And we’re off… August ends and September begins. What will the market do today, this week this month, for the rest of the year? As always, the answer is blowing somewhere in the wind. Sure, we can speculate, and I often do, but let’s be clear, at best speculation is a reasoned conclusion based on a study of the facts, and, at worst, speculation is out and out guessing, a shot in the dark, a blind swing at a pinata.
Now, many prognosticators will tell you they base their conclusions on fact, but facts are a relative thing these days. For example, can a chart based on a theoretical premise produce facts to analyze? Can Elliot Wave Theory predict calamity with accuracy? A reader has asked this very question …
Sir, do you believe in Elliot Wave Theory? Mr. Robert Prechter is forecasting financial catastrophe, banking crisis etc. What is your take on it?
The first answer is that I don’t believe or disbelieve in Elliot Wave Theory. I don’t use it, but many folks utilize Wave Theory to invest and trade, so who am I to diss it or promote it? What I’d rather do is diss a conclusion of Robert Prechter, “the nation’s foremost proponent of the Elliott Wave method of forecasting” and the founder and leader of Elliot Wave International, arguably “the world’s largest independent financial forecasting firm.” Take a breath and a read one of his conclusions …
Mr. Prechter is convinced that we have entered a market decline of staggering proportions – ‘perhaps the biggest of the last 300 years. If I’m right, it will be such a shock that people will be telling their grandkids many years from now. Don’t touch stocks.”
Staggering prediction, yes, and one we should heed, yes? The problem is that he made this prediction in July 2010. Back then, he went on to say …
The Dow, which now stands at 9,686.48, is likely to fall well below 1,000 over perhaps five or six years as a grand market cycle comes to an end, he said.
“Perhaps over five or six years,” he says. What does one do with that? I live in California, and I am used to learned folks couching predictions in such nebulous terms – California will experience the “big one” sometime in the next 25-50 years.”
So, what he is saying today, I don’t know and I don’t care. He could be right. Sometimes, shots in the dark hit their mark. At best, though, his theoretical approach to predicting the future is a reasonably probable outcome based on theory. At worst, it is a “blind swing at a pinata.” Either way, I’d rather speculate based on what I know about the market, the global economy, and the current geo-political frame. I’d advise the same for you …
Trade in the day – Invest in your life …
