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Posted on 07/04/2010 6:47:40 PM PDT by HearMe
A Market Forecast That Says ‘Take Cover’
WITH the stock market lurching again, plenty of investors are nervous, and some are downright bearish. Then there’s Robert Prechter, the market forecaster and social theorist, who is in another league entirely.
Prechter is convinced that we have entered a market decline of staggering proportions — perhaps the biggest of the last 300 years.
......
Originating in the writings of Ralph Nelson Elliott, an obscure accountant who found repetitive patterns, or “fractals,” in the stock market of the 1930s and ’40s, the theory suggests that an epic downswing is under way, Mr. Prechter said. But he argued that even skeptical investors should take his advice seriously. .....
His advice: individual investors should move completely out of the market and hold cash and cash equivalents, like Treasury bills, for years to come. (For traders with a fair amount of skill and willingness to embrace risk, he suggests other alternatives, like shorting the market or making bets on volatility.) But ultimately, “the decline will lead to one of the best investment opportunities ever,” he said.
Buy-and-hold stock investors will be devastated in a crash much worse than the declines of 2008 and early 2009 or the worst years of the Great Depression or the Panic of 1873, he predicted.
For a rough parallel, he said, go all the way back to England and the collapse of the South Sea Bubble in 1720, a crash that deterred people “from buying stocks for 100 years,” he said. .......
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, he said. That unraveling, combined with a depression and deflation, will make anyone holding cash “extremely grateful for their prudence.”
(Excerpt) Read more at nytimes.com ...
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I have no doubt about the crash but the inflation that will come will wipe out cash too.
If this happens think of all of the analysts who say this was unexpected!
The government said the economy is GREAT!
It’s not in this article, but Prechter who here prophesies a crash and deflation, also has an alternative disastrous inflation scenario.
He says that if he is wrong on a crash and the market moves instead to new highs, surpassing 2008, that will signal an inflationary catastrophe.
Some pundits love to bash “buy and hold” stock investing. It’s almost as if they want the market to crash or are trying to keep people constantly buying and selling stocks. Could it be they have other selfish motivations than concern for their fellow investors? I think so.
Your comment is NOT comforting...
so if the feds can steer the economy away from crushing deflation a catastrophic inflation then the stock market volatility won’t be so profound
No, no. I think what the forecast actually says is “bend over, here it comes again”.
Just saying. If you follow the market, it had quite a run since last Summer.
Prechter of the other hand had called the start of his crash at every single replacement since then. Being wrong so far.
Saying that, my charts do show we are on an edge right here and the situation could look precarious. My guess is that some news - extraneous to the market- could be a trigger of real trouble.
And then there is the prediction of Arch Crawford- for anyone who knows who he is.
Just call it all Change without Hope.
Interesting stuff. Bump.
replacement = retracement
If Israel attacks Iran, and Iran chokes the Straight of Hormuz, look out!
Is it “blood in the water” time yet?
“And then there is the prediction of Arch Crawford- for anyone who knows who he is.”
Arch Crawford. Wasn’t that the name on the grave marker next to the grave marked “Unknown” where the gold was hidden in The Good, The Bad, And The Ugly?
Possibly a deflationary depression? Depends on what the government looks like after the crash.
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