August 2, 2008
Where’s Robert Prechter When You Need Him?
Back on December 24, 2002 there was a big feature article on Prechter which was widely read on the Bloomberg: Market Seer Prechter Called 1987 Crash, Says Dow to Fall to 800 (sorry, no link):
“Forget about the Dow Jones Industrial Average returning to 11,000. Try Depression- era levels below 1,000. And don’t flock to bonds for safety: Municipalities will default and corporate bonds will be wracked by downgrades. Even the U.S. government’s credit status may sink low enough to make Treasury bills shaky.
If you believe in such gloomy prophecies, you probably know about Robert Prechter Jr. [who] is now undergoing a renaissance. His book ‘Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression’, which warns of a looming economic cataclysm, reached the top of Amazon.com’s financial bestseller list in 2002. His two main monthly newsletters have increased their subscriber base by more than 50 percent.”
In order to end the current bear market, it’s very important that Prechter makes an appearance calling for Dow 800. Can you work your magic again, Bobby?
August 3rd, 2008 at 2:21 am
That could be nice!
Even better if Bill Gross also predicts Dow to 5,000
“Since in the short-term the stock market is a voting machine/popularity contest, it’s impossible to say exactly when, if ever, this fair valuation mark of approximately Dow 5,000 will be reached. If it doesn’t get there however, future real equity returns will be lower than 5%, and a diversified portfolio of government, mortgage, and corporate bonds will be the best performing asset class for years to come.”
Investment Outlook | Bill Gross | September 2002 | Dow 5,000
August 3rd, 2008 at 7:07 am
Prechter also predicted that the Dow would drop to 400 in 1995. Hmmm….Dow 400 in 1995, Dow 800 in 2002…Dow 1600 in 2009?
———8The ‘100-year bear market’ portfolio - (MarketWatch.com)
Commentary: Think the unthinkable — before it’s too late
I first read about this scary scenario in Robert Prechter’s “At the Crest of The Wave: A Forecast For The Great Bear Market.”
Prechter, who also publishes the Elliott Wave Theorist newsletter, predicted in 1995 the Dow dropping to 400. It was 4000 at the time. The information technology revolution suddenly appeared. The bull took off. We laughed at Prechter’s Great Bear Market predictions — absurd, unthinkable.
Unthinkable? No more. Today you better start thinking: “Not if, but when.”
August 3rd, 2008 at 8:45 am
@Hypatia: Yes, thanks for the reminder. Be nice if a bullish Wall Street strategist also got canned, like Jeff Applegate did in Q4 2002.
@Keith: 400 must have been the simple-minded Fibonacci projection off 1995 levels. :-)
August 6th, 2008 at 11:17 am
I subscribe to Prechter’s Elliot Wave Theorist. The guy is highly intelligent and articulate. Whatever you may think of Elliot Wave, he writes really well — just don’t go whole hog following his advice. When his new monthly issue arrives, I make sure I unplug the phone, turn off the computer, and lock the door before I read his latest. This is so I don’t go screaming to the broker buying ten thousand S&P index put options after reading his creatively gloomy and apocalyptic vision.
Elliot Wave Theorist is good financial porn and thriller all combined into one.
Highly recommended.
August 6th, 2008 at 1:48 pm
synchro: I suppose there’s a market for “financial (chart?) porn and thriller combined,” but I’m oddly unswayed by it. I tend to like the dry musings of stuffy old guys in off-the-rack suits who know what’s really going on… think Jack Webb with a CPA. (They’re dying off — all these guys were born before 1940 (preferably 1930.))
August 6th, 2008 at 8:37 pm
Poor Bobby, he’s never been the same since the 80’s. He’s like a fading pop star. Every calamity he has predicted since then has occurred to him, not the markets. The start of all his problems is that while he claims to have predicted the 1987 crash, nobody really remembers him doing so before it happened. There seemed to have been some problem with that newsletter update getting to his subscribers on time. But honestly, folks, he did predict it–it was just that it was particularly noisy that day and no one heard him.
August 19th, 2008 at 1:10 pm
Bobby has overlooked the RENEWABLE ENERGY sector. The next bull factor in the US stock market. Wind, Solar (Thermal or PV) and even Nuclear is coming. So is coal liquification.