NYT: A Market Forecast That Says ‘Take Cover’

www.nytimes.com...

A Market Forecast That Says ‘Take Cover’
By JEFF SOMMER
Published: July 2, 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.

If Robert Prechter is right, one market analyst said, “we’ve basically got to go to the mountains with a gun and some soup cans.” Mr. Prechter is convinced that we have entered a market decline of staggering proportions — perhaps the biggest of the last 300 years.
...

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.
...

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.
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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.
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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.”
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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.”
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...More at link

Warnings of a crash keep coming. Now brought to you by the New York Times - MSM.

Food for thought for you thinking this is a buying opportunity. The article warns of DOW declining below 1,000 over the next few years. That can't be good for jobs or asset values.

it is my estimate that the Dow will
never see 12K again in our lifetime.
Wise advice in this article and one
that I agree with. Course I told everybody
over a month ago to leave the markets
but nobody listens to me. And I believe
they won't listen to this article either.
so sad, the market is like a Casino
and you have a gambling problem.
The house wins, you lose.

Last time I remember there was a dip in the DOW, the mainstream media was still hopeful, which is why it rebounded. This time, the media is not all peachy, so it will not rebound. Remember the markets are just based on perception. There is absolutely no reason that the markets wont continue to collapse, the media was the only thing keeping them alive. I believe we're going to witness what the "Hidden Hand" described as the controlled demolition of the stock markets, he said it would happen right after the recovery efforts seemed to be working.

With the way the report sounds, and... I dont know why, but when they say for you to 'hold' cash.. This is a bit daft to me because, if the price of the Dollaaaa drops, then it'll be worthless, like most paper.
And the only people who will benifit, are the people with A-Lot of dollers.
Imagine, paying 40 quid for something in the future which is worth about 10pounds in todays money. Only because your money dosnt mean squat...

These reports are quite frequant and with their ''Boy who cried Wolf'' attitude, when something really does happen, none of us will take note until its too late.


And put it this way...

If we have a 'super' depression, would you sell your Tin of Bean's for money?

Even the 2year DOW chart at finance.yahoo.com is pessimistic. Like a warning.

[atsimg]http://files.abovetopsecret.com/images/member/6c23edf9e949.png[/atsimg]

I started another thread warning of this downturn. April 2010 had $8.2Billion in bank failures, second only to July 2008. Two months before the September 2008 crash and contraction. Bank failures tend to 'destroy wealth', bank failures take a lot of money out of circulation.

reply to post by boondock-saint


That entirely depends on the level of inflation the economy is to see.. If they resort to a direct method of inflation, increasing the monetary base of the consumer .. through wage, tax cut or handouts, if it's large enough the stock market will explode. Granted, it will be almost as relative to inflation as Gold at that point.. but regardless, there are many things "they" could do to force the economy far outa whack to save their own hides. I believe we've seen just a fraction of what "they" are willing to do..

I do some extremely hard times ahead of us..

Originally posted by CREAM
Last time I remember there was a dip in the DOW, the mainstream media was still hopeful, which is why it rebounded. This time, the media is not all peachy, so it will not rebound. Remember the markets are just based on perception. There is absolutely no reason that the markets wont continue to collapse, the media was the only thing keeping them alive. I believe we're going to witness what the "Hidden Hand" described as the controlled demolition of the stock markets, he said it would happen right after the recovery efforts seemed to be working.

The markets are not only based on perception. In the short run yes, in the long run fundamentals do matter. You don't have to go back very many years to see this either, all you have do is look at the the dot com bubble.

I will grant you perception is a huge force, but no amount of hype can overcome people seeing with their own eyes obvious contradictory evidence.

Basically we are in the process of people starting to understand there is no recovery, but 99% have no clue how screwed we actually are. When the market crashes, pensions and 401k's get wiped out. Things are going to get very interesting then.

Originally posted by proximo

Originally posted by CREAM
Last time I remember there was a dip in the DOW, the mainstream media was still hopeful, which is why it rebounded. This time, the media is not all peachy, so it will not rebound. Remember the markets are just based on perception. There is absolutely no reason that the markets wont continue to collapse, the media was the only thing keeping them alive. I believe we're going to witness what the "Hidden Hand" described as the controlled demolition of the stock markets, he said it would happen right after the recovery efforts seemed to be working.

The markets are not only based on perception. In the short run yes, in the long run fundamentals do matter. You don't have to go back very many years to see this either, all you have do is look at the the dot com bubble.

I will grant you perception is a huge force, but no amount of hype can overcome people seeing with their own eyes obvious contradictory evidence.

Basically we are in the process of people starting to understand there is no recovery, but 99% have no clue how screwed we actually are. When the market crashes, pensions and 401k's get wiped out. Things are going to get very interesting then.

True, the markets arent just based on perception, I kinda exaggerated there, but I think if it was all based on the fundamentals it would have imploded by now, especially with all the governmental debt that is being ignored, so in my opinion it pretty much is based on perception right now because if people knew how bad things really are, everybody would take their money out of the stock market.

i have never invested in the market. it is a money making scam for IPO's, then speculators afterwards. I don't buy lotto, either. I am a low risk kind of guy.

The article say to keep cash. That is ridiculous. The fact that he recommends keeping cash, or T-Bills tells me that he is just pulling this out of his butt. Cash will rot in your pocket when TSHTF.

Hard goods. That is what you need. Foods that are high impact/low spoil. Gold. Water. Equipment. This is the currency of the future. Learn how to make a yoke. Learn how to make a plow. Learn skills that will make you valuable. That is how you survive when TSHTF. Squirreling away money is the stupidest thing i have ever heard.

it's all being staged to move yet more wealth over to the bankster so they get to take you house even if you only own a few thursand quid on it or can not keep up with the land tax demands.

you will be offered the amero but i say seize the wealth from these people and tell them where to stick the personal carbon tax they have planned for us all.

Prince Charles own 10% of the land in the UK and building land costs £150k just for a bit of mud and we have people living just to pay rent or meet the mortage payments.

This needs stoping and agreeing to swap one bit of paper for digits on a computer won't stop it so don't be fooled by the international bankster that got us into ths mess to get us out.