Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Book Review-The Next Great Bubble Boom
Old 09-17-2004, 05:19 PM   #1
Full time employment: Posting here.
 
Join Date: Nov 2002
Posts: 768
Book Review-The Next Great Bubble Boom

I perused Harry S Dent's new book. He still thinks demographics will keep the bull going through 2009, but now he thinks the decennial cycle is more powerful than the demographic cycle (stocks perform better in the 2nd half of the decade due to corporate managers using 10 year plans that come to fruition then). He also advises the sell in May and go away strategy during the 2nd year of Presidential terms, because incumbent Presidents are getting the pain over then so that they can goose the economy for the next election in years 3 and 4.

An interesting point he made is that rapidly increasing population has played a large role in economic growth for centuries, but population is expected to soon stabilize or decline in many nations. Declining population could result in declining economic stats. Once the bear comes, areas such as Western Europe may not recover significantly during our life times.

__________________

__________________
Michael is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Book Review-The Next Great Bubble Boom
Old 09-17-2004, 06:26 PM   #2
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Book Review-The Next Great Bubble Boom

Quote:
stocks perform better in the 2nd half of the decade due to corporate managers using 10 year plans that come to fruition then
Maybe it's just my lack of exposure to large corps, but how many really work against a 10-year plan each decade? I just find it really hard to believe that there is any such effect.

Quote:
An interesting point he made is that rapidly increasing population has played a large role in economic growth for centuries, but population is expected to soon stabilize or decline in many nations. Declining population could result in declining economic stats. Once the bear comes, areas such as Western Europe may not recover significantly during our life times.
This point seems more serious. The Congressional Budget Office study I referenced in another thread predicts that US GDP will fall to below 2% and stay there for a *long* time.

Even Scott Burns had an article on this not too long ago. He recommended buying EPP (Asia ex-Japan) as a demographic play.
__________________

__________________
wabmester is offline   Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-17-2004, 07:28 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
 
Join Date: Oct 2003
Posts: 5,105
Re: Book Review-The Next Great Bubble Boom

I've been corporte life for all my life - (I'm 49) I never heard a any discussion of a 10 year plan. The corporations I worked for only had plans 3 years out - the next year's budget and two other years.

In the 80's; when the Japanese were going to rule the world it was said they were so successful because they didn't manage quarter to quarter but had 100 year plans. They must be in a bit of a lull.

__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-17-2004, 07:35 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
 
Join Date: Oct 2003
Posts: 5,105
Re: Book Review-The Next Great Bubble Boom

Quote:
An interesting point he made is that rapidly increasing population has played a large role in economic growth for centuries, but population is expected to soon stabilize or decline in many nations. Declining population could result in declining economic stats. Once the bear comes, areas such as Western Europe may not recover significantly during our life times.
As to population it is expected to peak at about 9 Billion in about 2050 or so - I'll be dead I hope, by then.
Many European countries do have negative population growth because of declining birth rates and restrictive immigratioin policies. The USA does have similar birth rate issues but, immigration more than offsets that. So he might be correct about Europe. But what is the issue or problem with Europe? If you don't invest in Europe it should only create opportunities. If you want to visit Europe it should be less crowded and maybe cheaper.

I think our current population is about 6.5 Billion can you even imagine life in India or China with a world population of 9.5 billion? Travel and see the world now there won't be room to see it in the future. You just might need to bring your own water and air to breath.
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-18-2004, 10:14 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Book Review-The Next Great Bubble Boom

According to this, and my experience, his cause and effects are almost 100% wrong. He does identify some causes and some effects, but they arent in synch.

For example, while its true that every company I worked for had long range planning, I dont remember a single one tying it to a firm ten year cycle, and even if they did, theres no sense in thinking they'd all start in 00 and work through 09.

Further, while its also true that the last 2 years of each presidential cycle are good economically, and the first two arent, the cause is not 'getting over the pain'. The cause is economic programs specifically targetted and timed to peak at election time, after which they run out of gas. The next set of programs are then retimed to peak at election time again to keep the 'ruling party' in the house.

I would also completely disagree that western europe will be hardest hit economically. One of the biggest problems with an economic slog has to do with energy. Europe, especially western europe, is one of the lower users of energy worldwide; we're one of the highest. The worst hit areas will be emerging markets and 3rd world areas like Africa that have weak fledgling economies or total dependence on energy for survival.

Isnt this the dipsy doodle who thinks the Dow is going to 40,000 by the end of the decade?
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-18-2004, 10:24 AM   #6
 
Posts: n/a
Re: Book Review-The Next Great Bubble Boom

Briefly.............I spent almost my whole career in industry. The slightly larger companies all did some sort
of long range planning (5 years and out). This sucked up lots of management time, but in my almost 40
years working I never saw ANY benefits to trying
to
predict that far in advance. I have no reason to think
this sort of exercise works any better in other arenas.

JOhn Galt
__________________
  Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-18-2004, 11:05 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Book Review-The Next Great Bubble Boom

Our LRP ran about 5-7 years. It was constructive as a rough planning and roadmapping exercise, but counterproductive when we decided to lay in too much detail. Sometimes people became 'married' to the products, directions and planning and resisted changing it as conditions changed.

And of course every organization is chock full of nimrods who want to continue detailing and documenting every agonizing detail...
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-18-2004, 07:35 PM   #8
Full time employment: Posting here.
 
Join Date: Nov 2002
Posts: 768
Re: Book Review-The Next Great Bubble Boom

The explanation for the decennial cycle did not seem to me to be based upon extensive research, but rather anecdotal evidence. *It appear to me to *have been adopted as an explanation for the post Y2k bear, which took him by surprise, and shocked him by its severity. *Much of the work on the statistics of the cycle was done by Ned Davis. The 10 year cycle has been reaonably consistent during the 20th century, but no one has conclusively proven the reason for its existence.

Yes, he is still predicting Dow 40k and Nasdaq 13K by 2009, followed by the long, cold winter that will drop them back below 10K and 2k. *The 40k number is derived by looking at charts of past performance of the Dow during bull markets, and extending the bullish trend line upwards until 2009 or so. *At least this is my current understanding of his algorithms.
__________________
Michael is offline   Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-19-2004, 07:54 AM   #9
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Book Review-The Next Great Bubble Boom

Scott Burns published another short article on demographic trends this morning:

http://www.dallasnews.com/sharedcont...rns.a15f5.html

Interesting stats include percent of population over 60 in 2050:

US: 26.9%
Italy and Japan: 42.3%
Germany: 38.1%
historical average: <5%

Now if the CBO thinks that our aging population will slow GDP growth to below 2%, imagine what it'll do to Italy, Japan, and Germany....
__________________
wabmester is offline   Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-19-2004, 09:11 AM   #10
 
Posts: n/a
Re: Book Review-The Next Great Bubble Boom

Several posters on this thread have questioned whether large
corporations do long range planning on the order of 10 years.
The answer is a definite *yes*. I have been involved with
planning 20 years out with quarterly milestones. The real issue is
not whether or not they do it, the issue is whether or not it makes
any sense. It doesn't. In the case of my corporation, the CEO
typically doesn't last 20 years. The new CEO comes in and
all bets are off.

In the case of my company, it does some defense work. Defense
is a monopsony (the opposite of a monopoly: several suppliers
and only one buyer). The DoD currently has a "Joint Vision
2020" that supposedly, among other things, will drive defense
spending through the year 2020. If you want DoD business,
you simply do not tell the DoD that thery are FOS. So you
"plan" for Joint Vision 2020. My personal view is that Iraq
has pretty much given the Joint Vision a mortal wound, but
you have to wait for the DoD to say it

--
Able to leap over tall buildings in two or more bounds.
__________________
  Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-19-2004, 10:45 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: Book Review-The Next Great Bubble Boom

Quote:
. . .Interesting stats include percent of population over 60 in 2050:

US: 26.9%
Italy and Japan: 42.3%
Germany: 38.1%
historical average: <5%

. . .
While I believe that demographic concerns are certainly important, these statistic are surely of little value in estimating the problem. Today, a significant percent of our population -- even over the age of 70 -- is still active and does not require institutional care. I don't know if the same were true of the population over 60 in the 1800's (when they represented only 5% of the population).
__________________
sgeeeee is offline   Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-19-2004, 10:50 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: Book Review-The Next Great Bubble Boom

Quote:
Several posters on this thread have questioned whether large
corporations do long range planning on the order of 10 years.
The answer is a definite *yes*. I have been involved with
planning 20 years out with quarterly milestones. . . . .
While I have seen (and participated) this kind of planning too, it was only in companies that catered to the pentagon. I never witnessed any situation where an executive's bonus, salary or advancement were tied to those goals. In addition, the half-life of most executives is far shorter than a decade, so even if their performance were tied to such goals, I don't see how it would have much effect on the stock market.
__________________
sgeeeee is offline   Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-19-2004, 10:53 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Book Review-The Next Great Bubble Boom

Quote:
While I believe that demographic concerns are certainly important, these statistic are surely of little value in estimating the problem. Today, a significant percent of our population -- even over the age of 70 -- is still active and does not require institutional care. I don't know if the same were true of the population over 60 in the 1800's (when they represented only 5% of the population).
Obviously not.

I have a clue for the writer about the post 2000 bear market. Stocks were ridiculously overpriced and were driven by tulip mania.

One does not take abberant trend lines and extend them out another 5 years.

To get to 40k (possible, although it would indicate further insanity, not mathematical, calculable or psychologically determinable) we'd have to have something like 25%+ growth annually through 2008.

So people really make money writing books like these, hmm?

(shaking head)
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-19-2004, 12:17 PM   #14
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Book Review-The Next Great Bubble Boom

Quote:
While I believe that demographic concerns are certainly important, these statistic are surely of little value in estimating the problem.
I guess the question to ask is can anything *good* come out of stats like these? * *Most of us use this forum because we used FIREcalc to come up with a worst-case estimate for long-term portfolio performance. * It's worth asking if there are any obvious future trends that might imply an even worse worst-case. * I think this is one.

The best-case outcome of the demographic bubble is probably that people start retiring much later in life, and social security gets indexed to lifespan. * I'm not sure how well that's going to fly with the boomers, but I think we either take that course or we sink the economy.
__________________
wabmester is offline   Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-19-2004, 12:18 PM   #15
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Book Review-The Next Great Bubble Boom

Quote:
So people really make money writing books like these, hmm?
There's a lot of money to be made telling people how to get rich, whether the advice is good or not.
__________________
wabmester is offline   Reply With Quote
Two words, th.
Old 09-19-2004, 03:38 PM   #16
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Two words, th.

Quote:
So people really make money writing books like these, hmm?
Suze Orman.

A few more words-- man, that's an eerily carnivorous portrait-- http://www.suzeorman.com/home.asp .
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Re: Book Review-The Next Great Bubble Boom
Old 09-19-2004, 03:43 PM   #17
Recycles dryer sheets
 
Join Date: Sep 2002
Posts: 252
Re: Book Review-The Next Great Bubble Boom

Quote:
So people really make money writing books like these, hmm?
I'd love to be a financial columnist. You write a few columns and keep on reprinting them with minor changes.
__________________
Whakamole is offline   Reply With Quote
Re: Two words, th.
Old 09-19-2004, 04:53 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Two words, th.

Quote:

Suze Orman.

A few more words-- man, that's an eerily carnivorous portrait-- http://www.suzeorman.com/home.asp .
Aye me bucko...if she's carnivorous then she can eat me. ;D

__________________

__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
What Real Estate Bubble? Art FIRE and Money 76 11-09-2006 03:33 PM
Book Report: "Why Do I Love These People?" Nords Other topics 4 06-12-2006 11:40 PM
Book report: "The Way We Never Were" Nords Other topics 9 05-17-2005 10:57 AM
New Book - America The Broke Telly Other topics 30 11-18-2004 12:28 AM
Good book - The Millionaire Next Door Telly Other topics 18 08-20-2003 04:37 PM

 

 
All times are GMT -6. The time now is 06:56 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.