DOW 25,000 By 2011 - Part 3 of 10

There is evidence that we are taking the 1920's bull market with a 81 year lag... Just take what happened in the 1920's and add about 81 years and you will get today's market...Show more

In the early 1990s, he predicted that the DOW would reach 10k. This prediction was met with much skepticism. In 2000, he predicted that the DOW would reach 40k, a prediction which was repeated in his 2004 book. In his book, he also predicted the Nasdaq will reach 13-20k. In January 2006, he predicted that the DOW would reach 14-15,000 by the end of the year. On 20th December 2006, it stood at 12,463- 11% below the lower end of his prediction.

Dent makes heavy use of charts, cycles and trends apart from his demographic theories in predicting future economic and stock cycles. His work is primarily based on the assumption that most long term stock market performance can be explained by studying long term trends and charts from the past. His critics question the assumption that clues to all major stock market events can be found in the relatively short history of well functioning stock markets in the world. His work has also been criticized for heavy use of data dredging- where it is easy to find patterns in past data and assign predictive powers to them when many such patterns occur in every data collection purely by chance.

While Dent's accuracy in calling long term demographic impact is impressive, his record on calling short term stock market behaviour is patchy, as shown in his recent backtracking on his original predictions of Dow 40,000. In November 2006, Dent made a dramatic change to his forecast for the new 'bubble', now estimating the Dow topping at 20,000 and the Nasdaq at 5,000 by late 2009. The key reasons cited by him were geopolitical tensions.

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