Sep

21

Prechter says to sell rally, one reads. One recalls a chapter one wrote about the man who I facetiously said may have caused more financial harm to more people than anyone. The chronic bear of Barron's. One concluded that he never could close out his bearish calls which had been unanimously, completely negative every seek since he started writing in 1966. (For once this is not hyperbole. I was forced to read every one of his columns before a certain collab would let me say it). Prechter is in a similar situation. How could he say that any time is a good time to buy since most of the time he has been bearish since Dow 500 when he took the six month boat ride which regrettably came back to the US. However one must compliment him on his very propitious bullish call near the lows in 2009. As one said about the chronic bear at Barron's, "how one wishes he had stuck to journalism (subtly recapping what B said about Rossini." "how one wishes he had stuck to comic opera)". "If E did not say to sell the rally, he would be closing out a position at a 5000% loss. May both of them join Livermore in a place reserved for those who have inflicted more financial harm than any one else in history. P.S in saying this, one calls out to Dr. Jov for augmentation as to who from history has caused more financial harm. Napoleon? Lenin? John Law?

Jeff Sasmor adds:

Add the legions of "Financial Consultants" working for the big retail brokerages who advised buy and hold no matter what. Couple that with "averaging in" (there was some spiffy term for it I can't recall) we now have a population of boomers who demographically have most of the wealth but have no feeling of confidence in the stock market and no trust in the available advisers.

Burned badly 2x in 10 years has profound negative implications for aging boomers who are concerned that they have no time to make back the losses and just want steady income. Will they feel good when the bonds they've been advised to buy go down in price? Or feel helpless that they get hosed no matter what they do.

Peter Earle writes:

For the most harm caused in financial history - a topic I cannot, if I tried, avoid weighing in on– I put forth he who informed both the philosophical and argumentative implementaria of agrarian reformers of many stripes most plentifully, in my estimation, over the last nearly two hundred years: Claude Henri de Rouvroy, comte de Saint-Simon. Saint-Simon, an early intellectual who disavowed his wealthy, aristocratic moorings, was an advocate of positivism and, applying that practically, a sort of technocratic central planning which, as history has shown, was far more workable than other philosophies he inspired; specifically, Marxism. A contemporary of Hegel, I consider him the rightful heir to the modern scourges of Communism, Socialism, Fascism, the "Third Way", and central planning as a holistic species.


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7 Comments so far

  1. dave whitesel on September 21, 2010 3:14 pm

    mouthpiece for oligarchic malfeasance.

  2. Emmett Moore on September 22, 2010 11:49 am

    Am dusting off Prechters book now. As I open the pages, the cover cracks and moans from the pain of atrophy. During extreme sell offs, Prechter sure sounds like a smart dude. Kind of like the crazy street preacher, right after a big earth quake.

  3. Emmett Moore on September 22, 2010 11:57 am

    Just got the following from Elliot Wave International (Prechter)…Bob sure makes a fun argument.

    It is NOT the end of a bear market when:
    1. Mutual fund cash holdings fall to just 3.4%, the lowest level in 60 years (previous extreme lows came in 2000 and 2007)
    2. The Dow Industrials have a 2.7% annual dividend yield (a lower percentage than 1929)
    3. A major sentiment indicator shows 24.3% bears (fewer than Oct. 2007)
    4. TRIN readings since the May 6 flash crash register .25 or lower for 21 trading days (readings this low indicate “buying panics”)
    5. The market sees trading volume rise during declines but not during rallies (which was true during the summer months and into September)
    6. The city of Atlanta has a 21.2% commercial vacancy rate (2nd highest of major U.S. markets), yet owners of troubled properties claim to “remain optimistic”
    7. This year has seen the sale of $4.4 billion in bonds which are tied to subprime auto loans (already more than 2x sales in 2009)
    8. All the above (and more) is true, but the nation’s financial newspaper of record posts a mid-day stock market summary with a quote from a top fund manager who says, “This as optimistic as I have been this year.”

  4. DH. on September 23, 2010 5:42 am

    Dear Vic,

    please excuse my presumptious comment, given the level of my ignorance, but I would be very interested to hear you explain in a simple non-esoteric manner the reasons for your outright dismissal of Livermore…do you genuinely believe he had no market qualities? (is there anything in your condemnation which is indicative of your own psychology, do you think?)

    my enquiry is genuine; I am more than happy to be disabused of my ‘romantic illusions’ by yourself, Larry etc..

    respectfully and naively,

    David.

  5. Craig Bowles on September 23, 2010 7:16 am

    He does sometimes seem to get trapped in defending previous long-term Elliott Wave analysis. Wave analysis is amazing but seems to be more useful as a trading tool rather than for the basis of an investor’s top-down framework. The biggest bullish case for stocks is the drop into negatives of the leading inflation index earlier than we’ve ever seen. The wave can’t really factor in a total economic setup change. Also, the wave analysis on items in terms of gold seems to be reliable. Everything is playing out just like Prechter said ten years ago when you view stocks in terms of gold. They don’t come much smarter or nicer than Bob Prechter. He’s always been the same whether during the media hysteria of the 1980s or more quiet periods. If ever in Gainsville, GA north of Atlanta, stop by his office and you’ll always find his door wide open and a willingness to talk about any ideas you might be working on.

  6. Mark Bates on September 24, 2010 1:39 pm

    Mr. Prechter is certainly not perfect but I have found his analysis and thoughts the most useful of anyone I’ve found. During the ’80s bull mkt. he was solidly bullish. During the ’90s I’d say he was on the wrong side in stocks but most of the other markets were well covered. From 1999 or so the EWT has done a brilliant job….

  7. douglas roberts dimick on September 25, 2010 10:34 pm

    Smoking Gun

    In terms of (present money) valuation, the Dynamic Duo of Clinton-Rubin beat out Lenin and Napoleon via the repeal of the Glass-Steagall Act in 1999.

    How can it be? Nation-state building a la revolutionary dictatorship entails command economy dynamics; resources are marshaled and allocated in (non)correlation to (non)productivity. Whereas, legislative redistribution of depository and investment banking strata of an entire, developed (US) economy appears juxtaposed to national and global social-economic centricities as relative to geo-political measurement(s) of “financial harm.” Consider…

    “The secular bear market reality in the equity market is such that if you invested $10,000 in the S&P 500 on December 31, 1999 and waited it out, you would have little more than $9,400 to show for it right now. And that included reinvested dividends, by the way.”

    See… When Watching TV is Better than Making Money By Todd M. Schoenberger; www.landcolttrading.com.

    Which brings us to John Law… Unlike the cited Russian and French dictators, Law was a mere speculator clothed in banker’s garments. The idea of leveraging a private bank’s government bills and notes is not unlike what Rubin effected – while having one foot in the US Treasury and the other in Citigroup’s boardroom at the eleventh hour of the Clinton Administration – to realize the resulting asset-back derivative markets. Both scenarios presented legally sanctioned means of creating “instruments of credit… backed by… land.”

    See… http://en.wikipedia.org/wiki/John_Law_(economist)

    Of course, as Law’s Banque Royale issued notes guaranteed by the king of France, a departure from any comparison with Rubin a la Clinton occurs post 2008 Crisis, as American homeowners lose their assets without any such government indemnification or securitization in forms of guaranty from loss when market runs commence on such paper (derivative) securitizations – continuing to this day. Therefore, the loss suffered by France post the Mississippi Bubble does not present a magnitude similar, for example, to either the Great Depression or our currently experienced Great Recession – perhaps to become the Greatest Depression.

    In comportment and context, concerning the Chair’s article then, Mr. Prechter appears reduced to being a footnote, is he not?

    dr

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