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

Episode Date: December 29, 2023

Investors, Happy New Year! It's December 29th, and we're getting ready for New Year's Eve. Thank you for joining us all year. The problem with the New Year's is it usually brings out the Dumers. And with that, I bring you this week's content. Investors, The Trouble with Harry is a 1955 dark comedy directed by Alfred Hitchcock. Yes, you heard that right. Alfred Hitchcock, a comedy directed by him. The film primarily takes place during a sunny autumn day in the countryside in Vermont.

The fall scenery sets an ideal New England tone. Investors, the story is about how nine residents of a small Vermont town react when the corpse of a man named Harry is found on the hillside. However, the film is not a normal Hitchcock murder mystery, but rather, a comedy drama with a little bit of romance thrown in. In the end, viewers learned that Harry died of natural causes. There was no murder, there was no crime, there was no suspect to jail. There was no foul play at all, no harm, no foul. Move along, nothing to do. see here, folks, which 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 nearly exact copy of his annual end of the world is upon us. 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? Or, from Rich Dad, Poor Dad, or Mr. Black Swan, year after year, largely because Permabair stock market appearances on TV

bring in Baby Boover 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 in social media networks. Investors remember the lyrics to Don Henley's hit song dirty laundry. Well, he could have just substitute almost any phrase in the financial markets in his lyrics,

and a song would have been just about the same. People like watching train wrecks in fear sells. It sells often and it sells well. Directly, selling fear is an outright moneymaker. It's a moneymaker 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 manage money for a living, but rather sell books and newsletter subscriptions.

The Harry Dent's, the Robert Kayasaki'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. Okay, so I'm going to pick on Harry Dent and his forecasting ability for the last 20-plus years. Why? Because he's near the top of the list of doomers that our clients seem to ask time and time again about, 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 at AIM in 1999. One can do a timeline Google search and see for yourself how 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 Woller's research done in December of 2021, titled Harry Dent's Stock Market Economic Predictions, 1999 through 2021. How'd 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. Woller's article is as follows. Flashback to October 1999, Mr. Dent released his best-selling book, The Roaring 2000s, Build the Wealth and Lifestyle You Desire in the Greatest Boomer in History. published in October of 1999. What was his tagline? He predicted the stock market would experience a significant boom during the 2000s.

Mr. Dent predicted that the Dow would hit 35,000 in the upcoming decade, largely based on Mr. Dent's economic-specific demographic changes. He cited the baby boom generation reaching their savings window for his optimism. At the time, the Dow was trading at around 11,000. So what happened? The Dow peaked at just under 12,000. 12,000 on January 14, 2000, and went absolutely nowhere with a very high amount of volatility for the next 10 years. 2000 didn't enter in the roaring 20s as Mr. Dent surmised, but instead, the lost

decade of no net stock returns. Mr. Dent in January of 2006 published another book with similarly optimistic view titled The Next Great Bubble Boom, How to Profit from the Greatest Boom in History. If you followed his advice, he did have a good 18-month run in the markets before the onset of the great financial crisis that started to brew in June of 2000, and before the market truly crashed in the second half of 2008 and early 2009. So Mr. Dent, having been twice burned by being overly optimistic about the economy in the markets, what did he do? He decided to pull a 180-degree turn and published his next book, The Great Depression Ahead, How to Prosper in a Craft. What was the timing on that? December 2008. Of course, this could be Mr. Dent's worst call in the last 25 years since the stock market bottomed on March 9th, 2009, and we've seen significant returns in the stock market ever since. Investors' more recent Harry Dent articles and headlines December 2016. In the wake of Donald Trump being elected president, Mr. Dent predicted Dow 3,000 to 5,000 on CBC. As of this writing, the Dow is between 7,000, and 12 times 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 minus 45%, by the end of June, said Dent, making the great financial crisis look like a cakewalk. Of course, that didn't happen. Oops. But Harry was unflustered and doubled down in July of 2021, calling for equities to fall by,

minus 80% before Thanksgiving. Why not? If 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, 4,800 into year-end, 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, he did get a downward move in the stock market that mimics a recession of minus 35% in real terms in the first half at 2022. 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 who are listening to Mr. Dent's advice, he reverted to his old form in 2023, doubled down and predicted both a recession in 2023 and another big wave of down at stocks for 2000. as well. Mr. Dent predicted that Bitcoin and cryptocurrencies in general would be the hardest hit assets in 2003, wrong on all accounts in a big, big way. Bitcoin rallied over 200% in 2023, and the S&P 500 has rallied over 20% as well. Of course, many other financial soothsayers also got 2003 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 about 2004, and what do I think about it? He's saying nearly the exact same thing he said since he first started selling fear in 2008, near the stock market lows, instead of selling the message of greed in late 1999 near the dot-com bubble top. His call is a crash of a lifetime is coming again in 2024, and you should sell everything as there's nowhere to hide. Investors, will Mr. Dent finally be correct in his view of a stock market crash 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 prediction is no. Mr. Dent might be a great book salesman and a great self-promoter, but he's not someone that the investment public should be listening to for financial advice. That's the trouble with Harry and others like him. Like Robert Kiyosaki, they are not full. fiduciaries and as such are not required to put investors' interests first. Rather, they can put their own self-interest like book sales, newsletter subscriptions, or click and add revenue first. Yes, investors, we will have more recessions in the future. Yes, we will have another financial crisis

in my lifetime. The odds say yes, but sorry, Janet Yellen, 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 matters to you and your money. So what does the team at Oak Harvest see for 2025? we still see more of the old normal, which should include a spike in volatility almost right out of the gate to start 2024. However, we don't see a crash happening. We do see it as a likely buying opportunity in late February that should lead the markets back to new all-time highs, almost approaching 5,000 into the late first quarter, early second quarter. A crash, unlikely, new highs, most likely. The best advice I have for you is put down the Dumer Books this weekend, get out Enjoy the weekend with your family.

Enjoy the New Year's from the whole team here at Oak Harvest. Have a blessed new year. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you.

you and nothing in this podcast should be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss and past performance is not indicative of few. future results.