DOW 36,000 Redux

Tom Lehman uswa12 at
Fri Aug 20 09:28:42 PDT 1999

When do you think the Y2K sell off will be?


Doug Henwood wrote:

> Michael Pollak wrote:
> >I love the way they use an entirely different formula from the first time
> >around and somehow finagle it to end up with exactly the same weird
> >estimate of 36,000 that just happens to be in the title of the forthcoming
> >book that they've been flogging since June.
> Their major theoretical claim - that investors have been mispricing
> the risk of stocks for several centuries - is truly hilarious. (Risk,
> of course, is defined in the financial analyst's sense of volatility,
> of deviation from expected returns, and not the colloquial sense of
> the possiblity of suffering a loss). There's nothing even in recent
> empirical experience to offer any support for this wacky notion. But
> if you accept it, then once the Dow hits 36,000 - a one-time
> adjustment to this new notion that stocks are no riskier than T-bills
> - after that the stock market should return just what T-bills do - an
> average real rate of 0.45% since the early 1930s. How boring that
> would be!
> Doug

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