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Conquer the Crash
Book

Conquer the Crash

You Can Survive and Prosper in a Deflationary Depression

Robert R. Prechter
Wiley, 2002
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Editorial Rating

8

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Recommendation

Prophets of doom have always made entertaining reading. In his latest fire-and-brimstone warning, Robert R. Prechter, Jr., an experienced forecaster of long-term economic and social trends, says financial Armageddon is just around the corner. While his technical analysis ("Wave Theory") may appear to be stock-market astrology, readers may appreciate his examination of the basic functions of money and credit, his argument that worldwide central banking has fundamentally altered these functions, and his perceptive comparisons of the late 1990s with the Roaring Twenties. Prechter might have appealed to a broader audience by toning down his graphs and technical talk, and focusing instead on his investment suggestions: If the market turns down, you’ll save your skin, but even in a bull market, keeping your money safe can’t hurt. getAbstract.com recommends this book to anyone looking for bear-market investment advice, as well as those interested in technical analysis or an opinionated view of business and market cycles.

Summary

The Burst Bubble: Precursor to Economic Depression

Stock prices have not regained their January 2000 peak, but talk of the so-called "new economy" continues to percolate among economists and the media. Few believe that a long-term downtrend is even possible, simply because they have never experienced one. Despite this widespread mindset, stock market crashes do occur, and a big one is on the way.

To understand why, you must know a little about Wave Theory. First, the stock market is a very good barometer for the mood of the public (euphoria breeds rising stock prices, and worry produces a bear market). Contrary to popular belief, economic contraction and expansion are not reasons for a bear or bull market; they are caused by market activity.

Wave theory recognizes that the market as a whole acts somewhat like a living system, one with predictable patterns of behavior. Furthermore, the graph of stock prices is a fractal - it takes on the same shape no matter the length of the time period studied. So, by carefully examining stock prices graphed over time, it is possible to predict future market activity by figuring out where we are in the predictable pattern.

About the Author

Robert R. Prechter Jr. is president of Elliott Wave International, a forecasting firm that provides long-term and intraday analysis of stock markets, currencies, interest rates, commodities and social trends for institutional and private investors. He has written ten financial books since 1978.

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