Harry Dent's Stock Market Crash Predictions, 1999-2021: How Did They Turn

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Harry Dent is a prolific author of investing books and predictor of the direction of the stock market and the economy. ThinkAdvisor has featured a number of interviews with Dent, including a discussion in late November of his negative views on the stock market and the economy for 2022.

We wanted to go back over time and take a look at some of Dent’s predictions and compare them to what actually happened, looking at where Dent’s predictions were on target and where he missed.

Who Is Harry Dent?

Dent, known as the “Contrarian’s Contrarian,” is a Harvard-educated economist who runs a research firm, HSD Publishing. The firm publishes newsletters including the HS Dent Forecast. Dent is also the author of many bestselling books on the markets and the economy.

Dent has written at least 10 books over the years, with a number of them becoming bestsellers.

Dent bases his predictions largely on demographic, market and economic cycles. He has pointed to intervention by the Federal Reserve when those predictions have not materialized, likening continued stimulus to giving drugs to an addict.

When asked by ThinkAdvisor in March how he responds to critics, he said he told them to pound sand (not his exact words) and pointed out that publishing newsletters allowed him to adjust forecasts as conditions changed.

What Dent Got Right

Dent correctly called the “bubble burst” in Japan in 1989 and the long recession that ensued.
He also correctly predicted the bursting of the dot-com bubble.
Additionally, Dent is credited with predicting the populist groundswell that propelled Donald Trump into the presidency.

Beyond these predictions, many of Dent’s forecasts have missed the mark. Here is a look back at some of his more notable stock market and economic calls.

(Cover photo courtesy of Harry Dent)

1999: ‘The Roaring 2000s’

In Dent’s best-selling book “The Roaring 2000s: Building the Wealth and Lifestyle You Desire in the Greatest Boom in History,” published in October 1999, he predicted that the stock market would experience a significant boom during the first decade of the new century. In fact he predicted that the Dow might hit 35,000 in the upcoming decade, in large part fueled by demographic changes for the Baby Boomer generation.

This did not happen. Both the S&P 500 and the Dow finished the decade at lower levels than at the end of 1999.

Dow Jones Industrial Average 12/31/1999: 11,497
Dow Jones Industrial Average 12/31/2009: 10,428
S&P 500 12/31/1999: 1,469
S&P 500 12/31/1999: 1,115
(Source: Market data Source: BigCharts.com)

The decade was marred by three events. First, the dot-com bubble at the beginning of the decade, closely followed by the Sept. 11 attacks. The latter part of the decade saw the financial crisis of 2008-09 with its real estate bubble, havoc in the financial sector and a severe drop in the stock market.

(Credit: Adobe Stock)

2006: ‘The Next Great Bubble Boom’

Dent followed up his predictions of a boom for the upcoming decade made in “The Roaring 2000s” with another bold upward prediction. In his book “The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2006-2010” was published in January 2006. In this book he doubled down on his predictions for the 2000s and predicted healthy gain for the rest of the decade. Again, he was proved wrong by the financial crisis.

(Credit: Shutterstock)

2008: ‘The Great Depression Ahead’

At the end of 2008, Dent published his next book, “The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History”

If we look at the markets from 2009 through the present, the predictions made in the book have not come true. Since the stock market bottomed on March 9, 2009, we have seen tremendous growth in the major averages:

Dow Jones Industrial Average 3/9/2009: 6,547
Dow Jones Industrial Average 12/15/2021: 35,927
S&P 500 3/9/2009: 677
S&P 500 12/15/2021: 4,710
(Market data Source: BigCharts.com)

While we have seen some dips in the stock market and in the economy over this period, mostly we’ve seen growth. Perhaps the worst period for both the economy and the stock market was in early to mid-2020 in the wake of the pandemic. Even with everything that happened in 2020, the stock market finished with respectable gains for the year.

(Credit: Shutterstock)

December 2016: Dow 5,000

The market rallied in the wake of Donald Trump’s election as president in November 2016. Dent made this prediction in December of that year. He was quoted on CNBC in December of 2016 as saying. “I think it [Dow] is going to end up between 3,000 and 5,000 a couple years from now.”

Again, this prediction did not come to pass. The Dow has not dropped below 19,000 since he made this prediction. The Dow did drop over 20% in March of 2020 in the wake of the pandemic, but that decline brought the index down to just under 22,000. The Dow closed at over 35,550 on Dec. 14, 2022.

(Credit: Shutterstock)

2017: Major Crash Within 3 Years

In a June 2017 interview with ThinkAdvisor, Dent predicted a major crash in the stock market, the economy and in real estate over the next three years. He predicted this in his 2017 book, “Zero Hour: Turn the Greatest Political and Financial Upheaval in Modern History to Your Advantage.”

Part of the book description on Amazon says, “The turn of the 2020s will mark an extremely rare convergence of low points for multiple political, economic, and demographic cycles. The result will be a major financial crash and global upheaval that will dwarf the Great Recession of the 2000s — and maybe even the Great Depression of the 1930s.”

In part, Dent’s predictions did come true. First in 2018, major market averages finished down for the year, with the S&P 500 losing more than 6%.

We saw a brief major market decline that began in March of 2020 as the impact of the COVID pandemic became widespread. The S&P 500 declined about 34% from its high in mid-February to its pandemic bottom in late March. By the end of 2020, the index had posted a gain of over 16% for the year.

(Credit: Adobe Stock)

March 2021: Biggest Crash Ever by End of June

Dent predicted in March that we would see the biggest market crash ever by the end of June. He predicted that this crash would cause a drop in excess of 45% in the S&P 500 and that this crash would initiate an economic downturn that would be worse than the financial crisis of 2008-'09.

This prediction did not come to pass. On June 30, the S&P 500 closed near a record level and the economy had not collapsed. The index closed at 4,298 on June 30 and continued to move higher, closing at 4,710 on Dec. 15 — an increase of about 9.6%.

In July 2021, he followed up with a prediction indicating that most equities would drop by 80% in the fall, which did not happen, either.

(Credit: Bloomberg)

November 2021: Stock Market Crash of Early 2022

In a recent interview with ThinkAdvisor, Dent said that “The biggest stock market crash of our lifetime will hit in 2022.” Additionally, Dent predicts “crypto is going to drop even more than stocks.” Beyond these predictions, he foresees “the biggest recession, or a depression, of our lives” next year and says “the economy isn’t going to get strong again until 2024.”

Of course, only time will tell if Dent’s dire predictions for 2022 will come to pass.

(Credit: Shutterstock)

Conclusion

Before acting on the predictions of any forecaster, it’s important to look beyond the headline of the prediction and understand the underlying rationale. For most of your clients, using a diversified approach based on an appropriate asset allocation is a better strategy than making drastic moves based on anyone’s predictions of the markets and the economy.

(Credit: Shutterstock)