Author Archive: Robert Prechter

Robert Prechter, Jr. is a stock market analyst, credited with the development of the Elliott Wave Theory and Socionomics.

Prechter was born in 1949, and received a full scholarship to attend Yale University, graduating in 1971 with a B.A. in psychology. Mr. Prechter then began studying technical analysis, and landed a job in Merril Lynch working on the Market Analysis Department.

During his time at Merril Lynch, Mr. Prechter began to develop the the Wave Principle, based on research done by Ralph Nelson Elliot in the 1930's. The Elliot Wave Principle states that financial market cycles move in patterns that can be predicted using investor psychology, social patterns and high and low prices. These patterns occur in a series of waves, and analization of financial markets using the Elliot Wave Principle is used by investors to predict upward or downward movements in the stock markets. Mr. Prechter is credited with expanding Elliot's theory and successfully applying it to modern-day finance.

He left Merril Lynch in 1979 and founded Elliot Wave International. His new company began to publish a newsletter with the title The Elliot Wave Theorist. He became famous as a financial advisor in the following years, by applying the Wave Principle to the gold market. Gold had witnessed a spectacular rise during the crises of the 1970's, and while most remained bullish on gold, Mr. Prechter applied his Wave Principle to gold and predicted a fallback in 1980. This reversal in gold, coupled with his prediction of a retreat in stocks in 1982, propelled him and his wave theories to fame.

Mr. Prechter also coined the term "Socionomics", in which he postulates that social mood defines market and political behavior, and that social action is what defines trends both inside and outside of the financial world.

Another field where Mr. Prechter differs from the mainstream is that of finance. His Socionomic Theory of Finance rests on the assumption that financial investment is entirely different than common economic assumptions. While day-to-day economics seeks price equilibrium through supply and demand, Mr. Prechter theorizes that the same forces at work in economics cannot be applied to finance. His thesis is based on the belief that financial investors act more on impulse than rational thought process, distorting the law of supply and demand to the point that demand regulates prices in the financial world, leaving financial prices vulnerable to herd mentality and, consequently, wild price swings based solely on investors' impulses.

Robert Prechter is the author of books explaining his theories in detail, including Elliot Wave Principle and Conquer the Crash.

Popular Books:
Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression
Elliott Wave Principle: Key To Market Behavior
Socionomics: The Science of History and Social Prediction

Other books include:
-The Wave Principle of Human Social Behavior and the New Science of Socionomics
-At the Crest of the Tidal Wave: A Forecast for the Great Bear Market
-View from the Top of the Grand Supercycle
-Prechter's Perspective: Conversations with Bob Prechter, Legendary Market Theorist
-Beautiful Pictures from the Gallery of Phinance
-The Mania Chronicles : A Real-Time Account of the Great Financial Bubble

Author's Website