Analyst Uses Fractals To Predict Market Crash of ‘Staggering Proportions’

Xaos fractal

Robert Prechter, who uses technical analysis, a theory that holds that there are mathematically computable patterns in the stock market, think’s we’re in for the “big one” in a big way:

Mr. Prechter is convinced that we have entered a market decline of staggering proportions — perhaps the biggest of the last 300 years. [...]

Originating in the writings of Ralph Nelson Elliott, an obscure accountant who found repetitive patterns, or “fractals,” in the stock market of the 1930s and ’40s, the theory suggests that an epic downswing is under way, Mr. Prechter said. But he argued that even skeptical investors should take his advice seriously. [...]

For a rough parallel, he said, go all the way back to England and the collapse of the South Sea Bubble in 1720, a crash that deterred people “from buying stocks for 100 years,” he said. This time, he said, “If I’m right, it will be such a shock that people will be telling their grandkids many years from now, ‘Don’t touch stocks.’ ”

New York Times: A Market Forecast That Says ‘Take Cover’

4 Comments

  1. Is it bad I hope he’s right?

  2. My late Grandfather, who was a depression survivor said: “The stock market is what was there to keep those that are richest richest”

    IMO, ALL stocks are a con game. Even during the classic “Tulip Mania” most did know it was pure stupidity, they just wanted to be the “Second to the most stupid” person. Then when the price crashed, it turned out there were a lot of “Most stupid” people.

  3. Chris – I think there could be positive side effects in the case of a massive market crash. But there’d also be pretty negative side effects too.

    Annexian – That’s pretty much my view of the stock market as well – not that I, or almost anyone I know, has any money to invest anyway.

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