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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: TH who wrote (26082)	12/16/2004 6:44:15 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Have you ever wondered why the Harry Dent folks never update their charts? home.pacbell.net .

To: TH who wrote (26082)	12/16/2004 11:34:21 PM
From: AC Flyer	Respond to of 306849

>>Each vertical line represents two years, so that would put the leading edge of 30,000 in 05<< I think you're misreading the chart in two ways. The vertical red bars show the birth rate lagged by 47 years. So the peak of the red bars that you have identified should be read across to the y axis labels on the left side of the chart as ~5.3 million live births. Also, each red bar represents 2 1/2 years, not 2 year, so the peak of the red bars occurs at 2008, not 2005. The orange line is the inflation-adjusted Dow. Dent wins no prizes here for clear charting, I'll agree, and also implies by his subtitle that we will see Dow 35,000 in 2008. I think that this is just a case of confusing precision and accuracy - the point of the chart is that the shape of the curve (bar chart) of live births lagged by 47 years and the shape of the curve of the inflation-adjusted Dow are similar. Dent infers a causal relationship. Dent generally does not claim that the two curves are or will be identical - there are always exogenous factors that affect the Dow in the short term - but he does claim that demographic factors are the primary driver of the performance of both the US equities markets and of the performance of the US economy. This demographic argument seems to have a polarizing effect - some people, me among them, find Dent's analysis quite plausible - the US economy is no more than the sum of its parts, or in this case the sum of the spending behavior of its parts. Other people seem repulsed by the idea that conventional economic thinking is all wrong, that fiscal and monetary policy have marginal effects only that are superimposed on the real driver of economic performance - demographics. It is easy to dismiss Dent out of hand if you are so inclined, but a closer look at Dent's work shows other convincing examples - the Japanese economic malaise, for example, which Dent shows was caused by a twenty year collapse in the Japanese birth rate following WWII and which he forecasts will finally end towards the end of this decade. It seems to me that the burden of proof is largely on the naysayers at this point. The US economy and equities markets should have collapsed following the 2000 tech wreck - many smart folks have been predicting this for 4 years now. But they haven't. So just how is it that the US economy has powered through a four year depression in business capital spending with so little damage?