Narrator: Welcome to the American Monetary Associations Podcast where we explore how monetary policy impacts the real lives of real people and the action steps necessary to preserve wealth and enhance one’s lifestyle.

Jason Hartman: Welcome to the podcast for the American Monetary Associations Podcast. This is your host, Jason Hartman, and this is a service of my private foundation, The Jason Hartman Foundation. Today we have a great interview for you. So I think you’ll enjoy it. And comment on our website or our blog posts. We have a lot of resources there for you. That’s AmericanMonetaryAssociation.org or the website for the foundation which is JasonHartmanFoundation.org. Thanks so much for listening and please visit our website and enjoy our extensive blog and all our resources there.

Start of Interview with Harry Dent

Jason Hartman: It’s really my pleasure to interview Harry Dent on the show. He is a fantastic author and prognosticator that I have been following for must be almost 15 years now. And Harry Dent has really been sort of a god of the financial services industry. He, years ago, back in early 2000s people were listening to his predications with bated breath. I mean, he was the guru of Wall Street. And he’s written several bestselling books. I believe the first book of his I read was The Great Boom Ahead and I think that was published around 1995 or so. And then I read The Roaring 2000s and The Roaring 2000s Investor. I believe his last book was The Great Boom Bubble. And his next book, aptly enough, is entitled The Great Depression Ahead.

So, again, I want to just stress to all of our listeners, there’s a lot of negative news out there, and you know what, I mostly agree with it. I think our economy is in a mess, a huge mess. But every crisis is an opportunity and there are loads of opportunities out there right now. Okay, one more comment about Harry Dent. I was really glad to interview him, love his work. He made some predictions, many of which came true, I mean the guy has just an impressive track record. One that didn’t come through, and I did ask him about this, was when he predicted the DOW would come to 30,000, and of course that didn’t even get anywhere close. But he explains that in the interview and I think you’ll really enjoy the interview.

Again, Mr. Dent, just like so many commentators, really virtually all of them, tends to view housing as a national market. And it’s funny, when you ask all of these experts about the real estate market or the housing market, they paint it with a broad brush. But as soon as you then ask them what about Texas versus California or North Carolina versus California or North Carolina versus Florida, they say oh well of course, those are much better markets. So you have to kind of dig a little deeper when talking to all of these experts to really see what they think because if you take it at face value, and I know that when they do their various media interviews and so forth and comment on the markets, they have to talk in sound bites and say things in brief format because television, for example, is largely the idiot’s medium. You just don’t have much time. So, that’s one of the things to just remember when you’re listening. And as soon as I asked Harry Dent about the local markets, he parsed them up and segmented them.

Anyway, I think you’ll find this interview interesting. Again, not much time to talk to you today but I will talk to you more on the next show. Listen in and enjoy the interview.

Start of Interview with Harry Dent

Jason Hartman: Well, it is my honor and pleasure to welcome Harry Dent to the show. Harry, it’s good to have you on.

Harry Dent: Nice to be here, Jason.

Jason Hartman: Good. Well, tell us a little bit about what you do. You’ve written several books, many of them hot selling books. And give us a little background on your company.

Harry Dent: I really got into forecasting in the late 80s after working in business consulting, first at Bane and company, the large companies, and then with New Ventures and small companies in California. And I just started realizing that the baby boomers, new generation, was driving all these trends and just kept doing more research and the new technologies emerging in this generation, and kind of came up with a whole new way of approaching economics. We look at demographic cycles, in other words the predictable things people do as they age. And of course people kind of come in large generational surges like the baby boom generation. And so as the baby boom’s been aging and getting married and having families and buying houses, we’ve seen a boom.

And we started realizing in the late 80s when we first got some of our key indicators that a lot of people were calling for a depression in the 1990s on a famous [00:05:00 ] for kind of 55-60 year cycle and we were saying no. No, the 90s is gonna see the greatest boom in history because the baby boomers are gonna be in their strongest period of productivity and spending and then that boom was going to continue into this decade and we would see a depression, an extended downturn from late in this decade into the next decade and beyond. We also predicted the Japanese slowdown in the early 80s.

So, again, we took indicators that the economists do not even look at and say oh my gosh, the long term is very predictable, economists have it backwards. It’s the short term that’s difficult. This recent crash in stocks, even though we were expecting it sooner or later, kind of came out of nowhere and then all this hidden off balance sheet stuff and all and kind of like Enron. But the short term stuff you can get huge curveballs. But long term trends are very predictable. Every 40 years we’ve seen generations peaking their spending and you get long term tops in stocks. Like 1929, 1968, and now between 2007 and 2009. And commodities are similar, too. It’s a different clock and it’s more of a technology cycle, but commodities have peaked every 29 to 30 years. In 1920, 1951, 1980, and now we think we’re due for some sort of peak higher. We don’t think the commodity boom’s over yet, probably around late 2009, early 2010, so we start with fundamentals.

Technology cycles and which go through very clear stages and affect our economy and we look at demographic cycles of spending, investment, borrowing, all that sort of stuff, and down to micro areas like potato chips if need be. And then we look at cycles that repeat like this commodity cycle and then like a 4 year cycle in stocks and the decennial cycle and things like that. And then finding the short term in our newsletter, we looked at, just like any technical analyst would be, how bullish or bearish are people and that sort of thing, whether the markets are likely to be going up or down short term because the short term really doesn’t have as much to do with fundamentals, so we say in the long term the fundamentals are everything. And they’re actually pretty darn easy to measure and project. And in the short term, the technical indicators, how bullish and bearish and how crazy people are makes more of a difference. I mean, we’ve got panic hedge fund selling unwinding all their leverage and bad moves. And that’s just causing a short term meltdown that doesn’t have that much to do with the economy.

Jason Hartman: I agree with you. I kind of differentiate that by saying there’s the virtual economy or the Wall Street or the financial economy and then there’s the real economy, you and I trading. And there’s a difference. There seemed to be distinct elements. And as you see these hedge funds unwind and deleverage, you’re seeing a lot of artificial downward pressure on various commodities out there and various assets. One of the things I love about your work since I discovered it in the 90s, it seems to be pretty simple, at least the way you put it has simplified itself so much for me.

You name the peak earning years. I think you say about age 46 or the peak spending years. Do you want to go into that for us? And it seems so easy to follow demographics.

Harry Dent: True. The demographics is simple. We have a lot of indicators and putting them together can be complex to some degree, but yeah, the indicators themselves are very simple. Yes, people enter the work force at age 20 ½ today on average, part from high school, part from college, and they grow up and they earn and spend more money until a plateau between 46 and 50. So all we do is take the birth index, adjust it for immigration, past and future forecast, move that forward 48 years for the average peak in spending and boom, the economy grows without you. You’ve got a 50 year leading indicator. The economy grows with that, the stock market adjusted for inflation generally follows that, I mean it’s an incredible indicator.

And it allows our indicators, because they’re simple, number one, and 2, because you can project them well into the future, they allow people to plan for the rest of their lifetime, not just until the next election.

Jason Hartman: I agree with you, yeah.

Harry Dent: It’s a whole different approach. And again, economists hate people like us cuz they say that’s not possible and we’re all too complex and it’s changing too fast. But you know the more complex the world gets, the smarter we get and the better our information. And all we’ve done throughout all of human history is understand more processes and make things predictable like the seasons and farming and al