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I Beg For Some Accountability for Talking Heads On Television – Example Number One – Robert Prechter

February 27, 2011


I don’t know about you, but I long ago listening to the opinion of virtually any analyst who regularly appears on financial television. It frustrates me to no end that the same people keep appearing on these networks providing their expert opinions no matter how accurate their opinions have been in the past.

Why can’t there be some accountability for these people ? There should be a full disclosure of their past opinions and how credible they are as a source of information.

Last week I saw Bob Prechter on television again and it actually made me a little bit angry. I know, I need to calm down. But give me a chance to explain.

Last week I saw Prechter providing some new advice for investors. Free of charge of course to a wide audience. So who knows who he might have influenced. Here is what he had to say:

http://finance.yahoo.com/tech-ticker/bob-prechter-we're-still-in-a-massive-bear-market-and-stocks-will-crash-to-new-lows-535963.html?tickers=%5Edji,%5Egspc,spy,%5Eixic,qqqq,gld

“But the pigs are about to get slaughtered, says Bob Prechter, president of Elliott Wave International and editor of the Elliott Wave Theorist.

Prechter still thinks the new bull market is just a cyclical "retracement" of some of the bear market losses that we've had since the market crashed in 2008. Prechter expected this retracement to drive stocks 50% above the market lows, but stocks have since soared 30% higher than than he expected.

So when the day of reckoning comes, Prechter thinks, it will be even more startling. And Prechter still thinks that stocks will eventually crash to new bear-market lows (read: below 6,800 on the DOW).

What makes Prechter think this day of reckoning may come sooner rather than later?

Sentiment indicators and other technical analysis.

Investor bullishness has now gotten so extreme, Prechter says, that it has exceeded the levels in 2008 before the market crashed. Investors could still get even more bullish, of course, but eventually they'll pay for this optimism.

And Prechter's not just bearish on stocks: He thinks oil, silver, and other commodities are absurdly overvalued, too. The only thing he's bullish on is the dollar.

And lest he be dismissed as a perma-bear, Bob Prechter is quick to add that he hopes there will come a day when he can come on the show and tell everyone that stocks are finally so crushed and hated that it's a historic opportunity to buy them.

When will that be?

Stay tuned...”

Ok. There is his current forecast. Can’t say anything about that one now, but maybe check back on it in a few years.

Now. How about we check back on some past calls that have had some time to mature ?

Number 1 – August 13, 2009 – Prediction Oil Will Crash to between $4 and $10 per barrel Within the Next Decade

http://www.businessinsider.com/prechter-oil-with-fall-to-10-a-barrel-in-the-next-decade-2009-8

...“The Elliott-Wave picture pretty much assures us that there will be no additional waves of advance to extend the ‘peak oil’ mania,” Prechter said in the report. “On the contrary, if five waves are complete from the early 1990s, oil should fall to between $4 and $10 a barrel, which, needless to say, supports our deflationary outlook.”

I guess he still has some time for this to work out.

Number 2 – June 15, 2009 – Stock Market Will Crash Below the March 2009 Low Before the End of the Year or Early 2010

http://www.reuters.com/article/2009/06/15/us-financial-summit-prechter-idUSTRE55E6BM20090615

“Prechter, speaking at the Reuters Investment Outlook Summit in New York, said he sees investors' confidence in an economic rebound fading, a trend that will drag the S&P 500 stock index .SPX well below the March 6 intraday low of 666.79 by the end of this year or early next.”

That prediction was just completely wrong. Note to Prechter, don’t box yourself in with short time frames.

Number 3 – January 26, 2010 – Gold, commodities, stocks and real estate to crash

http://economicedge.blogspot.com/2010/01/bob-prechters-latest-comments.html

“During the January 26, 2010 interview Prechter went on to state that gold will also crash in the upcoming sell off and it is likely that real estate, commodities and stocks will all drop in the near future. In general he predicts a collapse in most all risk assets. Of course, this makes bank CD investments, bank savings accounts and bank money market accounts attractive investment choices.”

Again, not looking too good.

As far as I can tell Prechter’s method of operation is to constantly predict doom. Then every 10 years or so when there is a big sell off you can step forward as one of the few people who saw it coming. Of course he is wrong 90% of the time.

But any time Bloomberg or CNBC need someone to present the “bear case” they know they can count on Prechter. And he gets to make a career out of it. Not surprisingly his claim to fame is “predicting the 1987 stock market crash”.

I think he should likely be known for falsely predicting about 100 other stock market crashes.

I encourage you to do a search on Mr. Prechter and check out the track record of his newsletter according newsletter tracker Mark Hulbert. You won’t believe how bad it is.

I guess this is part one of my plea to bring some accountability to talking head financial analysts.

About the author:

CanadianValue
http://valueinvestorcanada.blogspot.com/

Rating: 4.3/5 (34 votes)

Comments

paulwitt
Paulwitt - 8 years ago    Report SPAM
Here in southern california we have waves too...but they aren't used for stock predictions!

superguru
Superguru - 8 years ago    Report SPAM
IMHO, TV and Astrology and Market forecasts are for entertainment only.

BTW, I correctly predicted the current Indian Stock market correction and 2008-2009 crash as well. I just did not know how to make money off it. But I was 75% cash before both of them.
paulwitt
Paulwitt - 8 years ago    Report SPAM
@Superguru

Individual stock valuations is the only thing that makes sense to me.

traderatwork
Traderatwork - 8 years ago    Report SPAM
Even a broken clock is right twice a day. I have nothing to add.
jhodges72
Jhodges72 - 8 years ago    Report SPAM
If you feel that strongly about it, why don't you do what every value investor that is worth his weight in salt does? Simply turn off the TV. It's no great mystery that CNBC, FOX Business, & Bloomberg ARE NOT geared towards the rationale mind of a value investor. Simply turn off the TV. I highly doubt you'll find Warren Buffett spending his days watching CNBC or, much less, giving two cents worth of value to anything that is said by these talking heads. I certainly couldn't care less what these networks provide.
heisenman
Heisenman premium member - 8 years ago


I received a copy of his comments from last spring or summer. Prechter's forecast for the Dow was

1,000! For that to play out I suspect that we would have to experience close to a complete global meltdown. Maybe he's expecting an asteroid to hit planet earth? I suspect that a complete collapse of the global system of "paper currencies" would have to take place for such a draconian forecast to materialize.
paulwitt
Paulwitt - 8 years ago    Report SPAM
@Heisenman

Can you imagine how many stocks Warren Buffett will be buying when they cost $.05, $.10, or $1.00!

rozer
Rozer - 8 years ago    Report SPAM


Couldn't agree more!! Thanks for a great post.

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