Swedroe: Beware Of Investment Books
Most of the time, the panicked messages I get from investors have to do with doom-and-gloom headlines or TV reports. Lately, I’ve been getting a lot of calls and emails about recently published books that have investors freaked out. Just as with the rest of the investment pornography, these books shouldn’t cause investors to abandon their investment plans.
Because of the nature of these books, the level of concern among investors goes up as they read them or hear their friends discuss them. This is especially true for those who have little to no training in finance and economics (which is true of most investors), so it’s important that we discuss the nature and value of these dire forecasts.
What most people fail to recognize is that many authors aren’t really in the information business. Instead, they are in the fame business. They know that you don’t get famous making “average” forecasts, just outlandish ones. For example, one of the more foolish books ever written was “Dow 36,000,” published in 1999 and written by journalist James Glassman and economist Kevin Hassett. It, along with such equally foolish books as demographer Harry Dent Jr.’s “The Roaring 2000s: Building The Wealth And Lifestyle You Desire In The Greatest Boom In History,” probably caused many readers to rush into stocks just as the bubble was about to burst.