Who Is Harry S Dent, Jr And Why You Should Know
Who is Harry S.
Dent, Jr.
? Harry S.
Dent, Jr.
is an accomplished financial advisor and author.
He has written a number of books predicting economic trends since 1992.
He uses a combination of economic cycles and demographic studies to predict the financial future.
Dent obtained a MBA from Harvard and has worked as a consultant.
Today, in addition to writing books on his methodology he publishes the HS Dent Forecast newsletter and the HS Dent Perspective.
He also is head of the HS Dent Financial Advisor Network.
Dent is best known for his four books: The Great Boom Ahead (published 1992) The Roaring 2000s (published 1999) The Next Great Bubble Boom: How to Profit from the Greatest Boom in History, 2005 - 2009 (published 2004), and The Great Crash Ahead (published 2011) What does Harry S.
Dent, Jr.
Predict In The Great Boom Ahead Dent forecast a strong economic period in the 1990s for the U.
S.
when most economists and pundits were predicting a down period.
In The Roaring 2000s Dent predicted the economic boom of the early 2000s which came true.
His central thesis was that the large Baby Boom Generation (those born between 1946 and 1964) would be fuel a major period of consumption during this period which, when combined with other economic cycles, would bring about a strong and growing economy.
In The Next Great Bubble Boom he repeated much of the material from the second book and advised investors to take advantage of an economic boom he predicted would follow the bursting of the tech bubble in the early 2000s.
Again, he proved largely accurate in the outcome.
In the earlier books he predicted that the boom of the 2000s would burst as the largest demographic group in the nation, the Baby Boomers, entered the last period of high spending.
In his most recent book, The Great Crash Ahead, (2011) Dent predicts not only that the economy will experience a significant downturn in the latter part of the first decade of the 2000s but that this downturn would be sustained for at least a decade followed by a slow recovery.
This prediction is based in part on the same cycles and demographics that his earlier books relied upon, but adds to it the shrinking workforce in the U.
S.
combined with the unprecedented corporate, government and personal debt.
Dent argues that consumers, investors, business and the government became drunk with what appeared to be an endless period of affluence and rising markets including real estate.
All these rising markets were, as they always have been in the past, a growing bubble which could not be sustained and would ultimately crash.
In 2007-2010 the markets and especially housing of course did crash.
He argues that the immense public and private debt is not sustainable and there will not be a means to pay it off.
This will require the writing off of trillions of dollars in debt leading to massive deflation, under production, higher unemployment and what would otherwise be called an Economic Depression.
He also argues that there would be a "false recover" in 2011-2012 leading to a second and greater crash of both the housing and equity markets.
He sees the Dow Jones dropping from the $13000 level to $3000 during the 2012-2014 period.
He says that as of 2011 we are four years into a 12-15 year downward cycle driven by demographics combined with a giant housing and credit bubble which must be deflated.
He then sees a very gradual recovery during the 2015-2018 period possibly taking a bit longer.
He does not forecast a genuine booming economy until 2019-2024.
Is Mr.
Dent Correct? Dent has many detractors.
Some argue that his reliance on cycles and demographics is too simplistic and others argue that it is over complex but misses other vital factors.
Gene Epstein of Barrons, for example, published a critique on line of Dent's work and his reliance on demographics and consumption in September 2011.
It is true that not every prediction in Dent's books have been absolutely accurate and his timing may have missed a bit when he earlier predicted the late 2000s fall would occur later than it did.
It would seem however that the criticisms miss the point.
Dent has been largely correct in his predictions of what would occur whether his critics are prepared to agree with his methodology or not.
Anyone who predicts economic trends for years and decades in advance is bound to attract detractors.
Likewise anyone who sells books with dramatic titles predicting boom times and crashes will also draw serious criticism.
No one will really know how accurate Dent's predictions for the next decade are until that time has passed.
It seems fairly safe to say however that given Dent's largely accurate track record it would be unwise to ignore him.
Even if he has it only partially right his data and his conclusions point to hard times ahead for the U.
S.
and for much of the world.
(He also makes predictions for the economies of much of the rest of the world.
) Dent does not recommend specific stocks nor for the most part even stock categories to invest in.
For the short term he advises removing one's money from the stock market and placing it in bonds, first government bonds and later corporate bond.
What You Should Do Now To the extent you choose to follow Dent's recommendations from his latest work, The Great Crash Aheadhere are the bottom line ideas he offers: 1.
Understand this is not "your father's economy".
That is, the financial advice of obtaining a diverse stock and bond portfolio and holding for the long term may not be sound advice for the next decade.
2.
If you do choose to invest in stock concentrate on businesses that meet actual needs and desires of the marketplace now driven increasingly by a less consumptive retiring population.
3.
Dent calls debt the grim reaper.
He counsels paying down debt as quickly as possible and avoiding new debt as much as possible.
For many this means foregoing owning a home and renting instead.
He sees a major deflationary period ahead with little real growth in home values.
4.
He suggests you increase your cash flow as cash will be critical.
He advises creating additional streams of income from both passive and active investments or a second business.
He urges acquisition of municipal and US treasury bonds, especially those that generate a coupon or cash flow.
He also suggests that as fewer people can afford to buy homes the rental market will grow.
It may be a good time, depending on the all-important location issue, to consider investing in residential rental properties.
He cautions against commercial rentals at present.
5.
He sees interest rates spiking in 2012 and then dropping again through 2015 with some fluctuations thereafter.
6.
He suggests cautious return to equity markets in late 2013 or later.
7.
He sees continued high unemployment with the worst to come in the 2013-2015 period.
Dent says a lot more than this and it is beyond the scope of this article to discuss all his recommendations or the analysis behind them.
Is Dent right? No one can answer that.
However, to whatever extent he is right, in both his analysis and his conclusions; it may prove profoundly foolish to ignore him.
Dent, Jr.
? Harry S.
Dent, Jr.
is an accomplished financial advisor and author.
He has written a number of books predicting economic trends since 1992.
He uses a combination of economic cycles and demographic studies to predict the financial future.
Dent obtained a MBA from Harvard and has worked as a consultant.
Today, in addition to writing books on his methodology he publishes the HS Dent Forecast newsletter and the HS Dent Perspective.
He also is head of the HS Dent Financial Advisor Network.
Dent is best known for his four books: The Great Boom Ahead (published 1992) The Roaring 2000s (published 1999) The Next Great Bubble Boom: How to Profit from the Greatest Boom in History, 2005 - 2009 (published 2004), and The Great Crash Ahead (published 2011) What does Harry S.
Dent, Jr.
Predict In The Great Boom Ahead Dent forecast a strong economic period in the 1990s for the U.
S.
when most economists and pundits were predicting a down period.
In The Roaring 2000s Dent predicted the economic boom of the early 2000s which came true.
His central thesis was that the large Baby Boom Generation (those born between 1946 and 1964) would be fuel a major period of consumption during this period which, when combined with other economic cycles, would bring about a strong and growing economy.
In The Next Great Bubble Boom he repeated much of the material from the second book and advised investors to take advantage of an economic boom he predicted would follow the bursting of the tech bubble in the early 2000s.
Again, he proved largely accurate in the outcome.
In the earlier books he predicted that the boom of the 2000s would burst as the largest demographic group in the nation, the Baby Boomers, entered the last period of high spending.
In his most recent book, The Great Crash Ahead, (2011) Dent predicts not only that the economy will experience a significant downturn in the latter part of the first decade of the 2000s but that this downturn would be sustained for at least a decade followed by a slow recovery.
This prediction is based in part on the same cycles and demographics that his earlier books relied upon, but adds to it the shrinking workforce in the U.
S.
combined with the unprecedented corporate, government and personal debt.
Dent argues that consumers, investors, business and the government became drunk with what appeared to be an endless period of affluence and rising markets including real estate.
All these rising markets were, as they always have been in the past, a growing bubble which could not be sustained and would ultimately crash.
In 2007-2010 the markets and especially housing of course did crash.
He argues that the immense public and private debt is not sustainable and there will not be a means to pay it off.
This will require the writing off of trillions of dollars in debt leading to massive deflation, under production, higher unemployment and what would otherwise be called an Economic Depression.
He also argues that there would be a "false recover" in 2011-2012 leading to a second and greater crash of both the housing and equity markets.
He sees the Dow Jones dropping from the $13000 level to $3000 during the 2012-2014 period.
He says that as of 2011 we are four years into a 12-15 year downward cycle driven by demographics combined with a giant housing and credit bubble which must be deflated.
He then sees a very gradual recovery during the 2015-2018 period possibly taking a bit longer.
He does not forecast a genuine booming economy until 2019-2024.
Is Mr.
Dent Correct? Dent has many detractors.
Some argue that his reliance on cycles and demographics is too simplistic and others argue that it is over complex but misses other vital factors.
Gene Epstein of Barrons, for example, published a critique on line of Dent's work and his reliance on demographics and consumption in September 2011.
It is true that not every prediction in Dent's books have been absolutely accurate and his timing may have missed a bit when he earlier predicted the late 2000s fall would occur later than it did.
It would seem however that the criticisms miss the point.
Dent has been largely correct in his predictions of what would occur whether his critics are prepared to agree with his methodology or not.
Anyone who predicts economic trends for years and decades in advance is bound to attract detractors.
Likewise anyone who sells books with dramatic titles predicting boom times and crashes will also draw serious criticism.
No one will really know how accurate Dent's predictions for the next decade are until that time has passed.
It seems fairly safe to say however that given Dent's largely accurate track record it would be unwise to ignore him.
Even if he has it only partially right his data and his conclusions point to hard times ahead for the U.
S.
and for much of the world.
(He also makes predictions for the economies of much of the rest of the world.
) Dent does not recommend specific stocks nor for the most part even stock categories to invest in.
For the short term he advises removing one's money from the stock market and placing it in bonds, first government bonds and later corporate bond.
What You Should Do Now To the extent you choose to follow Dent's recommendations from his latest work, The Great Crash Aheadhere are the bottom line ideas he offers: 1.
Understand this is not "your father's economy".
That is, the financial advice of obtaining a diverse stock and bond portfolio and holding for the long term may not be sound advice for the next decade.
2.
If you do choose to invest in stock concentrate on businesses that meet actual needs and desires of the marketplace now driven increasingly by a less consumptive retiring population.
3.
Dent calls debt the grim reaper.
He counsels paying down debt as quickly as possible and avoiding new debt as much as possible.
For many this means foregoing owning a home and renting instead.
He sees a major deflationary period ahead with little real growth in home values.
4.
He suggests you increase your cash flow as cash will be critical.
He advises creating additional streams of income from both passive and active investments or a second business.
He urges acquisition of municipal and US treasury bonds, especially those that generate a coupon or cash flow.
He also suggests that as fewer people can afford to buy homes the rental market will grow.
It may be a good time, depending on the all-important location issue, to consider investing in residential rental properties.
He cautions against commercial rentals at present.
5.
He sees interest rates spiking in 2012 and then dropping again through 2015 with some fluctuations thereafter.
6.
He suggests cautious return to equity markets in late 2013 or later.
7.
He sees continued high unemployment with the worst to come in the 2013-2015 period.
Dent says a lot more than this and it is beyond the scope of this article to discuss all his recommendations or the analysis behind them.
Is Dent right? No one can answer that.
However, to whatever extent he is right, in both his analysis and his conclusions; it may prove profoundly foolish to ignore him.
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