A Market Forecast That Says âTake Coverâ

charts · Jul 6, 2010

... Mr. Prechter is convinced that we have entered a market decline of staggering proportions â perhaps the biggest of the last 300 years. ... his reasoning [...] based on his version of the Elliott Wave theory ... suggests that an epic downswing is under way ...

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 âfrom buying stocks for 100 years,â he said. This time, he said, âIf Iâm right, it will be such a shock that people will be telling their grandkids many years from now, âDonât touch stocks.â â

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 âextremely grateful for their prudence.â

Mr. Prechter is hardly the only market hand to advocate prudence now, but nearly everyone else foresees a much rosier future, once current difficulties are past.

... Along with A. J. Frost, Mr. Prechter wrote âElliott Wave Principle,â a 1978 book that predicted the emergence of a great bull market â a forecast that was largely fulfilled. By 1987, he was widely regarded as an expert in technical analysis.

... A grand cycle is ending, he says, and the time for reckoning is near.

... In 2002, he published âConquer the Crash,â which predicted misery ahead. Even so, he said in 2008 that the market would soon rally sharply â then said late last year that stocks were about to fall and that the great decline would resume.

... Since 1980, the advice in his investing newsletters, when converted into a portfolio, has slightly underperformed the overall stock market but has been much less risky, losing money in only one calendar year, according to calculations by The Hulbert Financial Digest. Mr. Prechter said he disagreed with the methodology used in these measurements, but offered none of his own. ...
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pspr · Jul 6, 2010

You can take Prechter's advise with a grain of salt. But, the Royal Bank of Scotland is, again (they were right last time) looking for big economic problems. And, if I recall, Arch Crawford, who has a decent reputation, is looking for a market meltdown sometime around Aug. 1st.

10yr_DONK · Jul 6, 2010

blah blah blah blah

wilburbear · Jul 6, 2010

Naysayers feel vulnerable when they realize they don't have control.

Prechter is adrift and "swinging for the fences", trying to make a name for himself as "the guy who called the crash".

He's tried this before. It won't happen.

nazzdack · Jul 7, 2010

Quote from charts:
......a much rosier future, once current difficulties are past.....

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They're always "certain" about the long-term but always unsure about the near-term.

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A Market Forecast That Says âTake Coverâ

charts

pspr

10yr_DONK

wilburbear

nazzdack

A Market Forecast That Says âTake Coverâ