Harry Dent- A Change in Forecast

Harry S. Dent, economist and writer has had much success at predicting major market moves. In the early 90's he virtually stood alone in predicting that the Dow would hit 10,000 and we all know how that played out. In 2000, he predicted that the Dow would reach 40,000, a forecast that was repeated in his latest book "The Next Great Bubble Boom" (2004). His forecast was that by the end of 2006 the Dow would reach 15,000 and the NASDAQ would hit 3500, by the end of 2008 the Dow would hit 20k and by 2010 the Dow should be flirting with 40,000 with the NASDAQ peaking at 13,000 by late 2009. Last year he was looking for a rapid advance between Oct. '05 and Summer of '06 and stated that if he didn't see a major advance between Nov. '05 and April '06 that he would reexamine his forecast.

Even though the market did advance during this period of time the moves were not rapid enough to keep the previous forecast. The main reason that he gave why the markets did not make the rapid advance expected was due to geopolitical trends and tensions. So the forecast has been lowered. Even though the numbers have been lowered he is still looking for a major advance between now and 2010. The Dow and NASDAQ are still expected to move significantly higher. According to Harry, we are in the midst of a 3 year bubble that will bring the Dow to 15,000 by late 2007 or early 2008 and by late 2009 the Dow should reach 20,000. He is also predicting the NASDAQ will reach 4300-5000 by late 2009.

Once these highs are achieved around 2010, he is looking for a crash into 2012 to early 2013 and then an extended slowdown in the United States into 2022 with stocks and real estate entering a long term decline. (This, Harry wrote, will be similar to the long term bear market in Japan from 1990-2003). He also touches on commodities, believing that the oil and commodity market has peaked for now, will correct well into 2007 with a slowing economy and will become attractive again in late 2007, early 2008 with oil likely seeing $100 a barrel by late 2009.

For now he suggests focusing on large cap growth sectors of technology, financial services, healthcare, Asia and emerging markets. During the crash you should invest in high quality bonds and fixed income. Opportunities after the initial crash will be in Asian economies and the healthcare sector of US economy.
Even though the numbers have been dramatically lowered, if he is accurate there is still a huge move ahead for the markets into 2010. I, for one, will be watching (and investing) very carefully. You can read more about Harry S. Dent and his forecasts at www.hsdent.com.