A Cautionary Tale - The Hyperion Effect

In 1999, James Glassman wrote a book called Dow 36,000 and declared that the new Internet economy would see the U.S stock market rise this this level (it’s currently around 12,500) which is now widely regarded as the epitome of ‘unbridled enthusiasm’ gone wild. Glassman recently wrote in the Wall Street Journal that he was wrong but interestingly he justified this on the basis of two points.

He says that the U.S. economy slowed relative to emerging markets which he did not anticipate and secondly he was only accounting for volatility in markets and had not considered that uncertainty was also a factor that influenced them.

In my mind the factors the resulted in him being wrong are actually irrelevant and in reading his article they key word is ‘anticipate’. The book he wrote, indeed the books many so called gurus write are all based on them providing you, the reader, with advice based on what they anticipate will happen. But let me ask you a question that I do regularly in presentations, if these people can anticipate what is going to happen in markets why would they tell anyone?……….

Speaking for myself I know that if I wake up tomorrow with an ability to accurately anticipate what is going to happen I will most certainly use that knowledge to profit for myself and my family. Very low on my list would be the urge to run out and write a book about it or set up a fund for other people to invest in to profit from it.

So the next time you see, hear or read about the ‘next big thing’ that you should invest into, ask yourself, why is this person telling me?

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