...
Mr. Prechter is convinced that we have entered a
market decline of staggering proportions â perhaps the biggest of the last 300 years. ... his reasoning [...] based on his version of the
Elliott Wave theory ... suggests that an epic downswing is under way ...
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 âfrom buying stocks for 100 years,â he said. This time, he said,
âIf Iâm right, it will be such a shock that people will be telling their grandkids many years from now, âDonât touch stocks.â â
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 âextremely grateful for their prudence.â
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.
... Along with A. J. Frost, Mr. Prechter wrote âElliott Wave Principle,â a
1978 book that predicted the emergence of a great bull market â a forecast that was largely fulfilled. By 1987, he was widely regarded as an expert in technical analysis.
... A grand cycle is ending, he says, and the time for reckoning is near.
...
In 2002, he published âConquer the Crash,â which
predicted misery ahead. Even so, he said
in 2008 that the market would soon
rally sharply â 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 offered none of his own. ...
