Alex Pollock for the R Street Institute: The Dow Jones Industrial Average has surged past 26,000. Observing this historical stock price boom should make us recall a book and a forecast published in 1999, at the top of the tech-stock bubble: Dow 36,000, by James Glassman and Council of Economic Advisers Chairman Kevin Hassett. As wildly over-optimistic as this book was in its day, does its forecast look less wild now, 18 years later?
How high can a price go? Higher than you thought. Also lower, of course. A price has no physical reality, but is the interaction of human expectations, strategies and emotions, naturally including periodic irrational exuberance.
Can you remember now how you felt about the stock market just two years ago? On Jan. 19, 2016, the Dow Jones closed at a little more than 16,000. On that day, what odds would you have set on its closing more than 60 percent higher than that by today, as it has done? Not high odds, I’ll bet.
I would take another 38 percent increase from the current level to get to 36,000. Your odds on that, say in the next two to three years?
Speaking of prices, used copies of Dow 36,000 are available from Amazon for as little as $1.99. If the Dow Jones Industrial Average does continue its amazing ascent, I predict that the book’s secondary market price will rise accordingly.
Don’t let Amazon force local politicians into a bidding war