Elliott Wave InternationalmyEWISocioniomics.Net
Home > Stocks

Stock Market Lesson: "Institutional Investors Say a Crash Can't Happen"
Even professional investors can be radically wrong

By Bob Stokes
Mon, 04 Feb 2013 16:45:00 ET
Add to Facebook Add to Twitter Email to a friend Printer Friendly

Students of market history are familiar with often-repeated bullish quotes from around the time of the 1929 stock market top. 

One legendary example is from Yale economics professor Irving Fisher: "Stock prices have reached what looks like a permanently high plateau." -- (Oct. 17, days before the 1929 crash)
Lesser-known quotes include several in the days just after the 1929 market crash -- for example:
This crash is not going to have much effect on business.
Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, New York Times, Oct. 26, 1929
There will be no repetition of the break of yesterday. … I have no fear of another comparable decline.
Arthur W. Loasby, President of the Equitable Trust Company, New York Times, Oct. 25, 1929
So even those who head large financial institutions can be way off the mark with financial assessments. 
Consider recent CNBC headlines. The first quote expresses the sentiment of the founder of a large mutual fund family:
‘100% Return’ on Stocks in a Decade -- Feb. 1
The second is the view of a well-known bank analyst:
Bank Stocks to See 14-Year Bull Market -- Jan. 30
The chairman of one of the nation's largest banks believes stocks are a bargain:
U.S. Stocks at 'Very Good Prices' -- Jan. 24
Investors, including professionals, tend to get more bullish as prices climb higher. Logically, investors should become more cautious as stocks ascend. But that's almost never the case.
History proves that investors are the most bullish at market tops. And, as you might suspect, they're the most bearish at market bottoms.
EWI takes an independent view of the market.


FFSEWI's Financial Forecast Service equips you to think, trade and invest independently from the crowd. Here's what you'll get, risk-free:
  • Short Term Update -- Intensive forecasts and analysis 3x/week for U.S. stocks, gold, silver, bonds and the U.S. dollar.
  • Financial Forecast -- In-depth, intermediate-term perspective on U.S. stocks, gold, silver, bonds and the U.S. dollar.
  • Theorist -- Bob Prechter's monthly big-picture insights.
Get complete details and start your risk-free trial today >>
Free Video Course
Learn the Why, What and How of Elliott Wave Analysis

Financial media use news and economic events to explain market moves. Steer clear of this misguided approach. Take part in the Elliott Wave Crash Course to learn what really moves the markets.

© 2016 Elliott Wave International
TRUSTe online privacy certification

The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.