FF | The Elliott Wave Financial Forecast
Editors: Steve Hochberg, Pete Kendall
Published since: 1999
Markets: DJIA, S&P, NASDAQ, Bonds, Gold, Silver, U.S. Dollar
Scope: Medium to long term
Inside the latest issues
Invest Independently from the Herd.
Avoid Dangerous Market Risks.
Keep Your Money Safe.
Includes our newly updated Special Gold & Silver Report with Bob Prechter's Big 5 Gold Warnings and more.
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The Elliott Wave Financial Forecast turns conventional wisdom on its head every month. Each issue gives you the investment perspective you need to act independently from the herd and anticipate the trends the mainstream "experts" simply aren't equipped to recognize.
Packed with fully labeled Elliott wave price charts, unique sentiment measures, contrary analysis and prescient forecasts, the Financial Forecast brings a laser-like focus to keeping your money safe.
Since the inception of the Financial Forecast in 1999, co-editors Steve Hochberg and Pete Kendall have given subscribers early alerts to many of the most important trend changes in the U.S. stock indexes, bonds, gold, silver, the U.S. dollar and in society at large. The Financial Forecast has received multiple awards, including Timer Digest's 2007 "Bond Timer of the Year." Even the mainstream financial media recognized the Financial Forecast for its positive performance in one of the toughest market environments in decades.
"The Elliott Wave Financial Forecast, edited by Steve Hochberg and Pete Kendall, is [one of the few] investment letters ... to have beaten the market in 2011 through September," says an article by MarketWatch's Peter Brimelow. "2008 was a great year for EWFF, especially because it also made one of its brief excursions into bullishness in time to catch the subsequent bounce," said Brimelow in another report.
How Elliott-Minded Investors Outperformed
Stocks for 10-Plus Years – With ZERO Risk
Many newsletter ratings services apply their performance metrics equally across all recommendations to all investor types. While the Financial Forecast welcomes recognition for its occasional recommendations for aggressive speculators, it is most proud of the big-picture analysis and forecasts it provides everyday investors who subscribe. After all, everyday investors are the Financial Forecast's reason for being.
With an approach that defies convention, the Financial Forecast prepared everyday investors to beat the S&P 500 for 10-plus years with zero risk. Think about that for a moment ...
Mutual funds are the preferred investment vehicle for most American investors. The mutual fund industry manages about 20% of U.S. household financial assets (some 90 million investors). Yet studies show that after management costs, the average annual mutual fund return for shareholders is about 2% less than the average stock market return. So if you can beat the stock market, you can more than beat the conventional approach to investing.
Financial Forecast readers learned how to beat the S&P 500 for 10-plus years without risking their original capital. We know of no other market letter that can say that, because no other market letter approaches investing like the Financial Forecast.
What is this incredible zero-risk investment vehicle capable of beating the market for 10 straight years, you ask? It's the lowly 3-month Treasury bill. The result of this largely overlooked strategy speaks for itself.
The risk of Treasuries is virtually zero; the U.S. government has never reneged on its "full faith and credit" promise. Investors who took this slow-and-steady approach enjoyed the twin guarantees of safety and consistent returns. As you can see, 3-month Treasury bills outperformed the S&P 500 by a large margin for 10 years.
Even when you expand the duration to include stock market rallies between January 1999 and November 2011, the 3-month T-bill's +37.86% return still beat the S&P 500 (+25.59%) and NASDAQ (+25.86%), thus extending its superior performance to a 12th straight year.
Many financial experts now call this the "Lost Decade." But Financial Forecast subscribers are among the rare few investors who weren't "lost" at all. They understand that the mainstream is usually late to trends, so waiting for after-the-fact recognition like the Lost Decade leaves little time to act. In other words: Financial Forecast subscribers saw then what others saw eventually. They were prepared.
This blend of safety, returns and liquidity should have made the 3-month T-bill a no-brainer for average investors. Yet you didn't hear about it from the experts on the financial news networks. Why?
Atop each issue of the Financial Forecast, the DJIA Summary & Outlook table gives you, at a glance, our preferred and alternate wave counts on multiple degrees of trend, each count's implications, and the optimum strategies for investors and traders. Subscribe now to view the full table.
Put simply, mainstream investment gurus exhibit the common human tendency to follow each other. They herd. Treasury yields (ranging from 5% at the end of 1999 to .01% in 2011) weren't "sexy" enough for them. The Great Asset Mania of 1995-2008 trained investors to think that big financial bets should pay off with big returns. The 2008-2009 collapse should have taught them that those days are long gone, and that the return of capital can be as challenging as a return on it. But all too predictably, the experts are back to their old ways, shunning cash and ignoring market risks.
By minimizing risk and maximizing opportunity, the Financial Forecast's T-bill strategy outperformed the major averages during the run-up and onset of one of the greatest financial crises in living memory. Could you have benefited from this safety-first strategy?
See what the Financial Forecast recommends now.
"Steven Hochberg and Pete Kendall do an excellent market analysis and present it in a clear, concise form, both easy to read and easy to comprehend, making it easy to utilize. Both the wording of their analysis and the labeling of their charts are clear, well-organized and uncannily accurate." - Robert S.
, Edmonds, WA
Ignore the Mainstream Chatter to Spot
Big-Picture Trends Others Miss
The mainstream herd will tell you, "Nothing beats a diversified stock portfolio." Bookstores are chock-full of titles extolling this very claim.
But the experts won't tell you that almost every diversification strategy assumes ever-rising asset prices and inflation.
What happens when inflation is flat or turns to deflation, and asset prices fall? What happens when the markets trend together with waxing and waning global liquidity as they have for the past decade? How does their diversification strategy perform then?
The short answer is, diversified gains turn into consolidated losses – fast.
The Financial Forecast explained the risk in a 2007 special section, "They'll All Fall Down." Unfortunately, investors holding diversified portfolios of stocks, bonds and commodities in 2008 already understand the scenario all too well.
Since 2002 when Conquer the Crash (Prechter's best-seller) postulated an emerging positive correlation between stocks and commodities and illustrated “that markets are responding primarily to liquidity flows,” Elliott Wave International has tracked the upward sweep of this “shared cycle.” In a 2004 article for Barron’s, Prechter and Kendall extended the correspondence to junk bonds, silver, gold, real estate and the U.S. Dollar (inverse relationship) and theorized that it was the culmination of a “two-decade pattern of credit expansion and speculation.” We concluded, “The resolution of all this is likely to be a credit contraction.” The now unfolding credit squeeze is the start of that contraction.
Excerpted from the November 2007 Financial Forecast
The Financial Forecast calls the liquidity-driven correlation "All the Same Market" and says the trend will travel as far on the downside as it did on the upside. A chart of nine different markets published in February 2011 reveals the close correlation since the Financial Forecast's 2007 warning.
The financial news and the mainstream experts aren't even equipped to recognize trends like All the Same Market – much less alert investors to the risks and opportunities that accompany them. They're oblivious to the critical role investor psychology plays in asset prices. They're biased toward ever-rising asset prices. They constantly spin the latest news and statistics to serve their predetermined outlook.
By contrast, Elliott-minded investors understand that collective psychology is the driving force behind the trends and turns in asset prices.
The Wave Principle is a catalog of the ways that the crowd goes from the extreme point of pessimism at the bottom to the extreme point of optimism at the top. It is a description of the steps human beings go through when they are part of the investment crowd, to change their psychological orientation from bullish to bearish and vice versa. That description fits the movement of any market, as long as human beings are involved …. Since this aspect of people doesn’t change, the path they follow in moving from extreme pessimism to extreme optimism and back again is essentially the same over and over and over, regardless of news and extraneous events.
Excerpted from media interviews in Prechter's Perspective
EWI's All the Same Market insight recognizes that the mood of investors worldwide is more in sync than ever before, and that a positive correlation across most asset classes sends prices up and down with waxing and waning global liquidity.
The Financial Forecast is the only market letter to recognize and report on the importance and magnitude of the All the Same Market trend. It has kept subscribers two steps ahead of the "upward sweep" and downward trend that follows it.
It took years for the mainstream to recognize what Financial Forecast readers saw years before.
Could you have benefitted from such foresight?
"Thanks for your forecasts on gold and silver. You have saved me a lot of money and headaches."
- Don W.
, Coaldale, CA
Be Alerted to Major Economic Trend Changes
with Far-Reaching Implications
Armed with knowledge of EWI's All the Same Market trend, what major market moves could you have taken advantage of (or protected yourself from) in the past 10 years?
In 2005, mainstream experts said the getting still appeared good in most asset classes – not least of all, U.S. real estate. Yet the Financial Forecast published a chart-supported forecast to the contrary.
Originally published in 2005. Market data updated to 2007.
Time magazine issued a real estate cover story in early June as the NAREIT Index shown here was completing a five-wave rally. As [the Financial Forecast] explained in January and February 2000, major magazine cover stories have a “strong record of marking a trend change in the fortunes of a profiled firm, sector or market,” and Time magazine’s record is among the most distinguished. Back in 2000, we were referring to a slew of covers on the New Economy, Amazon, AOL and Martha Stewart that did, in fact, mark the all-time peak with glowing profiles. Here on the right shoulder of the same long-term peak, Time has done it again. Its “Home $weet Home” cover focuses on the most ubiquitous holding in the average American’s investment portfolio. Now that its editors are all on board, it is the most dangerous, too.
Excerpted from the July 2005 Financial Forecast
A New York Times best seller, Prechter's Conquer the Crash (2002), foresaw and explained the real estate collapse, plunge in stocks, liquidity crisis and more. And that's only the first half. The second half provides the "how to" and "should you" advice that will help you survive and prosper.
More than 100,000 read Conquer the Crash in time to protect their wealth. As a new Financial Forecast subscriber, you get a FREE hardback copy (480 pages) delivered to your doorstep.
Today, investors are painfully familiar with real estate's dramatic fall; the Time cover has become a symbol of the now-infamous U.S. real estate bubble. Yet the Financial Forecast was virtually alone in alerting subscribers to the coming collapse with enough time to prepare.
A special section titled "The Real Estate Bust Begins" sounds the alarm.
Here's what it said:
The Real Estate Bust Begins
With real estate now the focus of investment clubs, a Chicago Mercantile Exchange futures instrument, full page ads in the local newspaper and best-selling books like Building Wealth One House at a Time, The ABC of Real Estate Investing and The Millionaire Real Estate Agent, it is clear that the optimism of the Grand Supercycle bull market peak attends the real estate market. …
Conquer the Crash notes that there is an intermediate phase in a real estate reversal when demand wavers, supply spikes higher and sellers hold out for higher prices. In September [2004, the Financial Forecast] contended that the market had reached such a stage, then added, “Eventually a few sellers will give in and sell at lower prices.” January brought the first wave of mark-downs. The median sale price on new U.S. homes plunged 13%, from $229,700 to $199,400. The decline is the largest one-month fall in the history of the data, which goes back to 1963. Total new home purchases dropped 9.2% from the level of December, while existing home sales were down 0.5%.
Excerpted from the March 2005 Financial Forecast
As we now know, few investors outside of EWI's readership were prepared for the devastating declines that would wreck U.S. and global real estate markets just a few years later.
"I greatly enjoy reading The Elliott Wave Theorist and The Elliott Wave Financial Forecast every month. In fact, the clarity of your thoughts is so powerful that I typically read an issue at least a half dozen times."
Know When to Invest in a Market
and When to Step Aside
Robert Prechter's first book, co-authored with renowned Elliottician A.J. Frost, is the definitve textbook on using the Elliott Wave Principle. Its brash bullish forecast for the 1980s made it a run-away hit, but it's timeless Elliott wave lessons make it a requirement for any investor's library.
As a new Financial Forecast subscriber, you get a FREE hardback copy (248 pages) delivered to your doorstep (plus a complete online version).
In January 2007, the Financial Forecast once again used mainstream news as a contrary indicator of a major trend change – this time in stocks.
The Financial Forecast's special section, "2007: The Year of the Financial Flameout," was so prescient that it's mind-blowing to read in retrospect.
You have to read it for yourself to believe it.
2007: The Year of the Financial Flameout
A sure sign of a financial zenith is the recent massive media acknowledgment of the liquidity boom that underlies the Great Asset Mania. The Wall Street Journal and Newsweek opened the year with major articles extolling the virtues of a “world awash in cash.” “Let The Good Times Roll,” says Newsweek. …
Even the most pessimistic economists and central bankers see little sign that the liquidity boom, and the benign financial environment that it has fostered will disappear soon. Confidence in the current environment stems from financial innovations and new financial players that have helped disperse risk more quickly and more broadly than ever before. While the argument that things are different has always been dangerous, many economists now subscribe to the brave new cycle, or a cycle in which the ups and downs have become much more muted, largely thanks to the stabilizing influence of new financial technology.
A cycle that doesn’t cycle? We heard the same thing in January 2000 when belief in the New Economy grabbed hold amid assurances that the business cycle had become an anachronism. This time, “financial innovation” replaces technology as the holy grail of economic growth. Our chart shows that the influence of finance has been growing for three decades, but only now is its “magnitude and persistence” itself the reason for the boom.
The psychology is so powerful, and dangerous, that many of the financial system’s most fundamental weaknesses are listed as strengths: it’s “easier for the less creditworthy to borrow than ever before;” “the biggest banks don’t hold much debt, having sold it on to others;” securitization has distributed debts “far and wide, so no single holder has significant exposures;” derivatives insure “the holders of debt against losses.” But the pervasive spread of risk doesn’t mitigate it, it simply intensifies it and snares everyone.
Excerpted from the January 2007 Financial Forecast
By the end of 2007, stocks were in a decline that would last until March 2009. The Dow Industrials, S&P 500 and NASDAQ tumbled 54%, 56% and 57%, respectively.
As a shift toward investor pessimism fueled the decline, the folly of the mainstream experts became clear to everyone. Analysts came out of the woodwork to jump on the bears' bandwagon.
Yet as true contrarians, the Financial Forecast (alongside Prechter's Theorist) took the opposite stance on Feb. 27, 2009.
The five-wave decline that started in October 2007 has now drawn the DJIA beneath its October 2002 low, down 50% in just 16 months. Some measures of investor pessimism have reached extreme levels, suggesting that the decline has reached its latter stages.
Excerpted from the March 2009 Financial Forecast
A week later – March 9, 2009 – stocks bottomed and began an extended bear market rally.
With the Financial Forecast, you will spot major stock trends early – before they happen – while you still have time to act.
"I find your analysis of the U.S. stock markets, bonds, the dollar and precious metals to be of the highest caliber. You have achieved a level of expertise that is unparalleled in the industry and your analysis definitely needs to be an integral part of any serious traders' decision-making process."
Read Research You Cannot Read Elsewhere
Discover Opportunities No One Else is Talking About
Each issue of the Financial Forecast publishes unique research and insights others routinely overlook.
Take, for instance, the common belief that the Federal Reserve sets interest rates and thus controls the bond market. The Financial Forecast and other EWI publications have debunked this pervasive myth repeatedly, yet it's still commonly referenced today.
Originally published in 2007. Market data updated to 2010.
With respect to the timing of the Federal Reserve Board rate cuts, we need to reiterate one key point: The market, not the Fed, sets rates. The chart of the Federal Funds rate (dashed line) and the 3-month U.S. Treasury Bill yield shows how obediently the Fed’s mandated rate follows the lead of the freely traded T-bill market. This relative timing is consistent with our discussion in the June  issue of government’s role as the ultimate trend follower. The Fed’s latest effort to stem the retreating financial tide came after T-bill rates had fallen and after the Dow Industrials completed a 10.7% decline. In other words, it was a response to a market decline that was already in place. … [emphasis added]
History says quite plainly that any near-term positive response to a Federal Reserve rate cut will be short-lived.
Excerpted from the September 2007 Financial Forecast
By mid October 2007, the so-called Fed-induced stock rally was over. All the post-rate-cut gains were wiped out by early November.
When investor psychology turns to the bear, neither the Fed nor any other government agency can reverse it. Their best efforts amount to pushing on a string.
This universal truth is also evident in the spread between junk bonds and Treasuries, a widely followed indicator of investor confidence. A narrowing spread indicates increasing optimism. A widening spread indicates increasing pessimism.
Here's what the Financial Forecast said about this all-important metric in 2007:
Let’s not forget that the financial world’s overwhelming willingness to extend credit produced the expansion in the first place. [The Financial Forecast] foreshadowed the impending crisis in March 2005 when it identified the exact low for 30-year junk-to-Treasury credit spreads with this forecast:
If we were forced to make just one statement with respect to bonds, it would be this: The spread between junk debt and U.S. Treasuries should widen to a record level. If you play that spread now, you’ll probably make a lot of money.
Excerpted from the September 2007 Financial Forecast
In mid 2007, the junk-to-Treasury spread exploded, going wider and wider (or higher and higher as the chart shows) even as the mainstream experts declared "the Worst is Over." The Financial Forecast emphatically disagreed. The dramatic chart reveals exactly where the experts stepped in to declare the crisis dead and what happened next.
Only EWI's subscribers read that this trend was coming.
With the Financial Forecast, you will separate yourself from the herd. You will follow an entirely different and proven set of investment indicators. You will even learn to read between the lines of mainstream news articles to uncover the hidden "a-has" others miss.
You will find these market insights from no other source. Here are just a few of the financial, economic and social trends Financial Forecast subscribers were prepared for over the past several years.
Declining ownership of stocks as a percentage of U.S. household assets,
Shocking financial scandals like Enron, Worldcom and Bernie Madoff,
Major bank failures worldwide,
New political parties and increased political polarization,
The Failure of Fannie Mae and Freddie Mac,
Wars and destabilization in the Middle East,
State and local government bankruptcies,
The vilification and increased taxation of the rich,
U.S. dollar rally despite the Fed's inflationary policies,
And much, much more – all before they became mainstream news.
See for yourself how you can benefit from getting ahead of the mainstream herd of investors. Try The Elliott Wave Financial Forecast risk-free for 30 days. If you don't like it, we'll happily give your money back or apply it to a different subscription – the choice is yours.
"'Could someone write an article on the word SURPRISE? I see it all the time in the Wall Street Journal. It is used in reference to earnings, job reports, government economists, etc. I am usually thinking, 'Hey, I remember reading about that in The Elliott Wave Financial Forecast
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