February 14, 2012 - I'd Love to . . . Turn Long-Term Bullish Again - By Elliott Wave International
Robert Prechter: "I'd Love to . . . Turn Long-Term Bullish Again"
On 18 August 1983, Robert Prechter wrote this in The Elliott Wave Theorist:
. . . the current environment is providing a once-in-a-generation money making opportunity. This opportunity takes on greater importance, however, because it may well precede not merely a Kondratieff cycle downswing, but the biggest financial catastrophe since the founding of the Republic.
The benefit of hindsight allows us to say that Prechter's then-radical forecast of a "once-in-a-generation money making opportunity" did happen. It actually surpassed what Prechter anticipated.
Yet that was a two-part forecast, so this question remains: Is the "biggest financial catastrophe" that Prechter foresaw still unfolding, or has the Fed confined the damage to the 2007-2009 financial crisis?
And if the worst is yet to come, how bad will it be -- and what will follow?
Near the start of the new year, Prechter provided a glimpse into the answers in an interview with Kate Welling of Welling@Weeden, a journal of independent research, analysis and opinion.
A link to the full interview is in the January Elliott Wave Theorist. Below is an edited excerpt.
Welling: . . . the social funk you see descending won't last forever?
Prechter: Well, it has to play out. I'm still hoping that it happens fast enough that I'm not dead by the time it does. I'd love to be able to come out and turn long-term bullish again, like I was in the early '80s. That was a great time and a good opportunity. The next one coming up is going to be even bigger.
Welling: So anybody left with investable assets at that juncture will have a great buying opportunity?
Prechter: Of a lifetime! In my book, I said real estate is probably going to drop 90%. It's down 45%, so arithmetically it's halfway there. But can you imagine buying your dream properties at ten cents on the dollar, or even less? I see that coming. Commodities will be a whole lot cheaper; way cheaper than people imagine today. People think that oil is only going to go up; that we are running out of it, and so forth. But I expect oil to take out its 2008 low before this deflation and depression are over.
Welling: I take it you don't agree with the rosy forecasts...for 2012.
Prechter: Not in the least. The leading indicators are telling us the economy is rolling over...In 2012, I expect to see the economy go back into contraction. We'll probably see the S&P resume its bear market and start a bigger decline than we saw from '07 to '09 - but that won't all take place next year. The bigger down years are going to be in the hard-down phase of the cycle...During 2012, there will be plenty of reasons for people to hold onto stocks and keep hope going. But hope is a four letter word in the financial markets when you resort to it at the wrong time.
Robert Prechter lays out his compelling case for why "hope" remains a slippery slope in what is already a classic -- his special 54-minute video August Elliott Wave Theorist. His presentation is so powerful that we've kept it available for our new subscribers, even though it was published 6 months ago! The accompanying text is fully 50% longer than the regular length of a Theorist, and you'll find over 50 eye-opening charts.
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