Remember the guy in 2000 who predicted the Dow would go to 35,000? It was Harry Dent, author of The Roaring 2000’s. In that book, he argued that in the long run, stocks are no more risky than bonds, and therefore should have the same discount rate applied to their earnings. Conceptually his math was correct. If you apply a very low discount rate to a stream of earnings (or cash flow), you can produce enormous theoretical stock market values. It is now obvious his inputs into his discounted cash flow model were way off. His book was published right around the peak of the market in 2000.

So what is the good news? According to Forbes Magazine, Mr. Dent now has a book called, “The Great Depression Ahead.” He predicts the Dow is going to 3600. Let’s hope this prediction turns out to be as a good a contrarian indicator as his last one was.