Customer Reviews

At the Crest of the Tidal Wave: A Forecast for the Great Bear Market

5 star:		(5)
4 star:		(3)
3 star:		(0)
2 star:		(3)
1 star:		(1)

 

 

Welcome to Dow 10,000. So, what's next? Skies the limit, right? Do you know what it means when everyone you know is in the stock market? Have you ever wondered why only the big name stocks have been soaring like rockets for years, while those of most small and medium size companies have languished? Would it surprise you to know that the 15 year rise in bonds has not been a bull market at all, but a BEAR MARKET RALLY? How far must the price of gold fall before it finally reaches "rock bottom"? And finally, what do you think your home will be worth ten years from now? Read this book and you will have an excellent guide to all these questions. Robert Prechter has seen it all. He entered the financial world in the early 1970's, just in time to witness the last true bear market in U.S. stocks. He forecasted the 1982 breakout of the Dow Jones Industrials four years before it occurred. His prediction was widely considered impossible and out of touch with the realities of late 1970's. And importantly, he then predicted that it would blossom into the full blown mania we are seeing today. As the world's foremost practitioner of the Elliott Wave Principle, Mr. Prechter has the long range view required to see just where we are in the "big picture". And although we've been patiently waiting since this book was written (1995), all the pieces are slowly, but surely, falling into place. I've read nearly fifty books on financial markets, many of them considered classics, and I can honestly say that this is one of only two books you'll ever need to own on the subject. The other is "Elliott Wave Principle", by Frost & Prechter.

This book is a must read for financial survival. Prechter has an engaging writing style. His opinions are often outrageous and sometimes too extreme. This value of this book is in that it is so different from the conventional financial press.

Almost alone Prechter predicted the great bull market back in 1979. He then called the top prematurely but at least he did warn this readers that a top was coming. The scope of Prechter's vision is awesome. He has charts with trendlines going back to 1700 with projections for the next century.

Chapter 11 "Manifestations of Investor Psychology" is very powerful.

There was a movie which showed an approaching tidal wave. There was no noise because the wave was travelling faster than the speed of sound. This is the case of the oncoming financial tidal wave of disaster. One can hear the bullish rantings of a stream of advisors, nudging us into a sleeping wonderment of good things to come. The tidal wave is on its way. Prechter has pointed out the various items unfolding before our eyes. He was early in many of the prognostications, but they are surely falling into place. If you read the book, you will surely see how they are unfolding. Your financial health is at stake. The tech wreck was only the beginning. Read on, there is still time, but the book will be out of date in a couple of years.

If you go to the list showing all of my reviews, you will see that I have read quite a few books about the stock market and trading in general. While I have encountered information that talked in generalities about the Elliott Wave Principle, I had never delved into it in much detail as I never felt the methodology was consistent. Having trudged my way through this book, I have come to the conclusion that either (1) I am too stupid to be able to understand and trade based on the EWP (an admittedly distinct possibility), or (2) I have never read so much after-the-fact 'curve fitting' in my life. If you are a student and believer in the Elliott Wave Principle, this will be like adding a second Bible to your collection. If, however, you don't already know and understand the EWP, and unless you are a genius, plan on spending years trying to understand the theory before you will be able to implement it into your trading system. Sorry, Mr. Prechter, but I just don't get it.

While Prechter is admittedly the guru of Elliott Wave Theory, he has been predicting a major Bear market in U.S. Stocks since 1985. Two years ago he went on record as predicting DJIA 800 in the next five years, and DJIA 1500 within two years. The books to read by Prechter are his expositions on EWT, which are THE presentations of EWT. Rather like Granville for so many years, Prechter seems bent on crying "bear" until one shows up. Unless you are fond of hearing yet another theory on "Why the economy will collapse and trash the world's wealth," skip this presentation by Mr. Prechter.

Prechter wrote a brilliant book about 1980 on Elliot Waves and then proceded to bask in the light of gurudom... That is until 1987, when his theories totally missed the October crash and a lot of his followers got their collective wallets smeared. As if to compensate for the missed crash, for the last decade Prechter has become obsessed with predicting the immanent crash of all civilization. Yes, The Bubble of the current market is going to burst. But Prechter keeps missing his prediction dates, and I believe he's also missing the extent. (At least I hope!) But still an enjoyable book if you don't take it *TOO* seriously.

I bought this book used about three years ago. Although I was skeptical of it's contents, since the title seemed dated, I picked it up because it was cheap. It was one of the best buys I've made.

Although I did not read the entire book, the portions I did read (chapters 9-12 about investor psychology) were timeless and made the book well worth the buy. Those chapters are highly recommended reading for contrarians. I'll quote among my favorite lines: "They show that people view stocks as being less risky than treasury bills. Indeed, article after article refers to the "risk of missing gains" as being more important than the risk of loss. This is an optimism so extreme that it has not been seen in the West for nearly three centuries." (p154); "The public is always trading oriented in the early stages of a bull market, and "investment" oriented at the top. - One-Way Pockets 1917 (189); "No top-heavy market with public involvement fails in the end to punish the average investor for his gullibility." (190); "All investment is speculation, and there is no more risky speculation than one that is confidently viewed by a majority of portfolio managers and the public as an investment." (414).

I gave four stars because Prechter's timing of the coming crisis was way off and his predictions sounded extreme, for example: chapter 21, page 431, "... secessionist movement will take place in many countries, including the US ...one or both current political parties will dissapear ...unemployment will reach 30%."

Overall I highly recommend this book. Tidal Wave is easy to read and follow.

Mr. Prechter may well be someday seen as the Roger Babson (see "Only Yesterday" [1931] and "The Great Crash 1929" [1954] by Allen and Galbraith) of the 1990's Great Bull Market. Although Mr. Prechter's warnings have largely been muted by the manic din of the Wall Street crowd, his analysis, nonetheless, is thorough and intriguing. It is difficult to argue with the author's underlying premise that psychology is a significant force in determining asset prices. One could rightly argue that the current market psychology is certainly reminiscent of manic financial bubbles of the past, but future events will have to determine this. With the most recent Asian financial crisis, the global markets may have witnessed a symptom of larger economic and historical forces coalescing to prove Mr. Prechter ultimately correct. For individuals who would like an alternative to the "buy-and-hold-and-get-rich" mantra, Mr. Prechter may well convince you that, with each tick up on the Dow Jones Industrial Average, the probability increases that stocks will soon cease always going up.

Excellent book written a few years before the beginning of a mega bear market and an unfolding depression. Prechter's prescience from the middle of a bull market is uncanny. The bear market and economic fall out he called for has been unfolding since early 2000, and continues on. If you're a fan of Elliott Wave principle and its uses and implications, or you want an unflinching look at what's coming, this book is a must read.

I've been reading this book as the Russian economy crashed, commodity prices hit new lows, and the U.S. dollar reached new highs (Aug/98). Spookily and disturbingly to me, these events are predicted!! in Prechter's book written in 95/96. Maybe he is wrong. But after an evening reading his book (and the 'verifying' financial news in the newspaper, I followed his advice and sold all of my stocks! Maybe Prechter is a crazy doomsayer and some of his theories seem off the wall to me. But maybe he is right like a chiropractor is to back pain. You don't have to believe all of the chiro's hocus-pocus about 'alternative medicine' to know he can fix your back better than any medical doctor. Prechter may have a wierd interpretation of common-sense human nature but he sure seems to be getting things right when he describes the state of the world financial markets.