A well known American author and stock market analyst has painted the ultimate bearish picture for the future of the markets.
Robert Prechter, past president of the Market Technicians Association and student of Elliott’s ‘Wave Theory’, has forecast a 70%-90% stock market plunge over the next few years.
His thoughts are reported on both sides of the Atlantic in the New York Times and the Guardian as well as Reuters.
Prechter’s predictions are based on his analysis of his version of the Elliott Wave theory. There are plenty of market bears about at the moment and talk about a double dip recession. But Prechter’s analysis is so extreme that another analyst, Ralph Acampora who has 40 years experience in the field, said that “…. if he’s right, we’ve basically got to go to the mountains with a gun and some soup cans, because it’s all over.”
Prechter told Reuters that "It is very clear there is substantial stockmarket risk". And talking to the New York Times he said '… winter is coming, buy a coat. Other people are advising people to stay naked. If I'm wrong, you're not hurt. If they're wrong, you're dead. It's pretty benign advice to opt for safety for a while."
His prediction, if true, would see the Dow Jones Industrial Average drop from just below 10,000 to somewhere between 1,000 and 3,000 over the next 5-6 years.
Prechter is advising people to go for safe haven investments such as US Treasury Bills and he also likes the Swiss franc. He puts US property prices at “about halfway down in their bear market” and says that the crude oil bear market that started nearly two years ago is not over yet.
Prechter has been known to be right in the past. He got the stock bull market right in 1982 and got out before the 1987 crash.