It’s Time to Get Out of the Stock Market

Market faces epic fall, social theorist predicts
Forecaster urges move from stocks to cash only

New York Times


Robert Prechter is convinced 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 recently, 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 1940s, the theory suggests 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: Investors should move totally out of the market and hold cash and cash equivalents, like Treasury bills, for years to come. But ultimately, “the decline will lead to one of the best investment opportunities ever,” he said.


Well, there it is.  Now what should the average American with a few grand in the market do?  I’d say- Get out!  In fact, my wife and I did just that two months ago.  We moved our meager mutual funds to an annuity because we’re done with other people playing around with our hard-earned savings.

And you know, that’s what it really is- letting other people gamble with our money and if they lose, so what!  For 10 long years we watched these mutual funds gain, lose, and gain once more- then lose again.  We were tired of the roller coaster because the ‘ride’ isn’t at all fun any longer.

Robert Prechter has a very good track record of predicting market movements.  He was one of the first ‘experts’ to warn, in October, 2007, of major cracks in the market. He continued to throw up red flags from that date all of the way through the giant tumble a year later.  Trouble is, few people heeded his warnings, except perhaps those who subscribe to his newsletter.

President Obama just signed the new Financial Reform Bill, with a handful of GOP votes, but I am sure that there are folks in the so-called ‘financial services’ sector who are burning the candle at both ends to figure out how to circumvent these rules and regulations so that they can once again gamble with other people’s money.

My wife and I are finished gambling; we played and lost and learned our lesson.


7 thoughts on “It’s Time to Get Out of the Stock Market

  1. Just a note of warning. You used a term on a recent post, that is,
    “SNOOKERED”. Did your friendly Bombastic Bushkin financial adviser, whom you have referenced previously, recommend an annuity? Did you do your own homework? What does the insurance company keep? Is there a penalty if you withdraw? Did it cost to move from the mutual funds to the annuity?

    As I reach the mandatory age to begin withdrawls from my retirement accounts, I have been wondering what to do. I have not rturned to even from the economic collapse in Sept, 2008. While they had been gaining, my last quarterly report again showed a significant loss, not a loss back to 2008 but a significant loss of what had been gained back.

  2. No cost to move from mutual fund to annuity. The money is no-load. There is a declining early-withdrawal penalty, but that is obvious with an annuity.

    Our first ‘bombastic Bushkin advisor’ was totally worthless. The new guy is better, but they are all really gamblers at heart [and so are we!]

    We get a monthly interest check which at least pays the electric bill. One needs to praise small financial victories!

    The really sad part of this story is that I had an annuity for 25 years but, get this, it was “only” returning 6.5% so our former FA ‘recommended’ rolling it into a mutual fund.

    Gamble and you lose!!

  3. Hello Muddy,
    I will be gone all weekend to marry off my oldest daughter. I did post a video clip on my site that will make you laugh your ass off. Enjoy and I will talk with you on Monday.

  4. I have to admit that I own no stocks. I am the ultimate cheap skate. I just don’t spend any money that I don’t have to. That’s my cunning plan and it seems to work quite well, thank you. I have a car, a house, a very productive garden…What more could I want?

    Engineer, I will check out your post, tout de suite!

  5. Is this the same muddy who was denigrating people not long ago for buying gold? The same guy who accused Beck and Rush of creating paranoia by endorsing gold purchases?
    The same gold that has seen an increase in value during every financial crises?

    The same gold that was worth $30 an ounce before FDR confiscated everyone’s gold coins…and today, 60 years later closed at over $1200 an ounce?
    The same gold that Nixon removed the value of our currency from and replaced with promises?

    I’ve made my share of bad financial decisions too but, gold and silver were neither of them!
    I prefer silver over gold because (and EOK may be able to back this up) because silver can be broken down into barterable tender easier than gold can should anarchy break out. I saw people breaking small silver ingots with visegrips and using it as hard currency when Yugoslavia fell apart!
    When every currency exchanges stopped trading dinars and it fell to zero, the only things trading were food, foreign currencies, gold, silver and sex!

    And at the rate our government is printing dollars, spending money and, borrowing it…you’d best have more squirreled away than T-bills and paper (electronic) stocks!
    Because if the government runs the dollar into collapse muddy, I hope that your backup plan isn’t selling sex!

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