[Front Cover of The Great Depression Ahead]

The author, Harry Dent, initially made his name by forecasting a severe downturn in Japan and a great boom in the United States in the 1990s. He was right on both counts and he has been milking his success ever since, churning out an endless stream of books filled with predictions. In his previous book, The Next Great Bubble Boom, published in 2006, Mr. Dent called for a peak in the last bull market between late 2009 and early 2010. And what a bull market it would be! The Dow would hit a peak between 35,000 to 40,000 and the Nasdaq “advancing to around 13,000 and potentially as high as 20,000″. That book, in turn was preceded by the unfortunately titled and unfortunately timed The Roaring 2000s Investor (published in 1999 as the great bull market was peaking).

Perhaps tired of being constantly bullish, Mr. Dent tries a different tack in this book. He foresees the crash of 2008 to be an appetizer to the main course, which will be ushered in by an equally brutal crash in late-2009 taking the Dow down to 3,800 and stocks would continue to deflate even more between 2010 and 2012 and repeating the process into the early 2020s. (And you thought the past ten years were tough!).

Mr. Dent claims he can make these forecasts based on cause-and-effect cycles that can be projected years or even decades into the future. For instance, one of the cycles he looks at is the demographic cycle, in which birth rates rise and fall over a 40-year period. As one generation ages, it enters its peak earning and spending years around age 50, resulting in a boom in the economy and in turn the stock market. A cycle in the stock market can hence be projected 50 years in advance based on the demographic cycle.

The theory of cycles, while interesting, has resulted in predictions that turned out to be wildly inaccurate. You could then reasonably conclude that cycles are, at best, unreliable and at worst, have no predictive power at all. But, Mr. Dent remains undaunted when a forecast he so confidently made did not pan out. He simply explains it away by claiming that not taking into account other important cycles resulted in an “overforecast”. In other words, if these hitherto unsuspected cycles had been taken into account, the past was indeed predictable! For example, he explains that he cut his Dow 35,000 forecast down to 16,000 to 20,000 based on the discovery of two new cycles: “a clocklike 29- to 30-year Commodity Cycle and a 32- to 36-year Geopolitical Cycle, which alternates between favourable and unfavourable environments pretty reliably every 16 to 18 years”.

As I find his arguments to be specious, I’m happily ignoring Mr. Dent’s latest prognostications (which I only read because the publisher sent me a free copy) without a second thought. You can be sure of a couple of things though: if this forecast turned out to be wrong, Mr. Dent would be writing another book offering yet more predictions, discovering more cycles (a 75-year Halley’s Comet Cycle, perhaps?) and offering reasons for his “overforecast” (or is it “underforecast”?). If he is right, he’ll still be out with a new book of predictions, in which he will crow about his latest success.

The book is published by Free Press and has a cover price of $32.