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How to Make Money in a Stocks Bear Market and Protect Your Bank Deposits Video

Stock-Markets / Stocks Bear Market Jul 23, 2008 - 12:58 PM GMT

By: Sarah_Jones


Best Financial Markets Analysis ArticleIn this new 40 minute long special video edition of the Theorist , Bob Prechter answer today's most urgent financial questions:

1) Your bank deposits – can they stay safe?
2) How do you navigate the bear market in stocks?
3) When will the bear market end?
4) And: what do these issues mean for the broader economy?

Despite what the mainstream media might have you believe, you CAN make money in a bear market. In fact, bear markets generate profits twice as fast as bull markets – if you know what you're doing.

But without a big-picture outlook, most investors become lost in the daily, weekly and monthly buy-high-sell-low herd, getting chewed up and spat out every time the market moves down or up.

Our friend Bob Prechter, at Elliott Wave International has just released his long-term outlook in a special video edition of his monthly Elliott Wave Theorist. Bob Prechter has been steadfastly bearish for some time now, so it will come as no surprise to many of you that, well, he's still bearish.

BUT, what we find especially interesting about Prechter's long-term outlook is his analysis for what's happening across the financial sector right now .

This forecast, for example, appeared in his bestselling book Conquer the Crash.

Bank loans to home buyers are bad enough, but government-sponsored mortgage lenders – the Federal National Mortgage Corps. (Fannie Mae), the Federal Home Loan Mortgage Corp. (Freddie Mac) and the Federal Home Loan Bank – have extended $3 trillion worth of mortgage credit. Major financial institutions actually invest in huge packages of these mortgages, an investment that they and their clients (which may include you) will surely regret.

Money magazine reports that the CEO of Fannie Mae “may be the most confident CEO in America.” Certainly his stockholders, clients and mortgage-package investors had better share that feeling, because confidence is the only thing holding up this giant house of cards.

When real estate prices begin to fall in a deflationary crash, lenders will experience a rising number of defaults on the mortgages they hold. My guess is that the Treasury will lose the $7 billion line of credit that it is required by law to extend to these quasi-government companies and even more if it attempts a bailout. In a strong economy, few give this risk any thought. Mangers of these companies are going to be utterly shocked when a depression devastates their portfolios and their earnings. Investors in these companies' stocks and bonds will be just as surprised when the stocks prices and bond ratings collapse. Most rating services will not see it coming.

In Prechter's new video, he talks a little bit about how he developed his outlook and the forecast above, but more importantly, he provides his answers to some of today's most urgent financial questions:

    1. Your bank deposits – can they stay safe?
    2. How do you navigate the bear market in stocks?
    3. When will the bear market end?
    4. And: what do these issues mean for the broader economy?

Whether you agree with Prechter's long-term deflationary outlook or not, we think it's a must to hear all arguments before you can make a truly informed decision.

Bottom Line: Prechter's outlook cannot simply be ignored. The new video is available as part of a subscription to Prechter's Elliott Wave Theorist. And it's also available for purchase as a single-issue for just $29. Learn more here

By Sarah Jones

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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