Posted on 07/06/2010 7:26:12 PM PDT by blam
A Market Forecast That Says ‘Take Cover’
By JEFF SOMMER
Published: July 2, 2010
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.
Tami Chappell, The New York Times. If Robert Prechter is right, one market analyst said, “we’ve basically got to go to the mountains with a gun and some soup cans.”
Mr. Prechter is convinced that we have entered a market decline of staggering proportions — perhaps the biggest of the last 300 years.
In a series of phone conversations and e-mail exchanges last week, he said that no other forecaster was likely to accept his reasoning, which is based on his version of the Elliott Wave theory — a technical approach to market analysis that he embraces with evangelical fervor.
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.
“I’m saying: ‘Winter is coming. Buy a coat,’ ” he said. “Other people are advising people to stay naked. If I’m wrong, you’re not hurt. If they’re wrong, you’re dead. It’s pretty benign advice to opt for safety for a while.”
His advice: individual investors should move completely out of the market and hold cash and cash equivalents, like Treasury bills, for years to come.
[snip[
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.
[snip]
(Excerpt) Read more at nytimes.com ...
I wouldn’t own stock if it was a gift but in reality it should go below 1000!!
I heard a guy refer to alot of the present sentiment as Apocalypse hypochondria I tend to agree.
>> I trust you are aware that more than 50% of the volume on NYSE today — TODAY — occurred in just 99 issues, and C and BP were the two share leaders.
No, I had lots of work to do today at the “day job” so I didn’t follow the market much. Thanks for the tip, and good trading to you also! My guess is, you practice trading MUCH more than I do so you’re no doubt very goot at it.
FRegards
Yeah good luck with those Treasury bills when rates go from 2.9% to 18%.
“The markets will go down but there is no way the DOW would go to 1000, may be 6000-7000 in worst case scenario.”
if it was just there 16 months ago..........it can easily go significantly lower IMO ;)
Q: How many Eliot Wave theorists does it take to change a light bulb?
A: An Eliot Wave theorist never changes his light bulb. He simply declares darkness to be “the alternate count” and goes on with his life.
“I’m disappointed. I thought Prechter based his analyses on economics fundamentals, not fractal patterns in the charts.”
It’s not just the fractal patterns. I have trouble seeing them as a predictive tool. But he sees economic fundamentals as the RESULT of social mood and has various measures of social mood—both economics and otherwise.
He’s made some pretty good calls on major market turns. Regardless whether you believe the various fractal wave forms characterize market behavior in a predictive sense, his case for a deflationary depression today (based on the fundamentals) is pretty darn good.
Good one!
“The global warming theory applied to the stock market”
The difference is this guy speaks the truth...
Ping for later read.
I could see this happening if there were no Americans left here. Otherwise, starting at Dow 6500 people would move to stop whatever down-force is being implemented and by 4500 all hands on deck would remove Obummer and all his puppets. Too many people have too much at stake to let it just bottom on ideology.
Well, N.T., I try. Generally somewhat successful. Nothing I do that any other trader can't do, given the will to learn a bit about the business of trading (and to stay WELL away from popular "Commentators" such as that clown Cramer on CNBC, as well as less-obvious clowns who appear on FoxBiz and CNBC.)t
The mkts in stocks have become BADLY skewed, no matter who one's favourite 'guru' is. The notion of 'fairly valued shares' is, sadly, now a fiction. The world of the stock mkt has changed for good and all (you might look up, TODAY, the incident wherein Anadarko Petroleum traded ...allegedly... 200 shares at $100,000/share. Oh, that trade was "busted", as we say, rendered invalid after the fact...but the fact that such numbers can even be printed on the ticker means that matters are SEVERELY out of order.)
It is what it is. It has ALWAYS been what it is. Unfortunately, what it is NOW is something that Graham & Dodd (I assume you've read traditional investment theory...) would simply be unable to recognise.
Best wishes and good trading to you (and, at peril of your trading life, do NOT believe what the "mainstream" financial press have to say; it's difficult, but you will HAVE TO form your own coherent views about finance and the various mkts, because the bilge that the press pump out is just that: bilgewater.)
save
“Why? In the GD I stocks lost about 90% of their value - or about the same amount to DOW 1000 today (GD II) despite all the insane FDR government socilaist policies. Life did go on...’
Exactly. Markets are stronger than governments. Governments are enormously powerful, but markets will win out in the end.
It doesn’t matter how many people put their best efforts behind propping up the market, they will fail and be destroyed.
I’m no expert, but I got into the market October 2009. Slowly added shares. Buying blue chip dividend payers, most tied to hydrocarbons, consumer staples, consumer discretionary [Coke, McD’s], some utilities, At&T, and in the taxable account MLP pipelines.
YTD I am down 1%, due to BP, RIG, and NE. Otherwise, I’d be up by several percentage points. Almost all pay a good dividend.
If we are going to hell in a hand-basket, why on earth would one want a bunch of near worthless Federal Reserve DEBT notes, or Treasury promissory notes? There won’t be much of any tax revenues to pay back those debts. However, companies with a strong balance sheet providing fairly essential commodities, services, and cheap food should be able to continue to provide some sort of income.
scaredy bump
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