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Dow 30 headed to 1,000 according to analyst.

rafterman

A sadder and a wiser man
Feb 15, 2004
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Ha ha ha.......don't say you weren't warned.

Get out of stocks, Robert Prechter warns
Jeff Sommer
10:56 EST Sunday, Jul 04, 2010

With the stock market lurching again, plenty of investors are nervous, and some are downright bearish. Then there’s Robert Prechter, the market forecaster and social theorist, who is in another league entirely.

Mr. 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 last week, 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 fervour.

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 ‘40s, the theory suggests that 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: Individual investors should move completely out of the market and hold cash and cash equivalents, like Treasury bills, for years to come. (For traders with a fair amount of skill and willingness to embrace risk, he suggests other alternatives, like shorting the market or making bets on volatility.) But ultimately, “the decline will lead to one of the best investment opportunities ever,” he said.

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 “from buying stocks for 100 years,” he said. This time, he said, “If I’m right, it will be such a shock that people will be telling their grandkids many years from now, ‘Don’t touch stocks.”’

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 “extremely grateful for their prudence.”

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. For example, Ralph J. Acampora, a market analyst with more than 40 years of experience, said he moved entirely out of stocks and into cash late last month. Now a partner at Alverita, a wealth management firm in New York, he said recent setbacks suggested that the market would drop another 10 or 15 per cent, probably until September or October, before resuming another “meaningful rally.”

Over the next several years Mr. Acampora expects an “old normal market,” characterized by relatively short-lived swings that will provide many opportunities for smart investors - one that resembles the markets of the 1960s and 70s. “I’ve lived through it,” he said.

Like Mr. Prechter, he is a past president of the Market Technicians Association, the leading organization of technical market analysts, and he said that his colleague has done “some very good work.” But Mr. Acampora doesn’t agree with Mr. Prechter’s long-term theories, either intellectually or emotionally.

The “mathematics don’t work,” Mr. Acampora said, because such a big decline would imply that individual stocks would need to trade at unrealistically low levels. Furthermore, he said, “I don’t want to agree with him, because if he’s right, we’ve basically got to go to the mountains with a gun and some soup cans, because it’s all over.”

Still, on a “near-term” basis, he said, “We’re probably saying the same thing.”

Similarly, Larry Berman, who co-founded ETF Capital Management in Toronto and recently ended his term as the president of the technicians association, says he sees a “classic” short-term negative market trend developing now. But he doesn’t use the Elliott Wave theory, saying Mr. Prechter is trying to “measure the market in decades, which is too long a time frame for practical trading purposes or for risk management.”

Mr. Prechter, 61, lives in Gainesville, Ga., where he runs Elliott Wave International, a forecasting and publishing firm. He graduated from Yale University as a psychology major in 1971, dabbled as a singer, drummer and songwriter in a rock band and became a technical analyst for Merrill Lynch.

Mr. Prechter became fascinated by Elliott’s writings, which suggest that the market moves in predictable if complex patterns. Along with A.J. Frost, Mr. Prechter wrote “Elliott Wave Principle,” a 1978 book that predicted the emergence of a great bull market - a forecast that was largely fulfilled. By 1987, he was widely regarded as an expert in technical analysis. Articles in The New York Times said he was known as “the market’s leading technical guru” -- and more. An article in October that year said he had “emerged as both prophet and deity, an adviser whose advice reaches so many investors that he tends to pull the market the way he has predicted it will move.”

He has far less day-to-day influence now, after years spent developing a theory he calls “socionomics,” which holds “social moods” as the cause not only of market cycles but also of economic and political events. A grand cycle is ending, he says, and the time for reckoning is near.

In 2002, he published “Conquer the Crash,” which predicted misery ahead. Even so, he said in 2008 that the market would soon rally sharply - 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 offers none of his own.

For his part, Mr. Acampora says that the Elliott Wave has some validity as an indicator but that “it’s only part of the story” of technical market analysis, which also needs to be buttressed by economic and fundamental research.

Mr. Prechter says his unifying theory, socionomics, is a “young science.”

“We’re quantifying it,” he said. “We’re working on it.” In the meantime, he contends, it has enabled him to “look around the corner” and prepare for a dangerous future.
 

hinz

New member
Nov 27, 2006
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Another bubble....bubble to speculate who's going to be the most bearish. :rolleyes:

Here are the contestants,

Nouriel Roubini
Eric Sprott
Marc Faber
Meredith Whittney
David Rosenberg
Paul Krugman
Robert Prechter
Harry S Dent
Peter Schiff
Ian Gordon
Ross Healy

Funny to know none of them prescribe guns, water and cans of beans as effective antitodes to survive this coming depression that may have every potential to beat the one in the 30s.

Another fruit for thought.
 

duang

Active member
Apr 17, 2007
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Ha ha ha.......don't say you weren't warned.
Nothing to do with the fact that Mr. Prechter knows that the extreme prediction is more likely to get quoted [as we are now discussing] than a sane and balanced view.

"Opinions are like assholes... everyone has one".

D.
 

oil&gas

Well-known member
Apr 16, 2002
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Ghawar
I can't predict if Dow would ever drop to 1,000 in the near
future. But I can tell with some confidence that long before
we get there we will finally get a taste of nuclear war,
cannibalism and whatever apocalypse scenarios that
would cause the end of civilization.
 

johnny

New member
Feb 12, 2002
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I can't predict if Dow would ever drop to 1,000 in the near
future. But I can tell with some confidence that long before
we get there we will finally get a taste of nuclear war,
cannibalism and whatever apocalypse scenarios that
would cause the end of civilization.
I dont think so, a crash of that proportion would make canada a world power. When all is said and done and no money left, what do you need to survive? Resources..and canada has plenty of resources.
what about a housing market crash? an average house in the GTA is like 500k....but the average income is only like 50k or so. salaries have not kept up with housing prices. how can average people afford a first house? lets say 2 young kids combined income of 100k, which is not bad for being in your 20's....how do they afford even a semi or a townhouse? they would have a 350 k mortgage for a starter house.
 

Malibook

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Nov 16, 2001
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Paradise
www.yourtraveltickets.com
I don't think the DOW will ever hit 1000 in nominal terms simply because Helicopter Ben has the printing presses and he will gladly drop money out of his helicopter.

I do believe such a drop is possible in relative terms like relative to gold.
The DOW was recently 10k and gold around 1k.
I could imagine them being equal at some point.

The US dollar is down around 97% relative to gold since being taken off of the gold standard.

While the DOW is supposed to be a broad sampling of the economy, the reality is that it is only 30 companies and it is not always the same 30 companies.
The losers get dumped so it isn't a consistent historical barometer.


In a speech in November 2002, early in his first stint with the Fed, Bernanke approvingly mentioned a Milton Friedman parable about how a "helicopter drop" of cash could push prices upward. It was simply an attempt to reassure then-skittish markets that the Fed had ways to stave off deflation, but the image of a man willing to dump bills out of helicopters stuck. In hard-money circles, Bernanke is still known as "Helicopter Ben."
 

oldjones

CanBarelyRe Member
Aug 18, 2001
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I dont think so, a crash of that proportion would make canada a world power. When all is said and done and no money left, what do you need to survive? Resources..and canada has plenty of resources.…edit…
Yeah, but the resources you'll need will be stuff like how to build a wood stove and install it in a house that never had a chimmney, or how to preserve your summer's crops to see you thru the winter in a world where glass jars are more precious than the gold you'll be buying them with. And lids—the ones we buy new every season?—haven't been seen for decades. Knowing how to make soap, or an icehouse, those are the resources we'll need.

We don't have a lotta natural resources you can extract w/ primitive tools down south here where most of us live. Even up north, it's all pretty much techno-dependent. And that means when the supertankers stop sailing, those resources stay where they are.
 
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looking-2play

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Mar 2, 2009
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Dow 30 headed to 1,000 according to analyst.

Is that good or bad?

Who's this Mr Dow you're talking about? Is he about to make his 1,000th post on terb? :)
Well with 2400 plus posts you have no time to read the Globe and Mail, or what ever financial paper they read across the pond!
 
Ashley Madison
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