A year later, in 2002, he wrote this in a Wall Street Journal op-ed:
What went wrong? Actually, nothing. Despite its flamboyant title, “Dow 36,000” was a book of sober explanation, not of wild prognostication. We calculated that 36000 was the point at which the 30 stocks that comprise the Dow Industrials would be fully valued, and we warned that “it is impossible to predict how long it will take.”
But picking target prices was not what our book was about—nor is it what investing is about.
In other words, never mind the title of my book!
By April of 2007, with credit-default-swap indices already flashing red on a major securitization-market malfunction, Glassman took to the pages of Kiplinger’s to write about “Why Stocks Are a Bargain,” again, six months before the peak of the market.
That’s a whole lotta wrong.
This is all a very long windup for a post about a column that ran yesterday at Bloomberg View by Glassman headlined “Dow 36,000 Is Attainable Again.” I’m not sure whether to laugh with Bloomberg or to laugh at them for running it. Did they run it ironically or because they thought it was worthwhile? Either way, it doesn’t help the editorial page’s credibility, and it’s worth noting that Hassett had a plum Bloomberg columnist gig for years.
It seems Glassman has been waiting for the moment when he could say, “See! I told you the Dow would get to 36,000!” and be vindicated for all time. Now, with stocks finally returning to 2007 levels, he says the magic number is in sight, even if it would require the stock market to more than double from where it is now, be nearly two decades after his book, and still come up many trillions of dollars short:
From its low of 6,547 on March 9, 2009, the Dow has risen 117 percent. Another 117 percent in four years would put it at 31,022, just 16 percentage points shy of the magic number
In the long run we are all dead.
Glassman actually writes this sentence, still holding on to hopes that P/Es in the triple digits will become standard:
One way stocks could jump to 36,000 quickly would be for fears to subside and P/E ratios to rise.
Well, no kiddin’. Another bubble would be great news for stock prices and for the never-ending Quest for Dow 36,000. Bubbles are way easier than growing corporate profits, particularly when median incomes have been shrinking. The Dow’s P/E is at 15.7, which is actually already higher than the historical average.
But my favorite part of this column is where Glassman says that investors would come around to fully valuing stocks and send the Dow to 36,000 if only various right-wing think tank policies would be adopted, like tax cuts, deregulation, school vouchers, and getting old people off the dole and back to work:
To get it, we need policy changes that will create a better environment for businesses to increase revenue, profits and jobs: a rational tax system that keeps rates low and eliminates special deductions and credits; immigration laws that encourage the best and the brightest to move here and stay; entitlement reform to bring down costs and provide incentives for productive seniors to keep working; sensible environmental, workplace and financial regulation that allows entrepreneurship to thrive; a K-12 education system that boosts student achievement and holds teachers, administrators and politicians accountable …
Scratch that. My favorite part is the disclaimer, where it says “James K. Glassman is executive director of the George W. Bush Institute.” That sounds about right.
More in The AuditRead More »