The Dow Jones industrial average today surged to more than 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 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 DJIA 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 in fact 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, thoughtful reader?

Speaking of prices, used copies of Dow 36,000 are available from Amazon for as little as $1.99 (it was originally issued at $25). If the DJIA does continue its amazing ascent, I predict that the book’s secondary market price will rise accordingly.

Dow 36,000 suggested its prediction might be fulfilled in 10 years. At the end of 1999, the DJIA was 11,497. Ten years later, at the end of 2009, it was 10,428, one thousand points farther from 36,000 than it started off. In the meantime, it had seen the March 2009 low of 6,507. From that low, however, the DJIA has now covered 20,000 of the 30,000 points needed for the Dow 36,000 forecast one day to come true.

Or perhaps it hasn’t. A 1999 dollar is worth a lot more than a current dollar, needless to say. So let’s adjust Dow 36,000 for inflation.

In January 2018 dollars, the book would need to be retitled:  Dow 53,000.

Image by Pavel Ignatov


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