March 28, 2011
By Elliott Wave International
"If you were fortunate enough to have read the first edition of Robert Prechter's Conquer the Crash, your money was safe and sound as stocks, real estate, commodities and many bonds plummeted."
Conquer the Crash, 2nd edition, (quote from inside book sleeve)
The New York Times bestseller Conquer the Crash published in 2002: As the quote above suggests, Bob Prechter advised readers to avoid risky assets and embrace cash and cash equivalents.
But did the 2007-2009 declines represent all of the bear market? And is the "Great Recession" over?
Many financial commentators believe the answer to both questions is "yes." The latest Elliott Wave Theorist reports on attitudes toward the rally of the past two years:
"...sentiment measures today do not indicate caution, skepticism and disbelief but rather multi-year extremes in optimism among five sets of market players: individual investors, futures traders, options traders, newsletter advisors and mutual fund managers."
Regarding the economic outlook, the March Elliott Wave Financial Forecast notes a recent business story headline which reads, "Good Times Ahead." The story quotes a top banker saying, "Businesses have plenty of capital and are starting to expand again."
The same issue of the Financial Forecast also reminded subscribers that the fear of inflation remains widespread:
"When Fed Chairman Ben Bernanke touched on the 'politically volatile subject of inflation' in [recent] Congressional testimony, the blogosphere erupted with proclamations about runaway prices across the board. Here's one sample, 'There can be only one possible result. Inflation of everything we use is going to explode.'"
Yet Robert Prechter has another perspective on market optimism, a business climate "turnaround," and notions of runaway inflation. That is why he updated the second edition of Conquer the Crash to include 188 new pages.
These new pages include "updated lists of banks, insurers and Treasury-only money market funds in the U.S., top-rated for safety."
More than ever, Prechter emphasizes safety. In a word, it's the key to conquering a severe market downturn. Follow the advice about safety in CTC, 2nd edition, and you'll be better prepared for a deflationary depression.
Elliott Wave International has put together a FREE, 8-lesson report based on Conquer the Crash, 2nd edition. This free, 42-page report can help you prepare for the future -- financially and economically!
Why not read "8-Lesson: Conquer the Crash Collection"? It's FREE! Become a member of Club EWI (membership is also free), and you'll have immediate access to "8-Lesson: Conquer the Crash Collection." Just follow this link and you're on your way to financial peace of mind.
This article was syndicated by Elliott Wave International and was originally published under the headline Still Enough Time to "Conquer the Crash?". EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
March 10, 2011
By Elliott Wave International
We can now add the recent uprisings in North Africa and the Middle East to the category of life imitating art -- specifically, music lyrics. Those who lived through the 1980s might be forgiven for hearing an unbidden snatch of music run through their heads as they watched first Hosni Mubarak and now Moammar Gadhafi try to hold onto power -- "Should I Stay or Should I Go" by The Clash. In Libya, where Gadhafi has used air strikes and ground forces against the rebels, The Clash's other huge hit from 1981, "Rock the Casbah," describes the current situation so well it's almost eerie:
The king called up his jet fighters
He said you better earn your pay
Drop your bombs between the minarets
Down the Casbah way
Punk rock played by bands like The Clash, X, The Ramones, and the Sex Pistols had that in-your-face, defy-authority attitude that crashed onto the scene in Great Britain and the United States in the '70s and '80s. It's interesting that the lyrics can still ring true 30 years later, but even more trenchant is how the prevailing mood is reflected by the music of the times, as seen in this chart that Robert Prechter included in a talk he gave last year.
Popular culture reflects social mood, and the stock market reflects that same social mood. That's why we get loud, angry music when people are unhappy with their situation; they want to sell stocks. We get light, poppy, bubblegum music when they feel happy and content; they want to buy stocks. In a USA Today article about music and social moods in November 2009, reporter Matt Frantz made clear the connection that Elliott Wave International has been writing about for years:
The idea linking culture to stock prices is surprisingly simple: The population essentially goes through mass mood swings that determine not only the types of music we listen to and movies we watch, but also if we want to buy or sell stocks. These emotional booms and busts are followed by corresponding swings on Wall Street.
"The same social elements driving the stock market are driving the gyrations on the dance floor," says Matt Lampert, research fellow at the Socionomics Institute, a think tank associated with well-known market researcher Robert Prechter, who first advanced the idea in the 1980s. [USA Today, 11/17/09]
In the talk he gave to a gathering of futurists in Boston, Prechter explained how the music people listen to relates to social mood and the stock market:
When the trend is up, they tend to listen to happier stuff (see chart). Back in the 1950s and ‘60s, you had doo-wop music, rockabilly, dance music, surf music, British invasion — mostly upbeat, happy material. As the value of stocks fell from the 1960s into the early 1980s, you had psychedelic music, hard rock, heavy metal, very slow ballads in the mid-1970s, and finally punk rock in the late ’70s. There was more negative-themed music. [excerpt from Robert Prechter’s speech to the World Future Society's annual conference, 7/10/10]
Which brings us right back to punk rock. Although there's lots of upbeat music in the air now, we can assume that after this current bear market rally, we will hear angrier music on the airwaves as the market turns down. It might be a good time, then, to pay attention to what the markets were doing the last time punk rock blasted the airwaves. Here's an excerpt from "Popular Culture and the Stock Market," which is the first chapter of Prechter's Pioneering Studies in Socionomics.
The most extreme musical development of the mid-1970s was the emergence of punk rock. The lyrics of these bands' compositions, as pointed out by Tom Landess, associate editor of The Southern Partisan, resemble T.S. Eliot's classic poem "The Waste Land," which was written during the 'teens, when the last Cycle wave IV correction was in force (a time when the worldwide negative mood allowed the communists to take power in Russia). The attendant music was as anti-.musical. (i.e., non-melodic, relying on one or two chords and two or three melody notes, screaming vocals, no vocal harmony, dissonance and noise), as were Bartok's compositions from the 1930s.
It wasn't just that the performers of punk rock would suffer a heart attack if called upon to change chords or sing more than two notes on the musical scale, it was that they made it a point to be non-musical minimalists and to create ugliness, as artists. The early punk rockers from England and Canada conveyed an even more threatening image than did the heavy metal bands because they abandoned all the trappings of theatre and presented their message as reality, preaching violence and anarchy while brandishing swastikas.
Their names (Johnny Rotten, Sid Vicious, Nazi Dog, The Damned, The Viletones, etc.) and their song titles and lyrics ("Anarchy in the U.K.," "Auschwitz Jerk," "The Blitzkrieg Bop," "You say you've solved all our problems? You're the problem! You're the problem!" and "There's no future! no future! no future!") were reactionary lashings out at the stultifying welfare statism of England and their doom to life on the dole, similar to the Nazis backlash answer to a situation of unrest in 1920s and 1930s Germany.
Actually, of course, it didn't matter what conditions were attacked. The most negative mood since the 1930s (as implied by stock market action) required release, period. These bands took bad-natured sentiment to the same extreme that the pop groups of the mid-1960s had taken good-natured sentiment. The public at that time felt joy, benevolence, fearlessness and love, and they demanded it on the airwaves. The public in the late 1970s felt misery, anger, fear and hate, and they got exactly what they wanted to hear. (Luckily, the hate that punk rockers. reflected was not institutionalized, but then, this was only a Cycle wave low, not a Supercycle wave low as in 1932.)
In summary, an "I feel good and I love you" sentiment in music paralleled a bull market in stocks, while an amorphous, euphoric "Oh, wow, I feel great and I love everybody" sentiment (such as in the late '60s) was a major sell signal for mood and therefore for stocks. Conversely, an "I'm depressed and I hate you" sentiment in music reflected a bear market, while an amorphous tortured "Aargh! I'm in agony and I hate everybody" sentiment (such as in the late '70s) was a major buy signal.
Popular Culture and the Stock Market. Read more about musical relationships to social mood and the markets in this 40-page-plus free report from Elliott Wave International, called Popular Culture and the Stock Market. All you have to do to read it is sign up to become a member of Club EWI, no strings attached. Find out more about this free report here.
This article was syndicated by Elliott Wave International and was originally published under the headline How Punk Rock and Pop Music Relate to Social Mood and the Markets. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
EWI's new groundbreaking FREE eBook teaches you how to think and invest independently
March 25, 2011
By Elliott Wave International
Below is an excerpt from the newest free Club EWI investor education resource, The Independent Investor eBook 2011. Inside are some of the most eye-opening research findings by EWI's president Robert Prechter, as published in the recent issues of his monthly Elliott Wave Theorist.
Enjoy this short excerpt -- and for details on how to read this eBook in full, free, look below.
Club EWI's Free Independent Investor eBook 2011 (excerpt)
Chapter 1: Quantitative Easing Has Not Brought Back the Old Inflationary Trend
(From Prechter's January 2011 Elliott Wave Theorist)
While long terms rates are rising, Treasury bill rates are stuck near zero. How is it possible?
... During hyperinflation, rates typically rise to double digits per month. Inflationists find it difficult to reconcile the Fed’s massive balance sheet growth over three years beginning in August 2008 with short term rates at zero and long term rates only in the 2-5% range.
Deflationists (all ten of us) understand why investors are willing to hold government paper at such low returns: The total supply of debt is contracting. Most bonds won’t survive. The federal government’s bonds will survive the longest.
Figure 10 shows that the total supply of “money” plus debt (all of which is in fact debt) peaked in 2008. This decline in overall money and credit is the first on an annual basis since 1929-1933. It is a big deal.
... This graph explains why gold in 2010 was so much lonelier in making an all-time high than stocks, commodities and real estate were in 2006, when everything was making an all-time high simultaneously: The total money + credit supply is down and cannot support new highs in all markets at once.
The Fed’s QE programs are failing to re-ignite inflation. By mid-2011, the Fed will have monetized just over $2 trillion worth of debt since 2008 to bring the value of its total assets to about $3t. This does represent a huge amount of fiat money. But the overall debt load is $65 trillion. Thus, the Fed will have monetized only 5% of the total, meaning that 95% of the outstanding debt is still suffocating the economy like a giant pool of sludge. …The Fed’s degree of monetization in light of these debts is very small.
For more of Robert Prechter’s insights on the markets, including why QE2 was a major tactical error, why rising oil prices are not bearish for stock, and why earnings don’t drive stock prices, read the rest of this FREE 51-page Independent Investor eBook. Download your free eBook NOW.
This article was syndicated by Elliott Wave International and was originally published under the headline Quantitative Easing: Why It Has NOT Brought Back Inflation. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
"Yet in Bahrain, I had a depressing experience. King Hamad and Crown Prince Salman have been bowing to their 70 per cent (80 per cent?) Shia population, opening prison doors, promising constitutional reforms. So I asked a government official in Manama if this was really possible. Why not have an elected prime minister instead of a member of the Khalifa royal family? He clucked his tongue. "Impossible," he said. "The GCC would never permit this." For GCC – the Gulf Co-operation Council – read Saudi Arabia. And here, I am afraid, our tale grows darker.
We pay too little attention to this autocratic band of robber princes; we think they are archaic, illiterate in modern politics, wealthy (yes, "beyond the dreams of Croesus", etc), and we laughed when King Abdullah offered to make up any fall in bailouts from Washington to the Mubarak regime, and we laugh now when the old king promises $36bn to his citizens to keep their mouths shut. But this is no laughing matter. The Arab revolt which finally threw the Ottomans out of the Arab world started in the deserts of Arabia, its tribesmen trusting Lawrence and McMahon and the rest of our gang. And from Arabia came Wahabism, the deep and inebriating potion – white foam on the top of the black stuff – whose ghastly simplicity appealed to every would-be Islamist and suicide bomber in the Sunni Muslim world. The Saudis fostered Osama bin Laden and al-Qa'ida and the Taliban. Let us not even mention that they provided most of the 9/11 bombers. And the Saudis will now believe they are the only Muslims still in arms against the brightening world. I have an unhappy suspicion that the destiny of this pageant of Middle East history unfolding before us will be decided in the kingdom of oil, holy places and corruption. Watch out." *
Liberty Dollar Introduction:
FBI seizure of Liberty Dollar property video 1:
FBI seizure of Liberty Dollar property video 2:
FBI seizure of Liberty Dollar property video 3:
Bernard von Nothaus, creator of Liberty Dollar, Guilty 4 Counts:
"Robert Prechter explains how stock price movement is the result of changes in social mood and teaches the basics of the Elliott Wave Principle. From his July 2010 presentation at the World Futurist Society."
"The images are repulsive. A group of rogue US Army soldiers in Afghanistan killed innocent civilians and then posed with their bodies. On Monday, SPIEGEL published some of the photos -- and the US military responded promptly with an apology. Still, NATO fears that reactions in Afghanistan could be violent." *
""I completely understood his feelings," Regan pointed out. After all, "who could countenance such brutality? The news of the slaughter had come at a key moment in the deliberations about whether the U.S. would invade Iraq. Those who watched the non-stop debates on TV saw that many of those who had previously wavered on the issue had been turned into warriors by this shocking incident. Too bad it never happened."
""We are getting shot by American weapons fired by American-trained Bahraini soldiers with American-made tanks," a medical orderly in Bahrain told Robert Fisk of The Independent of London. The same was true in Egypt prior to Mubarak's belated abdication. Both of those countries have been convulsed by uprisings against deeply corrupt, well-entrenched elites. People throughout that region have endured decades of government-abetted plunder, and endless abuse at the hands of the police states that protect the plunderers." *