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Stocktake: After 22 years, Dow hits 36,000

An infamous book published during the dotcom bubble got it wrong – and right

The New York Stock Exchange. US stocks have enjoyed a five-fold return since the publication of Dow 36,000. Photograph: Johannes Eisele/AFP via Getty Images

Proinsias O'Mahony's face
Proinsias O'Mahony
Tue Nov 9 2021 - 05:10

The Dow topped 36,000 last week – 22 years after the publication of Dow 36,000, the infamous book published during the dotcom bubble in 1999.

High-profile Harvard economist Kenneth Rogoff recently offered a defence of the book, pointing to its buy-and-hold message in a Wall Street Journal piece headlined "Why the Dow 36,000 Forecast Was Right".

Still, it's hard to disagree with Paul Krugman's description of Dow 36,000 as a "very silly book". After all, authors Kevin Hassett (who went on to advise President Donald Trump on economic policy) and James Glassman argued the Dow, then trading around 10,000, was terribly undervalued and should be trading at 36,000.

That was fanciful, to say the least. The Dow fell below 6,500 in 2009, 10 years after the book’s publication.

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Still, it’s also true that the book’s long-term buy-and-hold message has been vindicated: including dividends, US stocks have enjoyed a five-fold return since publication.

Unfortunately, many have not benefited from these gains. As Glassman noted last week, a lower proportion of American households owns equity investments today than when the book was written in 1999.

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