I noticed today that the top two most emailed articles from the New York Times were, number one, an article about Robert Prechter, the Elliott Wave guy, and two, an article about a book titled This Time Is Different, written by two economic experts covering 800 hundred years of global booms and busts.
It is easy to gather from the popularity of these two articles just how preoccupied folks are with current market conditions, but more importantly, an attempt here by readers to learn if there is anything about current market conditions which might forecast what is ahead. The answer is no.
First of all, Robert Prechter has been around forever rolling his cycle map out in front of traders always predicting extremes, whether up or down, and rarely being right especially when factoring in any notions of timing. Now Bob is calling for the greatest of all market dives which will, and if any one survives, result in the greatest bottom in the history of, well, big bottoms. According to Bob, everyone should sell just about everything they own and run with only a can of tuna to the woods and wait for his signal. But since timing has never been one of Bob's big strengths, better just skip the nature part and rent a movie.
The other article is about a Harvard economist named Ken Rogoff and University of Maryland economist Carmen Reinhart who together have written a history covering 800 years of economic disasters where, some how, unbelievably to the two professors, each previous economic disaster was generally ignored by the next blow up participants and so on so on. That is insight. It may be news to these two authors that they have offered little in the way of any useful material to combat present economic woes and according to their own analysis, everyone will ignore their advise in the future anyway.
So do not listen to Prechter and ignore the history lesson. This market will be different and no one will know just when a solid bottom is in or when the next boom will bust. If you are a buy and hold investor, that model is broken and new investment alternatives will be delivered from Wall Street which will be just a lethal. Individuals and groups will now have a challenge to find investment management which utilises adaptive risk methodologies. Good luck.
