Big Buy Signal

Now marketing himself as a “rogue economist,” Harry Dent is forecasting “gold down to $750 an ounce, housing down 35%, oil down to $10 a barrel, the Dow down to 6,000, [and] a war between inflation and deflation” this year. The headline is indeed shocking:

If Only HALF of Harry’s Forecasts Come

to Pass, the American Life We Know Will

Disappear for Good!

So is the headline immediately above (from his personal website — the brazen self-promotion is shocking too).

Of course, Harry can show you how to avoid and even profit from this impending catastrophe. Amazing. More importantly, unlike most of his ilk, Harry has perhaps offered something actionable, if not in the way he intended. You don’t even need to buy anything to learn what to do.

 Let me explain.

Despite the hyperbole about his swami-like predictions in the headline above, Dent’s actual track record is truly dreadful. In December of 1993, Dent published Great Boom Ahead: Your Comprehensive Guide to Personal and Business Profit in the New Era of Prosperity. Dent was more than a bit early as the market rose just 1 percent in 1994. However, over the following five years the S&P rose almost 29 percent per annum, giving him a plausible platform for the success of his next book.

In October of 1999, Dent wrote the bestselling The Roaring 2000s Investor, wherein he claimed that the Dow would rally big, to 44,000 by 2008, due in large part to changing demographics. He was only off by 35,000 points or so. And he was especially positive on NASDAQ stocks, predicting that “the technology revolution will favor internet-oriented companies.” Within three years, the NASDAQ had lost three-quarters of its value and the leading index of internet stocks plummeted 89 percent.

Undaunted, in early 2006 Dent published The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2006-2010. This time he called for 40,000 on the Dow by 2009. Again, Dent was dead wrong. By the spring of 2009, the Dow had dropped below 6,500.

Still, Dent persisted, although he changed course. From calling for an immense boom he shifted to predicting imminent doom.  The Great Crash Ahead: Strategies for a World Turned Upside Down, was released in September of 2011, calling for 3,800 on the Dow which, as I write this, has moved above 16,000.

It’s bad enough that his books are a joke. But those who invested with Harry really got hurt. The AIM Dent Demographic Trends Fund was launched on June 7, 1999 with Dent’s name and him acting as a consultant to the fund. The fund was up 54 percent for the remainder of that year. However, the fund’s results were dreadful thereafter. From 2000 through 2004 the fund lost over 11 percent per annum and underperformed the S&P 500 Index by almost 9 percent per year. In 2005 its sponsor put investors out of their misery by merging the fund into the AIM Weingarten Fund.

Undeterred, in September of 2009, Harry tried again. The AdvisorShares Dent Tactical ETF (with the ticker symbol “DENT”) was launched, with Harry himself as co-manager. Unfortunately for investors. the fund’s track record was so poor it was put out of its misery in 2012.

Of course, the usual caveats apply. Even a stopped clock is right twice a day and even a blind squirrel finds an acorn once in a while. The market is beholden to no man, even one as apparently powerful as Harry. But it seems to me that Harry is as fantastic a contra-indicator as is available. Past performance is not indicative of future results, but just look at that past “performance.” Since Harry Dent is calling for catastrophe, maybe it’s time to buy….