Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression

by Robert R. Prechter Jr.

"The forecasts in Conquer the Crash continue to be uncannily accurate. Look out below as the rest become reality." Jim Puplava, host, financialsense.com ____________ A year after Conquer the Crash published, stock markets around the world fell precipitously. The rebound of the last six months has convinced some that we are leaving the bear market behind and entering a bull market and economic boom. In this expanded and updated Second Edition of the New York Times bestseller, Prechter returns to provide answers as to what lies ahead. He provides updated economic and market analysis, shows you how to take steps to protect, survive, and prosper and asks, contrary to what most market analysts believe, whether the depression is truly at an end? The expanded and updated edition includes a new 50 page supplement plus current Safety Sources. Written by a leading expert on investing in bear markets, this book is a timely and insightful guide for anyone looking to protect and make money in today's financial markets. Praise for the first "...I am saying that this is 'must reading' for anyone who has even the slightest interest in the stock market and his or her own investing."
Richard Russel, Dow Theory Letters "Prechter's understanding of technical, contrary and economic analysis is exceptional"
Lawrence G. MacMillan, The Option Strategist "All investors imbued with the idea that stocks should be bought and held forever should read this book."
Charlie Minter and Marty Weiner, Comstock Partners, Inc. "Conquer the Crash provides disciplined investors with a map, compass and survival guide. Don't leave home without it."
Henry Van der Eb, The P.Q. Wall Forecast "A compelling exposition of how both the mechanics and the psychology of the business cycle can be encapsulated in market analysis."
Sean Corrigan, Capital-Insight.com "Prechter knows the facts like few others. Read this forceful argument carefully. It can save you from financial loss."
James R. Cook, President, Investment Rarities "...required reading for anyone who wants to enhance his or her prospects for the years ahead."
Timothy Bost, Editor, Financial Cycles

Genres: Finance, Economics, Nonfiction, Business

352 pages, Paperback

First published June 21, 2002

About the author

Robert R. Prechter Jr. (born March 25, 1949) is an American financial author, and stock market analyst, known for his financial forecasts using the Elliott Wave Principle. Prechter is an author and co-author of 14 books, and editor of 2 books, and his book Conquer the Crash was a New York Times bestseller in 2002. He also has published monthly financial commentary in the newsletter The Elliott Wave Theorist since 1979, and is the founder of Elliott Wave International and New Classics Library. Prechter served on the board of the CMT Association for nine years, and as its president in 1990–91. He has been a member of Mensa and Intertel. In recent years Prechter has supported the study of socionomics, a theory about human social behavior.

Reviews

[Laura]

My dad passed this book along to me during a two-hour conversation about the current economic crisis during Thanksgiving break. He's a 30-year veteran of the finance industry, and one who predicted this current credit bust a solid decade ago, so I trust his economic wisdom and financial advice, and I expect this book to give me a solid grasp on what's happening on Wall Street right now--and what will happen. In case you're wondering, dear old dad predicts that the economy will rebound enough that it will appear we're in the clear, only then to get much worse. Save up your dollars, kiddos.

[se lee]

Popular passages:

Inflation is an increase in the volume of money and credit relative to available goods resulting in a substantial and continuing rise in the general price levels. - Page 87
Appears in 30 books from 1923-2007

... after long periods of rising stock prices and economic expansion. A depression begins, then, with the seemingly unpredictable reversal of a persistently, indeed often rapidly, rising stock market. The abrupt change from increasing optimism to increasing pessimism initiates the economic contraction.... You might be interested to know that almost every smaller stock market decline observable in Figure 2-1 also led to an economic contraction. The severity of each contraction is related to the size... - Page 20
Appears in 3 books from 2002-2003

With real estate, you can't pick up the phone and sell. You need to find a buyer for your house in order to sell it. In a depression, buyers just go away. Mom and Pop move in with the kids, or the kids move in with Mom and Pop. People start living in their offices or moving their offices into their living quarters. Businesses close down. - Page 151
Appears in 3 books from 2002-2003

Figure 2-1, you will see that the largest stockmarket collapses appear not after lengthy periods of market deterioration indicating a slow process of long-term change but quite suddenly after long periods of rising stock prices and economic expansion. A depression begins, then, with the seemingly unpredictable reversal of a persistently, indeed often rapidly, rising stock market. The abrupt change from increasing optimism to increasing pessimism initiates the economic contraction. - Page 19
Appears in 2 books from 2002-2003

In contrast to the assumptions of conventional macroeconomic models, people are not machines. They get emotional. People become depressed, fearful, cautious and angry during depressions; that's essentially what causes them. A change in the population's mental state from a desire to expand to a desire to conserve is key to understanding why central bank machinations cannot avert deflation. - Page 128
Appears in 2 books from 2002-2003

After the stock experience of 2000-2001, people are saying, "Maybe stocks can come down for a few months from time to time, but real estate won't; real estate never has." They are saying it because real estate is the last thing still soaring at the top of the Great Asset Mania, but it, too, will fall in conjunction with a deflationary depression. - Page 151
Appears in 2 books from 2002-2003

During the A wave of a bear market, the investment world is generally convinced that this reaction is just a pullback pursuant to the next leg of advance. The public surges to the buy side despite the first really technically damaging cracks in individual stock patterns. - Page 74
Appears in 2 books from 1998-2002

A bull market that has endured since the time of the Great Depression is definitely ending, and its termination could well mark the end of an uptrend of one degree larger, which has endured since the founding of the Republic. - Page 34
Appears in 2 books from 2002-2003

I think this outcome has a fairly high probability in the next Kondratieff cycle. When a government embarks on a policy of currency hyperinflation, such as the Confederate States did in the 1860s, Germany did in the early 1920s or France did after World War II, the monetary path is utterly different... - Page 134
Appears in 2 books from 2002

Near the end of a major expansion, few creditors expect default, which is why they lend freely to weak borrowers. Few borrowers expect their fortunes to change, which is why they borrow freely. - Page 90
Appears in 2 books from 2002-2005

[Allie Fowler · Rating 3 out of 5]

The first 25%-30% is slow and weird. It has troublesome stats that aren't adjusted for inflation - the biggest no-no in economics.

Towards the middle and end, it's a quite good review of what happens in a crash, large or small, and the recommended steps to maneuver near tops and bottoms.

[Sangam Agarwal · Rating 3 out of 5]

if you think Elliott wave is all about technical analysis than you should read this book. How to use this theory with fundamental analysis. This book will teach you how to predict black swan event using Elliott wave

[Jon · Rating 4 out of 5]

Two books in one. The first part explains the Elliot Wave where we are in perhaps a Grand Supercycle that began in 1700's and will end now. The second part of the book explains what happens during the deflationary depression that will come and what to do before and after it happens. You can read this post from my blog that gives an extensive review.

One note that I don't include in the review is that the author suggests that if you own a small business, sell it, and buy it back for 10 cents on the dollar when we are at the bottom of the cycle. Same suggestion for almost all assets.

[C.J. · Rating 4 out of 5]

If you're looking for a book that contradicts the "inflationary bubble" that most are predicting, this book is excellent in giving insight into why the opposite might occur instead. The main reason, the banking system. Now, I do wish that Mr. Prechter would have discussed the M3 (or its extrapolated equivalent) more in the book, as I think it is of vital importance; however, that being said, he gives a very compelling argument for deflation, so much so, in fact, that I found this 400+ page book to be a page turner. I highly recommend that every American read this book.

[John · Rating 3 out of 5]

I've read a couple inflationists, and here, Prechter gives the deflationary perspective. The argument is a compelling one. The Fed can only pump in so much liquidity while deflation destroys our credit based monetary system.

But the big problem I see is that Prechter has been completely wrong about the gold price, which just today reached an all time high. Hmm...

A good read, and the Elliot Wave analysis was very interesting in the early part of the book.

[عبدالعزيز الراجحي · Rating 5 out of 5]

Predicted the crisis few years ago, the founder of Elliott Wave International, Robert Prechter, describes how the expected crash in markets would happen and to what extent. Besides, he explains how to veer away the mess, and which investments are safer than others. This book is an encyclopedia of historical corrections, crash, and manias for wisdom investors and analysts.

[Edgar · Rating 4 out of 5]

This book had some good ideas on preserving your savings in the case of extreme economic conditions. It also explains various types of recessions and depressions and how people modified their habits during them. It talks about wave theory and peoples attitudes prior to changes in the market.

[Michael · Rating 5 out of 5]

This book is prophetic. Written in 2002, Prechter has predicted the global financial crisis (though his timing is a few years off). About 50% of the things he predicted in 2002 have already happened. That leaves one to wonder when the other 50% will come to fruition.

[Ryan Young · Rating 4 out of 5]

A must read for 2008.

[Mr. V · Rating 3 out of 5]

Its amazing that he wrote this before 2008. How right he was is amazing. Now I do disagree with somethings though. People do matter. The right Leadership can help!