Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression

Fast forward to today: the average U.S. homeowner has suffered a decline of 30% to 40% in property value. Stocks and commodities had their biggest fall since 1929-1932. Fannie Mae is a zombie corporation under the government?s protection. The Fed has pushed every button at its disposal (and then some), to no avail. If Prechter thought a whole new book would help, he'd have written one. But Conquer the Crash is a book-length forecast that's still coming true -- only some of the future has caught up with the specific predictions he published back then. There is much more to come. That means more danger, but also great opportunity. Conquer the Crash, 2nd edition offers you 188 new pages of vital information (480 pages total) plus all the original forecasts and recommendations that make the book more compelling and relevant than the day it published.

In every disaster, only a very few people prepare themselves beforehand. Think about investor enthusiasm in 2005-2008, and you'll realize it's true. Even fewer people will be ready for the soon-approaching, next leg down of the unfolding depression. In this 2nd edition, Prechter gives a warning he's never had to include in 30 years of publishing -- namely, that the doors to financial safety are closing all over the world. In other words, prudent people need to act while they can. Conquer the Crash, 2nd Edition readers will receive exclusive online access to the Conquer the Crash Readers Page, where Prechter continually updates the book's recommended services and institutions.

His advice is basically to pay off your bills, put your money in rock solid banks. Don't rely on the government to protect you, buy some precious metals, and get ready to profit once we are at the rock bottom by way of investment strategies that take advantage of the subsequent inflation post a "Deflationary Depression." What's harmful about being in cash?

Now the review: Prichter is confident that there is going to be a deflationary depression. A period of great contraction in our economy that drives down any and all inflated value out of any goods or services such as the depression the United States suffered through in 1929.

He supports his premise with monetary statistics such as the 30 trillion dollar credit bubble that America now has, and numerous other statistics that aren't that pretty.

Prichter also bases his premise for a "Deflationary Depression" on a controversial charting method known as "The Elliot Wave Theory". It's controversial in that some stock market analysts think it is merely conjecture, while other analysts feel it is an absolute, social, "fractal". (A "Fractal" is defined as a geometric shape that self repeats over and over into a larger shape. This can especially be observed in nature.)

As a result, the Elliot Wave Theory is believed to be an accurate way of charting graphs whereas the viewer trained in this principle can predict where that statistic is going to go based on Elliot Wave analysis. Whether this is nonsense or not, every major brokerage firm has an Elliot Wave analyst.

Prichter teaches the basics of this technique and supports his findings with background statistics such as market volume and breath.

The book is divided into two sections: Why a "Deflationary Depression" is going to happen, and the second part of the book covering how to profit and protect yourself when it does. At the very least this book is an educational exercise as to what to do if a "Deflationary Depression" or bear market occurs.

To repeat, his advice would do no harm if followed even if he is wrong. Challenge any reviewer who says otherwise.

Tony


Read This Book While There's Still Time!   July 1, 2002
Timothy L. Bost (Sarasota, FL USA)
162 out of 181 found this review helpful

A lot of what drives market activity--and what creates opportunities for profitable trades--is herd behavior. When prices start to go up, the bullish sentiment spreads, and as soon as a crowd gets involved, a rally is underway. When fear sets it, it gets contagious and the market crashes.

But the really big opportunities come from the ability to step outside of the herd's expectations and see things from a different perspective. If you have the wisdom and the courage to go against the popular belief, you can reap substantial rewards, especially if your timing is right. And someone who demonstrates that ability to defy the herd is someone worth paying attention to.

Robert R. Prechter Jr. is a good example. As the world-renowned popularizer of the Elliott Wave Principle, he has repeatedly revealed his capacity for original and insightful thinking. Along the way, he has time and again come up with startling forecasts for the markets and for the economy, sharing perceptions that boggle the minds of the more pedestrian pundits who are hopelessly locked into linear thinking.

In 2002 Prechter published a watershed book, Conquer the Crash, in which he made some astonishing predictions that defied the popular logic of the time, when the focus of the financial experts was on buy-and-hold strategies in the stock market, speculation in real estate that could presumably only go up in value, and on hedging investment positions with sophisticated derivatives as a kind of portfolio insurance.

And what did Bob Prechter predict? The implosion of collateralized securities. The collapse of Fannie Mae and the crumbling of major banks. The failure of bond-rating services to issue timely warnings. The advent of bailout schemes from the government. And an extremely rare, simultaneous plunge in real estate prices, commodities, and the stock market.

Oddly enough, as one after another of Prechter's forecasts were precisely reflected in the financial news of recent years, he didn't get much attention in the mainstream press. Maybe it was because his book also featured another prediction--that we are facing a deflationary depression.

While some would argue that deflation is impossible under the present circumstances, it might be prudent at least to consider that possibility, especially considering the stunning accuracy of Bob Prechter's other predictions. And if you're willing to take a peek at that scenario, Prechter has just the thing for you--a brand-new edition of Conquer the Crash!

All of the analysis and insight from the original edition is included in the new second edition. But Prechter has added 188 pages of entirely new material, and every one of the book's pages is worth reading and re-reading, even if your copy of the original edition is coffee-stained and dog-eared.

There are plenty of fresh gems between the covers. Here are just a few samples:

"It is not the case that Fed chairmen are either fools or geniuses, as their records appear to imply. They do, however, preside over eras that make them appear to be one or the other."

"I hate to challenge mainstream 20th century macroeconomic theory, but the idea that a growing economy needs easy credit is a false theory. Credit should be supplied by the free market, in which case it will almost always be offered intelligently, primarily to producers, not consumers."

"Those waiting to get rich in the stock market, however, have just been kidnapped, trussed up and thrown in the trunk of a car heading to Bankruptcy City. . . . Just look at this 25-year trendline, which just burst like an Army Corps levee."

"One of the biggest scams ever perpetrated is the idea that the stock market has made people rich over the past 80 years. Almost the entire gain in the Dow is due to debasement of the currency."

Even more important, though, the new edition of Conquer the Crash does more than just make dire forecasts and describe an ever-more-likely scenario of extended economic catastrophe. It also provides sound, specific strategies not just for surviving a wave of deflationary depression, but also for turning the troubled times ahead into an enormous opportunity for profit and personal prosperity.

Note the word "specific" here. Conquer the Crash not only offers clear theoretical insights and extraordinary strategic thinking; it also provides a treasure trove of references and useful resources, including websites, phone numbers, and the names of sound banks, insurers, gold dealers, advisors, and other individuals who can help you with your plans for prosperity during a deflationary depression. There's also an access code for a special online question-and-answer forum for readers of the book.

So here's the bottom line. Get a copy of Conquer the Crash immediately. Then read it, and put the strategies it suggests into action. If Bob Prechter's forecasts somehow turn out to be wrong, you won't really be any worse off--in fact, you'll wind up with a more solid grasp on your own financial future. But if he turns out to be right, you'll not only be able to make it through the coming depression--you'll also be able to reap some very big rewards as we hit bottom in a time of unprecedented opportunity.

*****

By the way, here's what I had to say about the original edition of this book back in 2002:

"How much time is left?"
That's the question that kept ringing through my mind as I finished reading Bob Prechter's new book, Conquer the Crash.
"How much time is left? And how fast can I take appropriate action?"
There's definitely a sense of urgency created in this insightful and wonderfully readable book. While it's not specifically about equities trading or financial astrology, the topics that provide the usual focus for Financial Cycles, it's required reading for market astrologers, active traders, and anyone else who wants to enhance his or her prospects for economic survival in the years ahead.
Prechter, the world's preeminent authority on Elliott Wave theory, makes an extremely convincing argument, not only that we are headed for a major market crash and a widespread depression much bigger than the one 70 years ago, but also that we will experience severe deflation, halting and reversing the inflationary trend that has been a bedrock assumption in virtually all financial planning throughout our lives. He examines market history, social psychology, and the prevailing money myths to create a startlingly clear vision of some pretty scary situations that demand serious attention.
Along the way, he illuminates the workings of the Federal Reserve, assesses the impact of increasing terrorism, examines the outlook for government, and makes suggestions for employers, collectors, and prospective retirees. And while he isn't writing about financial astrology, he does provide vital insights into the workings of economic and social cycles-not only Elliott Wave, but the Kondratieff long wave as well.
That's not to say that this is a technical book written only for seasoned analysts or would-be experts. In fact, the opposite is true. It contains some of the clearest, easiest-to-understand material I've ever read on Elliott Wave. But more importantly, its real charm, and its usefulness, comes from the fact that Bob Prechter is writing for average folks who probably haven't really given much thought to what might happen to the economy in the years ahead. And while some of the insights in Conquer the Crash are scary enough, this isn't really a doom-and-gloom piece. It's chock full of practical tips for specific actions you can and should take right now. You'll find valuable guidance here, not only on how to handle the stock market ("The opportunity to make money on the downside in a deflationary crash can hardly be overstated"), but also on real estate, bonds, insurance, banking, annuities, and precious metals. And the actions Prechter suggests aren't vague generalities-you'll find easy-to-read check lists of the particular things you can do in various situations, plus specific names of financial and research institutions that can provide additional help, along with toll-free phone numbers, URLs, and other contact information.
All at once, Conquer the Crash manages to be gripping, thought-provoking reading, a handy reference book, and a stirring call to personal action. As Prechter notes, he certainly gets into "concerns that most investment counselors view as little different from paranoia. As the old saying goes, I may be paranoid, but that doesn't mean there isn't someone following me. In the final analysis, it is better to be safe and wrong than exposed and wrong."
Robert Prechter deserves a lot of respect for the outstanding work he has done over the years in his analysis of social and economic trends. He never hesitates to define his point of view clearly, and he's never afraid to risk taking a stand. As a result he is one of those truly rare commodities in today's hype-filled age: a genuinely original thinker. Conquer the Crash is a delightful case in point.
If Bob Prechter is right, the only question is how much time is left for you to take appropriate action. And if it turns out that he's wrong, taking the actions he suggests won't endanger your financial security or severely impact your current lifestyle in any negative way. So what have you got to lose? I strongly suggest that you get your hands on a copy of this book, read it, and pay very close attention to what it says.
-Tim Bost
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Who are you going to believe?   July 29, 2002
Christopher Holm (Silicon Valley, CA)
67 out of 77 found this review helpful

Subscribers to Prechter's newsletters will have already read most of what is in this book. But for the other 99.99% of investors in the world who are not his subscribers, he has distilled down his reasoning and recommended course of actions into one convenient place.

This book is really two books within one set of covers -- the publisher even uses two different kinds of paper stock to differentiate the "books." In "book one," Prechter draws from history and shows charts & graphs (some going back 300 years) of what has happened in situations similar to what we are going through today. Known for his Elliott Wave analysis, Prechter does not stop there. He uses all of the tools of technical and fundamental analysis to methodically build his argument that the current market downturn is very far from over. Like a lawyer presenting a case, he covers everything from esoteric considerations such as rising federal debt as a percentage of GDP, to public psychology, to the ultimate impotence of the Fed. At the end of the section, the reader is left with the choice to either believe that history repeats, or that "this time it's different."

"Book two" presents practical advice of what to do now. He offers suggestions of what to do if you're in the stock market and your account is way down. He covers junk bonds, real estate, treasuries, pension plans, 401Ks, insurance, gold, and the whole spectrum of investments. To help the reader, he lists the safest banks in the country. He has eye-opening advice for people who are relying on government protection such as FDIC bank account insurance. Finally, he shows how to actually profit in the environment we are currently in.

Some disparage Prechter for his past fault of getting out of the market too early. It's a valid criticism; nevertheless, every one of his predictions are currently playing out. How do you argue with someone who is right?

Ultimately, the reader is left with a choice. One is to follow the financial mass media, economists and brokerage analysts who say recovery is just around the corner. The other is to look at history and Prechter's prediction, along with his track record of being only one of a handful of people to predict the magnitude of the market crash. Who are you going to believe?


Elliot may be Junk but Deflation is Already Here   January 23, 2003
18 out of 19 found this review helpful

Although I am Australian (the book is mainly written for an American audience) and relatively unaquainted with Prechter's other writings, I still found this book a fascinating read. I can understand why people were quite sceptical about deflation with US interest rates in the region of 6%+ but jeez with them now at 1% ? and even that failing to reinvigorate your economy... How could anyone think that deflation isn't possible or even likely? This book explains very nicely concepts (such as deflation) shunned by mainstream economists with their typically myopic view of the future and gives a perfectly reasonable road-map for preserving (and maybe even building) wealth in the contracting economic environment that lies ahead. Since the largest asset/liability in the world is DEBT it is very important to understand the potential impact that deflation could have on the status quo. Even if most of the debt is adequately collateralised now, deflation would devestate the security behind trillions of world-wide debt causing the bad-debts to baloon, devestating the world economy.
Interestingly we have already observed these very effects in Japan.
Anyone with an open mind should definitely get this book, It may challenge your current thinking, especially about conventional investments such as equities, bonds and real-estate. Even if you personally would be financially devestated by Prechter's future prediction, which incidentally is an impending disaster of larger magnitude than the Great Depression in the 30's, this book is definitely fundamamental to any understanding of what is happening now.
I am not a big supporter of Elliot Wave, but the good thing about this book is that Prechter's thesis does not rest solely on the validity of Elliot Wave.

Remember how many banks collapsed in the 1930's ? ... you might not prove as wealthy as you think.


wish I read this book sooner   July 24, 2002
jdt (New Jersey, USA)
31 out of 36 found this review helpful

This book is a must read. I picked it up 10 days ago and could not put it down until I finished it. My only regret is that I did not have access to this book a few months ago. It would have saved me a lot of anxiety and money as I have suffered w/ other investors through a tortuous decline in the market. I have been aware of the Elliott Wave concept for years but admittedly not as a serious student of the concept. Prechter gives a good introductory course to the basic elements of the Elliott Wave concept so the reader can understand where the market is in Elliott Wave terms. More valuable however to me was how the author tied this discussion in with relevant economic statistics that helped explain why the markets are in the precarious position they are today. In other words, whether or not you are a student of wave theory, after reading this book you will have a sufficient explanation, in relevant and cogent terms, why you must heed the author's advice and get out of the market now! A reason I have always been a fan of Prechter is whatever he says or writes comes from the heart and mind of an individual who seems to be able to make bold predictions about the markets- my favorite call of his was in the early eighties re gold- without being intentionally sensationalistic. Prechter calls things the way he sees them not merely for effect. His sincerity- he is not afraid to admit he has been wrong,which he does more than once in this book - makes his bold predictions that much more believable. The support he gives for those predictions,especially as they relate to the impending (I think its already here!)crash, will make any reader of this book want to heed his recommendations right away. Although a couple of his suggested safety havens might seem a bit extreme, the vast majority of his suggestions of what to do w/ your money in an environment where no market or sector provides adequate refuge, are extremely helpful. I have already modified my investment behavior on the basis of reading this book.Although I am disturbed by the potential magnitude of the decline the author predicts, I received some consolation from the fact that I now have a cleare vision of what lies ahead and I am more confident that I will not be missing out on any great stock rebound near term and will be able to preserve whatever resources have not already been ravaged by this market so I have something left when the market turns up somewhere down the road. Finally, I am an avid follower of the market and market trends and read a lot of pundits who have varying views of the market. I think Prechter is as good as they come in providing a sincere and easy to follow discussion of where the market is going and why. Whether you are a beginner or advanced student of Elliott Wave, or don't care about the wave at all, there is important and relevant facts about economic growth, market liquidity, stock valuation etc that provide compelling evidence to support Prechter's conclusions. Understanding and anticipating what is likely to be the ultimate outcome of this difficult market environment is critical to any individual's personal economic survival. In summary this is a must read book that once you are finished you will be very grateful to the author for his insights and recommended course of action.