Is the Worst Over for Stocks?
Posted January 25th, 2008 by manystrom
in
Is the worst over for stocks? Robert Prechter's short answer (above) is "NO." His long answer is compelling, extremely interesting and includes insights into what you should be doing NOW to prepare for what's still to come. For the long answer, join his free economics & financial community, Club EWI.
The sign up link is at the bottom of this post, after my full disclosure notice:
Full disclosure: I have been reading Robert Prechter's work since 1998, when I picked up his book "At the Crest of the Tidal Wave" on a backpacking trip in Bangkok. He has been pessimistic on the the US economy & stock market for the past decade. His arguments are valid, in my opinion, and I subscribe to his US Market Newsletter package. He is not always right (who is?), but he is one of the most interesting analysts around because he usually goes against the crowd and has a fantastic way of looking at what is going on, one that you won't read in the MSM / old media. As the video notes, he was one of the few analysts to call the 1987 crash.
One difference in his analysis from Dr. Paul's is that he expects massive deflation, rather than hyperinflation. Dr. Paul says the Fed prints money from thin air; Prechter's position is that it isn't money, but credit that it being created. This may sound like a minor point but the difference is that money is money, but credit is just a loan.
The reason everything is so expensive these days is because it is easy to borrow money. Who could afford to pay cash for a home? Hardly anyone. But if you can borrow money cheaply, nearly anyone can afford one, as the recent sub-prime debacle shows. However, borrowed money has to be paid back. As the economy slows down, people won't be able to repay their loans. Assets then fall in value. The stock market drops, housing prices fall, etc. One of Prechter's main differences is that he believes gold will fall in value along with everything else. The reasoning is that people need cash to pay off their loans. You can't pay your mortgage with gold. You need Federal Reserve Notes. So people will sell everything to stave off bankruptcy; all asset values fall, and the value of the US dollar will paradoxically go up - though only through the deflationary period. In the end however, Prechter, like Dr. Paul agrees that gold is real money.
The full disclosure part is that Bull! Not bull receives financial compensation for any signups to his club, and/or subscription purchases that result from people clicking on the link. However, as I said, I'm a subscriber and I wouldn't recommend checking it out if I didn't think there was value in his opinions. I look forward to his newsletters every month.
Finally - do not follow anyone's opinions slavishly. Think for yourself. No one, and I repeat NO ONE has a crystal ball with absolute clarity of what will happen in the future, including you, me, Dr. Paul or Mr. Prechter. Independent thinkers take in as much information as possible and come to their own conclusions.
With all that out of the way, click on the link below if you'd like to join the club. Membership is completely free. Hours of interesting new insights await!
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Market Updates:
astroharmonics & Armstrong date coming crash?
8 of the greatest stock market crashes occurred 2 weeks before to 6 weeks after a solar eclipse accorrding to Steve Putze. With the majority starting after a full moon 2 weeks after after a solar eclipse. The crash usually last 2 to 4 weeks.
Martin Armstrong decades in advance had the date of the oct 87 crash as a possible turn date as well as many other important historical turn dates. Which he originally had calculated from the crash of 1929 which also was with in the perameters of Steve Putz time window for a crash.
Think about 2 of Martins Armstrong turn dates that I know of were within 2 to 4 weeks of a lunar eclipse after a solar eclipse. The 1929 crash date he never predicted but it is with in his cycle turn dates if you go backwards. His turn date after both 1929 & 1987 resulted in a crash when there was a lunar eclipse 2 to 4 weeks before.
Eclipse occures on Feb 20th 2008 the full moon 2 weeks after solar eclpise. Martins turn date Mar 20 2008 full moon 4 weeks after the solar eclipse
It is possible to count several 1,2 1,2 to the downside. As well as a 3 3 3 correction that takes the all time high into account as well the lows of this year.
Oct could have put a Lynsday (SP maybe) top in instead of putting a low to low to low the cycle went low to low to high which happens @ major tops
Darren
it's not that there is something wrong with EWT..
it's just that Prechter is no good at it. most people aren't any good at it. they usually use it to validate a view they already have, or to make it so complicated as to confuse others into thinking it's magical. EWT is just a tool, not more important than trend or momentum or cyclic analysis.
ps. he does not trade his own money, just buys t-bills. says it's to give his subscribers an unbiased view of markets. i think he realizes he sucks at it, and gave up. decided to make money with a newsletter.
waves
I've read his stuff from time to time over the last 30 years and he's been wrong so much that I chuckle when I see him. He must only make his $ from newsletter subscriptions, not growth or profits...
Prechter
Mr. Prechter is a one hit wonder. He called the stock market crash in 1987 and has managed to parlay that prediction in to a career. Every release since has been a flop. Eventually he'll get something right, of course - stop clock and all. But listening to him and his advice is less than useless. One might even start to take the man seriously (as he so obviously takes himself) and loose some serious money in the process.
Some one give this man some advice such as when you find yourself in a hole stop digging. Instead, Mr. Prechter pulls out a shovel.
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give up on prechter
michael, the last time you bonused everyone Prechter's newsletter (Nov?), he was bearish on gold [as he as been since $400], and bullish on the stock market [we were in a triangle formation, with the averages making new highs this year]. he is consistently wrong. use him as a contrary indicator. you'll be better off.