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Only A Dent In Housing: The New Market Bubble Theory For Stocks

[Here’s an interview with Harry S. Dent on the Market Bubble Theory [Wired News].]((http://www.wired.com/news/technology/1,70034-0.html) The bubble he refers to is the stock market but the housing market will be one of the factors to impact it.

Welcome to the world of Harry S. Dent, an economist and demographic researcher whose 1992 book, The Great Boom Ahead, called the stock-market bubble of the late ’90s when few saw it coming. In his 2004 book, The Next Great Bubble Boom, Dent predicts an even bigger bubble forming over the next few years. That is, before everything crashes down around us.

“Obviously, it’s hard for stocks to take off with oil going straight up to $71 a barrel. It’s hard for stocks to take off when the Fed keeps saying, “We’re going to raise interest rates higher and higher, and we don’t care what the bond markets say about inflation.” And every day, people putting more money into housing speculation is more money not going into the stock market. Now that housing is deflating, there’s no place for money to go. The money has to go back into stocks. We see the Dow at 32,000 to 40,000, and probably on the higher side. The Nasdaq around 13,000.”

We’re going to mainly see housing prices just kind of flatten — maybe decline a teeny bit. We expect south Florida, the Northeast, California, Las Vegas and markets like that to actually decline, but most housing markets will simply just be at slightly negative or slightly positive or neutral. That doesn’t cause a housing crisis.

He sees housing leveling off as people move their funds into stocks causing a large run-up in stock prices that ultimately crashes in 2010.

Its interesting how the experts that called a previous market bubble, are the experts for the next one. I am not aware of anyone who has called two in a row, but I may be wrong on this, but it does sell books.