One of the leading financial newsletter publishers in the U.S., Mark Hulbert of The Hulbert Financial Digest, is reporting that now may be the time for investors to leverage their portfolios “200 percent” and short the stock market.
Writing in his column for MarketWatch, Hulbert, notes that Robert Prechter, the famous follower of the Elliott Wave theory, is now totally bearish on the U.S. stock market.
“That's because he has been playing the equity market from the short side for quite some time now,” writes Hulbert.
“But what is news is that, earlier this week, he became even more aggressively bearish than usual: He is now recommending that traders allocate 200 percent of their stock trading portfolios to shorting the stock market.”
How much merit should one give to this strategy? Hulbert notes that Prechter's advice over the last few years has been top-notch.
“It's not just that he was bearish during the financial meltdown — he also did a good job of playing the various intermediate-term corrections,” writes Hulbert.
Consider, for a minute, the edition of The Elliott Wave Financial Forecast that was published at the end of August 2008, 15 months ago.
Edited by Prechter colleagues Steven Hochberg and Pete Kendall, this edition of the newsletter appeared weeks before Lehman Brothers went bankrupt.
Hochberg and Kendall wrote at the time: "The stock market is building up the necessary reserves for its next major move, a third wave decline at multiple degrees of trend. This should be the strongest decline of the bear market” to date.
Notes Hulbert, “right on target, as we now know.”
David Dreman says investors should be prepared for high inflation rates — as high as 10 percent — to start within the next three years, and that the Obama administration is powerless to stop it.
Dreman, the well-known contrarian investor and CEO of Dreman Value Management, told Fox Business that the stock market will see a correction, although “it’s anybody’s guess” when that correction will occur.
He said inflation could rise to be as high as 8 percent to 10 percent within the next three years.
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