It's hard to believe it's been over two decades since James K. Glassman and Kevin A. Hassett predicted that the Dow Jones Industrial Average would reach 36,000 by the year 2004. This bold forecast was made in their book "Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market".
The authors based their prediction on a combination of factors, including the expected growth of the US economy and the increasing efficiency of the stock market. They argued that the Dow's price-to-earnings ratio was below its historical average, making stocks undervalued and poised for a significant increase.
Their prediction was not without controversy, and many experts at the time dismissed it as overly optimistic. However, the authors' confidence in their forecast was rooted in their research and analysis of market trends.
The Concept
The authors of Dow 36,000, James Glassman and Kevin Hassett, were puzzled by the rising stock market for years, wondering if the law of gravity was being defied.
They conducted an in-depth investigation to understand the situation, resulting in a book that's a must-read for investors.
The book provides an original and unrefutable analysis of the market, along with practical advice for investors to benefit from the market's upward trend.
According to the authors, the stock market is not overvalued, but rather undervalued, with the potential for stocks to double or quadruple in a short amount of time.
The Dow Jones Industrial Average is expected to reach 36,000 points soon.
The authors propose a new model for measuring the value of a stock, based on the amount of money it distributes to shareholders.
This new approach is called the "Prix Parfaitement Raisonnable" (Perfectly Reasonable Price).
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The Dow 36,000 prediction, made famous by authors Robert Kiyosaki and Philip A. Fisher, is still valid, according to its original author, Jeremy Siegel. The prediction is that the Dow will triple by 2021.
Investors who bought the Dow's 30 stocks in October 1999, when the book was published, waited more than four years to break even. The average lost 38 percent from the bull-market peak to the bear market low of Oct. 9, 2002.
The Dow is a price-weighted average of 30 companies that are among the biggest in their industries. It has risen in value by an average of about 5 percent a year since 1928.
The market has historically doubled every seven to 10 years. To achieve a 36,000 Dow by 2021, the average annual growth rate would need to be 7.6 percent.
Stocks have never offered a negative return, after inflation, if held for 17 years or more.
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