At The Atlantic, we pride ourselves on the foresight of our authors. We like to point out that “As We May Think,” Vannevar Bush’s 1945 meditation on information networks, foresaw the creation of the World Wide Web. We less often highlight “The Coming Air Age,” another Atlantic article of the same period, which predicted that the average businessman would soon be commuting to work in a helicopter.
The last decade has been no exception: we’ve published some 2,000 articles, and many turned out to be eerily prophetic. Nine years after James Fallows’s cover story “The 51st State,” Uncle Sam is, as our cover image anticipated, staggering under the weight of a smoldering Iraq. But inevitably, our crystal ball has its flaws. Here are five thoughtfully argued
36,000 (September 1999)
by James K. Glassman and Kevin A. Hassett
This brazenly bullish article actually appeared in late 1999, but it captures the turn-of-the-millennium zeitgeist so perfectly (and so painfully) that we couldn’t resist including it. The authors, both fellows at the American Enterprise Institute, had listened to Alan Greenspan’s warning against “irrational exuberance” and emphatically rejected it. “Markets and media pundits have persistently warned that stocks are extremely risky,” they write in the opening of this piece. “About this they are wrong. … Stocks are now, we believe, in the midst of a one-time-only rise to much higher ground—to the neighborhood of 36,000 for the Dow Jones Industrial Average.”
Needless to say, that swift, steady climb didn’t exactly happen. First there was the brutal dot-come crash, which sent the Dow down more than 30 percent. Then came the slow recovery march, which reached its summit in October 2007 at 14,164. By the end of this past February, when the Dow sank back down to less than half that level, Glassman and Hassett’s argument sounded breathtakingly naïve—an echo of the Roaring Twenties economist Irving Fisher, who announced shortly before Black Tuesday that stock prices had reached “a permanently high plateau.”
How could two financial experts have been so wrong? Mostly because the Internet was still in its infancy. The authors based their back-of-the-envelope calculations on late-’90s Silicon Valley trends—estimating, for instance, that Cisco stock would again double over the next five years. They also found it hard to imagine that investors of the information age, relying on abundant and up-to-the-minute data, would make the same mistakes their forefathers did. The primitive investor was like a nervous bather, dipping a toe into the chilly river of the stock market. In contrast, they wrote, Americans were now free to dive in head first, knowing from their Internet research that the water would be fine.
The authors now admit that their exuberance was perhaps a bit irrational after all. But they stand by their vision of a Dow index that will more than double the current all-time high. “I have no doubt about that,” James K. Glassman recently told The Washington Post. “I think that is absolutely true. But I’m not going to tell you what date.”