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Mix-Ansicht- Prechter: worst is yet to come in markets - Morpheus, 05.12.2002, 10:17
Prechter: worst is yet to come in markets
-->Here is an important article By Len Boselovic
Noted bear believes worst is yet to come in markets
Market pundit Robert Prechter Jr. says interest in his latest book,"Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression," waxes and wanes with the stock market.
Giving the Dow Jones industrial average's 16 percent rise since the end of September, not many readers are curling up with Prechter these days. He predicts that's about to change.
"When the Dow hits 7,000, I think they'll be interested in picking it up again," Prechter said in an interview yesterday morning. The widely watched index"has a lot more down to go than that."
Prechter said the optimism defies the fact that stocks are still overvalued by traditional measures such as price-to-earnings ratios. His forecast: a depression along the lines of the Great Depression or the deflation that Japan has suffered since the collapse of that nation's go-go economy of the 1980s.
"If you are preoccupied with pedestrian concerns or blithely going along with mainstream opinions," Prechter writes in the book,"you need to wake up now, while there is still time."
Prechter, a former Merrill Lynch technical analyst and proponent of the Elliott Wave theory of economic forecasting that takes into account trends over centuries, gained fame in the 1980s for correctly predicting that decade's bull run in stocks. More recently, he's been predicting a massive crash in the stock markets that would dwarf the sell-offs of the past few years.
He noted that Japan has been struggling with a deflationary depression for 12 years, but said it wouldn't take the U.S. economy as long to work itself out of the coming depression.
His recommendations: find the safest bank and money market accounts you can because cash will be king. Be very careful when investing in bonds, even government bonds, because there will be many issuers who won't be able to make payments, Prechter said. Those who can handle the risk should make a bet on a market decline by shorting stocks.
"I think that's the safest speculation there is," he said.
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