today, economists around the world are generally bearish on the future. It claims that investors can only get a single-digit rate of return in this ten-year period, and another legendary investor, Sir John Templeton, even predicted that investors will not be able to return in the next five or six years. The loss is already pretty good.It was at such a moment that Dent spoke out again.

Dent wrote in "The Next Big Bubble," "Right now, we have a forecast that is very different from Warren Buffett's and most pundits', as it was in the late 1980s. In this decade Before the end of the period, we can see the Dow hit 35,000 to 40,000, and the Nasdaq reach around 13,000, and may hit a high of 20,000." No macro forecaster has ever dared to be as bold as Dent. He even dared to express his prediction with such a clear time node: We believe that the most impressive returns will come from the period from 2004 to 2009, especially from 2004 From the end of the year to the middle of 2006, and from the end of 2006 to the end of 2009.Obviously, it's too late to fully join the next bull market and the biggest bull market in history!

Dent claimed that late 2002 to late 2004 was a "once in a lifetime investment opportunity.""All of our fundamental research and cycle research suggests that investors are likely to see the highest average annual compound returns in history from 2002 to late 2009 or early 2010," he said. In Dent's prediction system, the use of demographics is the most important and characteristic aspect.He analyzed consumption data from the Bureau of Labor Statistics under the US Department of Labor and found that there are two consumption peaks, which occur at the age of 46 and 50 respectively.Then, for the remainder of life, consumption will drop.That is, each generation produces boom and bust economic cycles with great accuracy, and they occur roughly every 40 years.In the United States, the peak year of the latest "baby boom" was 1961. This generation will enter the high consumption year at the age of 37 and reach the peak at the age of 47.Accordingly, Dent boldly predicts that the coming boom will peak in 2009.

After the great boom, there must be a long-term decline, starting around 2009 or 2010 and continuing until 2022 or 2023, just as past bear markets often followed the passing of a generation's peak consumption.Dent warned, "This is probably going to be the biggest depression in history, at least the biggest since the Great Depression of the 1930s." He suggested, "The period from 2005 to 2009 is not only the most important investment opportunity in your life, but also the best time to reposition your business and career. You will decide how and where you live. Life, not only for the coming great boom, but also for the great recession that will follow." After making this shocking prediction, Dent seems to have more to say.He went on to propose: The most important thing you can do today is to make good use of this boom period in your career and investment strategy, prepare for the next very difficult recession period, and sell your business before 2009 Most of the investment and real estate.

Today, Harry Dent's prediction has caused quite a stir in American academic circles and even public opinion circles.What makes everyone have to pay attention to Dent's prediction is that "The Next Big Bubble" was published at the end of 2004, and his stock market predictions for the second half of this year and even the first half of 2005 in the book are completely consistent with reality !Dent is gambling his reputation as a prophet this time, writes noted critic Mike Fermore in The New Yorker, and we don't have to bet with him, but we must tighten our pockets , in case the "magic ball" really comes true.