Tag: Robert Prechter

Ink + Paper Doesn't Equal Value: Prechter on Fiat Money

Posted on by The INO.com Team

By: Elliott Wave International

My dad will turn 84 this year. When he was born, you could walk into a Federal Reserve Bank or the Treasury and redeem your paper money for gold. It actually said you could on every piece of U.S. paper currency:

"Redeemable in gold on demand at the United States Treasury, or in Gold or lawful money at any Federal Reserve Bank."

You can't do that today, which helps explain why my dad is so grumpy.

But, seriously, I mention my father to make it personal. The move away from the gold standard did happen in the lifetime of some folks who are still around. Is that such a big deal?

Well, it is a big deal when the government unilaterally changes all economic and financial transactions, from having a basis in something, to ... Continue reading "Ink + Paper Doesn't Equal Value: Prechter on Fiat Money" →

One Sentiment Gauge in Europe Reaches Epic Proportion

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A visual history of complacency and fear as seen by the 10-year spread over German Bunds

By: Elliott Wave International

The one-two punch 2014 winter storms that battered the southeastern United States left $13.5 million in damages in Georgia alone and thousands of residents displaced due to burst pipes and power outages. I am one of the displaced. Three months after the flood, I'm still living out of suitcases in a hotel while my apartment gets rebuilt.

I'm ashamed to admit before Icepocalypse, I had the least comprehensive homeowner's insurance. Why bother, I thought. This is Atlanta. The only blizzard this city's seen in the last decade is on the dessert menu at Dairy Queen.

But now, you better believe the first thing I'm going to do when I move back in is upgrade my policy to cover all and any acts of man and God -- fire, tornado, sharknado, alien invasion, you name it.

It's human nature. You can never truly prepare for the worst until you experience it first-hand. Then, and only then, do you go above and beyond to protect your health and welfare. Continue reading "One Sentiment Gauge in Europe Reaches Epic Proportion" →

Stocks Peak One Year After Bonds (History Set to Repeat?)

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Financial parallels between the 1920s and today

By Elliott Wave International

When the financial media mentions the late 1920s, they usually mean the 1929 stock market top. But today's investors can also learn from what happened in 1928. That was the year that the bond market topped, while commodities peaked even sooner.

You can see this for yourself in a chart published in the September 2013 issue of Robert Prechter's Elliott Wave Theorist.

In the deflationary collapse of 1929-32, commodities fell
from lower peaks, not higher peaks; stocks fell
from all-time highs down to the bottom; and bond
prices fell from an all-time high a year earlier.

The Elliott Wave Theorist, July-August,
2013

These markets could see a similar outcome in the near future: Commodities peaked in 2008, while Treasury bonds topped in 2012. The high in the Dow Industrials remains December 31, 2013. Continue reading "Stocks Peak One Year After Bonds (History Set to Repeat?)" →

Many Are Betting on a Calm Market. We're Not.

Posted on by The INO.com Team

Here's one good reason why: a historic market sentiment extreme

By Elliott Wave International

The DJIA, S&P and NASDAQ are struggling to bounce. Yet the bullish convictions remain high. Says a February 5 Investor's Business Daily headline:

"Why Mutual Fund Investors Need Not Panic After January Sell-Off"

When is the best time to get out of the stock market? When everyone else is invested and extremely optimistic. When is the best time to buy, then? Exactly: when you see the opposite sentiment.

Market sentiment is one indicator you don't hear much about on financial networks. Yet we've seen sentiment extremes repeat at every recent market top and bottom. What's more, as Robert Prechter, the president of Elliott Wave International, puts it, "the greater the degree of the advance that is ending, the greater the optimism at its peak."

This contrarian view of the market can be a financial lifesaver.

Below is an excerpt from Prechter's recent Elliott Wave Theorist, a monthly newsletter he has published since 1978. It shows you one way how Bob finds bearish and bullish extremes in the market. Continue reading "Many Are Betting on a Calm Market. We're Not." →

Snapchat and the Disappearing Bears in the Stock Market

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See what happens in the financial markets when the bears vanish

By Elliott Wave International

If Inspector Gadget or Maxwell Smart had lived in the digital age, their bosses would have used the smartphone app Snapchat to deliver their secret missions.

Snapchat is a popular app with about 8 million users that lets your smartphone send a photo that self-destructs seconds after your recipient views it. As of September 2013, users were sending about 350-400 million vanishing messages a day -- which compares with the 127.5 million shares that changed hands in the Dow on Jan. 27, 2014.

But when Evan Spiegel, the Stanford student who came up with the idea, unveiled it to his product design class in 2011, his classmates gave it a thumbs-down. Disappearing photos? Who will use it? Little did his classmates know how the app, originally called Picaboo, would go on to capture the attention of teenagers and young adults. And even a few older folks who want to connect with them, such as 51-year-old Senator Rand Paul, who recently signed up to woo younger voters.

The idea of the disappearing photo applies beautifully to the situation in the stock market today. Pessimists on stocks are disappearing quickly. And so are bearish analysts. Not in 10 seconds, but they are still doing a version of a Snapchat disappearing act. Here's how The Elliott Wave Financial Forecast describes it (emphasis added) in this excerpt from our just-released 2014 State of the Global Markets report: Continue reading "Snapchat and the Disappearing Bears in the Stock Market" →