Mathematics Predict U.S. Depression Coming: Elliott Wave Theory & Fibonacci Numbers

Have you guys ever read into this? The Elliott Wave Theory? Or Fibonacci numbers?

Fibonacci Lines/Numbers:

"Leonardo Fibonacci was an Italian mathematician born in the 12th century. He is known to have discovered the "Fibonacci numbers," which are a sequence of numbers where each successive number is the sum of the two previous numbers.

e.g. 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.

These numbers possess a number of interrelationships, such as the fact that any given number is approximately 1.618 times the preceding number."

www.investopedia.com...

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On The Elliott Wave Theory:
"Fractals are mathematical structures, which on an ever-smaller scale infinitely repeat themselves. The patterns that Elliott discovered are built in the same way. An impulsive wave, which goes with the main trend, always shows five waves in its pattern. On a smaller scale, within each of the impulsive waves of the before-mentioned impulse, five waves can again be found. In this smaller pattern, the same pattern repeats itself ad infinitum. These ever-smaller patterns are labeled as different wave degrees in the Elliott Wave Principle. Only much later were fractals recognized by scientists."

"In the 70s, this wave principle gained popularity through the work of Frost and Prechter. They published a legendary book on the Elliott Wave, entitled "The Elliott Wave Principle – The Key to Stock Market Profits". In this book, the authors predicted the bull market of the 1970s, and Robert Prechter called the crash of 1987."

www.investopedia.com...

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Prechter called not only the bull market of the 70s, but then turned around and predicted the crash of 1987. That is unbelievable I think. He then called the crash in the late 90s.

And now he is calling another creash coming soon. But not just any crash, a depression!!!

"Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression" by Robert R. Prechter, November 14, 2003

www.amazon.com...=1130651553/sr=1-1/ref=sr_1_1/002-4526349-4953604?v=glance&s=books

He's saying we'll see a lot of the inflated value taken out of the markets to the same levels of 1929.

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What do you think about all of this? Here you have someone that has proven numerous times that his mathematical methodology works to predict the future and he is now betting on a depression.

What do you think about all of this?

Interesting! I had not heard of this theory. Have you read the books? Are you planning to take action based on this guy's recommendations?

Zip

I definitely plan on reviewing it. I've read about it in the past some but never knew he called bull and bear markets with accuracy using it. I thought it was just some technical analysis tool.

I plan to start with a few of the older books and work my way forwards to the last book. Just so I have a better range of knowledge on the subject before trying to apply any of it.

The interesting thing is he is calling a deflationary depression.

Deflation Defined:
"A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression."

www.investopedia.com...

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Ironically it says it's caused by a decrease in government spending. Which would lead me to assume the depression won't come under Bush. Also perhaps the spending Bush has been doing has been done to try to artificially stimulate the Economy just like all the previous wars in U.S. history seemed to do.

I think an increase in unemployement will lead to a larger military enlistment in the United States. That was something I was thinking about the other day. If the U.S. wants to increase it's dwindling enlistment numbers, it simply has to increase it's unemployment numbers. Historically from what I've seen, people who have difficulty finding good jobs or knowing what they want to do with their lives, will tend to enlist in the military.

This in turn could be why war seems like such a viable option during a depressionary time period.

Either way, I thought it was interesting, and wanted to share it with everyone on here!

[edit on 30-10-2005 by Lord Altmis]

I must say, it is quite unusual to see mathematics as a way of prophecy/prediction, on this site. I know it is used in the outside world, but I didn't know if it ever worked.

Mathematics, particularly sacred geometry seems to be fairly popular. I'm still a bit skeptical, but find it interesting.

If America slips into a depression ya'll might as well call it
a WORLD depression, not an American depression. The
international markets are so interdependent and so sensitive
that if America fell like that ... everyone in the industrial world
would as well. Heck, so would the 2nd world economies that
are beefed up with our aid packages.

If you're capable of delving into this topic without your eyes glazing over until you go face down in a boredom coma, this may be of interest.

Kondratieff Waves, or for short, K-Waves are defined as an approximate 60-year cycle of change in the modern world economy.

The basics-
Spring - Inflation/Reflation - Bonds and interest rate products do poorly, commodities do well
Summer - Hyperinflation/Stagflation - commodities do well, most everything else is horrid
Autumn - Disinflation - bonds and stocks both do extremely well, commodities do poorly
Winter - Deflation -Treasuries and interest rate products do well, most everything else horrid

*Note* these periods denote the timing of the cycle, not actual calendar seasons.

Here's a pretty good interactive visual. Click on "Enter Fullscreen" or "Enter Popup". Navigate away.

Still awake? Here is a current article from the Free-Market News Network dated 10/24/05.

The Fed is not just "fooling around" like some staggering alcoholic - although I'm sure some would violently disagree - the Fed has a strategy in mind, even though that strategy may in fact be long-term detrimental to monetary stability as we currently know it, or it may turn out fine, we don't know at this juncture and neither does the Fed. Equally, nobody ever said the Fed was apolitical, and currently the US is facing longer-term military "endeavours" abroad which must be taken into account with regard to funding while maintaining price stability at home.

...most consumers are now considerably both into debt and have zero savings. This might be a recipe for consumer and national disaster. The ball is now squarely in the Fed's court to do something accordingly. The biggest short term "if" I see is who will now take over the reigns at the Fed upon Mr. Greenspan's departure. This will be a delicate call at a time of great imbalances.

So are we in, or on the cusp of, a Kondratieff Winter? I don't know. The best hedge would probably be gold. Personally, my capital's tied up in mortgage, food, fuel, and health insurance.

[Edit to remove inadvertent smilies. How'd those get in there?]

[edit on 10/31/2005 by yeahright]

Take a look at this review on the Big bubble from 2005-2010:

www.amazon.com...

As I understand it, multiple wave theories predict a period of crippling deflation in the years ahead. After the dot com crash, global excess manufacturing capacity suggested at least the possibility of Japan-style deflation, but the housing and re-fi boom and lowering of interest rates helped to prevent that outcome.

The situation today looks very different though, with rising oil prices making the prospect of hyperinflation seemingly more likely than deflation. Unless there is a precipitous drop in consumer demand or a discovery of vast new oil reserves deflation doesn't look highly probable.

I remember these wave theorists saying the same thing (huge depression, stock market collapse) right before the Internet bubble started.

It's probably all bunk IMHO.

[edit on 11/1/2005 by djohnsto77]

Maybe it's not all bunk.. Many people thought it was and ignore the warning signs in 1987, they again ignored it 2000, and then again they will ignore it in 2005. as they say history always repeat itself, as always there will be the masses who will miss the boat.. when it do come in. The prospect of hyperinfaltion is indeed probable, with inflation at record levels.. Maybe we might see what happen in Germany, at the collapse of the Weinmar republic. don't you think?

Originally posted by crusader
Maybe it's not all bunk.. Many people thought it was and ignore the warning signs in 1987, they again ignored it 2000, and then again they will ignore it in 2005. as they say history always repeat itself, as always there will be the masses who will miss the boat.. when it do come in. The prospect of hyperinfaltion is indeed probable, with inflation at record levels.. Maybe we might see what happen in Germany, at the collapse of the Weinmar republic. don't you think?

Yes, except I think their model predicts not hyperinflation but deflation in the coming years. If peak oil either doesn't happen or the effect is mitigated by new technologies and sources of energy coming online in a timely fashion, and the government/consumer debt bubble plus the fact that generation x is smaller and spends less than the boomers causes consumer spending to drop significantly deflation I think could be a possibility. Right now though inflation looks more likely.

But you know, as well as I know that Peak Oil is a myth, doesn't mean Oil will run out. It just means that the cost of bringing it to the seurface will increase, that is be more costly. Well the Government is increasing the money supply, not allowing the economy and nature to work the normal Bust and boom cycle, so this can't go on forever.

Looking back at when this was posted in 2005, does anyone believe this guy predicted our current economic situation with math? I know we are not in a depression, yet, but at the time what this guy said about the stock market had critics luaghing at him.