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Dow 36,000: The New Strategy for Profiting from the Coming Rise in the Stock Market [Hardcover]

James Glassman , Kevin Hassett
2.6 out of 5 stars  See all reviews (60 customer reviews)

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Book Description

Oct. 1 1999
Contrarian . . . controversial . . .
compelling . . . practical
This book will liberate investors from conventional wisdom and change the way everyone thinks about stocks and investing.
What's the message investors have been getting from media pundits and so-called market experts? "Stocks are in the stratosphere. . . . They're risky. . . . We're headed for a fall."
Jim Glassman and Kevin Hassett heard this message for years but wondered why the opposite kept happening. Instead of declining, the prices of stocks kept rising. Was financial gravity being defied, or were other forces at work? Were investors being frightened away from profits they could be enjoying from a market that will continue to boom?
Dow 36,000 is the result of Glassman and Hassett's investigation. It is one of the most important and provocative books on markets and investing written in recent years. Its original and compelling analysis and practical program for profiting from the continuing rise in the stock market are ideas that every investor--from neophytes to the most experienced--must understand and act on now.
¸  Stocks are undervalued, not overvalued. Stock prices will double, even quadruple, within a short period of time. The Dow Jones Industrial Average will soon reach 36,000. Astounding profits can be made, but the time to act is now! Dow 36,000 tells why this one-time rise is coming and how to adjust your portfolio and invest without fear.
¸  The perfectly reasonable price. Prices are too low because investors and Wall Street have been looking at stocks the wrong way: at valuation levels of the past (the traditional ceiling of the price/earnings ratio, for example). Dow 36,000 provides a new model--a new way of valuing the worth of any stock by figuring out how much money it will put in an investor's pocket.
¸  How to invest with confidence. Glassman and Hassett provide investors with a sensible strategy for making money by becoming a disciplined "36er." Their practical advice tells why many investors should not be active traders and why it's important to hold on to stocks and mutual funds even when they go into a downturn.
¸  A practical program to maximize your portfolio. Glassman and Hassett provide their picks for the best stocks and mutual funds, but just as valuable are their ideas on how to think about the kinds of stocks and mutual funds that will help earn the most money. Examples include not only such stocks as Cisco Systems, Microsoft, and GE, but many you may not have thought of, including Tootsie Roll and Biogen.
Investors have long needed a new way to understand what is happening in the stock market. Dow 36,000 provides that understanding. It is the new paradigm.

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From Amazon

Most books that predict a sky-high stock market make their forecast either by extrapolating the trend line of the market's recent past or by looking at the demographics of the baby boom and the vast amounts of retirement funds chasing stocks. In Dow 36,000, James Glassman and Kevin Hassett see a bright future for stocks, but rather than looking at external factors, the two base their prediction on the intrinsic value of equities and their ability to generate cash.

At the heart of Glassman and Hassett's argument is the idea that stocks have been undervalued for decades and that, for the next few years, investors can expect a dramatic one-time upward adjustment in stock prices. Why? While Wall Street has focused on valuation measures such as P/E ratios, it has virtually ignored how stocks can work as cash engines (the good ones, at least). The authors cite example after example of the growth in dividend income for stocks and how it has consistently beaten the annual payouts of long-term Treasury bonds. One example they cite is Exxon, which you could have bought in 1977 for about $6 when it was paying a dividend of 37 cents, or about 6 percent a share. Twenty years later, the dividend had grown to $1.63 or 27 percent of your initial $6 investment. Compare two $1,000 investments over 20 years in Exxon and 7.5 percent Treasury bonds: payments from the T-bonds would amount to $1,500; the Exxon dividends would add up to $3,585--not to mention that shares in Exxon went from $6 to $61 during that same period. To get to their target of 36,000, the authors project dividend growth of the 30 stocks that make up the Dow and apply a valuation measure that they call PRP ("perfectly reasonable price"). Many will dismiss this kind of thinking as wishful, but they're probably the same Chicken Littles who have been calling the market overpriced for years (think back to January 1993, when the Dow was hovering around 3,300).

In addition to making their case for undervalued stocks, the authors toss off some good investment advice about stock picking, portfolio allocation, and buying mutual funds, and they go to great pains not to bulldoze readers with investing and economic jargon. As you might expect, Glassman, an investing columnist for the Washington Post, and Hassett, a former senior economist with the Federal Reserve, are firmly in the buy-and-hold camp, and make the case for working with a full-service broker as a check against churning, something that's all too easy to do when trading over the Internet. This book is sure to rile some, but no matter where you think stock prices are headed, Dow 36,000 is a provocative read that belongs on the bookshelf of any thoughtful investor. Who knows? We may come to think of these guys as value investors on steroids. --Harry C. Edwards

From Publishers Weekly

The only thing missing from this half-time speech of an investment book is an exhortation to buy stocks for the Gipper. Despite the sensationalist title, Glassman, a syndicated columnist, and Hassett, a scholar at the American Enterprise Institute who used to be an economist at the Federal Reserve, argue only the classic case for investing in stocks: that over long periods of time stocks have always outperformed alternative investments. But no motivational device is spared to make this case more strongly than it has ever been made before. Experienced investors will wince at the simplification and overstatement as the authors, in their effort to obliterate the arguments of anyone who has ever suggested that stock prices might actually fall, brush aside considerations like risk, dividend yields and price-earnings ratios. These and all other objections are downed out by the drumbeat of Dow 36,000! How do they arrive at this number? In several different ways, none of which is described in detail. Over long periods of time the Dow goes up, with inflation if nothing else. In the last two decades, it has been rising at a rate that makes it triple every seven years. So predicting that the Dow will triple eventually is not saying much. The key question for investors is, will it triple fast enough to make stocks an attractive investment? Here the authors fall into confusion, suggesting, in the space of seven pages, that it could happen in three years or 10 years. This last prediction implies that the stock market will actually do worse in the next decade than it has in the previous two. Agent, Rafe Sagalyn. First serial to the Atlantic Monthly; BOMC alternate selection; Money Book Club main selection; 5-city author tour.
Copyright 1999 Reed Business Information, Inc.

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Customer Reviews

Most helpful customer reviews
2.0 out of 5 stars Paradigm Shifting? Not Yet. Jan. 15 2004
Format:Paperback
The Dow 36,000 Theory is all about predicting a paradigm shift in current investors' perceptions. Tomorrow's investors are expected to forsake the old paradigm and embrace a new one. Authors James K. Glassman and Kevin A. Hassett present the "discounted dividend" model of the stock market as their reason why stock prices will soar, eventually. In 1999, they said it could happen anytime but put a window on it of 3-5 years. Hasn't happened yet. But this book is important as a look-see into how academic constructs originate and work their way into "commonly accepted stock market wisdom." The P/E was once a kernel of an idea in someone's head. Now, it's the basic way to value stocks. So, conceptions do change over time.
Dividends, say Glassman and Hassett, whether paid out quarterly or totally retained in the company, are the only important way to determine a company's true worth. They call it the PRP (perfectly reasonable price).
To justify lofty expectations, the words "assume" and "assumption" are used dozens of times and lie at the bottom of what, so far, is wrong with this concept. Just because they calculate something as being worth many times what it's selling for today doesn't mean prices will skyrocket tomorrow. It requires acknowledgement and action by investors. We're back to the old high school conundrum of whether a tree makes any noise if it falls in a forest without anybody hearing it. It this case, the question is whether a stock will ever sell at its "true value" if nobody ever bids the price up that far? Obviously not.
Their credo, "Buy anytime, hold forever," as well as the recommended use of index funds is a recipe for never having to admit you're wrong regardless of what happens to your investment account.
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1.0 out of 5 stars Authors that later lie about their message. Nov. 6 2002
By A Customer
Format:Paperback
This book was one of the reasons I got completely out of the stock market in late '99 early 2000. When I read this pustulous piece of putrescent puffery I just knew I had to get out. THANK YOU KEVIN AND JAMES!!!!!
I come to write this review because just for a lark I thought I'd search the internet for Glassman, see what he's pushing today, so I can get out of it for my own safety.
In writing this review I treat the authors' late-90s media appearances and book-related articles all as one whole.
Hassett and Glassman are out there now (Nov 2002) writing (paraphrased) "we never wrote the DOW would be at 36000 soon".
I read the book in fact in winter 99/00 along with some of their articles, and did catch a few of their TV appearances. They definitely did write either in the book or one of the accompanying pieces (Washington Post or The Atlantic) that stocks are in a 'one-time surge' and everyone must GET IN NOW.
Their media appearances were even worse...
"GET IN NOW!!!
DON'T MISS THIS ONCE IN A LIFETIME OPPORTUNITY!!!!
YOU'RE FOOLS IF YOU DON'T
MORTGAGE YOUR HOUSE TO BUY STOCK!!"
They used to remind me of that Joe Piscopo SNL salesman character (you remember, the frenzied salesman, "WE MUST BE INSANE!!! OUR PRICES ARE SO LOW WE'LL GO OUT OF BUSINESS YESTERDAY!!!!").
And they are completely unrepentant. I just read a Glassman article (Wash Post - why the ...are they still giving this unrepentant, lying moron/clown a stage?) claiming he was right all along and 36000 is STILL the DOW's fair value. Claiming that Siegel's research supported G&H's conclusions (Siegel, who currently seems bullish said they misconstrued his research. Interesting word, misconstued - is Siegel saying G&H are liars, idiots, or some combination thereof?).
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1.0 out of 5 stars Greetings from Bearsville Oct. 10 2002
By A Customer
Format:Paperback
This book is proof that, during the sort of financial mania that occurs about every three generations (when the folks who suffered through the aftermath of the last one [Great Depression] are gone or in retirement homes), ingenious rationalizations are created to perpetuate the optimism. We're now about six months from the 3-year anniversary of the beginning of the Millennium Bear Market, and we haven't even gotten to the point of private Dow investor panic; so far, it's mostly just institutional investors who have been selling. When the post-bubble (yes, it was a bubble a la Tulipomania) consequences are fully realized over the next few years, many people will be compelled to sell regardless of their desire to "buy and hold" because they'll need the money to pay their bills. Study history and you can pretty clearly see what's coming (although no one can predict the timing or exact chain of events)...an epidemic of personal and corporate bankruptcies, skyrocketing inflation as the government prints money like mad to combat deflation ,and massive unemployment and general hardship. One aftermath effect that can almost absolutely be counted on (because it has happened after all other paper asset bubbles throughout history) is a flight from paper assets to tangibles. Real estate has already been in a bubble of its own, but the commodities market is just getting warmed up. Gold has started a bull market, and gold mining stocks (those of companies who do not sell their unmined gold in the futures market, aka "hedging") have done spectacularly well since 1/1/2002. They are the hottest sector in the stock market, but the popular media (e.g., CNBC) pretty much ignores them. Look at articles about "what sectors performed best over the last year" and mining stocks aren't discussed. Read more ›
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Most recent customer reviews
1.0 out of 5 stars waiting .....
As an addendum to my previous review, where I wrote that one reason I got out of the market was this book, let me add that before I get back into the market I'm waiting for... Read more
Published on Nov. 7 2002
1.0 out of 5 stars Hard to make it out there in the "Real World"....
I can see why Glassman went back to his old job at the Wash. Post. It's hard to sell dribble like this, once reality sets in. Read more
Published on Oct. 10 2002
1.0 out of 5 stars A view on Buy & hold From turtletrader.com
James Glassman is the polar opposite. Almost every piece of writing he submits is geared to preserving the buy and hold mantra no matter what real life shows to be true. Read more
Published on Aug. 2 2002 by qqqq
1.0 out of 5 stars Scams for the Greedy
Well, Glassman and Hassett wrote in 1999 that the market was undervalued. They might still believe that today, but I'd wager they will not be following this book up with "Dow... Read more
Published on July 31 2002
5.0 out of 5 stars Great investment?!
Buy this book now. The Dow should probably decline to 5,500 which is its fair value. And then it would take over 24 years at 8% annual growth to reach 36,000. Read more
Published on July 30 2002
1.0 out of 5 stars Hahahahaha
Dow 36,000. Hahahahahahahahahaha. ::slaps knees:: Hahahahahahahahahaha. That's a good one. Dow 36,000. Haha. Read more
Published on July 28 2002 by Matt
3.0 out of 5 stars Three stars for humor
Dow 36,000 elicits (or did from me) plenty of laughs. It would have taken a couple of academics to produce such a relentlessly wrongheaded book. Read more
Published on July 28 2002 by Kenneth Umbach
1.0 out of 5 stars I Haven't Seen These Guys on Any Financial Chat Shows Lately
Maybe it's because they are aware of the guilt they should be feeling for hyping a stock market that was already wildly overvalued at the time they were hyping it. Read more
Published on July 28 2002
1.0 out of 5 stars Just How Wrong Could They Be?
Lop off the three zeroes and you have the combined economics IQ of the authors. You'd be hard-pressed to find a more glaring example of market charlatanry (other than the daily... Read more
Published on July 23 2002
1.0 out of 5 stars Morons
I never bought this book, but I read a few chapters in the store. These guys are absolute idiots - not because their predictions were entirely wrong - but because their... Read more
Published on July 23 2002
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