We have talked here before about Harry Dent, financial advisor, analyst and bestselling author. His latest book, The Great Depression Ahead, published in 2008, continued the apparently flawless predictive capacity of Dent to use macro demographic data and modeling. He predicted the Bubble Boom of the early 2000s, in a previous book, and had predicted all along that there would be a downfall in 2009-2010 that would last for the better part of a decade.
On November 17, 2009 Dent seemed however to take a second look at this model and lose his footing in the process. In a post at http://www.hsdent.com/blog/2009/11/17/funding-another-bubble-what-choice-do-we-have/#more-757
it suggests that his model made assumptions for the last decade that have not turned out. He did not anticipate the heavy investment in housing or commodities it seems. After writing two solid books full of complex modeling and data he says now we are “breaking new ground” and there is no telling where this will take us.
Alright, in all fairness the blog was not signed by Dent but by Rodney Johnson. But Johnson is President of Dent’s company and a regular on his blog.
What is up here? Is Dent/Johnson serious? Do we throw away his last 25 years of models and his books too and wait and see what will happen next?
For those who have studied Dent’s work and have been impressed this is at the least disconcerting and at most a big disappointment. His final advice is to “ I think the key is to remain as flexible as possible, willing to protect your investments at a moment’s notice. Investing has just gotten much harder than it was for the last 25 years.” Well OK, what else is new? I could have given that advice.
Perhaps this is just a good time to remember that no predictions are infallible and that investing is risky, no matter how much data you have or how snazzy your models might be.
The lesson is to broaden your reading – do not put too many eggs in one basket. I have not written Dent off – his ideas are still very compelling – but they warrant some caution in their application.
Wishing you Success and Prosperity,
Daniel R. Murphy
Wishing you well,
Daniel R. Murphy
Educating people for building wealth, adapting to a changing future and personal development.