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Well Respected Man

|Includes: AdvisorShares Dent Tactical ETF (DENT)

Before I get into the multitude of issues I have with Harry Dent, I'd like to begin by saying that I think he's an intelligent man and not the charlatan one financial Web site called him. After all, he's in the market timing business and to get it right once is almost a curse because your followers expect you to be on the money each and every time you open your mouth. It just doesn't happen that way. Even being in the ballpark doesn't cut it when day traders have you under the microscope. As a disclaimer, I'd like to say that I'm not a subscriber to Dent's newsletter and hot line, but do have access to them through a fellow investor that shares them with me. I also have read all of his books and find the majority of his material useful because he's an excellent researcher. His prowess as an investor is questionable, but we'll get to that in a moment.

Dent was a raging bull in the 1980's, 1990's and 2000's. I'm going by the seat of my pants here only because it's been a long time. But during the 1990's, Dent wrote both The Great Boom Ahead in 1993 and The Roaring 2000s in 1998. In The Roaring 2000s, Dent claimed that the DOW would reach 25,000 in a matter of years, only to see it come crashing down after reaching a high of 11,722 the week of January 10th, 2000. In 2004, he came out with another book, The Next Great Bubble Boom where he made another bold prediction of the DOW reaching 40,000 by the end of the decade. We all know what happened here. The Dow reached a high of 14,093 the week of October 8th, 2007 and never looked back as it went spiraling downward to the lows of March, 2009.

In fact, in the Fall of 2008 when the market imploded, Dent hung onto his bullish predictions until November when he advised clients to raise cash and get out of the market. It was a few months later at the beginning of January, 2009 that Dent wrote in his monthly newsletter urging subscribers to get back in. The market then proceeded to tank once more, but he garnered a 20% gain for his followers in 2009 if they stayed fully invested to take advantage of the current rally we are still experiencing. However, Dent is by no means a perma-bull. He's quite bearish right now (although he does see this rally continuing for another few months) and has been predicting another great depression for more than a decade. His 2009 book The Great Depression Ahead is a New York Times bestseller and rightfully so. It's a good read and I recommend it.

What I don't recommend is investing in Harry Dent's relatively new AdvisorShares Dent Tactical ETF (NASDAQ:DENT) because it is an actively managed Exchange Traded Fund and because Harry Dent has had poor performance in the past when he ventured into the mutual fund business. As Larry Swedroe of CBS MoneyWatch wrote in September of 2009: "In 1999, the AIM Dent Demographics Trend Fund was launched, based on the demographic, economic and lifestyle trends identified by Dent. Unfortunately, the fund's results were miserable. From 2000 through 2004, the fund lost more than 11 percent per year and underperformed the S&P 500 Index by almost 9 percent per year. In 2005, its sponsor put investors out of their misery by merging it into the AIM Weingarten Fund.". Although I realize the AdvisorShares Dent Tactical ETF (DENT) is a new venture for Dent and I should give him the benefit of the doubt, I am opposed to actively managed ETFs because of their high expense ratios and believe ETFs should just be index based.

I've had the opportunity to read many investment newsletters and find Dent's to be one of the better ones because he does such thorough research and backs up his findings with cold, hard data from a variety of sources. However, I think it's how you interpret the data that gets Dent in trouble at times. He tends to be more of a technical analyst and I am a value investor and many times don't see eye-to-eye with his interpretations of the statistics he presents. He's also in the dangerous business of making short-term projections as to where the market is heading. He reports these projections in his almost weekly updates. As stated earlier, The Great Depression Ahead is an excellent book and I found it to be instrumental in determining some of my bearish stances. The rest of his books are outdated now, so they are best to avoid. I'll continue to read his newsletter while taking them with a grain of salt.

Disclosure: No positions