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Antidote for Bubblevision. The trouble with being an economic Cassandra is that when you talk to financial experts about your concerns you might as well be speaking in Klingon. Nobody will have a clue as to what you are concerned about. They still think of a bear market as merely a temporary stock market correction and nothing more. But you've been warily observing the monetary sins of the Federal Reserve and the fiscal sins of the U.S. government for years. You struggle to save every dollar you can spare while your neighbors don't seem the least bit bothered paying almost nothing-down on a house whose valuation has monstrously ballooned. In other words, you probably know better. If you don't want your financial future ending up "...depending upon proceedings covered by C-Span", and the thought of monstrous stock and housing market valuations "...disappearing in a flash of aggregated neurons" makes you lose sleep, study this book carefully. Even if the author is a few years early in his forecasts, do not let the bear market rally of 2003-2005 catch you off guard. |
 Elliott Wave Theory views economic expansions through a unique psychological framework. A complete cycle consists of eight waves; a five wave motive phase and a three wave corrective phase. Motive subwaves are labeled with numbers; corrective subwaves with letters. |
In light of recent (2005) developments, such as changes to bankruptcy laws and credit card lending laws, and the lawlessness witnessed in the aftermath of hurricane Katrina, the information in this book is as relevant as ever.
Your biggest challenge in reading this book will be the mental battle you face considering economic scenarios in Book I that everybody says are impossible. The Federal Reserve is "targeting inflation"; we are seeing the price of oil up substantially over what it was some years ago; the housing market has almost hyperinflated over the past few years, so it is almost inconceivable that a severe deflation could come out of all this. Yet the author makes a good case, from a psychological viewpoint. As a society, we are unable to see future economic dangers because we have come to perceive credit as money, and we are too busy fighting our last economic wars. Perhaps the day of reckoning has been delayed a few years by kicking the can down the street, but we can't avoid the reality of all that excess credit out there fueling an asset mania and the eventual consequences.
Considering the suggestions here in Book II is somewhat like being on the good ship New Economy and leaving your cozy, warm, cabin room and putting yourself in a small rowboat on a dark sea during a moonless night - because the ship is sinking. You look around at your fellow passengers and they, too, are reluctant or unwilling to leave their warm cabins.
In the worst case, if the author is totally wrong and our economy chugs along happily ever after, your money will remain safe and no harm will have been done. You will have something to fall back on in case you put your 401k in stocks like Enron and WorldCom.
Just in keep in mind that a lot of southerners who had weathered hurricane Camille thought that Katrina would be no worse, and the Nobel Prize-winning economists who ran Long Term Capital Management had not planned for an event that all their models told them "couldn't happen".
Book I: Why a Stock Market Crash, Monetary Deflation and Economic Depression
Are Likely To Occur Soon
Book II: How to Protect Yourself and Profit from Deflation and Depression
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