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Anyone Familiar With Elliott Wave Theory?

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In another section of the forum, a poster raised the issue of whether real estate prices might be in a "bubble" and ripe for a fall.

I am wondering if anyone here is familiar with the work of Robert Prechter and his "Elliott Wave" theory? Prechter is a fan of Ayn Rand (I am not sure to what degree) and he even published a newsletter within the last few years comparing his Elliott Wave theory to Lewis Little's Elemental Waves, so there seems to be some cross-pollenization in his thinking.

At any rate, Prechter's been predicting (for far too long, so he admits his timing predictions have been off) a deflationary collapse, with real estate and other markets that appear to be hitting speculative tops leading the way down. I won't try to summarize his theory here, but the specifics are easy to find on his website at http://www.elliottwave.com, especially here: http://www.elliottwave.com/education/welcome/

It might be tempting to dismiss his Fibonacci-number-based analysis as numerology, but I do not think that is a fair criticism, and the recurrence of Fibonacci proportions in nature is itself fascinating, such as a dentist's use of it here: http://www.goldenmeangauge.co.uk/golden.htm and the mathematical studies here: http://www.mcs.surrey.ac.uk/Personal/R.Kno...ci/fibnat2.html

Regardless of whether I understand or accept all parts of Prechter's Elliott Wave theory, I do find it fascinating, and I do share his view that real estate (at least in some areas) is "overpriced". One of the things that concerns me the most is the observation that people (in my area at least) seem to have substituted "real estate investment" for investing in the stock market, with everyone piling in to the market on the presumption that with the decline in the stock market since 2000 that real estate "always goes up" and is the "only game in town".

I'd be very interested to read what others on this forum think of Prechter's ideas and work.

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I am wondering if anyone here is familiar with the work of Robert Prechter and his "Elliott Wave" theory?  Prechter is a fan of Ayn Rand (I am not sure to what degree) and he even published a newsletter within the last few years comparing his Elliott Wave theory to Lewis Little's Elemental Waves, so there seems to be some cross-pollenization in his thinking.

I am sorry to sound so demeaning, but I know of no other way to say this: Prechter's Wave Principle is neither a principle nor a theory, but rather a conglomeration of socio-psychological babble couched in pseudo-scientific trappings.

I am somewhat embarrassed that Prechter's Elliotwave Theorist links to my articles on quantum theory. I wish they would remove it. The last contact I had from that group combined their Wave Principle with my quantum mechanics to alter the physical architecture of the human body. :angry:

In my opinion, this is quackery.

... and the recurrence of Fibonacci proportions in nature is itself fascinating ...

Yes, it truly is. The Fibonacci series plays an interesting role in some higher-level mathematics, but if you like some of its more commonplace applications, there is a very nice little book by H.E. Huntley titled The Divine Proportion. Huntley connects the Ancient Greek Golden Section (phi) with the Fibonacci numbers, and discusses a myriad of applications in both art and nature. It is a small book, but enjoyable for non-technical people with an interest in this subject.

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Several years ago I took a course by Yaron Brook, Investing: An Objective Approach. He said that technical analysis is a subjectivist approach to investing and is nonsense.

He guardedly recommended the book, A Random Walk Down Wall Street by Burton Malkiel. In the chapter on technical analysis, Prechter is included with examples of technical analysts who gained some initial notoriety but flamed-out when they lost their clients a lot of money. The conclusion is, “The past history of stock prices cannot be used to predict the future in any meaningful way.”

(My version of the book is 1999. There are later additions.)

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I am wondering if anyone here is familiar with the work of Robert Prechter and his "Elliott Wave" theory?

I am sorry to sound so demeaning, but I know of no other way to say this: Prechter's Wave Principle is neither a principle nor a theory, but rather a conglomeration of socio-psychological babble couched in pseudo-scientific trappings.

Stephen’s statement that it is neither a principle nor a theory could explain my frustration with technical analysis. It seems to me that technical analysts have an excuse built-in to the theory of why any prediction particular doesn't come true: The contradictory behavior is merely part of a longer-term counter-trend.

How useful is an answer like that to an investor who has lost money?!

In this way, isn’t technical analysis almost a literal appeal to the existence of further “epicycles”?

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