Economists Wouldn’t Know a Crisis Coming if it Bit them in the Bum (Part One)
Our series of charts reveal that mainstream professionals follow the herd

By Nico Isaac
6/18/2013 1:30:00 PM

When it comes to public figures, no one is more private than the Queen of England. Apart from her love of Corgis and ornate headpieces, Elizabeth II has spent six decades staying out of the spotlight. But one event in the past five years was so controversial that even Her Majesty was compelled to speak out about it: the global financial meltdown.

Filed Under: Bob Prechter, credit crisis, earnings, economic indicators, Elliott wave, Elliott Wave Theorist, financial forecast, herding, Robert Prechter

Category: U.S. Economy

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Why Brilliant People Often Fail in Financial Markets
Isaac Newton lost $1 million in the South Sea Bubble. He said financial manias are driven by "human folly."

By Bob Stokes
6/10/2013 5:15:00 PM

If intelligence translated to investment success, then most professors and scientists would be wealthy. If anyone ever had "brains," it was Sir Isaac Newton. He lost $1 million in the South Sea Company bubble. Those who fail in financial markets often assume that cold reason governs market prices. But the opposite is true. 

Filed Under: Elliott wave, herding, history, investor psychology, mania, Robert Prechter, social mood, U.S. STOCK MARKET

Category: Stocks

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Get Ahead of the Crowd BEFORE It Moves
Use the Wave Principle to identify the trend of investor behavior.

By Bob Stokes
6/7/2013 5:15:00 PM

Individuals in the market crowd unconsciously take their cues from one another. Most feel like they don't know enough to make independent decisions. So, they look to others for signals -- in the hope that others know more. In turn, the process becomes self-reinforcing.
Robert Prechter put it this way ...

Filed Under: Elliott wave, herding, investment decisions, investor psychology, Robert Prechter, U.S. STOCK MARKET

Category: Classic Prechter

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Higher Housing Prices: Prepare for the Flop to Follow the Flip
Will real estate history repeat?

By Bob Stokes
5/10/2013 5:30:00 PM

The National Association of Realtors reports that home prices are up 11.6% year over year. And that has a new surge of house flippers into the real estate market. If the housing market is poised for another dramatic downturn, almost no one sees it coming.

Filed Under: all the same market theory, Bob Prechter, Elliott Wave Theorist, herding, history, housing prices, market crash

Category: U.S. Economy

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How an Instinct Can Be Financially Dangerous
Beware of what accompanies market tops.

By Bob Stokes
5/9/2013 4:45:00 PM

Teenagers dress and talk alike. This natural tendency to conform carries into adulthood. Nowhere is the human tendency to conform more pronounced than in financial markets. Investors instinctively adopt the market views of people they perceive to be "in the know." Learn why this instinct can be financially dangerous.

Filed Under: 1929 Stock Market Crash, CNBC, Elliott wave, herding, investor psychology, Prechter's Perspective, Robert Prechter, U.S. STOCK MARKET

Category: Classic Prechter

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Bears Continue to Take a Giant Bite Out of Apple
Our charts reveal why professional analysts never saw the 40% freefall in Apple shares coming.

By Nico Isaac
4/18/2013 5:30:00 PM

Last September, with Apple Inc. shares soaring into the outergalactic $700 region, the mainstream experts tightened their grip on the upside. But instead of going to the moon, AAPL crashed back to earth in a 40% selloff to the 16-month lows we see today. One question remains: How could the professional analysts have gotten it so wrong?

Filed Under: Bear market, Bob Prechter, Elliott wave, Elliott Wave Theorist, herding, mutual funds, Robert Prechter

Category: Asian Markets

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Investors Pile $61 Billion into Stocks (But Look Who's Selling)
Technology executives sell shares at a record pace.

By Bob Stokes
4/12/2013 4:00:00 PM

A financial professional recently opined on television that "You have to be in this market." Investors beat him to the punch. They've piled $61 billion into stock funds and ETFs so far in 2013. Inflows are on track to be the largest since 2000. But not everyone is buying. Learn about one group that's been selling at a frantic pace.

Filed Under: buy and hold, Elliott Wave Theorist, herding, investor psychology, mania, sentiment, U.S. STOCK MARKET

Category: Stocks

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Just Watch the Next Bear Market on Television
Better to be a spectator than a participant in this event

By Bob Stokes
4/8/2013 4:45:00 PM

When you consider what's on television, one wonders if human nature has changed very much since Romans packed the Colosseum for gruesome entertainment. One cable channel offers wall-to-wall coverage of a famous murder trial. The 2007-2009 financial crisis turned into a made-for-TV drama. The next bear market could turn out to be an even bigger television spectacle. The Wall Street classic, Elliott Wave Principle: Key to Market Behavior, states that "human nature does not change."

Filed Under: Bear market, Elliott Wave Principle, Elliott Wave Theorist, financial forecast, herding, history, market forecasts, Robert Prechter, stock indexes, wisdom of crowds

Category: Stocks

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Fear, Greed and Neuroeconomics: Q&A with Cambridge's Michelle Baddeley
Dr. Baddeley will discuss her latest research on financial herding at the 3rd Annual Social Mood Conference.

By Jill Noble
3/28/2013 2:30:00 PM

Learn about new research techniques that measure financial decisionmaking processes in this interview transcript...

Filed Under: herding, investment decisions, investor psychology, social mood, socionomics summit

Category: Socionomics

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As Dow Climbs to Record High, Money Managers Underperform
Most investors buy stocks "for the long run" at just the wrong time

By Bob Stokes
3/7/2013 5:30:00 PM

As the Dow Industrials climb to an all-time high, most professional money managers lag the broad indexes. This is an occurrence that's common to past bull runs. Also, private investors almost always underperform versus the main indexes. Learn what those who work in the back offices of brokerages know.

Filed Under: CNBC, Dow Jones Industrial Average (DJIA), Elliott Wave Theorist, herding, history, market forecasts, mutual funds, Robert Prechter

Category: Stocks

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Investors Look to Experts for Stock Market Signals
Discover the patterns of crowd behavior

By Bob Stokes
3/4/2013 10:30:00 AM

Stock market prices reflect the collective psychology of the people who buy and sell equity shares. Decades of observation show that this psychology unfolds in recognizable patterns. The Wave Principle helps to identify key junctures in those patterns. A special double-issue of the Elliott Wave Theorist elaborates on one such juncture – with an emphasis on "elaborates."

Filed Under: Dow Jones Industrial Average (DJIA), Elliott Wave Principle, Fibonacci, herding, , long-term trend, market forecasts, Robert Prechter, sentiment, technical indicators

Category: Stocks

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Apple Inc's Selloff Shows How the Herd Waits For No Man
Think the professionals were separate from the herd? These charts will make you think again

By Nico Isaac
2/12/2013 6:30:00 PM

Unless your name is Snow White and you've been in a deep sleep for months, you know that the share price of tech behemoth Apple Inc. has fallen hard. Talk about poison fruit: Since hitting an all-time high in September 2012, Apple stock prices (AAPL) have rotted to a one-year low, alongside flat earnings, and falling profit margins to levels not seen since the 2007 finanical crisis. And, according to recent New York Times article, many Apple shareholders were snared by the bearish trap in the one way you wouldn't expect -- by following the mainstream experts.

Filed Under: Bob Prechter, Elliott wave, Elliott Wave Theorist, fundamental analysis, herding, Robert Prechter, Wall Street

Category: Stocks

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A Study of Financial Bubbles Reveals a Remarkable Pattern
Financial manias end below where they started

By Bob Stokes
2/11/2013 4:15:00 PM

The tricky thing about financial bubbles is, even the smartest investors don't know they're in one until it bursts. Isaac Newton was a rare genius as a scientist, yet he decided to invest in the South Sea Bubble (1719-1722) just before it burst. Bob Prechter studied major financial bubbles going back to the year 1600 and made a remarkable observation which may be relevant today.

Filed Under: 1929 Stock Market Crash, Bob Prechter, conquer the crash, Dow Jones Industrial Average (DJIA), Elliott Wave Theorist, herding, history, market crash, sentiment, South Sea Bubble

Category: Stocks

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Mark Buchanan, Former Editor of Nature and New Scientist, Talks Social Mood
Q&A with author of "Forecast: What Extreme Weather Can Teach us About Economics"

By Jill Noble
2/7/2013 1:45:00 PM

"We know fully well that there are all these interactions going on and that there have to be collective patterns of mood..."

Filed Under: Elliott Wave Education, herding, investor psychology, social mood, socionomics, socionomics summit

Category: Socionomics

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

By Bob Stokes
2/4/2013 4:45:00 PM

Even those who head large financial institutions can be way off the mark with financial assessments. That was the case around the 1929 stock market top and other historical market milestones. Market history may repeat as prominent Wall Street figures sing from the same songbook. Learn why it's an important time to be an independent-minded investor.

Filed Under: 1929 Stock Market Crash, CNBC, Elliott wave, financial forecast, herding, history, investor psychology, mania, market crash, market forecasts, mutual funds, risk management, sentiment, U.S. STOCK MARKET, Wall Street

Category: Stocks

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Margin Debt is Fueling the Market Rally
Investors ignore the sign posts at their peril

By Bob Stokes
2/1/2013 3:00:00 PM

Margin debt is fueling the market rally, and the investors behind the wheel have no fear. Bob Prechter warns about this hazardous combination, and issues a bold stock market forecast for the next 3-1/2 years. Be aware that investors may face the most significant market juncture of the past three centuries.

Filed Under: Bob Prechter, CNBC, debt, Dow Jones Industrial Average (DJIA), Elliott Wave Theorist, herding, investor psychology, market forecasts, sentiment, VIX

Category: Stocks

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"Control of Interest Rates" is the Biggest Myth About the Federal Reserve
Bond investors need to prepare for a major change of trend

By Bob Stokes
1/31/2013 4:45:00 PM

Many observers of financial markets hang on the Federal Reserve's every word, and believe the central bank determines interest rates. However, the evidence shows that interest rates are not controlled by the Fed. Bond investors need to prepare for a major change in trend.

Filed Under: all the same market theory, central banks, conquer the crash, Elliott wave, herding, Interest Rates, market myths, Short Term Update, Treasury bonds, U.S. Federal Reserve (the Fed)

Category: Interest Rates

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High-End Real Estate: "The Market is Insane, I've Never Really Seen Anything Like It."
What's ahead for the re-inflation of real estate?

By Bob Stokes
1/25/2013 3:30:00 PM

Second chances don't always present themselves in financial markets. And when opportunities to recoup losses do appear, the psychology of the moment may stop people from taking beneficial actions. Consider the stock market and the recent surge in high-end real estate prices.

Filed Under: CNBC, economic indicators, Elliott wave, herding, home sales, housing prices, investor psychology, mania, stock indexes

Category: U.S. Economy

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U.S. Stocks: Today's Market Sentiment Starkly Contrasts 2009's
How extreme sentiment can signal a trend ready for change

By Bob Stokes
1/24/2013 5:30:00 PM

In March 2009, stock prices were at a 12-year low, and you'd have needed to search far and wide to find someone calling for a rebound.  Most investors feared that more of the same was ahead. Instead, stocks rallied. Investor sentiment is now at the opposite extreme.

Filed Under: Bear market, Bob Prechter, bull market, CNBC, Dow Jones Industrial Average (DJIA), Elliott wave, herding, investor psychology, market forecasts, sentiment, VIX

Category: Stocks

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Economic Reality Takes a Back Seat to Investor Irrationality
Following the investment crowd can be damaging to your portfolio

By Bob Stokes
1/18/2013 5:15:00 PM

The United States faces what a former Treasury Secretary calls a "debt bomb." Yet, investors continue to plow money into risk-assets, like stocks and junk bonds. Learn what Bob Prechter says about irrational investment behavior and its likely outcome.

Filed Under: bloomberg, Bob Prechter, CNBC, debt crisis, Elliott wave, herding, investor psychology, junk bonds, municipal bonds, sentiment, stock indexes, Treasury bonds

Category: U.S. Economy

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