How to Prepare for the Coming Crash and Preserve Your Wealth
Bob Prechter first released Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression during a stock-market high in 2002, and it quickly became a New York Times–bestseller. Now he has updated the book with 188 new pages for a second edition, and it looks like it, too, will be published near a stock-market high. John Wiley & Sons plans published the new edition in late October. Visit Elliott Wave International for information on how to order the new edition from major online retailers.
As was widely reported in the dark days of late February and early March 2009, Prechter called for the start of the biggest stock market rally since the 2007 high. He recommended speculators close the S&P short position that he recommended at 2007 top. Since then, the S&P has soared more than 80 percent in 2 years and seems to have topped in 2011. During the rally Prechter has called virtually all the minor tops to get in short positions for speculators. As of October 2011, his last short at the stock market top and the gold short has paid off. In his monthly newsletters, Prechter continues to remain bearish and thinks market will continue to decline with lower highs and lower lows with many bear market rallies that will make it look like a bull market.
The first edition of Conquer the Crash, which was published in early 2002, was “on the mark” with regard to our current economic environment — so much so that it’s uncanny. Prechter’s message has been good for investors who kept their money safe and for speculators who profited from declines. And he still expects a great buying opportunity ahead for those who can keep their money safe until it arrives. Here is a short list of some of the accurate predictions he made in 2002 that have come to fruition:
“Usually the culprit behind [simultaneous stock and real estate] declines is a credit deflation. If there were ever a time we were poised for such a decline, it is now.” Chapter 16
“If [governments] leap unwisely into bailout schemes, they will risk damaging the integrity of their own debt, triggering a fall in its price. Either way … deflation will put the brakes on their actions.” Chapter 32
Banking and Insurance Stocks
“We will see stocks going down 90 percent and more … [and] bank and insurance company failures….” Chapter 14
“Banks and mortgage companies … have issued $6 trillion worth of [securitized loans]…. In a major economic downturn, this credit structure will implode.” Chapter 19
“Leveraged derivatives pose one of the greatest risks to banks….” Chapter 19
“Major financial institutions actually invest in huge packages of … mortgages, an investment that they and their clients (which may include you) will surely regret…. Chapter 16
Fannie Mae and Freddie Mac
“Investors in these companies’ stocks and bonds will be just as surprised when [Fannie and Freddie's] stock prices and bond ratings collapse.” Chapter 25
“Banks are not just lent to the hilt, they’re past it. In a fearful market, liquidity even on these so called ‘securities’ [corporate, municipal, and mortgage-backed bonds] will dry up.”… One expert advises, ‘The larger, more diversified banks at this point are the safer place to be.’ That assertion will surely be severely tested….” Chapter 19
“The values of insurance company holdings, from stocks to bonds to real estate (and probably including junk bonds as well), will be falling precipitously…. As the values of most investments fall, the value of insurance companies’ portfolios will fall…. When insurance companies implode, they file for bankruptcy….” Chapters 15, 24
“What screams ‘bubble’ – giant, historic bubble – in real estate today is the system-wide extension of massive amounts of credit to finance property purchases…. [People] have been taking out home equity loans so they can buy stocks and TVs and cars…. This widespread practice is brewing a terrible disaster.” Chapter 16
“Most rating services will not see it coming.” Chapter 25
“A leader does not control his country’s economy, but the economy mightily controls his image.” Chapter 27
“In a bear market, bullish investors always come to believe that short sellers are ‘driving the market down’…. Sometimes authorities outlaw short selling. In doing so, they remove the one class of investors that must buy.” Chapter 20
“When the social mood trend changes from optimism to pessimism, creditors, debtors, producers and consumers change their primary orientation from expansion to conservation….” Chapter 9
“Confidence has probably reached its limit. A multi-decade deceleration in the U.S. economy … will soon stress debtors’ ability to pay…. Total credit will contract, so bank deposits will contract, so the supply of money will contract….” Chapter 11
Falling Tax Receipts
“Governments … spend and borrow throughout the good times and find themselves strapped in bad times, when tax receipts fall.” Chapter 32
“Retirement programs such as Social Security in the U.S. are wealth-transfer schemes, not funded insurance, so they rely upon the government’s tax receipts. Likewise, Medicaid is a federally subsidized state-funded health insurance program, and as such, it relies upon transfers of states’ tax receipts. When people’s earnings collapse in a depression, so does the amount of taxes paid, which forces the value of wealth transfers downward.” Chapter 32
“The tax receipts that pay for roads, police and jails, fire departments, trash pickup, emergency (911) monitoring, water systems and so on will fall to such low levels that services will be restricted.” Chapter 32
For more information on the new second edition of Conquer the Crash, visit Elliott Wave International. Bob Prechter has added 188 new pages of critical information to his New York Times bestseller.
Bob Prechter’s “Conquer The Crash”: Eight Chapters For Free
When EWI President Robert Prechter sat down to write the first edition of “Conquer The Crash” in 2002, the idea that the United States would enter a period of what news authorities coined “economic Armageddon” several years later was unheard of.
Flashing back, the major blue-chip averages were rebounding off a historic bottom, the notorious dot.com bust was making way for a powerful housing boom, Fannie Mae’s chief executive was named “the most confident CEO in America,” then President George Bush was enjoying a 60%-plus approval rating, Gulf War II hadn’t begun yet, and when it did, a “quick and easy victory” was supposed to follow, and the Federal Reserve was largely credited with slaying the big, bad bear via the sharp blade of monetary policy.
Five years later, the tables turned. The U.S. housing market endured its worst downturn since the Great Depression; Fannie Mae’s CEO was ousted amidst a mortgage crisis of incalculable damage. George W. Bush left the oval office with a record low approval rating of 25%, and the expected “cakewalk” victory in Iraq became a “quagmire” and national dilemma.
Anticipating these and other “shocks” to the global system is the unparalleled achievement of “Conquer The Crash.” Here, the following excerpts from the book put any doubt to rest:
- Housing: “What screams bubble – giant historic bubble – in real estate is the system-wide extension of massive amount of credit.” And “Home equity loans are brewing a terrible disaster.”
- Bonds: “The unprecedented mass of vulnerable bonds extant today is on the verge of a waterfall of downgrading.”
- Fannie Mae & Freddie Mac: “Investors in these companies’ stocks and bonds will be just as surprised when the stock prices and bond ratings collapse.”
- Politics: “Look for nations and states to split and shrink.” And — “The Middle East should be a complete disaster.”
- Credit Expansion Schemes “have always ended in a bust.” And — “Like the discomfort of drug addiction withdrawal, the discomfort of credit addiction withdrawal cannot be avoided.”
- Banks: “Banks are not just lent to the hilt, they’re past it. In a fearful market, liquidity even on these so called ‘securities’ [corporate, municipal, and mortgage-backed bonds] will dry up.” (176)
If the tools in Bob Prechter’s analytical toolbox, namely Elliott wave analysis and socionomics (Prechter’s new science of social prediction based on the Wave Principle), enabled him to foresee these “sea changes” in the economic, social, and political landscape — the only question is: What else do the pages of the “Conquer The Crash” reveal?
Well, your opportunity to find out just got a whole lot easier. Right now, you can download the 8-chapter Conquer the Crash Collection, free. It includes:
Chapter 10: Money, Credit And The Federal Reserve Banking System
Chapter 13: Can The Fed Stop Deflation?
Chapter 23: What To do With Your Pension Plan
Chapter 28: How To Identify A Safe Haven
Chapter 29: Calling In Loans & Paying Off Debt
Chapter 30: What You Should Do If You Run A Business
Chapter 32: Should You Rely On The Government To Protect You?
Chapter 33: Short List of Imperative ‘Do’s’ & ‘Don’ts”
Visit Elliott Wave International to learn more about the free Conquer the Crash Collection.