Robert Prechter

[winston]

What the Man Behind the Most Profitable Short Sale Ever Says Now By Tom Dyson

Robert Prechter just closed out the most profitable short sale in history...

Prechter is one of my favorite stock market analysts. He writes a newsletter called the Elliott Wave Theorist. Over the past three years, the advice in his newsletter has been sublime.

Prechter is pessimistic. He thinks America is heading into the worst depression in 300 years... the worst since the founding of the American Republic. Doug Casey, founder of Casey Research, is another bear. He jokes Prechter is the only analyst who thinks things will be worse than he does.

Prechter makes his stock market predictions by studying America's social mood. When he expects an improvement in the social mood, he'll predict a rise in the stock market. When he sees Americans becoming pessimistic, he turns bearish.

In 2007, for example, America was feeling more prosperous than ever before. But problems were beginning to appear... especially in the real estate market. House prices had peaked a year earlier, and the credit markets had started to lock up. New Century Financial collapsed in March 2007.

Prechter knew these problems would infect America's social mood. On July 17, he told his readers to expect a major decline in the stock market:

"Aggressive speculators should return to a fully leveraged short position now," he wrote.

Here's another example: In February 2009, the stock market had fallen 58%, the largest bank in the world, Citigroup, was on the brink of bankruptcy, and Wall Street was in total panic. The daily sentiment index was registering 3% bulls for the S&P 500. In short, the social mood was the darkest it had been since the 1970s. Prechter sensed a turning point.

On February 23, Prechter told readers to expect a strong bounce in the stock market and advised them to close out their short positions. "To be successful," he said, "you have to sell when people love 'em and buy when they don't."

Prechter claims selling the S&P in July 2007 and closing the position in February 2009 was the most profitable short sale in history. "This [800-point profit]," he says, "is surely the largest number of points that anyone has ever made, or will ever make, in the S&P futures in 19 months, and maybe ever."

Less than two weeks after I'd received this letter, the social mood turned positive and the stock market started a record-breaking rise. Here's what Prechter predicted this new trend would do to America's psyche...

"Regardless of its extent, [the rally] should generate substantial feelings of optimism. At its peak, the President's popularity will be higher, the government will be taking credit for successfully bailing out the economy, the Fed will appear to have saved the banking system, and investors will be convinced that the bear market is behind us."

As I write, seven months later, the S&P is up over 60% from its lows... As Prechter warned, a wave of optimism is washing across the investment community. Except for his remark about the President's popularity, which is waning, Prechter's description of the social mood in America could not have been more accurate.

Thing is, Prechter has now turned bearish again. The S&P has rallied to his target area of 1,000 to 1,100, and he says a new turning point in the social mood is at hand. In his August issue, he advised his clients to get bearish again...

"Investors should continue to keep the bulk of their wealth in cash and the safest possible cash equivalents, in the safest institutions," he writes. "If you actively invest in the stock market with money you can afford to put at risk, it's time to return to the short side."

Although it's worth noting Prechter's pessimism, I wouldn't bet against the market until it displays a bit of weakness – like if the S&P 500 fell to its lowest low of the past month (around the 1,025 area). This ensures you're betting with the short-term trend, rather than against it.

Source: Daily Wealth

[winston]

by OE2008 » Thu Nov 05, 2009 8:56 pm

Robert Prechter on CNBC.

http://www.cnbc.com/id/15840232?video=1319011626&play=1

He is super bullish on US Dollar. He was early in his August 09 call.

[LenaHuat]

I'm not a TA practitioner and this is the first time I'm hearing this guy. Hmmm...I like his accent and straight face. He said we would not see the tip of a "V" in 2010 Plunges start sneakly
He's in my corner.
Gotta look out for his book "Conquer the Crash" at Kinokuniya 2morrow.

Thanks a million to Winston and OE2009 for drawing our attention to him

[kennynah]

prechter says in the cnbc interview (above link)....

"I am very bullish on the dollar, for the next 1 - 2 years"...

I guess, he is not in roger's "circle of trust", and definitely not playing mahjong with him...

[LenaHuat]

At this point in time, I share his views especially 1Q 2010 and so this post :-

"I think we’re in for a very large decline in the S&P in 2010. I think it’s going to be at least as what we saw in 2008."

Why?

"In the first quarter only 2% of traders were bullish and now we've got over 90% bullish," he says.

But why is that concerning? Because during the 8 months of rally, "there's been a real contraction in momentum. There's been a decline in the Advance/Decline ratios that have been going up as well as a decline in volume."

http://www.cnbc.com/id/34113591

[OE2008]

Performance ratings of Robert Prechter's market forecasts over the past 20 years.

================================================================

http://www.marketwatch.com/story/elliot ... 2009-11-25

By Mark Hulbert, MarketWatch

ANNANDALE, Va. (MarketWatch) -- It might not exactly be news that Robert Prechter, the famous follower of the Elliott Wave theory, is bearish on the U.S. stock market.

That's because he has been playing the equity market from the short side for quite some time now.

But what is news is that, earlier this week, he became even more aggressively bearish than usual: He is now recommending that traders allocate 200% of their stock trading portfolios to shorting the stock market.

What should be your response to Prechter's latest advice?

There is no easy answer, unfortunately.

But this question does raise a whole range of fascinating issues having to do with how best to interpret not just his, but any adviser's, track record.

On the one hand, Prechter's advice over the last couple of years has been top-rated. It's not just that he was bearish during the financial meltdown -- he also did a good job of playing the various intermediate-term corrections along the way.

Consider, for example, the issue of the Elliott Wave Financial Forecast that was sent out at the end of August 2008, some 15 months ago. This issue, edited by Prechter colleagues Steven Hochberg and Pete Kendall, appeared just two weeks before Lehman Brothers went bankrupt. Soon thereafter, of course, the entire financial system came dangerously close to becoming completely unraveled, and the stock market went into a free-fall from which didn't finally stop until March of this year.

Hochberg and Kendall wrote: "The stock market is building up the necessary reserves for its next major move, a third wave decline at multiple degrees of trend. This should be the strongest decline of the bear market to date."

Right on target, as we now know.

Furthermore, only a couple of weeks after the March lows earlier this year, Prechter and his colleagues reduced their short-side exposure, anticipating that the rally would continue for some time.

No wonder, therefore, that their newsletter has one of the best stock market timing records over the last two years of any that the Hulbert Financial Digest monitors.

On the other hand, Prechter's longer-term record couldn't be more different. The last time that his newsletter recommended that traders be long stocks was in 1997, some 12 years ago. In fact, during the bull market of the 1990s, traders following his advice spent most of the time short the market or in cash.

This helps to explain why the newsletter's timing advice for traders is in last place for performance over the last 20 years among all stock market timing strategies tracked by the Hulbert Financial Digest.

So take your pick: Short-term top-rated, long-term dead last.

The newsletter's track record therefore provides a particularly graphic illustration of an enduring problem for assessing an adviser's track record: How much weight should be placed on recent performance, versus how much on the long-term?

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.

[LenaHuat]

Hi OE2008
Thanks a million for this post. Std caveat of : "past performances is no guarantee for the future" applies to all gurus. But I see merits in his present position.

[OE2008]

Hi LenaHuat,

I agree we ought to place a caveat on all calls by gurus. It is prudent, nevertheless to do individual stress test to survive these dreadful time should it come about.

Staying away from the market and staying by the sideline. Risk reward assessment does not justify taking long positions.

[millionairemind]

Next bear market phase starting: Prechter
26 Jan 2010, 0050 hrs IST, REUTERS

Prechter has previously said he believes the 2007-2009 markets crisis and US recession were harbingers of a severe, longer economic downturn. His book "Conquer the Crash" first published in 2002 , warned about the dangers of a deflationary depression and Prechter maintains the United States economy will struggle for years to come.

"We probably have begun the next phase of the bear market," said Prechter, president of research company Elliott Wave International in Gainesville, Georgia and known for predicting the 1987 stock market crash.
http://economictimes.indiatimes.com/art ... 500592.cms

[LenaHuat]

Pretcher's the guy to read.

I'm waiting for OE2008 to surface with his thoughts. Like him, I've been standing on the sidelines for a while now.