Robert Prechter on Deflation
I am still studying the inflation versus deflation question and in my daily perusal of the internet, I came across a new compilation by Robert Prechter called "The Deflation Survival Guide." In it Robert provides what he considers his most important writings on deflation. You can find it here:
Has anyone else here read this? Any comments?
I have followed Robert Pretcher off and on since 2003. I am a firm believer in his socionomic theory, that the mood of a society is the driver of its economics. I have to admit that things seem to be unfolding exactly as he has predicted so long ago. My only problem with his financial forecast services is that during the bull market run between 2003-2007, his beliefs seemed to obscure his perception of reality (of course this is a very widespread human trait). For example, at every downturn in the market, his service proclaimed that "this was it!". If his service was your only source of guidance, you would have lost a lot of money betting on his numerous bear market forecasts. A lot of people can claim that they predicted the financial collapse in 08, but I think its important to recognize how many times their predictions failed in the previous years. (They got it right in 08, but they were wrong in 04, 05, 06 and 07.)
I guess the one thing that keeps me coming back to Pretcher, is one observation about human nature that I see demonstrated over and over again in the markets. If the majority of people hold one particular perception of reality, then reality will surly refute that perception. Right now, it seems like the dominate perception is that the value of gold will continue to rise, the dollar will fall, and deflation is an impossibility. While the logic behind this perception seems very sound, it is still only a perception of reality, and a very widely held one at that. Pretcher, like everyone else, is held hostage by his beliefs. But his perception of reality is very often the opposite of the "herd" and I find value in it because of the propensity of markets to move against the perceptions of the herd.
Because we, as humans, have the unshakable propensity to fool ourselves, I think its important to be open to all possibilities. Figures such as Chris Martenson and Robert Pretcher certainly help one in this regard.
Great post, jageanangel. One question for you.
Right now, it seems like the dominate perception is that the value of gold will continue to rise, the dollar will fall, and deflation is an impossibility. While the logic behind this perception seems very sound, it is still only a perception of reality, and a very widely held one at that.
Surely, when you state the preceding you mean that this is the dominate perception within a small group of contrarians who challenge conventional wisdom and the mainstream as capsulized by websites like this one? Clearly, the opposite of this perception is the one most widely held within the total pool of people who comment on such issues.
A side note here: I don’t think that most who argue against deflation claim that it is an impossibility — as we’re clearly experiencing it now — only that it’s most likely not going to be the long-term condition.
Good point mainecooncat, I think I may have misspoke. I do believe the message of Dr. Martenson to be a contrarian viewpoint to the mainstream, but I also believe the dominant (most wide spread) perception is the expectation of inflation.I believe Dr. Martenson concurs with this expectation of inflation, but I think Robert Pretcher believes this expectation is premature. I simply think we should be open to as many viewpoints as possible.
Thanks to both of you for your comments. I too think we need to remain open to many viewpoints.
This guy is a total fraud.
He’s been consistantly bearish on stocks since june 2009, during which time the market has rallied about 50%. 900 to 1350 on S&P500. It doesn’t matter if he’s ultimately right, anyone trading his advice on leverage is more than wiped out by now.
Furthermore he has this massive deflation scenario that he’s published books about and been preaching about since 2008, during which time the commodities have gone to the moon, silver is up nearly 300%. Copper more than 200%, Gold double, Oil 300%, etc. etc.
Again it doesn’t matter if he’s ultimately right or not, he’s not made a single correct call and worse, his advice is totally around the wrong way. Even if you were just sitting in cash waiting for a short entry signal, you’ve just missed some of the most amazing runs higher.
He’s a classic example of why some of the best traders like Jesse Livermore said that its absurd to be bullish or bearish… you lose your opinion not your money. You make money when it goes up and when it goes down and timing is everything. You can’t just pick an opinion and preach about it like Pretcher….. the broken clock who is right once a decade…. that’s rubbish…..
Worse still he changes his tack all the time. Most of his analysis is backwards looking. He’ll predict a market top, and then 3 months later when he’s wrong all those charts and articles will disappear from his website and he’ll show you how he predicted the market would run higher still. Elliot Wave with 20.20 hindsight vision… Its a shame you can’t place orders with hindsight isn’t it Mr. Pretcher. ?
Hey Bob…. when was the last time you actually traded your own advice ? Can we get a copy of your brokerage account records, audited by a CPA. What about a paper trading spreadsheet of all your calls ? How much are you down by since 2009 on paper…..never mind real trades… just on paper…. with your giant bearish, deflation theory and the commodities markets running more than 100% in your face and showing no sign of abating ?
What stocks are you short Bob ? Proud to be bearish, but the market’s barely sneezed in more than 2 years….. yeah…. what a great prediction…. I’d be proud to put my head up my own [removed by moderator.]