Prechter’s main comparable is from almost 300 years ago:
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.’ ”
Call me crazy, but modern civilization hardly resembles anything from 300 years ago. And when you look at another comparable — performance of the S&P 500 — Prechter’s model doesn’t have much to add:
Since 1980, the advice in his investing newsletters, when converted into a portfolio, has slightly underperformed the overall stock market but has been much less risky, losing money in only one calendar year, according to calculations by The Hulbert Financial Digest. Mr. Prechter said he disagreed with the methodology used in these measurements, but offered none of his own.
I have no bone to pick with Prechter. In fact, I quite enjoy Fibonacci analysis. [Learn Basics of Elliott Wave Analysis — FREE – Ilene] But I do think it’s fair to ask some basic questions about his model and engage in a healthy debate about its efficacy.
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