Revisit of 12,000 Years of Elliott Waves and What This Means for the 21st Century
In the year 1999 Daan Joubert, Marion Butler and Joseph Miller jointly authored an ambitious research work titled 12,000 Years of Elliott Waves and What This Means for the 21st Century ( www.gold-eagle.com/editorials_99/mbutler120299a.html ). Almost two years have elapsed since this work was researched, written and appeared on Gold-Eagle. It is time to revisit the work and see how our conclusions have faired over the interim period.
During the approximately two years since our work was published, we have seen the NASDAQ top out and fall precipitously and we have seen most other world indexes stall and appear to make a multi-year bull market top. All of this action has been the cause for much discussion concerning when or if the bull market will renew its advance or if the bear market will continue and has a long way to run in both time and degree.
At the time our work was published it did not make much of a stir around the marketplace or at Gold-Eagle. There were several reasons for this. First, our work was long and complicated which limited the number of people willing to take the time to read and digest the data. Our work and conclusions were very bearish for the stock market going forward; this was not what most investors wanted to hear in late 1999. At that time we were in the midst of a full-blown stock market mania and our work, if believed, was throwing cold water on the flames fanning that mania. Our work found mostly deaf ears and apathy.
After even so short an interval as two years, considering the scale of our analysis, by mid-Summer 2001 conditions have changed considerably, and now more and more people are starting to consider the fact that we are in a bear market and that it may not end any time soon. There is even the horrible thought that the bear market may get a lot worse before a bottom is seen and a recovery starts. When we look at the economy in the last half of 2001 we see rising layoffs, decreasing profitability, increased consumer debt, rising debt delinquencies and bankruptcies, the increased threat of emerging market debt default and/or currency melt down, possible derivatives problems, Japanese woes, and rising commercial property vacancies, to mention a few of the current concerns.
Our work endeavors to answer the question - just how long and how deep will this negative period be?
Below you will find a summary of our work and conclusions. If you find the summary interesting, you should take the time to read our entire work listed at the address shown above. All of our forecasts and conclusions remain valid and unchanged. One of our speculations about future events and a possible trigger for a serious economic downturn proved to be a non-event. When our work was written and published we had the Computer Date Change (Y2K) ahead of us. It appeared this could be a major problem that would cause an economic downturn. Fortunately, it passed with little or no problem due to work done in 1998-99 to ameliorate the problem. That still leaves a myriad of current problems that can turn out to be the trigger that will begin the severe economic downturn our work forecasts.
Indications suggest there is a very high probability that over the period 1998-2001 we have come to the end of a Grand Super Cycle Elliott Wave, the largest size wave Elliott listed in his wave descriptions. The bull phase of this cycle started about 1776 and has lasted over two hundred years. When the bull phase of any cycle ends, the logical conclusion is that we are going to start the bear (correction) phase associated with this cycle. Each correction phase of any cycle degree is commensurate with the preceding bull phase it is correcting. We are ending at least a Grand Super Cycle Bull Market, so we can expect at the very least a Grand Super Cycle Bear Market Correction (Our work suggests this degree of correction can be very deep and last many decades).
Two of the possible reasons why there could be the long lasting downturn in the economy that is suggested by our analysis were sought in global warming and a potential oil crisis as reserves become depleted.
At the time of writing, less than two years ago, the general opinion among policy makers and even many scientists was that global warming was a myth and if there were some signs of a heating phenomenon it was a perfectly natural development. Now the opinion has shifted substantially to the view that global warming is real and that it does pose a threat to the stability of the world as we have come to know it.
Also, when writing on the depletion of oil reserves the widely held view was that there was enough oil to last for many decades, which implied that there was sufficient time to ensure adequate alternative solutions by the time a crisis could develop. Now it seems much more likely that the peak in global oil production could happen within as little as 10 years into the new millennium.
And with no reliable and practical alternatives to oil approaching the stage where these could be implemented on a large scale, and with the US veering away from measures to reduce the hothouse effect, the economic downturn into an extended bear market that now seems imminent may well be followed by an extended period during which the reduced supply of oil and a rising global temperature combine to make life really quite difficult, if not impossible, for many of us and for our children.
As we enter the 21st Century, we find the world's economies, currencies, debt markets, stock markets, and politics in disarray. Leadership in world affairs is sadly lacking. Both the IMF and the World Bank have fallen on hard times and dropped into disfavor. When we evaluate the United States Stock Market with these facts in the background, it should not come as a surprise to anyone that there is credible evidence of a looming turn downward in stock market direction and psychology.
We in fact tried very diligently to show in our article that there is good evidence to suggest such a market turnaround from bull to bear is currently happening between 1998 and 2001. In addition we have gone to great lengths to demonstrate the bear market we are facing is going to be much more severe than 1987, 1974, or even 1929. We have stated our reasons to suggest the bear market will resemble the bear market period between 1720 and 1776, a period of a generation in length and of great severity in degree of market and business decline. We discussed why this bear market will probably be even worse than just previously described, since we are ending an X-Wave (1,000 years in length and described in our article). These are sobering thoughts to contemplate in our current bullish and positive environment.
These are dire possibilities. This places us at a point where we must ask ourselves this question: How much validity does the Elliott Wave Principle have and how seriously should people take these horrible prospects? Based on the authors' study of the Elliott Principle over several decades, we can say the Principle has great enough validity to convince us to watch its signals carefully and pay attention to them. Each reader will have to decide how much weight to give the Elliott Principle, after examining the evidence presented in this article, as well as other sources.
The last item to cover in this summary is to remind ourselves that in a serious bear market, which can last for many years, a "Buy and Hold" policy is not prudent (contrary to popular belief as fostered by the Wall Street Community). A more prudent approach is to exit most stock market investments and replace them with alternative investments. Each investor must decide for himself or herself the best course of action to take after careful consideration of the facts.
The investment world during the years ahead of us is going to be extremely dangerous to our wealth, as well as our mental and physical health.
If your interest is aroused, go to the address listed in the first paragraph and read the entire original article. While our long term Elliott analysis - over a far longer time span than ever attempted before - and our conclusions, have not yet attracted widespread popular attention, there is evidence that our work is being studied by some people who place a high premium on the validity of the Elliott Wave. Our work is still as valid and even more pertinent to the investment outlook today as the day that it was published. In addition, visit the addresses listed below to learn more about the conditions that may exacerbate the long period of economic decline we anticipate.