Dow briefly tops 36Okay milestone, placing highlight on 1999 e book
The Dow Jones Industrial Average traded briefly above 36,000 early Monday, a level forecast in a later ridiculed book from 1999 that predicted a much faster rise to that milestone.
“Dow 36,000” by journalist James K. Glassman and economist Kevin Hassett argued that stocks were severely undervalued in 1999 and were on the verge of quadrupling. The catch, Jason Zweig noted in the Wall Street Journal on Monday, was that the book that came out with a Dow trade above 10,000 said the move should be “very fast” or even “today” as he conceded that it could take “three to” five years. “
Not in the credits
Glassman told Bloomberg that he believed he and his co-author were mistaken in believing “that investors were ‘wrong’ to demand high returns to compensate for the added risk that stocks, in truth, did not have. Our mistake was to define risk in only one way – the volatility of stock prices. I’ve learned a lot about risk since the book was written, like all Americans with events like September 11th and the COVID pandemic. “
Glassman later served as Secretary of State for Public Affairs and Public Diplomacy in the George W. Bush administration and founding director of the George W. Bush Institute. Hassett, a former Federal Reserve economist, served as chairman of the Council of Economic Advisers during the Trump administration.
Economist Kenneth Rogoff said in a guest column in the Wall Street Journal in September that while Glassman and Hassett misjudged investor risk perception, they also “did something very right.”
Rogoff said the couple’s “extreme view” of the equity risk premium enigma, which is the secret of why average stock returns appear high compared to safe bonds, underscored an important point:
Anyone who has the assets and liquidity to withstand short and medium-term fluctuations has an enormous advantage. For those with little wealth, the advice to invest in stocks doesn’t help much. But for the majority of middle-income Americans who understand long-term investing when it comes to housing, the stock premium is something they should know about and make their own decisions.
For its part, blue-chip reading DJIA, + 0.20%, held on to gain about 8 points or less than 0.1% near 35,835 after trading as high as 36,009.74 in Monday’s early activity. The S&P 500 SPX, -0.00%, fell 0.1% while the Nasdaq Composite COMP, + 0.22%, rose 0.1%.
All three major indices traded at intraday records in Monday’s session after logging completed on Friday.
If the Dow closed above 36,000 on Monday, it would be 70 trading days since its last 1,000-point milestone, the longest on that line since it moved from 29,000 to 30,000, according to Dow Jones Market Data.
It would also be the sixth milestone of 1,000 points in 2021, the highest in a single year since records began, although such milestones are obviously less impressive on a percentage basis as the index rises.