The Great Depression Ahead . . . A Real Estate Investing Must Read

The Great Depression . . . I Mean Opportunity Ahead

Monday, March 2nd, 2009

The Great Depression Ahead by Harry S Dent As most of you know, I’m an avid reader. You can probably tell by my recommended reading page. I’ve read hundreds of books over the past few years and have distilled them into what I believe is a “must read” book list for the serious student.

Well, you may not have noticed the newest addition to the list, The Great Depression Ahead, by Harry Dent. I do not highly recommend many books, but I’ve been telling everyone I know to check this one out. I have felt compelled to get the word out because I believe this book came into my life for a reason.

And if you know me, it’s obvious that I’m not a doom and gloom thinker.

But that’s not how this book has to be looked upon. Every intelligent investor knows that the greatest opportunities come in down markets . . . during crashes. Well, Harry Dent has put together a pretty compelling argument that says we’re about to experience the greatest depression in our country since the 1930’s.

AKA . . . the greatest opportunity during our life times to explode our wealth! If and only if, we’re ready for it.

Oh yeah, by the way, Harry Dent has had an incredible run at predicting the market over the past decades which have been documented in his previous books.

Here’s a number of excerpts from the book:

“We have missed the magnitude of some trends, but we have successfully predicted the key trends and cycle changes over the last two decades. The most important cycle for your wealth, health, life, family, business, and investments is just ahead during the first and last depression you are likely to experience in your entire lifetime . . .” pg. 13

“If you thought 2008 was scary, 2010 to 2012 will bring on the greatest economic and banking crisis since the early 1930s . . . If you think real estate already saw most of its downturn in 2008, you will be shocked at how low home prices will fall in many areas. Home prices will have to drop 40% to 50% nationally to get back to fair market value, not the 10% to 20% we have seen in 2008 . . .” pg. 19

“It was no accident that as soon as the stock bubble burst, beginning in 2000, housing prices accelerated upward more rapidly . . . Not only were the baby boomers moving into their peak house-buying years, but the huge flows of investment funds shifted suddenly from stocks to housing while interest rates plummeted dramatically with Fed easing and a slowing economy–making housing affordability and speculation even more attractive. To add to that, banks and mortgage companies competing in this bubble offered increasingly liberal financing with little or no money down, short-term ARM rates, and teaser loans with low interest rates that would ratchet up later . . . Now that housing has slowed down since late 2005 and 2006, investment funds have shifted more into commodities, energy, and emerging markets for stocks and banks are seeing steadily rising defaults and foreclosures.” pgs. 106-107

“. . . the continued real estate slowdown due to the aging of the massive baby-boom generation will be the greatest force in bringing down the banking system in the great depression ahead. Banks will have to write down more and more loans, including business loans collateralized by real estate and failing business loans.” pgs. 116-117

“The greatest opportunity for home builders will be to convert failing trade-up home zone plans into more affordable starter home developments in the next decade, including rentals that can be converted to purchases.” pg. 117

“Although vacation and retirement home demographics trends are the most positive in real estate as a result of the aging of the massive baby-boom generation, this segment of the housing market is the most overvalued from speculation and will be the most sensitive to the economic downturn at first due to its discretionary nature. This is the best area to sell now; and look to rebuy between late 2012 and mid-2013.” pg. 122

“Commercial real estate and business hotels will be hard hit, especially into 2011 or late 2012 to mid-2013. They have held up better in the late stages of the economic boom than residential real estate, but rising unemployment and business failures will take a high toll, as will rapidly rising baby-boomer retirement.” pg. 123

There’s so much more to it than what I’ve included here so I urge you to read this book! And understand this . . . the new wealthy will be created from this HUGE opportunity ahead us. If of course, things unfold as Mr. Dent is predicting.

The time of the creative real estate investor has come! It’s more important than ever to not only learn but to implement creative real estate strategies like buying property subject to, creating seller financing, and using private money.

A special note for our students: We’ll be covering exactly what strategies will and won’t work in the coming years, how to position yourself to become one of the “new wealthy,” and how to build a protective fortress around your portfolio to safeguard your success!

I would like to invite everyone to give us your feedback in the comment section. I would love to hear what you guys think.

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Tags: creative real estate investing, great depression, harry dent, harry s dent, real estate investing, the great depression ahead

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http://www.thinkarchimedes.com aturner

I just picked up that book a week ago and couldn’t put it down! I finished it in 4 days. No matter what you think about what’s going to happen in the coming months/years, I recommend checking it out.

It’s definitely made an impact on my investing strategy.
http://www.arcimedia.com/blog Doug Greathouse

As always Patrick, thanks for the timely advice and recommendations! You da man!
Heather

I’m lucky enough to have a personal relationship with Patrick so I got an inside track on this about 2 weeks ago.

I’ve already recommended it to everyone in my inside circle.

No matter what kind of investor you are, it has some great insights.

Thanks again Patrick!
Tim Hawkins

All — I found this bit on Wikipedia; it appears that Mr. Dent is often way, way wrong on his guesses (refer to the DOW at 40,000 estimate). While this author may write an interesting book, his prognostication should be taken with a grain of salt (as you would do for any information you receive)

Criticism (from Wikipedia):

Dent makes heavy use of charts, cycles, and trends apart from his demographic theories in predicting short and intermediate term economic and stock cycles. His work is primarily based on the assumption that most long term stock market performance can be explained by studying long term trends and charts from the past. His critics question the assumption that clues to all major stock market events can be found in the relatively short history of well functioning stock markets in the world. His work has also been criticized for heavy use of data dredging- where it is easy to find patterns in past data and assign predictive powers to them when many such patterns occur in every data collection purely by chance. Dent has also been criticized for being downright wrong on several of his predictions by many economists. In fact, http://www.maxfunds.com, a financial reporting site awarded him the The “Ultimate Charlatan”[3] Award. They write: “The worst investing advice usually arrives near the top and bottom of stock market cycles. Demographic trends guru Harry S. Dent is making the rounds again, and touting his latest book, The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History … In his 2006 work, Dent predicted, “The Dow hitting 40,000 by the end of the decade, the NASDAQ advancing at least ten times from its October 2001 lows to around 13,500, and potentially as high as 20,000 by 2009…The Great Boom resurging into its final and strongest stage in 2007, and even more fully in 2008, lasting until late 2009 to early 2010.” … Of course, those who read The Roaring 2000s, Dent’s 1999 masterpiece, should soon be buying each of us a turkey with all the fixin’s. According to the book, only a year remains before the Dow breaks 40,000 and the Nasdaq hits 20,000, at which time we’ll simply amplify our fortunes by shorting stocks in the coming depression. We can’t underestimate how big this final move up will be before the depression kicks in, since The Dow and Nasdaq are currently quite a bit lower than they were back in 1999 when The Roaring 2000s was published.”
http://becoming-a-real-estate-investor.com L J Sutherland

I spent last Saturday with Robert Kiyosaki and his lovely wife Kim (Rich Dad Poor Dad)in down town Phoenix. I’m fortunate to have them live so close.

Robert said that he is waiting for the stock market to hit 3200 or lower and that’s where all the real bargains on everything will be found.

He mentioned a book he had written in 2000 that may be similar to the one Patrick has recommended. I’m not sure what its called, maybe “Prophecy” the guy has to many books, I can’t remember all the titles. Anyway, he believes were in for a depression too; so I think I’ll pick up a copy of the book Patrick recommends and I’d better get one of Robert’s books too.

Thanks again Patrick, for the recommendations.
Chris Rock

I’ll have to pick that up! Thanks Patrick! Question for Patrick. If home prices keep declining how does that affect your strategy of buying subject-to and selling on lease options. Couldn’t a property be worth less today than the agreed upon option price? How would you handle that?
Scott Wallace

Thank you for the recommendation I intend to get Harry’s new book but also caution that before we all go buying into Harry Dents New Theory, just a reminder that he is the same economist that predicted the Dow to hit 30,000 in the late 90’s
Greg Cook

I have read several of Harry Dents books in the late 1990’s. They were required reading for every stockbroker or financial planner who was trying to show clients the value and opportunity that were in equity (stock) investing. In the late 1990’s (right before the market crash), Harry Dent used demographic studies to make a case for how the time period of 2000-2013 would be the greatest boom in the history of the United States. If I remember correctly, he predicted that the DOW would reach over 20,000 by 2013- after 2013, he said that the US would go into a long recession and stock values would dramatically decrease from 2013-2024! Now he is predicting that the market will tank from 2009 to 2013. I absolutely agree, there is no time to profit like a down economy- I would just be very careful basing my business strategy on anything that Harry Dent “predicts”.
Heather

one further thought on this….This book is a must read for anyone wanting to be at least on the positive side of the years coming if not on the ‘benefited HUGE’ side of these coming years
Patrick Riddle

Thanks to everybody so far for contributing your thoughts!

It’s great to hear both sides of the story.

It reminds me of one of Jim Rohn’s suggestions when reading books. He says you gotta read both sides. If you read a book on Gandhi, read a book on Hitler.

So after reading a book like The Great Depression Ahead, it would probably be a good idea to read a book that has a compelling argument against it.

Keep your opinions coming guys!
Seth Newton

Thanks for the suggestion! It’s good to see the commentary on both sides as well.
Patrick Riddle

If you any of you guys read the book, I woul love to hear what you think.

Or if you dig up any further info on Mr. Dent or his predictions over the years, throw it in the comment area here.

The Great Depression . . . I Mean Opportunity Ahead

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