Robert Prechter is a "Few Years Less Pessimistic" With Asset Prices Below Their 2006-8 Highs (Videos)

Reason TV's Matt Welch interviewed Robert Prechter, founder of Elliott Wave International and director of the Socionomics Institute, at FreedomFest 2012 in July. Prechter explained how waves of social mood affect the stock market and why he's still very bearish on stocks.

I think my Conquer the Cash book was probably about 4 years early because real estate didn't top out until 2006. But we saw the preliminary things. Most people extrapolate linearly, and we extrapolate according to this fractal model.

But I'm a few years less pessimistic because things have gone down. Real estate is down 45%, commodities are down 40%, stocks are down about 20-25%. So we are heading in that direction. And at some point I think we're going to see people hate stocks and say they will never buy a plot of land again for the rest of their lives. And that will be one of the greatest buying opportunities of all time, when everybody else is negative. We hope so.

Robert Prechter thinks this period of deleveraging will fuel deflationary forces so strong that the Fed's printing press won't be able to stop it! Listen to his recent interview with Peter Schiff at That's for another post. Here's a video of Prechter in August 2011 pointing out a right shoulder forming in the Dow Jones Industrial Index (head and shoulders pattern). The Dow rallied to new highs after the Fed moved Treasury yields and mortgage rates lower via open market operations, which boosted housing activity and the economy a bit. If you look at the chart today, it looks even more risky up here.

Updated chart (November 12, 2012)