31/03/2011 – Still Enough Time to “Conquer the Crash?”

The New York Times bestseller Conquer the Crash published
in 2002: As the quote above suggests, Bob Prechter advised
readers to avoid risky assets and embrace cash and cash equivalents.

But did the 2007-2009 declines represent all of the
bear market? And is the “Great Recession” over?

Many financial commentators believe the answer to both questions
is “yes.” The latest Elliott Wave Theorist reports
on attitudes toward the rally of the past two years:

“…sentiment measures today do not indicate caution,
skepticism and disbelief but rather multi-year extremes in optimism among
five sets of market players: individual investors, futures
traders, options traders, newsletter advisors and mutual
fund managers.”

Regarding the economic outlook, the March Elliott Wave
Financial Forecast notes a recent business story headline
which reads, “Good Times Ahead.” The story quotes
a top banker saying, “Businesses have plenty of capital
and are starting to expand again.”

The same issue of the Financial Forecast also reminded
subscribers that the fear of inflation remains widespread:

“When Fed Chairman Ben Bernanke touched on the ‘politically
volatile subject of inflation’ in [recent] Congressional
testimony, the blogosphere erupted with proclamations about
runaway prices across the board. Here’s one sample, ‘There
can be only one possible result. Inflation of everything
we use is going to explode.'”

Yet Robert Prechter has another perspective on market optimism,
a business climate “turnaround,” and notions of runaway
inflation. That is why he updated the second edition of Conquer
the Crash to include 188 new pages.

These new pages include “updated lists of banks, insurers
and Treasury-only money market funds in the U.S., top-rated
for safety.”

More than ever, Prechter emphasizes safety.
In a word, it’s the key to conquering a severe market downturn.
Follow the advice about safety in CTC, 2nd edition,
and you’ll be better prepared for a deflationary depression.