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BULLISH DOW SEERS ARE WAY OFF THE MONEY

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Social Links for John Aidan Byrne
Published July 22, 2007, 9:00 a.m. ET

There’s nothing like the movement of the Dow past a plateau to bring the fortunetellers on Wall Street back to peddling forecasts of extraordinary new highs.

Forget Dow 14,000, where the index parked on Thursday for the first time before slumping on Friday. Those with the clearest crystal balls on Wall Street have already been there, forecasted that.

A look back at some of the Dow forecasting books published in the last 10 years reveals some interesting takes on growth.

James K. Glassman and Kevin A. Hassett, who co-authored “Dow 36,000” in 1999, naturally feel stocks are still undervalued and have quite a bit of growth left in them.

“Stocks are still cheap for long-term holders,” Glassman said in an interview last week. “That was the point of the book and is still true.” The book was written before the dot-com massacre – a meltdown that discredited many of the Dow forecasting books.

While the duo didn’t pinpoint when the Dow would hit 36,000, they suggested it could come around 2005.

Ooops.

Robert Zuccaro’s December 2001 book, “Dow 30,000 by 2008” was a little less bullish – although more than doubling the 30-stock industrial average in the next 5½ months is probably out of the question.

In 1999, David Elias wrote “Dow 40,000” and predicted that with just 9 percent annual growth the Dow would hit the big 4-0 in 2016. Of course, if the Dow grew by his 9 percent annual yardstick now, it would hit just 30,000 in nine years.

Nice try, Dave.

Perhaps the most bullish of the Wall Street fortunetellers is Charles (Chuck) W. Kadlec, chief investment strategist for Seligman Advisors in New York. In his 1999 book, “Dow 100,000, Fact or Fiction,” Kadlec writes that the 100K mark was doable – needing just 11.1 percent annual growth to hit the mark in 2020.

“Do I think we are on a trend that will take the Dow to 100,000? Yes,” said Kadlec said in an interview last week.

If the Dow posted Kadlec-inspired 11.1 percent annual gains for each of the next 13 years, by 2020 it would hit just 55,000 – just half of that hallowed mark.