The Trouble with Harry, Dent, Robert, and Taleb-Fear Sells

Remember “The Trouble with Harry”? Hitchcock’s dark comedy, not a dead body in Vermont. This week’s episode tackles a different kind of trouble: Harry Dent’s fear-mongering predictions of the “Crash of a Lifetime” in 2024.

For over 20 years, Dent’s been a fixture in financial media, peddling doomsday scenarios and claiming imminent market crashes. But how accurate has he been? Let’s dive into his track record and see if his latest prediction holds water.

Dent’s misses:

• 1999: Predicted a roaring 2000s with a Dow at 35,000. Reality: Dow peaked at 12,000 and the decade was a bust.
• 2006: Touted “The Next Great Bubble Boom.” Investors enjoyed a short run before the 2008 financial crisis.
• 2009: Published “The Great Depression Ahead” after the market bottomed. Missed the subsequent bull run.
• 2017: Predicted Dow at 3000-5000 after Trump’s election. Dow currently 7-12x higher.
• 2021: Called a -45% crash by June, then doubled down with an -80% by Thanksgiving. Market hit new highs.
• 2022: Finally hit a single with a -35% downturn, but missed the year-end rally.
• 2023: Doubled down on recession and another “big wave down.” Bitcoin rallied 200%, S&P 500 up 20%.

Why fear sells:

Dent’s predictions might be shaky, but they’re lucrative. Fear grabs attention, drives clicks, and sells books and newsletters. Remember Don Henley’s “Dirty Laundry”? People love watching train wrecks, and financial doomsaying capitalizes on that.

But is Dent a reliable guide?

His history speaks for itself. He’s not a licensed fiduciary, so his interests (book sales, etc.) might not align with yours. While recessions and crises are inevitable, Dent’s timing has been consistently off.

So, what about 2024?

We predict more volatility, but no “Crash of a Lifetime” based on Dent’s past performance. Instead, focus on long-term investing strategies and avoid letting fear-mongering cloud your judgment.

Resources:

• Roger Wolher’s research: [link to Wolher article]
• Don Henley’s “Dirty Laundry”: [link to song]

Don’t let the trouble with Harry Dent derail your financial journey. Stay informed, invest wisely, and remember: fear sells, but it’s not always a reliable investment advisor.

 

Transcript:

The Trouble with Harry is a 1955 dark comedy directed by Alfred Hitchcock. Yes, you heard that correctly. A comedy directed by Hitchcock.

The film primarily takes place during a sunny autumn day in the countryside in Vermont. The fall scenery sets an ideal New England tone. The story is about how nine residents of a small Vermont town react when the corpse of a man named Harry is found on a hillside. However, the film is not a normal Hitchcock murder mystery but rather a comedy-drama with a bit of romance thrown in. In the end, viewers learn that Harry died of natural causes. There was no murder. No crime. No suspect to jail. There was no foul play at all. No harm, no foul. Move along; nothing to see here, folks.

This brings me to the title of this week’s episode, The Trouble with Harry…Dent..fear sells. Like clockwork, renowned, and I use that term, carefully, demographic economist Harry Dent is out with his now near exact copy of his annual, end of the world is upon us, the stock market will crash forecast for 2024. This year’s remake is titled, Crash of a Lifetime, coming in 2024.

Investors, why do we keep hearing the same thing from Mr. Dent, Rich Dad, Poor Dad, or Mr. Black Swan, year after year? Largely because permabear stock market appearances on TV bring in baby boomer TV viewers, which drives advertising dollars. Doomsday economic and black swan stock market calls bring in views on social media and click-throughs from nearly retired, semi-retired, or just always fearful investors, driving… Advertising dollars to social networks. Investors, remember the lyrics to Don Henley’s hit song “Dirty Laundry? https://www.youtube.com/watch?v=fwgJgTL5JmE

He could have substituted almost any phrase in the financial markets in his lyrics, and the song would have been rang just as true. People like watching train wrecks, and fear sells. It sells often, and it sells well. Directly, selling fear is an outright money maker. Most often, not for you as an investor, but for the purveyor of doom, gloom and the end-of-the-world forecast.

At the end of the day, we keep hearing from these same individuals, who almost never actually manage money for a living but rather sell books and newsletter subscriptions, the Harry Dent’s, the Robert Kiyosaki’s of Rich Dad Poor Dad fame, because those services are not regulated by the SEC or other investment

supervisors. We don’t keep hearing about them because their forecasts have proven omniscient but rather because they have personality, and at the end of the day, fear sells. Particularly fear in the financial markets.

I’m going to pick on Harry Dent and his forecasting ability for the last 20+ years. Why? Because he is near the top of the list of doomers that our clients seem to ask about time and time again, regardless of how wrong he’s been. As a full disclosure, for a short time, I was one of a group of portfolio managers during the early launch of the AIM Dent Demographic Fund in 1999. One can do timeline Google searchers and see for yourself, while loudly and confidently broadcast in books, on TV, and elsewhere, how poorly Mr. Dent’s forecasts have been. That or you can read from Roger Wolher’s research done for his December 2021 article “Harry Dent’s Stock Market, Economic Predictions, 1999-2021: How did they turn out? You’ll find a link to that great article in the description below.

My quick summary of Mr. Dent’s last 25 years and Mr. Wolher’s article is as follows.

Mr. Dent: In October 1999, Mr. Dent released his best-selling book “The Roaring 2000s: Building the Wealth and Lifestyle You Desire in the Greatest Boom in History,” published in October 1999. The tagline? He predicted that the stock market would experience a significant boom during the 2000s. Mr. Dent predicted that the Dow could hit 35,000 in the upcoming decade, based largely on Mr. Dent’s economic specialty, demographic changes. He cited the Baby Boomer generation reaching their savings window for his optimism. At the time, the Dow was trading at around 11,000. What happened? The Dow peaked at just under 12,000 on January 14, 2000, and went? Absolutely nowhere, with very high volatility for the next ten years. 2000 didn’t enter the roaring 20s as Mr. Dent surmised, but instead, the lost decade of no stock returns net.

Mr. Dent: in January 2006 published another book with a similarly optimistic view titled, “The Next Great Bubble Boom: How to Profit from the Greatest Boom in History.” If you followed his advice, you did have a good 18-month run in the markets before the onset of the Great Financial Crisis that started to brew in mid-2007 and before the market truly crashed in the second quarter of 2008 and the first quarter of 2009.

Having been twice burned by being overly optimistic about the economy and markets, Mr. Dent decided to pull a 180-degree turn and published his next book, “The Great Depression Ahead: How to Prosper in the Crash,” in? December of 2008. Of course, this could be Mr. Dent’s worst call in the last 25 years, as since the stock market bottomed on March 9, 2009, we have seen returns in most US stock markets.

More recent Harry Dent articles and headlines:

December 2016: In the wake of Donald Trump being elected, Mr. Dent predicted the DOW to 3000-5000 on CNBC. QAs of this writing, the Dow is between 7-12x higher than that range.

In March of 2021, Mr. Dent went further out on a limb, calling both price and time for his coming crash. The market would drop over -45% by the end of June, said Dent, making the GFC look like a cakewalk. Of course, that didn’t happen. Oops. But Harry was unflustered and doubled down in July 2021, calling for equities to fall by -80% before Thanksgiving. Why not? He didn’t get the call right four months ago, but go all in with your money. Get out! And what happened? The market went on to make major new all-time highs near S&P 500 4800 into yearend 2021.

Unflustered, near all-time highs, Harry once again called for the biggest stock market crash of our lifetime to hit in 2022. And well, as luck would have it, we did get a downward move in stocks that mimics a recession -35% in real terms. So, after almost 20 years of being consistently wrong, Mr. Dent did hit a single to deep right field in the first half of 2022.

Unfortunately for investors intent on following Mr. Dent’s advice, he reverted to old form in 2023, doubled down, and predicted both a recession in 2023 and another “big wave down” in stocks for 2023. Dent predicted that Bitcoin and cryptocurrencies, in general, would be the hardest-hit assets in 2023. Wrong on all accounts, in a big way. Bitcoin rallied well over 200% in 2023. The S&P500 rallied over 20%. Of course, many other financial soothsayers also got 2023 wrong. Either the economy or stocks or both wrong like Mr. Dent.

For those investors who feel compelled to listen to Mr. Dent on TV or read his books, what’s he saying for 2024, and what do I think about it? He’s saying nearly the exact same as he has since he started selling fear in 2008 near the stock market lows instead of selling the message of Greed in late 1999 near the

Dot.com top. His call is the: “Crash of a Lifetime is coming in 2024”, and you should sell everything as there is nowhere to hide.

Investors, will Mr. Dent finally be correct in his views of the stock markets in 2024. Views of the financial markets, not economic theories? I don’t know, but the history of the stock markets and the history of Harry Dent’s predictions is no. Mr. Dent might be a great book salesman and a great self-promotor, but he’s not someone the investing public should be listening to for financial advice. That’s the trouble with Harry and the others like him, like Robert Kiyosaki; they are not fiduciaries and as such, are not required to put investors’ interests first, rather they can put their own self-interest, be its book sales, newsletter subscriptions, or clicks and ad revenue, first.

Will we have more recessions in the future? Yes, Will we have another financial crisis in my lifetime? The odds say yes. Sorry, Janet Yellen. But the likes of Harry Dent and Robert Kiyosaki are not the ones that are likely to call them both in price and time, which is what would matter for your money.

For now, what do we see for 2024? More of the old normal, which should include a spike in volatility almost right out of the gate.

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