http://www.time.com/time/magazine/article/0,9171,1940667,00.html
"Prechter, a soft-spoken, thoughtful, engaging 60-year-old, believes that the bull market of the past eight months that pushed the Dow past 10,000 will inevitably give way to a crash that will drag prices well below the level of early March. He believes this because theories of market behavior put to paper by a guy who died in 1948 tell him so. Yet he makes it all sound perfectly plausible."
That guy is "Ralph Nelson Elliott, an accountant who, while bedridden in the 1930s, charted stock-price movements and found intricate patterns based on the Fibonacci number sequence (in which, after 0 and 1, each number is the sum of the previous two: 1, 2, 3, 5, 8, 13, etc.). The Fibonacci series, like pi, appears frequently in nature."
"Prechter republished Elliott's books and in 1979 went into the forecasting business for himself at what he dubbed the Elliott Wave Institute. In 1981 he moved his operation to Gainesville, Ga., an hour north of Atlanta, and he's been there ever since. His accurate forecasts of a stock-market boom in the 1980s and a crash in the autumn of 1987 made him, for a time, one of the most influential Wall Street gurus. After the market started its 1990s bull run, though, Prechter seemed to lose his touch. In 1995 his book At the Crest of the Tidal Wave predicted the onset of a ‘great bear market.’ The bear arrived, but not for five years. In 2002's Conquer the Crash he predicted the onset of a ‘deflationary depression.’ Again, he was years early."
"In other words, he's wrong a lot. But so are conventional economic forecasters, especially at the market turning points that can have the biggest impact on investors' portfolios. This is because, Prechter argues, standard economic models of financial markets depict prices as reflections — imperfect, perhaps, but still reflections — of true value. He believes instead that "waves of social mood are the driving factor" of both market moves and, to a certain extent, economic reality. He calls this approach socionomics, and he's doing what he can — his Georgia operation now includes a socionomics institute — to push it onto academic curriculums."
