"Dow 36,000" Author Changes His Tune, Now Touts Buying More Bonds

James Glassman's book Dow 36,000 couldn't have come out at a worse time.� Released in 1999, moments before the tech bubble burst and sucked the air out of the high flying Nasdaq, the book heralded the U.S. stocks market as essentially a surefire way to make money. (See:Man Who Once Said "DOW 36,000!" Now Recommends A Diversified Portfolio, But Still Believes 36,000 Is In the Cards)

Obviously, two major crashes has a tendency to change one's mind.

In his latest book, Safety Net: The Strategy For De-Risking Your Investments In a Time of Turbulence, Glassman seems to be making amends for his past indiscretion and irrational exuberance.� He's now touting a more timeless strategy focused on portfolio protection.

"The basic idea of 'Safety Net' is you pay an insurance premium in reduced upside to protect yourself a lot on the downside," Glassman tells Aaron and Henry in this accompanying clip.

In "Dow 36,000", Glassman and co-author Kevin Hassett argued, essentially: "Put as much as you can into stocks, specifically into U.S. stocks., 80-90% of your portfolio," he explains. "I no longer believe that."

Glassman now believes in something closer to a 50/50 split between stocks and bonds for long-term investors of all ages.� It's not necessarily the path to a quick buck but when the market is crashing all around you, as it did in 1999 and 2008, "at least you're getting some kind of peace of mind and lack of anxiety," he says.

Besides a more even asset allocation between stocks and bonds, Glassman suggests owning a bear funds, or funds that returns the inverse of the market and using option strategies to reduce downside risk.

While commodities are currently the favorite "alternative" investment of many money managers, Glassman does not recommend investing directly in hard assets. Instead he suggests buying stocks like Exxon that offer exposure to commodities but "you're also getting the benefit of the human imagination."

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