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Prechter: Stocks Will Plunge More than 40 Percent

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February 26, 2011 – Comments (11)

Stock guru Robert Prechter isn’t impressed by the recent stock-market rally. He says the Dow Jones Industrial Average is headed down to 6,800, 44 percent below current levels.

Technical factors will drive the market down, Prechter, president of Elliott Wave International, tells Yahoo’s Tech Ticker.

Indicators show investors are excessively bullish on stocks, he says.

Full article

11 Comments – Post Your Own

#1) On February 26, 2011 at 11:28 AM, MoneyWorksforMe (< 20) wrote:

Prechter has been wrong with just about everything involving this rally. Even his more specific predictions involving certain sectors were poor. I agree about what he says regarding high levels of optimism, and the desperate need for a correction, but the fact that he says he would seek safety in the dollar, is absurd for several reasons:

1.)I agree that it would be a contrarian play, but I don't think the market is overacting, i.e. it has been precipitously declining for many justifiable reasons...Contrarianism works best when sentiment is at extremes, and in the case of the dollar I don't believe market sentiment is much more bearish than it should be...

2.)Over the past few days when the major indexes were down, the dollar was also down...This tells me that the market is finally losing interest in the dollar as a flight to safety--a trend that I believe was way overdue...

3.) If we were to have another severe contraction before the economy and labor markets recover, how the hell will the government be in a position to handle our debt problem? Another imminent, severe contraction severely hurts prospects for the dollar. I think it could even precipitate a currency crisis, which is one of the major reasons the fed is engaged in QE...

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#2) On February 26, 2011 at 12:14 PM, ajm101 (31.91) wrote:

He's making a macro call on technical factors?  BZZZZZT.

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#3) On February 26, 2011 at 12:37 PM, kdakota630 (29.50) wrote:

MoneyWorksforMe

I'm with you.  I posted the article and link mainly because I liked about his call regarding the market regarding high levels of optimism and the need for a correction.  I'm surprised this rally has gone this far and lasted this long.

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#4) On February 26, 2011 at 1:22 PM, TSIF (99.96) wrote:

Always good to be cautionous and be aware that another collapse is possible and be ready to admit it if signals warrant.  I'd rather lose a few percent on a fall, however, than miss the more likely gain on a continued rise.

I've heard this song several times over the last two years, especially in regard to Elliott.  If I ran to my cave when Alstry and others did I'd still be below my last hit, instead of back ahead.  They truely are 3-5 lost years of investing if one took the loss and then bunkered down waiting for another chunk of sky to fall.  I'll keep my mix of investments with some lower risk. necessity producers, my miners, and my speculations and work for the best while limiting my exposure to the worse!

TSIF, The SKY is not falling today, but some days are cloudier than others and I know enough to hunker down during hurricanes and tornados!

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#5) On February 26, 2011 at 7:01 PM, Momentum21 (94.34) wrote:

Does he claim something something is going to fall 40% every year? : ) He claimed this in Jan 2010:

Gold could fall 40 percent from peak: Prechter

Anything is possible of course but Prechter seems to throw out wild ideas so when one eventually comes through he gets on TV again and sells more newsletters.

 

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#6) On February 26, 2011 at 8:08 PM, NOTvuffett (< 20) wrote:

A correction here wouldn't surprise me at all.  44%? No, that is stupid. I WANT a correction- that is where you will make the most money.

The Fool recently had an article about how listening to 'expert' opinion can shut down your brain.  If one is trying to do their DD, and they are methodical in their research, they will read 'expert' opinions all over the spectrum.  The Fool oftentimes pokes fun at analysts that are less reliable than a coin flip.

It is OK to read what the 'experts' say, but in the end everyone must judge how much weight to give to each opinion.  Even a broken clock is exactly right twice a day.

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#7) On February 26, 2011 at 8:31 PM, whereaminow (21.06) wrote:

Does he claim something something is going to fall 40% every year? : ) He claimed this in Jan 2010:

Gold could fall 40 percent from peak: Prechter

LOL, if both stocks and gold fell 40% this year, NO ONE on CAPS would have a positive outlook :)

David in Qatar

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#8) On February 26, 2011 at 10:35 PM, cwcj63 (69.34) wrote:

Is the sky falling again.Man oh man here we go again.

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#9) On March 02, 2011 at 3:25 PM, leohaas (32.13) wrote:

These things COULD happen, of course! The more important question is: how likely?

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#10) On March 02, 2011 at 4:10 PM, chk999 (99.97) wrote:

I bet the Dow never gets down to 6,800 again. Ever.

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#11) On December 07, 2011 at 10:55 AM, malia3 (73.22) wrote:

Going back to that day, February 26, when this article was published, the Dow stood at 12,130. It did drop, 6 months later. It's low was 10,655 with a drop of nearly 19%. That was nearly half what Pretcher predicted and a whole lot more than what is normal for a market correction.

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