No book forecast the financial
turmoil in 2002-03 and 2007-08 as early and in as
much detail as the first and second editions of Bob
Prechter's Conquer the Crash. The book became an instant New
York Times bestseller: More than 100,000 people
read it in time to protect their financial future.
Now, as the markets close in on their third massive
top in 15 years, more people than ever are in financial
peril -- again.
As Bob Prechter releases Conquer the Crash 2014, Wall Street
and the investing public have reached bullish sentiment extremes that
are even greater than in 2000 and 2007.
You can see this for yourself in examples 1, 2,
and 3 below. Examples 4 and 5,
however, begin to tell a different story. Consider them previews of
what Bob Prechter explains in the 424 pages of Conquer the Crash 3rd
- Investors Intelligence Advisors Survey: Not since 1987 has
this crucial sentiment indicator been so bullish.
But, it is a contrary indicator. It was also bullish
going into the bear market years of 2000 and 2007.
The arrow points to today's BIGGER extreme.
- Margin Debt is when investors borrow money to
buy stocks. Here's margin debt from the mid-1990s thru today.
Debt turned extreme in 2000 and 2007 and
foretold big bear markets. Now investors
have borrowed $178 billion -- an all-time record
of debt to buy stocks. This is risk taken to an extreme.
- Income Inequality is how economists say "the
rich get richer." This is what it looks like.
For the first time in a century, the top 10% of
U.S. households have MORE than 50% of all income.
- 20x INCREASE in Tax receipts-to-GDP: Here's what
taxes cost the economy each year (in GDP). Federal taxes used to
cost very little -- as little as 3% of GDP. But
the income tax drove the economic cost of taxation up by
multiples and launched the big government era -- as
high as 15%-to-20% of GDP. Ever see a chart like
this in history class?
- (Un)Employment: Here's the accurate picture
of how many people have jobs. In 2000, the percentage of employed working-age
people was near 65%. A deep decline began in 2007.
Millions of jobless individuals remain stuck in the grim rut. For
every 100 working-age people, 59 have
jobs, 41 do not (Bureau of Labor Statistics).
And it gets worse
Worker pay as
share of G.D.P.
Source: Bureau of Economic Analysis, authors' calculations
Does this look like a "recovery" to
you? A "recovery" that will last?
That is why Bob Prechter is releasing the 3rd edition of Conquer
the Crash right now. Much of the book's text remains word-for-word
from the previous two editions. Yet Conquer the Crash 2014
includes 130 pages of all-new content, including analysis, forecasts,
charts and specific instruction, now appearing for the first time in
- The updated list of the two highest-rated banks in each one of
the 50 U.S. states
- Must-know commentary about the financial rating services
- Prechter's analysis of bear funds and ETFs
- A list of "safety-first" money managers
- Select recommendations for the most credible gold and silver coin
Plus dozens more forecasts and recommendations to help you survive
The Epic First and Second Editions
There's never been a book like Conquer the Crash: It foresaw
and explained the debt crisis, the devastating collapse in home prices,
the two-bear-market-in-one-decade stock declines, the demise of Fannie
and Freddie, the Federal Reserve's failure to turn the trend, and lots
Conquer the Crash read this about real estate:
Real estate prices have always fallen hard when stock prices
have fallen hard.... What screams "bubble" – giant, historic
bubble – in real estate today is the system-wide extension of massive
amounts of credit to finance property purchases.... Many people
have been rushing to borrow the last pennies possible on their
homes. They have been taking out home equity loans so they can
buy stocks and TVs and cars and whatever else their hearts desire
at the moment. This widespread practice is brewing a terrible disaster.
And this about the coming debt crisis before it happened:
Debts are retired by paying them off, "restructuring" or
default. In the first case, no value is lost; in the second, some
value; in the third, all value. In desperately trying to raise
cash to pay off loans, borrowers bring all kinds of assets to market,
including stocks, bonds, commodities and real estate, causing their
prices to plummet. The process ends only after the supply of credit
falls to a level at which it is collateralized acceptably to the
surviving creditors. (pp. 91-92)
And this about the Federal Reserve:
For many people, the single biggest financial shock and surprise
over the next decade will be the revelation that the Fed has never
really known what on earth it was doing....Make sure that you avoid
the disillusion and financial devastation that will afflict those
who harbor a misguided faith in the world’s central bankers
and the idea that they can manage our money, our credit or our
economy. (p. 124)
And this about Fannie Mae and Freddie Mac:
Major financial institutions actually invest in huge packages
of [Fannie and Freddie's] mortgages, an investment that they and
their clients (which may include you) will surely regret.... Investors
in these companies' stocks and bonds will be just as surprised
when [Fannie and Freddie's] stock prices and bond ratings collapse.
Most rating services will not see it coming. (p. 154, 225)
The first two editions of Conquer the Crash published when
optimism reigned and the financial world was partying around-the-clock.
But then the average U.S. homeowner suffered a decline of 30% to 40%
in property value. In 2007-2009, investors suffered their biggest portfolio
losses since 1929-1932. Homeowners watched Fannie Mae wither into a
zombie corporation under the government's protection. Citizens in the
U.S. and Europe watched politicians try to cope with the growing debt
crisis -- to no avail. Those leaders in fact made the crisis worse
by piling new debt on top of old.
And for the record, Bob Prechter's stunning foresight extended far
beyond the realm of finance:
The occupation of Iraq by the U.S. will progress from a quagmire
to a financial, political and public relations disaster. (October
The benefit of hindsight helps us see that those forecasts were stunningly
accurate. But at the time he published them, Bob Prechter's analysis
was about as "contrary" as contrary can get.
Which raises the question, "Contrary to what...?
Fair enough. The short answer is, contrary to the conventional wisdom
of the time in the financial media, on Wall Street, and among most
of the investing public.
Here we'll let that sentiment from those years speak for itself --
verbatim from Conventional Wisdom Headquarters. (Please note the dates.)
"... the still relatively small but rapidly growing market
in credit derivatives has to date functioned well, with payouts proceeding
smoothly for the most part... But so far, so good."
September 25, 2002 | Source
"American consumers might benefit if lenders provided greater
mortgage product alternatives to the traditional fixed-rate mortgage."
February 23, 2004 | Source
"... a significant decline in consumer incomes or house prices
could quickly alter the [positive] outlook; nonetheless, both scenarios
appear unlikely in the quarters immediately ahead.
October 19, 2004 | Source
"... a 'bubble' in home prices for the nation as a whole does
not appear likely [but] there do appear to be... signs of froth in
some local markets."
June 9, 2005 | Source
"... a decline in the national housing price level would need
to be substantial to trigger a significant rise in foreclosures,
because the vast majority of homeowners have built up substantial
equity in their homes."
July 20, 2005 | Source
"I was aware that the loosening of mortgage credit terms for
subprime borrowers increased financial risk. But... the benefits
of broadened home ownership are worth the risk."
The Age of Turbulence (Sept. 2008), p. 233
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 Prechter published
There is much more to come, which is why it remains your best resource
for practical "How To," "What To" and "Should You" advice to help
you survive and prosper in this long-term bear market. If you own
an earlier edition, you already know it was a financial lifesaver in 2002 and 2007.
Yet as 2014-2015 unfolds, the third edition will
prove itself the most imperative of all. No investment volume can
match the fearless candor of Prechter's analysis regarding the months
and years ahead.
You can (and should) get your hands on Conquer
the Crash 2014 immediately. As Bob explains in the book, bear
markets are much shorter affairs than bull markets. They bring
the kind of destruction that can ruin anyone who ignores the warning
signs. It can take decades - not years - to recoup losses. It's
more important than ever to take action now.
Order Conquer the
Crash 2014: $29 for eBook or print edition, $39.95 for both.
Note to subscribers: If you subscribe to The Theorist, you may recognize some of the new charts and content in Conquer the Crash 2014 from recent issues.
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