Robert Prechter, market forecaster, has made a dire prediction - get out of the market and into cash. If he's right, one analyst said "We'll have to go to the mountains with a gun and some cans of soup." He is convinced that we have entered a market decline - the biggest for 300 years.
His advice: individual investors should move completely out of the market and hold cash and cash equivalents like Treasury Bills for years to come. But ultimately "the decline will lead to one of the best investment opportunities ever" he said.
Buy and hold stock investors will be devastated in a crash much worse than the decline of the 2008 and early 2009 or the worst years of the Great Depression or the panic of 1873, he predicts. He goes all the way back to England and the collapse of the South Sea Bubble in 1720, a crash that deterred people "from buying stocks for 100 years. This time, he said "If I'm right, it will be such a shock that people will be telling their grandkids many years from now - "Don't touch stocks."
The Dow which now stands at 9,686.48 is likely to fall well below 1,000 over perhaps five or six years as a grand market cycle comes to an end. That unravelling, combined with a depression and deflation, will make anyone holding cash "extremely grateful for their prudence."
So what do they say to people watching the rise and fall of their share price every day? "Don't panic, don't panic, hold your nerve!" Read the whole article here: http://www.nytimes.com/2010/07/04/your-money/04stra.html?_r=1&src=me&ref=general
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