A New Stock Market Crash?

Just as Bob Prechter did in 1978 with "Elliott Wave Principle: Key to Market Behavior," he is again preparing investors for events that aren't even considered possible by most analysts or economists --- except this time, the consequences of ignoring the message will be catastrophic!

In your professional career, you've made a number of long-term market forecasts that lie far outside of conventional opinion. Is there a reason why you have so often stood outside the crowd?

I make my forecasts using the Wave Principle. I don't rely on any data external to the market. I study the charts and interpret the waves as best I can. News is not helpful --- in fact, it's counter-productive.

I could do this on a desert island as long as I had access to the charts. This method often places my forecasts outside of public opinion because the majority relies on news, which is always bullish at tops and bearish at bottoms.

Majority opinion cannot be any other way, because the herding nature of human beings forms a popular consensus, which creates the market's trends and turns.

Let's talk about your current long-term forecast.

All signals point to the fact that wave 5, which is the final leg up of our great bull market, topped in early 2000. Mass psychological trends are now fueling a corrective move that will decimate stock prices.

I believe it's time for people to prepare for a vast economic disaster, which will include a deflationary crash and an economic depression as bad or worse than the one suffered in the early 1930s.

When will it begin?

It is already in progress! I'm not sure the world is ready for this. Has it ever been? Disasters of this magnitude always catch the general populace off guard. Today is no exception --- too few are even remotely prepared for this crash.

To someone not educated in both monetary trends and the Wave Principle, the coming of a second Great Depression is an idea that's very hard to swallow.

Understandably. deflation and depression are exceedingly rare. Sustained deflation hasn't occurred for 70 years, and the last one was so brief that it only lasted 3 years.

During the past two centuries, there have been just two depressions; one in the nineteenth century, and one in the twentieth. Most economists now believe that deflation and depression are utterly impossible in our modern economy, if not ever.

But there's an enormous wealth of historical evidence that suggests that this rare event is about to occur.

What evidence?

Let me begin by stating an undisputed fact that every first year economics student learns about stocks: A stock certificate may have an objective value on one basis or another, but is still only worth what someone else is willing to pay for it.

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