The main idea behind the book was that stocks were no more risky than bonds. The irrational exuberance of the roaring market circa 1999 led the authors to conclude that the risk premium for stocks was equal to that of bonds, which would inexorably lead to increasingly rising stock values.

The Dow Jones Industrial Average opened at a mere 10,528.25 the day Dow 36,000 hit the bookshelves in 2000. Unsurprisingly, it did not come close to hitting the magic number by 2008. In retrospect, the authors were not only wildly optimistic, but they also misapplied the Gordon Dividend Discount Model to calculate the price rise. You’d think the authors, with their reputations in tatters, would slink away in humiliation. In fact, they both did well for themselves. The book is now seen as the main reason why authors should never associate a number with a specific future date.

Takeaway: Making predictions can be fun and occasionally lucrative. Just never associate a date with a number. 

Notwithstanding the book’s annoying title, Are You Missing the Real Estate Boom? takes the cake as the most outrageously bullish casualty of pre–housing crash hysteria. The 2005 book by the chief economist for the National Association of Realtors, David Lereah, refuses to even consider joining the words housing and bubble in the same sentence. Instead, he assures that real estate “will continue to outpace other investments” and guarantees homeowners “dramatic increases” in their overall wealth. Only three years later, the wheels came off the housing market, bankrupting hundreds of thousands of investors who got on the housing bandwagon precisely because of predictions like this. Lereah likely misled thousands of readers out of their retirement funds.

Takeaway: Of course, in the long term—the long term!—real estate can be a fine investment. But the investor with a short investing horizon should be wary of nonliquid investments.

Here’s another cautionary tale of an author who made the mistake of attaching a prediction to a date. Of course, “Dow 30,000 by 2008!”missed the mark. That’s too bad, because Robert Zuccaro has actually demonstrated sound investing chops. One of the original quants, he introduced his quantitative investing strategy in 1978, 10 years before Morgan Stanley introduced its first quant fund. Zuccaro has some well-grounded views about why corporate earnings are the best predictor—better than PE ratios—of investing success. Unfortunately, he gets sidetracked in this book by making wild predictions. Not only did the Dow end the year at just 8,500, in the last quarter of his target year the Dow plummeted by more than 30%. Ouch.

Takeaway: Anytime an expert proclaims, “it’s different this time,” remember that it’s almost certainly more of the same.

The Great Crash Ahead was published in the wake of the passage of the American Recovery and Reinvestment Act of 2009, the stimulus package signed into law by President Barack Obama. To Harry Dent, the injection of over $800 billion in stimulus funds into the economy represented so much debt and uncertainty that a market crash was inevitable. Few authors have been so bold in their predictions. Dent predicted that the Dow, hovering around 11,000 for most of 2011, would fall by three orders of magnitude by 2013 to between 3,000 and 3,800. Few predictions survive the collision with reality. In 2013, the Dow was up 26.5% to an average closing price of 15,009. Dent also forecast a deflation in prices and the bursting of the bubble in China. Both forecasts also turned out to be without merit.

Takeaway: Beware any author who sees calamity when the Fed acts during extraordinary times to ward off recessionary forces. 

OK, let’s give Prechter credit for timing. His book came out just as the housing crisis, which crashed the markets in 2008, started bubbling out of control. But his comparison of the late 1990s with the Great Depression of the 1930s is pure cloud-cuckoo-land. In the five years after the book came out, the Dow increased by an average of 34%. The book’s extended analysis of Elliott Wave Theory serves only to make astrology look good in comparison. Nor did Prechter learn any humility. In July 2010, he wrote, “The Dow, which now stands at 9,686.48, is likely to fall well below 1,000 over perhaps five or six years as a grand market cycle comes to an end. …”  Shortly after he announced that prediction, the Dow hit an all-time closing high of 16,715.44, a 73% gain.

Takeaway: Despite the-sky-is-falling warnings that the world has turned upside down, the world goes on pretty much as it always has and it’s much more likely that it is the alarmist author who gets upended.

"The end of the modern Chinese state is near. The People’s Republic has five years, perhaps ten, before it falls,” Gordon G. Chang wrote in the first sentence of his 2001 book, The Coming Collapse of China. Has a prediction by a supposed expert ever been more laughably wrong? Chang insisted that the inefficiency of state-run enterprises combined with the internal contradictions of the Communist Party of China would sink the country’s economy in 2011. When 2011 came and went with China’s economy chugging along better than that of the U.S., Chang doubled down on his bet and was quoted by Foreign Policy as saying, “Instead of 2011, the mighty Communist Party of China will fall in 2012. Bet on it.” Anyone who bet against China based on Chang’s assurances should be able to recover damages for expert malpractice. 

Takeaway: Beware of experts expressing pessimism on a global scale.

“Dow 100,000: Fiction” would be a more accurate title for this bullish nonsense. Needless to say, even with the Dow at record highs, 23 years after publication, the Dow is nowhere in the neighborhood of the book’s assertion. Why is the author so bullish?  “The world is entering a new era, an historic moment, the beginning of a Great Prosperity—a decade or more of above average economic growth,” he writes. The world, apparently, didn’t buy Kadlec’s supply-side nonsense.

Nor can the author escape ridicule by invoking the ambiguity of the subtitle. In his introduction, Kadlec discards his credibility by invoking such loopy predictions as Prudential’s Ralph Acampora (Dow would reach 18,500 by 2006) and the claim by Roger Ibbotson, a professor at the University of Chicago that the Dow would reach 120,000 by 2025.

Takeaway: Technical analysis can be a solid investment tool for short-term bets, but for long-term market forecasting, flipping a coin is no less solid.

Many readers will remember the panic in the final years of the 20th century when experts warned that markets would crash due to a computer coding problem dubbed the millennium bug or Y2K. Dozens of books warned that without massive reprogramming, life on Earth as we knew it would basically disintegrate. Of course, the issue was totally overblown. As we now know, as the New Year’s revelers in Times Square shook off their hangovers on Jan. 1, 2000, electricity still flowed and no planes fell out of the sky. I’m picking on Time Bomb 2000, but there were other scary titles such as The Millennium Meltdown and The Y2K Tidal Wave that could equally be on this list. The books had covers with ticking time bombs or the Earth aflame, warning that “social stability is about to be shattered.” The problem was that all of these books created a relentless feedback loop in which the existence of Y2K alarmism led to more alarmism.

Takeaway: Beware of self-interested experts desperately alerting the country to supposed problems they happen to be in a unique position to fix.

“If all else fails, immortality can always be assured by spectacular error.” This quote from John Kenneth Galbraith may well appear in the obituary of Whitney Tilson, an American investor and former hedge fund manager, who in a much-ridiculed 2004 article, predicted that Google’s IPO would basically fizzle out. “I believe that it is virtually certain that Google’s stock will be highly disappointing to investors foolish enough to participate in its overhyped offering—you can hold me to that.” To compound his error, he continued, “Think about it. What are the odds that [Google] is the leading search engine in five years (much less 20)? Fifty-fifty at best, I suspect.”   

Takeaway: Even highly respected stock pickers with a good track record can get it spectacularly wrong.

Perhaps the most infamous financial magazine prediction of all time occurred when the Aug, 13, 1979, issue of BusinessWeek (now Bloomberg Businessweek) declared “The Death of Equities.” Based on the fact that inflation was raging and Wall Street was emerging from another bear market, the article asserted that “For better or for worse, the U.S. economy probably has to regard the death of equities as a near-permanent condition—reversible someday—but not soon. The death of equities is a near permanent condition.” Not quite. Within three years, the market—led by the very equities BusinessWeek declared DOA—rose from the dead and kept rising. The total return of the S&P 500 index since its 1982 low, with dividends reinvested, has been nearly 7000%. In retrospect, it’s clear what the article missed: Fed chair Paul Volcker’s determination to defeat inflation by putting the U.S. economy through a pair of recessions. With inflation under control, investor confidence returned and equities walked the Earth again.

Takeaway: “The Death of Equities” cover story actually was well reported. It captured what a lot of smart people on Wall Street thought at the time. Unfortunately, the smart people weren’t smart enough to know the era of high inflation was about to end.