Interview with Robert Prechter

Here's a video from Feb 2008 with legendary investment advisor Robert Prechter, author of Conquer the Crash and founder of Elliot Wave International. His company uses a variety of data, but his training is in psychology, and you see the influence. He looks a great deal at how people feel on an unconscious level; he calls the approach Socionomics.

Barron's has a nice interview with Prechter in which he argues that we're entering a long-term recession with deflationary tendencies. He sees further declines in the stock market, based on the fact that P/E ratios have not fallen enough to mark a bottom. Optimism is also high.

I agree with his analysis in general, though I think the Fed will win the battle against deflation by creating trillions of dollars of new money, as they have been. So far the Fed has avoided all but a slight amount of deflation. Prices over the last year have been flat overall, despite large decreases in the price of housing.