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The following article appeared in Left Business Observer #92, November 1999. It retains its copyright and may not be reprinted or redistributed in any form - print, electronic, facsimile, anything - without the permission of LBO.


Dow 36,000? No, Dow 9,572,460!

Numbers have a reputation for dullness, but you can do the wildest things with them, especially when they're joined to fantasies of effortless wealth. Recently we've seen books published with the titles Dow 36,000, Dow 40,000, and Dow 100,000. Curiously, the one with the smallest number is actually the most fanciful; 40,000 is proposed for 2016, the 100,000 for 2020. Hitting those targets would require performance above long-term averages, but not outlandishly so. Despite coming in with the low bid, the authors of Dow 36,000, James Glassman and Kevin Hassett, say their number would be a fair price today, though they concede it might take a few years to traverse the 25,350 points necessary to get there.

Before taking apart Glassman and Hassett, a few games of our own. Nearby is a graph of what the S&P 500 index would have done since 1982 had it performed according to the average prevailing from 1900 through 1981. (Though less famous than the Dow, the S&P is the standard benchmark because it's broader -- covering 500 stocks, rather than the Dow's 30 -- and has a longer history, going back to 1871, rather than 1896.) That would translate into a Dow of around 1,795, pretty dull compared to today's 10,650. But that's looking backward, using standards from before the