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Robert Prechter

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Robert R. Prechter, Jr. (b. 1949) is an American author and stock market analyst, known widely for his financial forecasts using the Elliott wave principle. Prechter has authored or edited 14 books, including Conquer the Crash, a New York Times bestseller. He has also published monthly financial commentary in The Elliott Wave Theorist since 1979, and is the founder of Elliott Wave International and New Classics Library. Prechter served on the board of the Market Technicians Association for nine years, and as the Association's President in 1990-1991. In recent years Prechter has supported the study of socionomics, a theory about human social behavior.

Career

Prechter attended Yale University and graduated with a degree in psychology in 1971. His career as an analyst began when he joined Merrill Lynch as a market technician in 1975, where he learned much about the trade from Merrill's Chief Market Strategist, Robert Farrell (June 1982). There Prechter also learned of the Wave Principle and was deeply intrigued:

So I tracked down R.N. Elliott's original books. They weren't even in the Library of Congress. But I finally dug around in the New York Public Library and found a catalog card listing a copy of them on microfilm and had photocopies made. I was amazed to find that there was a wealth of information that had been lost to Wall Street.

Prechter has also said, "after I decided to make markets a career, I realized that mass psychology is what they're all about."

Prominence

In 1979 Prechter left Merrill Lynch and published the first subscription issue of the Elliott Wave Theorist. The 1970s had been very bullish years in the gold market but mostly bearish for stocks, yet his Elliott wave analysis called for a long-term reversal lower in gold (February 1980) and a long-term "super bull market underway" in stocks (October 1982). Because these forecasts proved mostly correct -- especially for the stock indexes -- Prechter's following grew. His visibility increased further after he won the U.S. Trading Championship in 1984, with a then-record 444% return in a monitored options trading account. He was profiled in many financial and business publications, and named "Guru of the Decade" by the Financial News Network (now CNBC).

In recent years he has been forecasting a large-scale bear market.

Re-introduces Elliott

Much of Prechter's career as a publisher included his efforts to re-introduce R.N. Elliott's wave principle to investors. He compiled and republished all of Elliott's available writings, including the 1938 "Wave Principle," and the "Interpretive" and "Forecast" letters (1938-1946). Prechter also published a brief biography of Elliott, and the collected Elliott wave writings of the few technicians who practiced wave analysis in the 1950s and 1960s (Charles Collins, Hamilton Bolton, A.J. Frost, Richard Russell).

Still, not all the popular exposure to Elliott wave analysis was the result of Prechter's deliberate efforts. In the few years before and after 1987, media coverage inflated Prechter's "guru" status to extremes, including the assertion that his forecasts could single-handedly "cause" the stock market to rise or fall (a proponent of technical analysis, Prechter considered this absurd). In the months after Black Monday in October 1987, subscriptions to Prechter's Elliott Wave Theorist surged to some 20,000. That number declined in the early 1990s (as did the subscription levels of most other financial publishers), though "Prechter has done more to popularize and spread Elliott's philosophy than anyone else."

Criticism

While Prechter has his admirers, he has been subjected to strong criticism. The Wall Street Journal ran a page one article in August 1993 with the headline, "Robert Prechter sees his 3600 on the Dow--But 6 years late," in reference to Prechter's 1987 forecast for the Dow Jones Industrial Average. Technical analyst David Aronson wrote:

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.

Burton Malkiel has criticized Prechter for the bearishness of his forecasts in the time since October 1987.

Books

Among the books Prechter has authored, coauthored, or edited are:

  • Elliott Wave Principle: Key to Market Behavior. John Wiley and Sons. 1978–2001. ISBN 0-471-98849-9.{{cite book}}: CS1 maint: date format (link)
  • R.N. Elliott's Market Letters. New Classics Library. 1993–1997. ISBN 0-932750-20-6.{{cite book}}: CS1 maint: date format (link)
  • Complete Elliott Wave Writings of A. Hamilton Bolton. New Classics Library. 1994. ISBN 0-932750-22-2.
  • The Elliott Wave Writings of A.J. Frost and Richard Russell. Bookworld Services. 1997. ISBN 0-932750-47-8.
  • At the Crest of the Tidal Wave. John Wiley and Sons. 1997. ISBN 0-471-97954-6.
  • The Wave Principle of Human Social Behavior and the New Science of Socionomics. New Classics Library. 1999. ISBN 0-932750-49-4.
  • Market Analysis for the New Millennium. New Classics Library. 2002. ISBN 0-932750-52-4.
  • Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression. John Wiley and Sons. 2002. ISBN 0-470-87090-7.
  • Beautiful Pictures. New Classics Library. 2003. ISBN 0-932750-60-5.
  • View from the Top of the Grand Supercycle. New Classics Library. 2003. ISBN 0-932750-55-9.
  • Pioneering Studies in Socionomics. New Classics Library. 2003. ISBN 0-932750-56-7.
  • Prechter's Perspective. New Classics Library. 1996. ISBN 0932750400.
  • R.N. Elliott's Master Works. New Classics Library. 2005. ISBN 0-932750-76-1.
  • How to Forecast Gold and Silver Using the Wave Principle. New Classics Library. 2006. ISBN 0-932750-77-X.

Notes

  1. Best Sellers List (11 August 2002). "Book Review". New York Times: p. 24. {{cite journal}}: |pages= has extra text (help)
  2. Levy, Adam (February 2003). "The Ultimate Bear". Bloomberg Markets: p. 69. {{cite journal}}: |pages= has extra text (help)
  3. ^ Robert R. Prechter, Jr. (various dates). "Elliott Wave Theorist". Elliott Wave International. Gainesville, Georgia. {{cite journal}}: Check date values in: |date= (help)
  4. Robert R. Prechter, Jr. (1999). The Wave Principle of Human Social Behavior and the New Science of Socionomics. Gainesville, Georgia: New Classics Library.
  5. Penn, David (June 2003). "Social Mood and the Markets". Technical Analysis of Stocks & Commodities: p. 50. {{cite journal}}: |pages= has extra text (help); External link in |journal= (help)
  6. ^ McCaffrey Brecht, Kira (July 2003). "Trader's Hall of Fame Award - Robert Prechter - An Interview with the Elliott Wave Guru". Stocks, Futures & Options Magazine: p. 42. {{cite journal}}: |pages= has extra text (help); External link in |journal= (help)
  7. ^ Robert R. Prechter, Jr. (1996/2004). Prechter's Perspective. Gainesville, Georgia: New Classics Library. pp. p. 6. {{cite book}}: |pages= has extra text (help); Check date values in: |year= (help)CS1 maint: year (link)
  8. Lazarovic, Karen (30 April 1985). "Elliott-wave technician sees 2d-half blastoff". New York Post: p. 36. {{cite journal}}: |pages= has extra text (help)
  9. Shaw, Russell (9 Oct. 1987). "Prechter flees Wall St. for Georgia hills". USA Today: p. B1. {{cite journal}}: |pages= has extra text (help); Check date values in: |date= (help); External link in |journal= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help)
  10. Myerson, Allen R. (October, 1985). "Robert Prechter: From Lake Lanier, He Can See Wall Street Clearly". Georgia Trend: p. 26. {{cite journal}}: |pages= has extra text (help); Check date values in: |date= (help); External link in |journal= (help)
  11. Hendrick, Bill (July 15, 1990). "Unbelievers Don't Worry Prechter". Atlanta Journal Constitution: p. H-4. {{cite journal}}: |pages= has extra text (help)
  12. Wiggins, Phillip H. (7 October 1987). "Dow Drops a Record 91.55 Points". New York Times: p. A1. {{cite journal}}: |pages= has extra text (help)
  13. Grimes, Millard (August 1994). "Whatever happened to Robert Prechter?". Georgia Trend: p. 24. {{cite journal}}: |pages= has extra text (help)
  14. William Power (19 August 1993). "Robert Prechter sees his 3600 on the Dow--But 6 years late". The Wall Street Journal.
  15. David R. Aronson Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals (Wiley, 2006), p. 41
  16. Malkiel, Burton (2003). A Random Walk Down Wall Street, New York, W.W. Norton, p. 163. ISBN 0393057828.
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