Comments on: Lessons to Be Learned From Dow 36,000 http://www.ritholtz.com/blog/2009/09/dow-36000-2/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Fri, 19 Mar 2010 23:35:34 -0400 http://wordpress.org/?v=2.9.2 hourly 1 By: Dow 10,000! Now go back to living your life - The Curious Capitalist - TIME.com http://www.ritholtz.com/blog/2009/09/dow-36000-2/comment-page-1/#comment-225802 Dow 10,000! Now go back to living your life - The Curious Capitalist - TIME.com Wed, 14 Oct 2009 20:28:20 +0000 http://www.ritholtz.com/blog/?p=38668#comment-225802 [...] (0) • Related Topics: Wall Streetinvesting Well, we did it. Today we crossed Dow 10,000. Can Dow 36,000 be far [...] [...] (0) • Related Topics: Wall Streetinvesting Well, we did it. Today we crossed Dow 10,000. Can Dow 36,000 be far [...]

]]> By: cjcjc http://www.ritholtz.com/blog/2009/09/dow-36000-2/comment-page-1/#comment-219009 cjcjc Fri, 25 Sep 2009 10:59:55 +0000 http://www.ritholtz.com/blog/?p=38668#comment-219009 The Economist magazine (amongst many others) destroyed their argument at the time. As I recall, even if you accepted their lower (I think they argued for *zero*) risk premium case, they managed to confuse dividend yield with earnings yield, effectively doubling the Dow target from what might have been a "reasonable" 18,000 to 36,000. When this simple error was pointed out needless to say they tried to bluff...and failed dismally. The Economist magazine (amongst many others) destroyed their argument at the time.

As I recall, even if you accepted their lower (I think they argued for *zero*) risk premium case, they managed to confuse dividend yield with earnings yield, effectively doubling the Dow target from what might have been a “reasonable” 18,000 to 36,000.

When this simple error was pointed out needless to say they tried to bluff…and failed dismally.

]]> By: Unsympathetic http://www.ritholtz.com/blog/2009/09/dow-36000-2/comment-page-1/#comment-218306 Unsympathetic Wed, 23 Sep 2009 20:07:26 +0000 http://www.ritholtz.com/blog/?p=38668#comment-218306 Look at the cover art on the book, behind the words "Dow 36,000." It clearly shows a stock that does NOT plateau - rather, it shows something that looks suspiciously like the Dow.. today, if 9/07 was the second peak. Look at the cover art on the book, behind the words “Dow 36,000.”

It clearly shows a stock that does NOT plateau – rather, it shows something that looks suspiciously like the Dow.. today, if 9/07 was the second peak.

]]> By: Gatsby http://www.ritholtz.com/blog/2009/09/dow-36000-2/comment-page-1/#comment-217574 Gatsby Mon, 21 Sep 2009 17:13:31 +0000 http://www.ritholtz.com/blog/?p=38668#comment-217574 The bitch-slap of history once again delivered via Ritholtz. The bitch-slap of history once again delivered via Ritholtz.

]]> By: ndonahoe http://www.ritholtz.com/blog/2009/09/dow-36000-2/comment-page-1/#comment-217491 ndonahoe Mon, 21 Sep 2009 01:01:12 +0000 http://www.ritholtz.com/blog/?p=38668#comment-217491 I re-read the book in 2006-2007. I still have a copy on my bookshelf. In hindsight they had a lousy title. Yet, one of the main points was that stocks pay dividends and bonds pay interest on a regular basis. Many companies have long term records of paying out increasing dividends, much the same as interest is paid on bonds. The conclusion was that stocks were cheap, given the record of dividends being paid...sort of a Dividend Discount model. In reality dividend paying stocks proved to be quite cheap in 2000. From the top in March of 2000 JP Morgan had shown that by June 2007 the stocks in the S&P 500 that paid dividends as a group were up 148% - think of it as Dow 30,000...In June 2007 the Value managers were king having typically more than doubled in 7 years after the peak in the tech market.......however, as we know, many of these value managers were heavy into banks ! In conclusion, there are plenty of stocks (in a diversified portfolio) you can tuck away (buy and hold) and enjoy years of increasing dividends. I remind folks that what we see in the paper is simply the last trade. It is not an indication of the future value of a quality dividend paying company. Hold them to maturity and ignore the "market noise". I re-read the book in 2006-2007. I still have a copy on my bookshelf. In hindsight they had a lousy title. Yet, one of the main points was that stocks pay dividends and bonds pay interest on a regular basis. Many companies have long term records of paying out increasing dividends, much the same as interest is paid on bonds. The conclusion was that stocks were cheap, given the record of dividends being paid…sort of a Dividend Discount model. In reality dividend paying stocks proved to be quite cheap in 2000. From the top in March of 2000 JP Morgan had shown that by June 2007 the stocks in the S&P 500 that paid dividends as a group were up 148% – think of it as Dow 30,000…In June 2007 the Value managers were king having typically more than doubled in 7 years after the peak in the tech market…….however, as we know, many of these value managers were heavy into banks ! In conclusion, there are plenty of stocks (in a diversified portfolio) you can tuck away (buy and hold) and enjoy years of increasing dividends. I remind folks that what we see in the paper is simply the last trade. It is not an indication of the future value of a quality dividend paying company. Hold them to maturity and ignore the “market noise”.

]]> By: Onlooker from Troy http://www.ritholtz.com/blog/2009/09/dow-36000-2/comment-page-1/#comment-217453 Onlooker from Troy Sun, 20 Sep 2009 21:03:46 +0000 http://www.ritholtz.com/blog/?p=38668#comment-217453 Actually not ironic, but coincidental. Fell into that common error. Actually not ironic, but coincidental. Fell into that common error.

]]> By: Onlooker from Troy http://www.ritholtz.com/blog/2009/09/dow-36000-2/comment-page-1/#comment-217452 Onlooker from Troy Sun, 20 Sep 2009 21:01:46 +0000 http://www.ritholtz.com/blog/?p=38668#comment-217452 It's quite ironic that's there's a James Glassman at JP Morgan who's a raging bull right now and thinks we're going to have a vigorous recovery and a great new bull market. What a hoot. It’s quite ironic that’s there’s a James Glassman at JP Morgan who’s a raging bull right now and thinks we’re going to have a vigorous recovery and a great new bull market. What a hoot.

]]> By: going broke http://www.ritholtz.com/blog/2009/09/dow-36000-2/comment-page-1/#comment-217450 going broke Sun, 20 Sep 2009 20:48:17 +0000 http://www.ritholtz.com/blog/?p=38668#comment-217450 "So here is some irrational rationalizing: When the book was first sold it was probably going for 30 bucks. So the price tag relative to the 36,000 prediction looked pretty steep. Now, the book is 32 cents and the Dow is at 9820. So relatively speaking that book is a DEAL!" That is, IF, the book has any useful information... Let's say the DOW did get to 36K, what would the price be of some of the components? WMT is at $50 now, @ DOW 36K, WMT would be ? I'm not smart enough to figure this out. “So here is some irrational rationalizing:

When the book was first sold it was probably going for 30 bucks. So the price tag relative to the 36,000 prediction looked pretty steep. Now, the book is 32 cents and the Dow is at 9820. So relatively speaking that book is a DEAL!”

That is, IF, the book has any useful information…

Let’s say the DOW did get to 36K, what would the price be of some of the components?
WMT is at $50 now, @ DOW 36K, WMT would be ?

I’m not smart enough to figure this out.

]]> By: Cursive http://www.ritholtz.com/blog/2009/09/dow-36000-2/comment-page-1/#comment-217435 Cursive Sun, 20 Sep 2009 19:02:06 +0000 http://www.ritholtz.com/blog/?p=38668#comment-217435 @BR Yes, I'm chuckling because the permabulls, e.g. Ken "the Charger" Fisher, will take credit if that is the route. For doctrinaire permabulls, we are all supposed to be fully invested, all the time. You wouldn't want to miss the ride from 6,440 to 36,000, would you (wink, wink)? What's a little volatility among friends? @BR

Yes, I’m chuckling because the permabulls, e.g. Ken “the Charger” Fisher, will take credit if that is the route. For doctrinaire permabulls, we are all supposed to be fully invested, all the time. You wouldn’t want to miss the ride from 6,440 to 36,000, would you (wink, wink)? What’s a little volatility among friends?

]]> By: TheTradingReport » Blog Archive » Worst Think-Tank Fellows of All Time: Kevin Hassett and James K. Glassman http://www.ritholtz.com/blog/2009/09/dow-36000-2/comment-page-1/#comment-217433 TheTradingReport » Blog Archive » Worst Think-Tank Fellows of All Time: Kevin Hassett and James K. Glassman Sun, 20 Sep 2009 18:50:15 +0000 http://www.ritholtz.com/blog/?p=38668#comment-217433 [...] Lessons to Be Learned From Dow 36,000 | The Big Picture: [...] [...] Lessons to Be Learned From Dow 36,000 | The Big Picture: [...]

]]>