In criticism of Precter's Simpleton Analyses.
Prechter is a technical analyst. In other words, he uses past statistical trends to project a future prediction. This is fine when fundamentals remain constant. But fundamentals are anything but constant.
Prechter's genius is to see the future using the rear view mirror. If we are driving in a mostly straight line, this works fine and is often better than nothing when you can't simply see the future through the front window.
But in our times of total flux, re-vamping, tumultuous and upside-down spinning fundamentals, the likes of Prechter are rendering themselves into fools of the highest order.
Here is Prechter's biggest mistake made simple - He thinks that the dollar is a constant. All his models hold blind faith in the value of the dollar. Likewise, he thinks that energy and mineral availability will continue along as if the earth has unlimited capacity to feed forever growth projections moving forward. Although he didn't say this explicitly, his charting formulas imply this knuckleheaded way of thinking.
Who is he kidding?
To date, we have seen no less than 10,000 baseless fiat currencies die the value death in world history. And among those 10,000, guess how many held value over time? That's right - ZERO! Prechter is a fool to think the dollar is going to magically hover forever holding value as the Fed prints trillions from thin air to bail out the bankers.
Guys like Faber are are on the hard-core fundamentals that drive economies in flux. Prechter's simpleton analysis is useless in these times.
Cheers, Tate Ulsaker
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Faber: Prechter's Right on Dow 1,000 but Dollar Will Be Worthless
Friday, 06 Aug 2010 08:12 AM
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By: Julie Crawshaw
"The Gloom, Boom and Doom Report" publisher Marc Faber says analyst Robert Prechter is right about a lot of things, but a rising dollar isn't one of them.
Prechter, who forecasts markets using Elliot Waves, Fibonacci numbers and socioeconomic trends, says the Dow could hit 1,000.
"Prechter is right when says that when manias come to an end, prices tend to retreat to where the mania started,” Faber told CNBC. “So from this point of view, a Dow Jones at 1,000 should not be excluded."
However, Faber takes issue with Prechter's view that surviving "dollars and dollar credits, representing the denominator of the DJIA, will rise in value, and the Dow — along with everything else used as money — will fall in dollar price."
"The question here is really, with the Dow below 1,000, what kind of dollars — and especially what kind of dollar credits — will survive," Faber said.
"It is safe to assume that almost all banks in the world, and almost all governments, will be bust."
Faber concurs with Prechter that a complete credit collapse is in the offing, but differs from him on when this will happen.
"It is likely that if the Dow where to fall by more than 20 percent from the present level there would be further massive fiscal and monetary stimulus packages — not just in the U.S. but worldwide," says Faber.
"These economic policy measures would likely fail to boost economic activity in the U.S. but could support asset markets.”
Former Federal Reserve Chairman Alan Greenspan said the slowing economic recovery in the U.S. feels like a “quasi-recession” and the economy might contract again if home prices decline, Bloomberg reports.
“We’re in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession,” Greenspan said in an interview on NBC’s “Meet the Press.”
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