Mortgage Rates Report

Harry S. Dent, best-selling author and economic prognosticator, follows the Baby-Boom generation's cycles and accurately predicts their effect on the economy.  It was once said that watching the baby boomers' effect on the economy was like watching a basketball go through a python.  That is what Dent recognizes in his book. 

He originally predicted a Dow Jones Industrial Average of 40,000 by the end of the decade in his book. Next Great Bubble Boom.   He amended that prediction to DJIA target of 20,000 by YE 2009.  You can see his 18-page report here.

My reversion to the mean theory, touted in late 2005, went like this:

If equities return 9-10% annually (on average) and residential real estate returns 4-6% annually (on average), then some asset repositioning is in store.  The first half of this decade saw the returns inverted with residential real estate over 10% and stocks returning 4%.  This implied that real estate remains flat for five years and that stocks should average 16%.  Many of my past clients heard this theory all of last year.  Some took my advice and transferred some of that home equity into equity-based investments.

The Dow is around 13,500.  If Harry's correct, we could be looking at..well...16% annual return if the Dow reaches 20,000 by 2010.

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