Is the worst over for stocks? Robert Prechter's short answer (above) is "NO." His long answer is compelling, extremely interesting and includes insights into what you should be doing NOW to prepare for what's still to come. For the long answer, join his free economics & financial community, Club EWI.
The sign up link is at the bottom of this post, after my full disclosure notice:
Full disclosure: I have been reading Robert Prechter's work since 1998, when I picked up his book "At the Crest of the Tidal Wave" on a backpacking trip in Bangkok. He has been pessimistic on the the US economy & stock market for the past decade. His arguments are valid, in my opinion, and I subscribe to his US Market Newsletter package. He is not always right (who is?), but he is one of the most interesting analysts around because he usually goes against the crowd and has a fantastic way of looking at what is going on, one that you won't read in the MSM / old media. As the video notes, he was one of the few analysts to call the 1987 crash.
One difference in his analysis from Dr. Paul's is that he expects massive deflation, rather than hyperinflation. Dr. Paul says the Fed prints money from thin air; Prechter's position is that it isn't money, but credit that it being created. This may sound like a minor point but the difference is that money is money, but credit is just a loan.
The reason everything is so expensive these days is because it is easy to borrow money. Who could afford to pay cash for a home? Hardly anyone. But if you can borrow money cheaply, nearly anyone can afford one, as the recent sub-prime debacle shows. However, borrowed money has to be paid back. As the economy slows down, people won't be able to repay their loans. Assets then fall in value. The stock market drops, housing prices fall, etc. One of Prechter's main differences is that he believes gold will fall in value along with everything else. The reasoning is that people need cash to pay off their loans. You can't pay your mortgage with gold. You need Federal Reserve Notes. So people will sell everything to stave off bankruptcy; all asset values fall, and the value of the US dollar will paradoxically go up - though only through the deflationary period. In the end however, Prechter, like Dr. Paul agrees that gold is real money.
The full disclosure part is that Bull! Not bull receives financial compensation for any signups to his club, and/or subscription purchases that result from people clicking on the link. However, as I said, I'm a subscriber and I wouldn't recommend checking it out if I didn't think there was value in his opinions. I look forward to his newsletters every month.
Finally - do not follow anyone's opinions slavishly. Think for yourself. No one, and I repeat NO ONE has a crystal ball with absolute clarity of what will happen in the future, including you, me, Dr. Paul or Mr. Prechter. Independent thinkers take in as much information as possible and come to their own conclusions.
With all that out of the way, click on the link below if you'd like to join the club. Membership is completely free. Hours of interesting new insights await!
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