From the Letters to the Editor section (emphasis mine):
More than 10 years ago in these pages, James K. Glassman and Kevin A. Hassett argued a new theory of stock valuation, writing that the Dow Jones Industrial Average would rise “to the neighborhood of 36,000” (“Dow 36,000,” September 1999 Atlantic). In January 2000, J. Douglas Van Sant of Stockton, California, wrote in to say that their theory was “a giant fallacy.” He bet Glassman and Hassett that in 10 years, the Dow would be closer to 11,000. The writers agreed to the bet: “If the Dow is closer to 10,000 than to 36,000 ten years from now, we will each give $1,000 to the charity of your choice.”
On December 31, 2009, the Dow closed at 10,428, as Brad W. Bradley of Bel Air, Maryland, pointed out to Atlantic editors earlier this year. Glassman and Hassett conceded, donating $1,000 each to the Salvation Army, by Van Sant’s request.
“It’s been a bad run for optimists,” Hassett noted. “James and I included a chapter in our book [based on the article] outlining why the equity-premium decline that was at the core of our thesis might stop or reverse itself. Just about every equity-downside scenario we could envision, including terrorist attack, later became a reality. Going forward, investors have to decide whether the U.S. has had a run of bad luck or whether something fundamental has changed that cannot be reversed. Either is possible.”
“I’m surprised at the way it turned out. I thought their theory was pretty extreme, and that was the point of my letter,” Van Sant said. “I never imagined the Dow would have been less than in 1999 [when it closed the year at 11,453]. In a way,I was probably just as wrong as they were. If someone had bet me it would be lower, I would have taken the bet and lost it. Everybody lost on that one.”
Not only did the Dow never had a chance to even reach 36,000 their theory was entirely silly (according to Paul Krugman).
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