More than a year ago, we asked visitors to our website this question:
What Were You Reading at Dow 14,000?
Back then we got very little response. But now, elliottwave.com receives more than 30,000 visitors a day. We're deluged with emails from thankful readers who tell us how Bob Prechter's Conquer the Crash helped them prepare – they say he anticipated the "impossible."
Six years after that book's publication launch, some of the book's passages read as if they were written after the crisis, instead of a long time beforehand. The thing is, Bob himself says "We're about a third of the way through CTC. There are two-thirds left..."
Here is some of the story Bob foretold in Conquer the Crash:
Collateralized Securities
"Banks and mortgage companies … package and re-sell ...‘securitized loans,’ and [they] have issued $6 trillion worth of them. ...In a major economic downturn, this credit structure will implode." ~ Chapter 19
Mortgage-Backed Securities
"Major financial institutions actually invest in huge packages of … mortgages, an investment that they and their clients (which may include you) will surely regret.” ~ Chapter 16
Fannie and Freddie
“Investors in these companies’ stocks and bonds will be just as surprised when the stock prices and bond ratings collapse.” ~ Chapter 25
Banks
“Banks are not just lent to the hilt, they’re past it. In a fearful market, liquidity even on these so called ‘securities’ [corporate, municipal and mortgage-backed bonds] will dry up.” … One expert advises, ‘The larger, more diversified banks at this point are the safer place to be.' That assertion will surely be severely tested.” ~ Chapter 19
Insurance Companies
“The values of insurance company holdings, from stocks to bonds to real estate (and probably including junk bonds as well), will be falling precipitously. ... As the values of most investments fall, the value of insurance companies’ portfolios will fall..." ~ Chapters 15, 24
Derivatives
“Leveraged derivatives pose one of the greatest risks to banks.” ~ Chapter 19
Banking and Insurance Stocks
“We will see stocks going down 90 percent and more … [and] bank and insurance company failures.” ~ Chapter 14
Real Estate
"What screams 'bubble' — giant, historic bubble — in real estate today is the system-wide extension of massive amounts of credit to finance property purchases. ... [People] have been taking out home equity loans so they can buy stocks and TVs and cars. ... This widespread practice is brewing a terrible disaster. ...
“The worst thing about real estate is its lack of liquidity during a bear market. ... In time, there is a massive glut of real estate. ... If you have a huge mortgage on a McMansion or condo that you cannot afford unless your current income maintains, sell it and move into something more reasonable.” ~ Chapter 16
Credit Deflation
“Usually the culprit behind [simultaneous stock and real estate] declines is a credit deflation. If there were ever a time we were poised for such a decline, it is now.” ~ Chapter 16
Short-Selling Ban
“In a bear market, bullish investors always come to believe that short sellers are 'driving the market down.' ... Authorities outlaw short selling.” ~ Chapter 20
Bailout Schemes
“If [governments] leap unwisely into bailout schemes, they will risk damaging the integrity of their own debt, triggering a fall in its price. Either way ... deflation will put the brakes on their actions.” ~ Chapter 32
Conquer the Crash is still your best resource for practical "How To," “What To” and “Should You” advice to help you survive and prosper in this long-term bear market. If you already have a copy, re-read it – then send it to a friend. If you don’t, get your hands on one immediately. As Bob explains in the book, bear markets are much shorter affairs than bull markets. And they bring the kind of destruction that can ruin anyone who ignores the warning signs. It can take decades – not years – to recoup losses. It's more important than ever to take action now.
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