Prechter - Dow under 1000 by 2016

[Running_Man]

Prechter is a far more a long term position holder than market timer.

On July 27, 2007 with the S&P 500 Prechter announced he was expecting the market to fall to under 1,000 by 2016. He was reccommending all cash unless you had the wherewithall to under take some risk and then he recommended shorting the S&P500 futures at 1550. This would have cost $4,860 in margin with a maintenance margin of $3,860 per S&P minicontract. He reccommended exiting the trade on February 23, 2009 with the S&P500 at 750 for a profit of $40,000 per contract.

On January 21, 2010 with the S&P500 at 1116 he recommended reestablishing the short position in S&P500 futures. He can easily be accused of being overly bearish, because he certainly is very bearish. But make no mistake he is very specific in his recomendations which are long term in nature. Yet he is willing to wait years doing virtually nothing but holding, awaiting an extreme from which he can make a call.

 

[george76]

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.

I'm not at all arguing with your logic. Just bear in mind that the market tends to overdo things based on emotion. For example, we had the internet bubble back in 2000 where the Nasdaq had little to nothing to do with its own value.

But this prediction of the Dow going to 1000 strikes me just as ludicrous as the prediction of the Dow going to 36000 about 10 years ago.

 

[oilspill]

I plan to make money no matter which way the market swings-- by working at my job. Retired people who "invest" in the market have the most to fear, which is contrary to the idea of retirement.

 

[REWahoo]

The billy goats are on the bridge again...

 

[FIREd]

I plan to make money no matter which way the market swings-- by working at my job.

Hopefully you won't get laid off.

 

[ziggy29]

The billy goats are on the bridge again...

Don't go getting gruff with me...

Hopefully you won't get laid off.

Not to worry. I'm sure there will be plenty of jobs for oilspill if the Dow drops to 1000...

 

[haha]

Prechter is a far more a long term position holder than market timer.

On July 27, 2007 with the S&P 500 Prechter announced he was expecting the market to fall to under 1,000 by 2016. He was reccommending all cash unless you had the wherewithall to under take some risk and then he recommended shorting the S&P500 futures at 1550. This would have cost $4,860 in margin with a maintenance margin of $3,860 per S&P minicontract. He reccommended exiting the trade on February 23, 2009 with the S&P500 at 750 for a profit of $40,000 per contract.

Do you happen to know what his maximum drawdown during the period in which he held was? Also, do you know whether he suggested shorting an out month or nearer months and rolling?

Ha

 

[bbbamI]

Every time I see this thread and the word/name 'Prechter'...I feel like I'm at the gynecologist's office.

 

[Bikerdude]

Every time I see this thread and the word/name 'Prechter'...I feel like I'm at the gynecologist's office.

Or the proctologist.

 

[Running_Man]

Do you happen to know what his maximum drawdown during the period in which he held was? Also, do you know whether he suggested shorting an out month or nearer months and rolling?

Ha

He suggested rolling nearer months. There was never a margin call beyond the initial required margin and reserve as the most the S&P500 gained was just a couple of points over the entry point in October.

 

[haha]

He suggested rolling nearer months. There was never a margin call beyond the initial required margin and reserve as the most the S&P500 gained was just a couple of points over the entry point in October.

Wow. Thnx.

Ha

 

[bbbamI]

Or the proctologist.

....eh...anyway we look at it...it's painful....

 

[shotgunner]

I plan to make money no matter which way the market swings-- by working at my job. Retired people who "invest" in the market have the most to fear, which is contrary to the idea of retirement.

OilSpill you have nothing to fear if you are working, but;

Lets hope you are never disabled from a car accident or falling off a ladder or something and find yourself needing long term care at home or in a nursing home and unable to work and enjoy life.

Let's hope you don't have a stroke, heart attack or other malady preventing you from working and enjoying life

Let's hope your industry never experiences a downturn and you lose your job.

Lets hope you are never sued and lose all you have and work the rest of your life to pay a settlement.

Lets hope you never get divorced and have to work to pay alimony and child support for many years to someone else.

Lets hope you never find any hobbies or passionate interests you want to pursue and distract you from your desire to work.

Lets hope you live forever and never have to worry how many "good" years you have left to fully enjoy your life should you ever decide to retire.

Good luck with your life plan!