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Prechter - Dow under 1000 by 2016
Old 06-18-2010, 09:19 AM   #1
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Prechter - Dow under 1000 by 2016

So I have choice of returning to hiding under my bed or sucking my thumb again. Dow under a 1000, if that were to happen I would expect total anarchy, food riots and such.

Elliot Wave Chart Says Dow Going Below 1000 By 2016
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Old 06-18-2010, 09:24 AM   #2
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http://en.wikipedia.org/wiki/Elliott_wave_principle
Critics also say the wave principle is too vague to be useful, since it cannot consistently identify when a wave begins or ends, and that Elliott wave forecasts are prone to subjective revision. Some who advocate technical analysis of markets have questioned the value of Elliott wave analysis. Technical analyst David Aronson wrote:[17]
The Elliott Wave Principle, as popularly practiced, is not a legitimate theory, but a story, and a compelling one that is eloquently told by Robert Prechter. The account is especially persuasive because EWP has the seemingly remarkable ability to fit any segment of market history down to its most minute fluctuations. I contend this is made possible by the method's loosely defined rules and the ability to postulate a large number of nested waves of varying magnitude. This gives the Elliott analyst the same freedom and flexibility that allowed pre-Copernican astronomers to explain all observed planet movements even though their underlying theory of an Earth-centered universe was wrong.
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Old 06-18-2010, 10:52 AM   #3
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I read Prechter's book Conquer the Crash. It was written in 2002 I believe. It read like a history book, it's been so accurate about what recently happened economically. I for one won't dismiss what he says, but DOW 1000 sounds overdone. We might be at 1000 if the Fed didn't do all it's heavy lifting. Prechter predicted that too and says they will finally realize their efforts to be in vane.
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Old 06-18-2010, 12:52 PM   #4
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Dow 1000, eh?

If we treat the DJIA as dollars representing a composite share of the underlying companies, that is, the Dow at 10,460 represents a mythical share of an index fund at $10,460, we can look at underlying values.

The last four quarters of earnings come to $667/share.
The last four quarters of dividends come to $298/share.

The book value, the difference between assets and liabilities, or what one could get for a company by liquidating it, comes to $4,184 per share of our mythical index.

A Dow 1000 or lower as predicted by the Power of The Mystical Cycles would imply not just a drop in earnings, but significant destruction of the underlying basic assets, including factories, croplands, raw materials, and a valuation of labor close to zero, or a massive rise in the buying power of the dollar, shrinking the price of these assets (massive DEFLATION).

I just don't see it.
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Old 06-18-2010, 01:12 PM   #5
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bbbamI - Dow under 500 by 2016.

(I had to outdo the shock and awe don't ya know)

That will be $9.95 please. Credit cards and money orders only.

Thank you.
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Old 06-18-2010, 01:17 PM   #6
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bbbamI - Dow under 500 by 2016.

(I had to outdo the shock and awe don't ya know)

That will be $9.95 please. Credit cards and money orders only.

Thank you.
Dow under 499 by 2016 (but all credit [and cash] should go to bbbami )
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Old 06-18-2010, 01:21 PM   #7
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Yee Gods. I just realized that this prediction is for the DOW and not the S&P 500.

I ain't gonna lose any sleep over it.
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Old 06-18-2010, 01:24 PM   #8
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Yee Gods. I just realized that this prediction is for the DOW and not the S&P 500.

I ain't gonna lose any sleep over it.
I was predicting DOW 0 back several months ago when it was in full blown tank mode. Of course I was in full blown med mode too.
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Old 06-18-2010, 01:26 PM   #9
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Dow 1000, eh?

If we treat the DJIA as dollars representing a composite share of the underlying companies, that is, the Dow at 10,460 represents a mythical share of an index fund at $10,460, we can look at underlying values.

The last four quarters of earnings come to $667/share.
The last four quarters of dividends come to $298/share.

The book value, the difference between assets and liabilities, or what one could get for a company by liquidating it, comes to $4,184 per share of our mythical index.

A Dow 1000 or lower as predicted by the Power of The Mystical Cycles would imply not just a drop in earnings, but significant destruction of the underlying basic assets, including factories, croplands, raw materials, and a valuation of labor close to zero, or a massive rise in the buying power of the dollar, shrinking the price of these assets (massive DEFLATION).

I just don't see it.
Not commenting on your math or the validity of your numbers and the underlying accounting, but your approach to answering the question posed is a good one.
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Old 06-18-2010, 01:29 PM   #10
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Yee Gods. I just realized that this prediction is for the DOW and not the S&P 500.

I ain't gonna lose any sleep over it.
It makes no sense to me at all. Before it would ever get this far, a bunch of billionaires would form a cartel, buy shares, and hire the Army and Marines to keep us proles in line. Triple salaries for generals, double 'em for O5s and O6s, and give a great signing bonus to anyone else. Better control the air force too, and why not the Navy? And stock options for anyone with firepower.

Fire the congress, and who knows what might happen to el presidente- isn't Fujijmora still in the slammer? The vice president could become a valet to the new leader.

Problem solved.

Ha
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Old 06-18-2010, 01:31 PM   #11
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It makes no sense to me at all. Before it would ever get this far, a bunch of billionaires would form a cartel, buy shares, and hire the Army and Marines to keep us proles in line. Triple salaries for generals, double 'em for O5s and O6s, and give a great signing bonus to anyone else. Better control the air force too, and why not the Navy?

Fire the congress, and who knows what might happen to el presidente- isn't Fujijmora still in the slammer? The vice president could become a valet to the new leader.

Problem solved.

Ha
And welcome to feudalism redux!
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Old 06-18-2010, 05:18 PM   #12
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I don't see how anyone can predict the dow at 2016. That's like eons away if you look at it in terms of number of trading days.
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Old 06-18-2010, 06:10 PM   #13
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Dow 1000 at 2016. Lets that is a few years before Warren Buffet's put options on various stock index start to expire. If this comes to pass this would cost Berkshire Hathaway roughly30 billion.

If Pretcher is so smart how come he doesn't have Buffett's money. I think I'll stick with Buffett on this one.
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Old 06-18-2010, 06:24 PM   #14
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Prechter

Actually his forecast isnt THAT crazy. The DOW lost approx 90% back in the 1930s. That's what hes forecasting now. I neither agree nor disagree, but the drop has precedent.

The Dow dropped from 381.17 before the crash of 1929 to 41.22 in July 1932.
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Old 06-18-2010, 06:28 PM   #15
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Actually his forecast isnt THAT crazy. The DOW lost approx 90% back in the 1930s. That's what hes forecasting now. I neither agree nor disagree, but the drop has precedent.
Yeah, but the Dow lost about 89% in less than three years. This would be a drop of something like 93% from March 2000 to 2016. That's a 93% drop over 16 years!
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Old 06-18-2010, 06:52 PM   #16
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Yeah, but the Dow lost about 89% in less than three years. This would be a drop of something like 93% from March 2000 to 2016. That's a 93% drop over 16 years!
That would be unprecedented. Prechter's scenario would make the Great Depression look like fun times...

Of course it doesn't mean it can't happen...
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Old 06-19-2010, 12:53 AM   #17
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Actually his forecast isnt THAT crazy. The DOW lost approx 90% back in the 1930s. That's what hes forecasting now. I neither agree nor disagree, but the drop has precedent.

The Dow dropped from 381.17 before the crash of 1929 to 41.22 in July 1932.
Yes, but 1929 was the last hurrah of a bull market, and the market was arguably at the peak of an unsustainable bubble.

In 1929, the price to book ratio for the DJIA hit 5 to 1. For that same degree of overvaluation, the DJIA would have closed today at 20,920.

The Price/Earnings ratio on the DJIA in 1929 reached 32.6. Today's P/E (TTM) is 15.19. That same 32.6 P/E today would put the DJIA at 22,430.

Reaching a price to book ratio 1 to 4 (1/4 of current liquidation value), or a P/E ratio of 1.5 is going to take some combination of catastrophic economic failure and massive deflation.

I don't see it happening, and in particular, I don't see how a series of chart moves can be more aware of impending Armageddon than we humans are. I have this problem that some mystical nested cycles of three or five waves can supercede free will.
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Old 06-19-2010, 08:52 AM   #18
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Who knows what will occur. My crystal ball never worked right.

But I am not watching EWT to predict the outcome.

Diversification!
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Old 06-19-2010, 08:54 AM   #19
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Is that Sam Elliott, or Elliott Gould?

Perhaps we should rename it "The Hand-Wave Theory"...

Just in case, though, I'm short the Earth, and long Mars. One can't be too careful!
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Old 06-19-2010, 12:09 PM   #20
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Is that Sam Elliott, or Elliott Gould?
Robert, or "Chuckles" Elliot as known to his friends.

Perhaps we should rename it "The Hand-Wave Theory"...

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Just in case, though, I'm short the Earth, and long Mars. One can't be too careful!
Absolutely. I understand that Earth is obstructing this guy's view of Venus...



Now, if folks really want to worry, there is not merely the bottoming of the Grand Supercycle wave to worry about. Folks like Joseph Miller and Marion Butler think this could be the end of a Millennium or X wave, so that, rather than merely revisiting the market lows after the collapse of the South Sea Bubble in 1720, we could be revisiting the lows of the Dark Ages, 992 AD. (And don't even get me started on the implications of the 8-10 thousand year Z Wave cycle! Invest in caves and antelope thighbones!)


I plan on cornering the filth market, maybe set up an autonomous collective or an anarcho-syndicalist commune.
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