"As a comparison, I thought it might be useful to look at real GDP growth during the first three quarters of the Reagan Recovery. During the first three quarters of that recovery, the economy grew at 8.1%, 9.3%, and 8.1% respectively."
Posted on 07/08/2010 2:57:31 AM PDT by TigerLikesRooster
Prechter: Dow Could Plunge to 1,000 as US Sinks Into Deflationary Depression
Tuesday, July 6, 2010 03:38 PM
Longtime technical analyst Robert Prechter said on Tuesday he expects that stocks will plunge as the U.S. economy sinks into a deflationary Depression.
The Dow Jones industrial average stock index could fall to between about 1,000 and 3,000 points during the next five to seven years, he said in a telephone interview. The Dow was trading at 9,700 in late Tuesday afternoon trading.
"It is very clear there is substantial stock market risk," said Prechter, who urges investors to put their money in cash proxies such as safe-haven U.S. Treasury bills instead.
Prechter is known for his very bearish views on the economy and also for forecasting a big bull market in stocks in 1982 and for getting out before the 1987 market crash.
Over the near term, the dollar will remain under pressure against the euro and against the safe-haven Swiss franc, he said.
In early June, Prechter said the euro was about to embark on a near-term rebound of about 10 percent over two or three months because technical indicators showed that amid the euro zone sovereign debt crisis, investors had become overly bearish on that currency.
(Excerpt) Read more at moneynews.com ...
P!
If it does - BUY!
Precter has been a one note Johnny for 30 years, has been predicting this for decades so if he finally gets it right.....It still means if you took his advice at point a, b, or c, you lost your shirt
With the money he got from loyal subscribers to his “investment advice” he bought a nice place in rural Northern Georgia that I’ll bet is a disaster proofed survivalist compound. But he did that years ago because he’s been predicting doom and gloom for years and decades
It doesn’t take a rocket scientist to figure this out.
>> Precter has been a one note Johnny for 30 years, has been predicting this for decades so if he finally gets it right.....
Predicted twelve of the last three recessions, eh?
I agree.
UHHHHH...It closed almost 300 points higher at over 10,000 Tuesday.
The stock market (DOW) gained 7,000 pts. in the 1990’s. Based on 4% inflation, that is equivalent to a one century growth happening in one decade. Why? 401K money. When the white hairs start withdrawing 401K money to pay bills, due to medicare cuts, what will happen to the DOW?
Well, it COULD plunge to zero, but it won’t, and it won’t plunge to 1000 either.
The advent of lower cost Computer Based productivity tools for a host of industries had the effect of a quantum leap in productivity.
A CAD solid modeling program that with a skilled operator/designer could design a part in 2 to 4 hours that took two weeks on the drafting board.
Ditto that on the CAM end when the cut the part from the solid model.
Ditto all the small businesses that adopted the Windows Office suites.
This was a paradigm changer or game changing shift like we hadn't seen since going from agricultural to manufacturing. The microchip that had it's origins in miitary apps (if my history is correct) in the 80's became mainstream.
Clinton's economy was the benefit of this, he didn't have to do a damn thing. This is where Oboingo will muck it up. He does not have a game changer in his back pocket as he goes back to Clintonian tax rates and more. The only like springboard I can think of is genentically engineered drugs, but the question is will Obamacare dry up the R & D money or did the drug industry get enough of a honey pot to keep them moving along. If not I see the economy just drying up.
UMP
"As a comparison, I thought it might be useful to look at real GDP growth during the first three quarters of the Reagan Recovery. During the first three quarters of that recovery, the economy grew at 8.1%, 9.3%, and 8.1% respectively."
My first thought as well. JNJ and PG would be yielding 15% in that case. By all means bring it on; I’ll cash in some Series E and buy XOM.
Let's say I agree with you, then are you saying that stocks going up 300% in the 1990's is a fair market value? If so, then we should expect DOW 10,000 (with periods of ups and downs) for the next 100 years because there are no major "game changing technological advances"?
I just sold all my real estate and put the money into the stock market to try and recover what I lost in the housing crash. I thought Obama said the economy is recovering.
I can't see them repeating it with them not utilizing cash on hand and not investing in new product or added employees as they face the Obamacare and more with these dingbats, the buzz in business I read is they are quietly saying this is not a good environment going forward to conduct business.
this is not advice, but we be stuck @ 10,000 or will we trade in a range? possibly IMHO, until conservatives or business minded individuals remove the threat of further control from Washington. Then more advances will come, some may come from left field, ones we will not expect.
I don’t see a deflationary depression with all this inflationary, deficit spending. When China stops buying our debt instruments, our dollar will sink in value, which is what happens in inflation.
China is just waiting. I suspect that some day China will dump our bonds, and follow up by an invasion of Taiwan, takeover of India, rule of Korea as a protectorate, &c., and we will be able to do nothing about it. All China has to do is time things right.
The economy will then decline, and unemployment will rise. The government will keep shoveling ever-inflating dollars into unemployment relief, indexed Social Security payments, stimulus programs, &c. That will enhance the vicious cycle.
Things could get bad, but a deflationary depression it will not be.
For a comparison, look instead to Weimar Germany, post-WWII Hungary, or today’s Zimbabwe.
This clown is going in the other direction. Ya cash is cheap, but you can't get it, and on tax policy,IMHO if you go back to the Clinton rates and Obamacare in total, Oboingo will in effect wipe out everything Reagan did and take us back 20 years to Carter.
We are so screwed...
I guess the question one needs to ask is where would the stock market be valued at today if the financial industry hadn't been allowed to offload and ignore bad loans?
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