Letter: Robert Prechter

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Greetings Hugh,

I used to follow [Robert] Prechter somewhat closely back in the dotcom and housing bubble days because my Dad was a huge fan and I’ve read most of his books (in that regard I concur Conquer the Crash is a worthwhile read that, unlike most of his writing, is accessible to the layman).

While I find his unconventional “Socionomics” theories relating social mood and human behavior generally reasonable and I still analyze world events in light of them, I long ago decided they may be useful to the average person for explaining history and generally anticipating future macro trends but are ineffective at predicting economic or political events with any useful accuracy. (In short, my Dad lost plenty of money betting against TPTB.) I concluded that Elliot Wave analysis may have worked back when humans ran the markets and made buy/sell decisions based on value and anticipated returns but ceased to be an accurate guage/predictor once stock prices detached from all traditional measures of value, bank and hedge fund manipulation grew rampant, and computer trading took over nearly half the volume. Nowadays I think it mainly analyzes the effects of social, financial, and software engineering.

Like J.L., thanks to Prechter, I have avoided traditional investments, haven’t lost a cent in the dotcom, housing, or current debt bubbles, and sleep like a baby as yet again the markets reach to the heavens. But I recommend anyone reading him do so knowing his work has been predicting an epic crash for decades and “Markets can remain irrational a lot longer than you and I can remain solvent“. – K.W.

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