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.