Ritholtz wrote a nice column spanking people who are ignoring the empirical evidence without so much a rigorous philosophical criticism of the empiricist enterprise. But my main fascination with the column was the reference to Kevin Hassett. Doing a bit of research, I came to his 1999 book, Dow 36000.
I believe it’s safe to say that their position has since been disproved beyond doubt, and Ritholtz has a rather dismissive article in his archives telling us why. It is interesting to note that such an academic poopoo did not end their careers. Both Hassett and Glassman went on to work in the Bush administration. Hassett is still making rather misleading statements (as Ritholtz points out in his article). But at least Glassman seems vaguely embarassed by it all.
I especially enjoyed his uneasiness in this exchange:
Do you ever regret having written the book, or regret the title? Do people come up to you at cocktail parties and say “Oh, yeah, Dow 36,000 — how’s that working out for you?”
Yeah, people do say that. There is no doubt that people — especially people who haven’t read the book — think this is some sort of wild-eyed book that was part of the high-tech boom and so forth. Kevin and I usually joke that we really wish we’d called the book “A Treatise on the Declining Equity Risk Premium.” I have to say, I don’t really regret it. I think if people read the book, its examination of the nature of investing is right on. I think it’s exactly right.
Just not the number.
I think the fact that the book title is a number — as things have turned out, maybe a calmer title might have been better.