July 5th, 2010 by Alex

This is a clip from CNBC back in April 2010 of Robert Prechter telling the people on the show Fast Money that the market is due to turn down. The best part is near the end where Steve Grasso says “To call out a fall off the cliff in May is ridiculous.” Don’t these guys ever get tired of being wrong? What I respect so much about Prechter is that he has a definite strategy based on what the Elliot wave numbers tell him. These CNBC guys just blow in the wind; they are bipolar traders.

Prechter is a deflationist. Back in 2008, I was a much bigger believer in inflation than I am now. Ever since the credit meltdown, I’m more willing to suspect that the deflationary pressure of the debt burden is too big for inflation to get far out of hand. But I don’t know. I’m personally hedged in both directions these days: inflation and deflation. I personally would prefer deflation; it is a much more honest path of cleaning up the economy, and the investment strategy is simple: hold on to cash. I think if we see another big terrorist attack, which is realistically inevitable, the economy will be so negative that inflation won’t be able to overtake the downward pressure.

Prechter is calling for a choppy downtrend in the market into 2016, at which point we’ll see a new low. During much of that time people may still be thinking we are recovering, but the mood will eventually turn very gloomy.

For more Prechter listen to this recent interview on the Financial Sense Newshour.