Rating: 
Summary: Pretty Scary Stuff
Review: Prechter presents a very compelling analysis to support his extremely pessimistic view of the near term future. This book is an important work. Even if his predictions do not materialize, the possibility must be considered. As much I as do not want to believe Prechter, this book gives the reader much to ponder. My relatively conservative approach to the stock market makes me think I have a reasonable amount of protection for my portfolio. But Prechter's expectation that the Dow Jones Industrail Average will plummet to under 1000 puts that belief in jeopardy. Each reader must decide for himself how much protection is required. Read this book, then make your decision. Your financial life may depend on that decision.
Rating: 
Summary: Highly Recommended!
Review: Prophets of doom have always made entertaining reading. In his latest fire-and-brimstone warning, Robert R. Prechter, Jr., an experienced forecaster of long-term economic and social trends, says financial Armageddon is just around the corner. While his technical analysis ("Wave Theory") may appear to be stock-market astrology, readers may appreciate his examination of the basic functions of money and credit, his argument that worldwide central banking has fundamentally altered these functions, and his perceptive comparisons of the late 1990s with the Roaring Twenties. Prechter might have appealed to a broader audience by toning down his graphs and technical talk, and focusing instead on his investment suggestions: If the market turns down, you'll save your skin, but even in a bull market, keeping your money safe can't hurt. We recommend this book to anyone looking for bear-market investment advice, as well as those interested in technical analysis or an opinionated view of business and market cycles.
Rating: 
Summary: This book is a bust
Review: Robert Prechter believes that stock market movements are highly predictable. Such movements supposedly follow various patterns (either waves or fractals) that can be uncovered using technical analysis. If this were the case, Prechter would have made a fortune in the stock market. Instead, he has made one selling books with really poor advice. He positions himself as the Cassandra of the investment set. The only problem is Cassandra had insights, meanwhile he has none. Over 320 pages, Prechter pontificates about investment and economic theory, and geopolitics. Subjects in which he has no well grounded knowledge whatsoever. Regarding fiscal policy, he mentions that the Feds have lowered interest rate to historically low levels to fight inflation. This is wrong. They lowered interest rate to fight off the risk of deflation. He states that no one has taken precautions to fight against deflation, simply because the establishment does not believe it could ever happen. Again, this is all wrong. Alan Greenspan has been most concerned about deflation for the past couple of years. This is why he lowered short term rates to historically low levels. Prechter mentions that the money supply is growing way too fast. He further attempts to explain that inflation is caused by the money supply expanding faster than the production of goods. Well, obviously the money supply has not grown too fast relative to goods over the past decade and a half, given that we have had exceptionally tame inflation during this period. Again the current risk right now is not runaway inflation, it is deflation. Prechter states that the U.S. banking system credit underwriting is way too lenient. This will lead to a tsunami of loan and mortgage defaults, and real estate foreclosures. I have looked at the data, and this is nonsense. The balance sheet of both households and businesses are actually much stronger with a lower leverage than they were in previous decades. The risk of an onslaught of bankruptcies and foreclosure right now is very low. The cash flow of businesses are too sound for that to happen. Also, households have too much equity in their homes for foreclosures to take off nationwide. Similarly, the asset quality of banks currently is very strong. This suggests their credit underwriting standards are sound, and not so lacks as Prechter suggests. Regarding his investment recommendation, Prechter is not anymore proficient than in economic theory. He recommends you get out of all bonds and stocks investments, and reinvest everything in cash and precious metals. This advice is nonsensical. By following such an investment mix, you will not keep up your purchasing power over time. And, you will have a significant exposure to an investment that is purely speculative (gold). Mr. Prechter is a "Gold Bug" such an investment strategy has been out of date for decades. Owning a bit of gold may be OK, but to make it a major portion of your stock portfolio is financially really dangerous. He even recommends that you cash out your retirement plan and reinvest it after incurring hefty tax penalties in cash and gold. This is because he considers that there is a high risk the Government will confiscate your retirement assets. That is just not a real possibility. Regarding geopolitics, Mr. Prechter states that 9/11 was the result of a worldwide economic downturn. He has never heard of Wahhabism in Saudi Arabia that preaches the most extreme and violent interpretation of the Koran. Such Saudi Arabian Wahhabists accounted for 15 of the 19 terrorists of 9/11. The causes of 9/11 had nothing to do with an upcoming economic downturn. But, 9/11 certainly precipitated the worldwide economic downturn. Mr. Prechter confuses cause and effect here. And, thinks he is a contrarian genius because of it. I don't think so. If you want to read books on investment theory, I suggest the excellent books by Burton Malkiel: A Random Walk Down Wall Street, and The Random Walk Guide to Investing. If you want to inquire about the causes of 9/11, I recommend Longitude and Attitude by Thomas Friedman.
Rating:
Summary: The Coming Storm
Review: Robert Prechter is basically a behavioral economist who believes in the inefficient market theory that irrational bubbles can, and will, form in the market place. Not merely in the stock market, but also in real estate and commodities markets. His method involves the use of Elliott Wave Theory, a forcasting tool which primarily looks at investor sentiment. Prechter predicts a period of severe deflation. With interest rates at a historical low (not merely in the US, but also in places like Japan where the rate is zero), the Fed lacks power to inject additional liquidity into the economy in order to keep the GDP growing and the stock market propped up. Excess capacity and massive amounts of consumer and corporate debt have brought us to the brink of economic catastrophe. But I'm not entirely convinced that deflation will be our end-game. With the orgy of government spending, the fall of the dollar, and excess liquidity, I think a sharp spike in inflation looks imminent. Nevertheless, if I look around, I see Prechter's fears manifesting themselves; people taking out home equity loans to invest in the stock market and pay off credit cards, 5 Blockbuster video stores within 3 square miles, zero percent financing on cars...
Rating:
Summary: Something wicked this way comes
Review: Robert Prechter is expecting a devastating dose of deflation leading to a depression, and no collective body (read "government") can do anything about it. He is one of the "old-timers" who has survived the market's up and downs for more than 20 years, and his outlook on our situation is not to be taken lightly. Being high profile, his pronouncements make headlines, and it's all too easy to point to a previous mistake and write him off. However, his scholarship is second to none. He's been right in the past; he just may be right again. And if he is, most of us are in real trouble. Thus, his argument is too important to dismiss without a thorough reading.
Prechter starts with a good overview of his pride and joy, and the basis of all his study - The Elliott Wave Theory. His conclusion is that we are at the end of the 5th wave of the Grand Supercycle which reaches all the way back to 1700. We're talking big-time financial implications here.
To quote Prechter on describing the milieu we've just lived through, "Third waves are built upon muscle and brain. Fifth waves are built upon cleverness and dreams. During third waves, people focus on production to get rich. During fifth waves, they focus on finance to get rich." Sounds remotely familiar.
At the bottom of all our troubles is debt. Gobs and gobs of debt, piled as high as the eye can see. Deflation/depression results in a contraction of credit as debt gradually gets wiped out...one way or the other. It produces a line of falling dominos where less credit means less borrowing means less spending means less production means less employment...which means more liquidations which means more defaults as everything feeds on the downward spiral.
Prechter blames some of this on The Depository Institutions Deregulation and Money Control Act of 1980 which gave the Fed authority to monetize any government agency's (any government anywhere) debt. That power was recently noted in a speech on 21 Nov 02 at the National Economist's Club in DC by Fed governor Bernanke who said, "But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost." Clearly, Greenspan & Co. don't plan to sit around while deflation envelopes us. Yet, Prechter contends that the Fed's action to drive rates downward, in addition to continually reliquefying the economy via debt, also participated in the initial phase of the deflationary process.
One of Prechter's most fascinating contributions on which he's written several books ("The Wave Principle of Human Social Behavior and the New Science of Socionomics," "Pioneering Studies in Socionomics," and "Socionomics: The Science of History and Social Prediction"), is that stock market crashes produce depressions and stock market booms produce eras of optimism and economic expansion. Not the other way around. The stock market is a discounting mechanism, leading the economy, not following it. He, correctly, I believe, perceives that stock market values are a function of investor (and public) psychology. When we feel good about ourselves, we bid prices up as is evidenced by expanding PEs. When we are down on ourselves, we sell stocks down to rock bottom prices, again evidenced by low PEs. Therefore, he measures the health of the whole system based on the health of the stock market. And that, he shows us, is in very bad condition - internally weak and grossly overpriced. He even puts a potential number at where the Dow Jones Industrial Average could eventually bottom out...all the way down to 777!
From the stock market, Prechter continues on to the economy, where debt, liquidity, GDP, production, unemployment, trade and budget deficits, etc. are all laid out for investigation, and the picture is one of weakness compared with the economic cycles that have preceded our current era. It is the portrayal of a gradually slowing economy. All of this foreboding coincides with the Kondratieff Wave (Kondratieff Winter), producing this perfect storm of financial upheaval that's just around the corner.
After laying out why things are going to hell in a hand basket, Prechter proceeds to recommend a way out for the individual investor. He summarizes a list of investment precautions to take to protect yourself from potential calamity by surveying the various asset classes available to us today.
Bonds - Risky. AAA are safest but ultimately depend on ability to service debt.
Real Estate: Lack of liquidity. Prices will collapse with everything else.
Collectibles: Coins, maybe.
Stay away from commodities except gold and silver after they bottom out.
Money market funds are suspect.
Stocks: Only inverse index funds or going short.
Cash: All assets go down in deflation except cash. Short-term Treasuries. Outside US - hold bonds and notes of strong foreign entities. Protect against hyperinflation.
If you listen to Precheter, you will, as he cautions, not be any worse off if it doesn't happen as he predicts. But if he is right, then, at the bottom, you will be in perfect shape to buy stocks, real estate, etc. at bargain basement once-in-a-lifetime prices.
The book tells you why and how disaster could happen, with a lot of evidence on its side. Will it happen? No one knows how it will play out, but Prechter has done his best to ready you for the worst. Perhaps all we're waiting for is the last straw to break the camel's back, Precheter's "The Tipping Point."
Rating: 
Summary: Provocative Viewpoint on the Market and the Economy
Review: Robert Prechter Jr. is well-known in stock market circles for his Elliott Wave predictions over the years have had their success and failures. This is Prechter's third and latest book (At the Crest of the Tidal Wave (1995) and The Elliott Wave Principle (1978)). His current book is really two books in one printed on different colored paper! Even if you do not agree with Prechter's view of the world, you should certainly understand his arguments and make your own decisions. Part I (135 pp.) focuses on why he believes a stock market crash will occur in the near term, as well why deflation and economic depression are high probability scenarios. Although deflation and depression are rare occurrences, Prechter believes that they are at the brink. His goal is writing the book is to provide insight into defining both events and make you believe that they can happen, and eventually make you believe that they are likely to happen. Prechter compares the period 1942-1966 (called Wave III) with the economic expansion of 1974-2000 (Wave V). He points out that the most recent period had much weaker economic fundamentals and performance than the prior period, although by stock market standards Wave V had an increase of 1930% on the DJIA compared to 971% during Wave III. In his analysis he provides comprehensive statistics on GDP, Industrial Production, Capacity Utilization, Unemployment rate, household's liquid assets, federal and consumer debt, prime rate, federal budget deficit, personal savings among others. Prechter then defines depression and its relationship to the stock market. One of his key observations is that 'major stock market declines lead directly to depressions'. Prechter depicts the five waves evident in the stock market using four charts. He points out that the five-wave pattern occurs even taking into account major news events such as Hitler's rise to power and the end of the Vietnam war. Prechter provides four signs of a market top and explains the Elliott Wave characteristics of each of the five waves. Prechter presents his case for the existing stock market precarious situation (as of March 2002) by covering Wave V in great detail. He spends considerable time examining the fifth wave from 1974 to 2000 compared to previous waves. The case for the historically high stock evaluation is made by focusing on the low dividend yield, outrageously high book value, and high P/E ratio. Prechter then covers how psychology plays a major role in a stock market advance and decline. He reviews the psychology of he economists, brokerage strategists, money managers, public, and the media. Prechter believes that the upcoming bear market will be the most devastating since the great depression and perhaps since 1720-1784. If this occurs, he indicates that the U.S. will experience another depression. He forecasts that the DJI will plummet to 777, the August 1982 low, if that average follows the pattern of the prior manias (e.g., Nikkei; DJI 1929-32; Gouda tulip bulbs (1634-1722); and the South Sea Company (1719-1722)). Lastly, he makes the case for deflation, and discusses the Fed and banking system. Book Two provided Prechter's advice for protecting yourself and profiting from the upcoming depression. His recommendations include:
1. Have safety of principal by being in cash or high-quality short-term U.S. Government treasuries (T-bills) or money market mutual funds that invest in these types of instruments.
2. Sell your home (if you have a large mortgage) and rent instead.
3. Find a safe bank (using Weiss Ratings, Inc., for example) and keep your money there.
4. Do not own or invest in stocks, options or futures.
5. Consider buying inverse mutual funds (such as Rydex Tempest that double short the S&P 500) and Rydex Venture (double short NASDAQ 100). ProFunds also offers bear funds. To invest in any of these funds, Prechter cautions that you must be a short-term timer to be successful.
6. Buy physical gold and silver metals.
7. Cash out your whole life insurance policies and convert to term insurance from the safest firms (based on Weiss Ratings, Inc., for example) Prechter provides a very sobering view of the future that few individuals will heed because of its negative and extreme consequences. But if this book makes you think about the safety of your financial nest eggs, retirement funds, insurance policies, etc; then at least you can decide to take some steps to protect yourself. If the stock market can manage to rally 20-40% from the lows of July 2002, then perhaps you should consider cashing in your remaining equity and mutual funds positions before the 'real' bear market takes hold as Prechter envisions. I know I will be doing that and then using my charts and technical indicators to tell me when to get back in. It's shame that Prechter did not publish this book in March 2000 when the market was at its peak. He would have saved most investors, who believed his work, a great deal of money if they had followed his recommendations. Whether you agree with Prechter's view of the world, you will certainly agree with this quote:
'To be successful in life, or at least learn something along the way, you have to think for yourself.'
Rating:
Summary: Grandstanding
Review: Robert Prechter, using his Elliott Wave Theory, was a bear through the greatest stock market boom in history. He called the 5 Wave DJIA top in late 1993 before the market really took off. This book is a contrarian signal to the notion that we are about to enter into a deflationary spiral. Prechter is consistently wrong.
He is capitalizing on irrational fear instead of market moves. He understands swings between optimism and pessimism, fear and greed. He does not correlate these well to market moves. The world economy expands with population growth. Some periods are better than others and regions perform differently. Downturns can be serious or mild. But they occur with regularity. They end without cataclysmic events so often painted by writers like this.
I would rate this book in the category of pulp fiction rather
than serious financial analysis.
Rating:
Summary: READ THIS BOOK NOW!
Review: Scary as it may sound, things can get a lot worse! With the Bull on the run, the Bears quietly plan for the new depression. Will we see NASDAQ 5000? OR will we see NASDAQ 1000? Dont think another minute about what will happen, get the book and start thinking about how to prosper in it. - Mason Johnson, President, www.TomorrowsGold.com
Rating:
Summary: Common sense when there is none to be had
Review: The negative reviews of this book are quite puzzling. History always repeats itself, and while Prechters timing may have been off in calling the bear market, the points he makes in this book are still valid. While the depression he talks about may not materialize, one thing seems reasonable, unless you are an active trader or follow some of the suggestions outlined in this book, this market will eat you alive for the next few years. The [people]of Wall Street, Ned Riley, Hillary Cramer, Abby "Just-A-Colon", Joe Battapaglia etc will continue to run peoples money into the ground. Who ever said that you always have to be invested? Go back to 1965-82, unless you traded that market, it was dead money. Prechters main point is that the "system" is wrought with excess, he simply suggests standing aside until such time that an equlibrium is restored. The reviews on the jacket are penned by some of the brightest individuals in the business, Marc Faber, Martin Weiss, naturally they are anonymous to 99% of the morons who watch CNBC because they are not cheerleaders. The bottom line, the book is excellent food for thought, as the author repeadetedly states, "I may be wrong and miss out, but I won't be wrong and get my head handed to me." The so-called investment gurus both professional and the armchair variety may want to think about that as they wrap up another year where their performance (total return) is measured on a relative basis to the major indices (that is how overpaid, clueless portfolio managers justify their jobs) versus an absolute total return. All individuals who have anything of value to say are always viewed as nut cases. Only after their prediction comes true do the lemmings realize how dead on that person was. I for one subscribe to Prechters Short-Term Financial Forecast which is published for active traders 3 days a week (I am a former floor trader who now trades in front of screens) the analysis is raw and incredibly helpful. So to those reviewers who call this guy a quack, so be it.
Rating:
Summary: Defensive Strategy
Review: This book takes a very defensive posture, but that is consistent with the author's hypothesis, and he does a good job of explaining it. For this reason, I gave it 5 stars for consistency of view and clarity. For the less defensive, I recommend a conservative investment book. A simple gem is Andrew Tobias's "The Only Investment Guide You'll Ever Need". For those who want to rock and roll in hedge funds, go ahead and roll the dice. For hidden leverage in hedge funds, any investment can be made for virtually no money down. I recommend for finance professionals Tavakoli's book "Credit Derivatives" 2nd Edition.
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