Monday, September 6, 2010

Robert Prechter says Dow can go as low as 1000. Dr. Marc Faber says as high as anything to whom should we listen to?

It is said “If you ask same question to 10 economist you get 10 different answers.”

I have been following Dr. Marc Faber for a while and I am one of the big time fans of him. Robert Prechter who is another “Gray hair Wall street guru”, believes in Elliott Wave Principal can not be ignored. Even Dr Marc Faber says that we cannot dismiss him.

Dr Faber’s prediction is based on philosophy that till the time Fed keeps “Money Tap” ON and does not soak any liquidity out of system (by keeping ~ 0% Interest rate), markets will go up and up!! What we saw from Mar 2009 till date is exactly the same. None of the economic parameters have improved unemployment is at it’s record high. Still market is UP. And hence Mark Faber is right.

At the same time if you were tracking the news and market carefully since Sep 2007 (when Sub Prime issue was open to public) you can see that Markets were going down though FED was “co-operating”. Since Sep 2008 Fed started lowering Interest rates and made it effectively 0 in early 2009. At the same time via various means Fed “bailed out” number of Financial Institutes like never before. Still Dow travelled from 14000  - 6600 From Oct 2007 to Mar 2009.

So saying that If Fed Print money market will go up may prove wrong in Short term.

In March I remember mood was extremely pessimistic despite all bailouts money and support from governments. Dow was going down daily by 4-5% and there was not a single “good news” in media. People were angry on Banks, governments. Suddenly news came from Citibank saying they are expecting profit in Q1 2009. According to me that was a turning point in this recession. So we can’t ignore that even “news” can change the trend of market. And of course once city says that they expect profit their competitors have to say that they are expecting profit sooner or later and that changed the direction. So if that news would not have came Robert Prechter's figure of 1000 was perhaps only few weeks away. 

Once the direction was changed, 0% Interest rate and bailout money started working and it gave a huge rally of almost 6600 – 10600 in same year.

Concluding: For Common man it’s best to remain diversified strictly as all these big names can be correct in some or other way and if you are not diversified it can be very risky at times. Before ending let me put one sentence that I heard in this week from David Morgan “If all are thinking same then perhaps no one is thinking really”.

Amaresh Ashok Gangal

1 comment:

  1. If the seven major sectors of the economy could each begin succeeding, then the Dow & Jones Industrial Averages may rise profoundly. But, there is one area of those major sectors which has not recovered and it is the HOUSING MARKET; so, how does its "Real Estate" division improve its sector function? Well, because fraud was so massively prevalent leading unto the 2007 crash, then the 'individual housing' market shall have a much more difficult time recovering. Thusly, the REAL ESTATE functions shall have to succeed at functioning the portion of their interests where the greatest money investments are capably present: meaning that the downtown high-rises are the greater interests of investments where the most money is involved! Build more SKYSCRAPERS, etc. appears to be the answer. To do this, the general lot shall continue to increase tieing their investment portfolios unto Gold and the other precious metals, but mainly those related unto lust!!!!! Sorry, but it is an end game occurring at present with a metamorphosis in the change of dominions responsible for the furtherance of the Holy Gospel of Jesus Christ. Amen. Just the same, it is an opening game for another dominion: the Jews. The Anglo-gentiles shall always have their GOLD, although, right unto the very end 230+ years from now when the year 6000 arrives and that Savior and Redeemer of man appears in His grand Second Coming. That shall bring an end to the Telestial World as we know it and begin the Terrestrial World where the 'Devil' shall not have the ability to tempt anyone of mankind. Praise unto the Spirit. Amen. Thank you for this opportunity to comment!