Robert Prechter

Robert R. Prechter, Jr. (born 1949) is an American author and stock market analyst, known 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. [cite journal | title = Book Review | author = Best Sellers List | date = 11 August 2002 | journal = New York Times | pages = p. 24] 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. [cite journal | first = Adam | last = Levy | title = The Ultimate Bear | date = February 2003 | pages = p. 69 | journal = Bloomberg Markets] cite journal | first = Robert R., Jr. | last = Prechter | title = Elliott Wave Theorist | date = various dates | journal = Elliott Wave International | location = Gainesville, Georgia ] 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.Prechter, Robert R. Jr., (2003). "Socionomics: The Science of History and Social Prediction", Gainesville, GA: New Classics Library] . ISBN 0932750575. Two volumes: "The Wave Principle of Human Social Behavior" (1999); "Pioneering Studies in Socionomics" (2003). ] [cite journal | first = David | last = Penn | title = Social Mood and the Markets | date = June 2003 | pages = p. 50 | journal = [http://www.traders.com/ Technical Analysis of Stocks & Commodities] ] __TOC__

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).cite journal | first = Kira | last = McCaffrey Brecht| title = Trader's Hall of Fame Award - Robert Prechter - An Interview with the Elliott Wave Guru | date = July 2003 | pages = p. 42 | journal = [http://sfomag.com/ Stocks, Futures & Options Magazine] ] 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.cite book | first = Robert R., Jr. | last = Prechter | title = Prechter's Perspective | pages = p. 6 | publisher = New Classics Library | location = Gainesville, Georgia | year = 1996/2004]

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) [cite journal | first = Karen| last = Lazarovic | title = Elliott-wave technician sees 2d-half blastoff | date = 30 April 1985 | pages = p. 36 | journal = New York Post] and a long-term "super bull market underway" in stocks (October 1982).cite journal | first = Russell| last = Shaw | coauthors = Landis, David | title = Prechter flees Wall St. for Georgia hills | date = 9 Oct. 1987 | pages = p. B1 | journal = [http://www.usatoday.com/ USA Today] ] 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. [cite journal | first = Allen R. | last = Myerson | title = Robert Prechter: From Lake Lanier, He Can See Wall Street Clearly | date = October, 1985 | pages = p. 26 | journal = [http://www.georgiatrend.com/ Georgia Trend] ] He was profiled in many financial and business publications, and named "Guru of the Decade" by the Financial News Network (now CNBC) for the 1980s. [cite journal | first = Bill | last = Hendrick | title = Unbelievers Don't Worry Prechter | date = July 15, 1990 | pages = p. H–4 | journal = Atlanta Journal Constitution]

In recent years he has been forecasting a large-scale bear market, as explained in his book "Conquer the Crash". [Prechter, Robert R. Jr. (2002). "Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression", New York: John Wiley and Sons. ISBN 0-470-87090-7.]

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 [cite journal | first = Phillip H.| last = Wiggins | title = Dow Drops a Record 91.55 Points | date = 7 October 1987 | pages = p. A1 | journal = New York Times] (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." [cite journal | first = Millard| last = Grimes| title = Whatever happened to Robert Prechter? | date = August 1994 | pages = p. 24 | journal = Georgia Trend]

Criticism

While Prechter has his admirers, he has been criticised by media and pundits. For example, 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. [cite journal | title = Robert Prechter sees his 3600 on the Dow--But 6 years late | author = William Power | date = 19 August 1993 | journal = The Wall Street Journal | pages = ] 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. [David R. Aronson "Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals" (Wiley, 2006), p. 41]

Recently, Prechter has missed the latest portions of the rally in gold and oil. In July 2006 he asserted that gold had reached its peak and that oil, then around $70 bbl, also had peaked in price. His analysis was clearly flawed, as oil in late May 2008 reached $135 bbl and gold was at $925/ounce. [Prechter, Robert "Conquer The Crash 2006 Update" and preview on Bob's new book" "How to Forecast Gold and Silver Using the Wave Principle": "Financial Sense Newshour with Jim Puplava" interview [http://www.financialsense.com/transcriptions/2006/1007prechter.html ]

ocionomics

In 1979, Prechter postulated that social mood drives financial, macroeconomic and political behavior, in contrast to the conventional notion that such events drive social mood. [Prechter, Robert R., Jr. (Aug. 1979, "What's Going On?"). "The Elliott Wave Theorist", Elliott Wave International, Gainesville, GA. Reprinted in "Pioneering Studies" (2003).] His description of social mood as the driver of cultural trends reached a national audience in a 1985 cover article in "Barron's". [Prechter, Robert R., Jr. (September 9, 1985). "Elvis, Frankenstein and Andy Warhol," "Barron's".] Prechter coined the term "socionomics" and in 1999 published an exposition of socionomic theory, "The Wave Principle of Human Social Behavior".

Since then, the counter-intuitive premise of the socionomic hypothesis -- that in contexts of uncertainty, endogenous processes (not exogenous causes) create patterns of social behavior -- has gained attention in academic journals, [Prechter, Robert R., Jr. (2001). "Unconscious Herding Behavior as the Psychological Basis of Financial Market Trends and Patterns," "Journal of Psychology and Financial Markets" (now "Journal of Behavioral Finance"), vol. 2 no. 3, pp. 120-125. Also available [http://www.psychologyandmarkets.org/research/pdf/unconsious_herding.pdf here] , retrieved Nov. 19, 2007.] [Olson, Kenneth R. (2006). "A Literature Review of Social Mood," "Journal of Behavioral Finance", vol. 7, no. 4, pp. 193-203. [http://www.leaonline.com/doi/abs/10.1207/s15427579jpfm0704_2 Abstract here] , retrieved Nov. 19, 2007.] Prechter, Robert R., Jr., and Wayne D. Parker (2007). "The Financial/Economic Dichotomy in Social Behavioral Dynamics: The Socionomic Perspective," "Journal of Behavioral Finance", vol. 8 no. 2] , pp. 84-108. [http://www.leaonline.com/doi/abs/10.1080/15427560701381028 Abstract here] , retrieved Nov. 19, 2007.] books, [ [http://www.ftpress.com/store/product.aspx?isbn=0131345974 Kahn, Michael N. (2006). "Technical Analysis Plain and Simple", Indianapolis, IN: FT Press] , pp. 127-128. ISBN 0-13-134597-4.] [Dorsey, Woody (2003). " [http://ecatalog.thomsonlearning.com/155/lpext.dll?f=XMLHitList&qf=DCQuery&ht=catalog.xml&d=swep/1587991640&sf=item&p=&po=&q=%255Bor%253A%255Bfield%2CISBN%253AWoody%2520Dorsey%255D%255Bfield%2CProductIsbnIssnFormatted%253AWoody%2520Dorsey%255D%255Bfield%2CDescription%253A%255Bor%253A%255Bstem%253AWoody%2520Dorsey%255D%255D%255D%255Bfield%2CCombined_Title%253A%255Bor%253A%255Bstem%253AWoody%2520Dorsey%255D%255D%255D%255Bfield%2Cauthor%253A%255Bor%253AWoody%2520Dorsey%255D%255D%255D&list=ProductIsbnIssnFormatted&xsl=productdescription.xsl&p1=1-58799-164-0 Behavioral Trading: Methods for Measuring Investor Confidence and Expectations] ", New York: Texere, pp. 26-27. ISBN 1-58799-164-0.] the popular press, [Szala, Ginger, and James T. Holter (Nov. 2004). "Storm Warning! How Social Mood Drives Markets," "Futures" (cover).] [Penn, David, "Social Mood and the Markets" (June 2003). "Technical Analysis of Stocks & Commodities", p. 50.] at academic conferencesParker, Wayne D., and Robert R. Prechter Jr. (2006). "The Socionomic Theory of Finance and the Institution of Social Mood: Pareto and the Sociology of Instinct and Rationalization," presented at the meeting of the Association for Heterodox Economics, London, England, July 14-16, 2006. [http://www.socionomics.org/pdf/socionomics_pareto.pdf Document here,] retrieved Nov. 19, 2007. ] and in research funded by the National Science Foundation. [ [http://www.electionstudies.org/announce/newsltr/ANES_OCwinners_20060929.pdf Announcement of this research by the American National Election Studies] , retrieved Nov. 19, 2007.]

Books

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

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* cite book | title = "View from the Top of the Grand Supercycle" | publisher = New Classics Library | year = 2003
id = ISBN 0-932750-55-9
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External links

* [http://socionomics.net/index.aspx] Socionomics Institute, his organization.

Notes