OUTSPOKEN: A Conversation With James K. Glassman
Remember "Dow 36,000," the 1999 bestseller that promised a "wealth explosion" as the stock market scaled ever higher? Co-author Jim Glassman went back to his only-in-Washington career as a financial columnist, media executive, technology maven, think tank scholar and, most recently, Bush administration point man in the global war of ideas. As for the Dow, well, we know where that went. Glassman sat down last week with Outlook's Carlos Lozada to explain why Barack Obama will disappoint the world's expectations, why al-Qaeda doesn't get the Internet, and why he still thinks the Dow will hit 36,000 -- he's just not saying when. Excerpts:
So, 10 years ago you predicted that the Dow would reach 36,000. Now it has fallen to its lowest level since 1997, and 6000 seems more likely than 36,000. On behalf of investors and readers everywhere: What happened?
I think that people who read my columns would consider me a level-headed person who doesn't get upset, either way, doesn't have tremendous enthusiasms. But it's true that in 1999 Kevin Hassett and I wrote "Dow 36,000," which really made two points: The more important was that for investors who could put their money away for the long term, stocks were a much better investment than bonds. A lot of other people have said that, but we really made the case for stocks.
The second point was that based on our calculations, we believed that stocks would rise to roughly 36,000. We said in the book that it is impossible to predict how long it will take for the market to recognize that Dow 36,000 is perfectly reasonable, but then, of course, we did take a guess.
You said three to five years.
Obviously that hasn't happened. I think the question investors are facing now is, "Is history a guide?" In "Dow 36,000" we looked at history in, I think, a completely reasonable way and said a) you ought to be in the stock market and b) stocks are very much undervalued.
So, does history still prevail? My conclusion is that it does and that the basis of "Dow 36,000" is a good one and people should be in stocks for the long term. But I think reasonable people can differ about that today. We face a really scary time.
Would you be willing to hazard a guess on where the market will be three to five years from now?
No, and I think if there was a mistake in "Dow 36,000," it was that we in that one sentence did hazard a guess. We sort of said two different things: It's impossible to predict when this is going to happen, and then we said, well, we'll predict it anyway.
Do you still think it will hit 36,000?
I have no doubt about that. I think that is absolutely true. But I'm not going to tell you what date.
Do you ever regret having written the book, or regret the title? Do people come up to you at cocktail parties and say "Oh, yeah, Dow 36,000 -- how's that working out for you?"