Knowing Who Not to Listen To
One of the most important lessons you must learn to succeed in investing is who to listen to—and more importantly, who not to listen to. Over a complete business cycle, statistics show that roughly 95% of stock investors lose money.
I learned this lesson early.
When I was thirteen, my father—an active, self-directed investor—took me to a brokerage firm where he had an account. As we left, I asked him a question that stuck with me for life:
“If investing in stocks is such a great way to make money, how come all those brokers aren’t rich?”
He answered without hesitation:
“Son, none of those fellows own stocks. They see how few clients actually make money over time.”
My father never relied on brokers for advice. He did his own research, made his own decisions, and invested successfully well into his eighties.
Learning the Hard Way
I began risking my own money in the early 1980s. I already knew not to listen to brokers, but I assumed that if I followed the best independent minds in the business—and relied on a consensus of expert opinion—I would do well.
So I read. In the late 1970s, I devoured books by the leading market authorities and subscribed to their investment letters. Almost all of them were warning of an imminent depression.
Almost all—except one.
In 1978, Robert Prechter published The Elliott Wave Principle, forecasting not depression, but a major bull market. I bought the book, but after reading the first chapter, I put it down. His forecast ran completely counter to the prevailing consensus—so I dismissed it.
That was a mistake.
Years later, noted market analyst James Cowan would say that Prechter’s 1978 forecast “must go down in history as the most remarkable stock market prediction of all time.”
Going Against the Crowd
My focus shifted away from investing as I concentrated on building my businesses. I continued to follow the markets casually, but it wasn’t until the late 1990s—after selling my businesses—that I returned to investing full time.
It was an era of historic optimism. Stocks were soaring. We were told we had entered a “new era,” and the Dow was headed to 100,000.
The financial industry had exploded—from roughly 2% of GDP to over 15%—bringing with it a flood of new products, new theories, and ever-louder voices. But by then, I had learned the hard way that listening to the crowd is the surest way to fail at major turning points.
So I went back to the one voice that had been right.
I dusted off Prechter’s 1978 book and studied it cover to cover until I truly understood it. I began subscribing to Elliott Wave International (EWI), the firm Prechter founded. Today, EWI is the world’s largest independent market forecasting organization, followed by major global financial institutions and hundreds of thousands of serious investors worldwide.
Prechter is now widely regarded as a legend in the financial industry.
The Failure of Conventional Tools
Ralph Nelson Elliott, who discovered the Wave Principle, forecast in 1942—correctly—the end of the Great Depression. At the same time, he stated there would not be another depression for roughly 70 years. That forecast brought us to about 2012. It has now been more than 80 years.
By contrast, in the late 1990s, the economic and financial establishment was nearly unanimous in declaring a permanently prosperous future. They completely missed the dot-com collapse of 2001 and the financial crisis of 2008.
Why?
Because the tools they rely on do not work at major turning points. They are backward-looking, linear, and blind to shifts in mass psychology—the true driver of markets.
History shows that the financial and economic herd is almost always wrong when it matters most.
Nature’s Law
After more than 35 years of investing, and decades studying history, markets, and human behavior, I am convinced that the Elliott Wave Principle is exactly what its discoverer called it over eighty years ago: Nature’s Law.
The four greatest market forecasts in history were all made by leading Elliott Wave practitioners.
That is not coincidence.
A Warning from Robert Prechter (2019)
In 2019, Prechter wrote:
“Man, oh man, what a change is near. Almost no one has a clue about what’s about to transpire. When the tide turns, the burdens that optimistic, careless people have placed on the economy will finally crush it.”
“The downturn will seem to come out of the blue, but it has been germinating for a very long time.”
He continued:
“The ebullience of 2000 was amazing. The indulgence of 2006–2008 was flabbergasting. But words are insufficient to describe the breadth and depth of the financial insanity that exists today.”
“Stocks are overvalued, yet no one thinks it matters. The economy is weakening, yet economists say it’s fine. Real estate is weighed down by debt, yet institutions are buying tens of thousands of homes to flip.”
“The amount of risky debt is so vast it can never be repaid. Governments, institutions, and individuals are effectively broke—but most don’t yet realize it.”
“The risk in the stock market is epic. Its technical condition has staggering implications.”
“The global monetary system has made preserving wealth nearly impossible. And if, in a future panic, central banks move against cash itself, even cash holders will not be safe.”
Where This Leads
If you want to understand where we are headed—and why Elliott Wave analysis matters—
if you want to understand what life may look like on the other side of the next major turn,
and if you want practical guidance on how to survive and prosper rather than react and panic,
visit: safefuturegroup.org