Robert Prechter on Bloomberg (11/8/11) — ‘I think we’re in another declining portion of the bear market’

Robert Prechter was interviewed on Bloomberg TV today. Two months ago he was interviewed by Curt Renz (June 14th) and said that the technical picture for the stock market was terrible (I believe he said that US equities were in ‘Free Fall Territory’). Even if you view the subsequent market crash as mostly coincidental, you must admit that it was rather spooky timing! See below for the video and summary.

 

 

Summary:

 

  • This decline is more severe than the 2008/2009 decline. The A/D ratio has been at extreme levels, which suggests that we’re in wave 3 down of the bear market.
  • We’ve seen plenty of commentary urging people not to sell. The majority never want to let go. Just like in 2007/2008.
  • Robert Prechter believes that you should hold onto the gold you have and not buy anymore. That being said, he admits that he has been (and could be) wrong. Regardless, however, he believes that gold is overbought.
  • Everyone seems to be short-term oriented, including the Fed with QE2.
  • The Fed has wasted a lot of its ammunition and prestige by doing QE2.
  • Debt has been climbing since the 1930s. The volume of debt is enormous and there is no short-term solution. This is what the market is figuring out; this will resolve itself by deflation.
  • Investors should be thinking; Risk OFF. There are going to be terrific buying opportunities in the next few years.
  • The key reason for why we’re in trouble is that the banks are excessively leveraged.

See here for our collection of rare historical economic data.

Posted Aug 12, 2011
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