Conquer the Crash | Robert R. Prechter Jr.

Summary of: Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression
By: Robert R. Prechter Jr.


Embark on a journey to understand the impending crash and learn how to survive and prosper in the resulting deflationary depression through Robert R. Prechter Jr.’s book ‘Conquer the Crash’. Utilizing Wave Theory, Prechter presents an analysis of predictable patterns in the stock market and foresees a downtrend worse than the Great Depression. This summary will help you comprehend the factors that lead to a deflationary crash, such as the expanding supply of money and credit, while debunking misconceptions surrounding inflation and other economic indicators. Moreover, discover how to prepare and take charge of your personal finances, choosing smart investments and securing a safe financial future, even in times of crisis.

The Coming Stock Market Downturn

The book challenges the notion of a “New Economy” and predicts a stock market crash using Wave Theory, which sees the market as a living system with predictable patterns. The fifth wave of a rising wave cycle peaked in 2000, and the coming downturn will be the worst since the Great Depression of the 1930s. The author urges readers to take charge of their finances.

The Dangers of Ignoring Deflation

Inflation and deflation are not just about rising and falling prices but depend on the volume of money and credit. A deflationary crash can happen when the volume of available credit contracts rapidly, resulting in lenders becoming unwilling to lend to anyone but the most creditworthy borrowers. Recently, the U.S. Federal Reserve Bank has decreased its interest rates to historically low levels to reduce the risk of runaway inflation, but almost no one is taking precautions against deflation. The worldwide supply of credit is top-heavy and ready for collapse. The book warns of the dangers of ignoring deflation and not taking steps to prepare for it.

Investing During a Depression

Investing during a recession can be unpredictable, making it difficult to know what assets to choose. The book advises against conventional wisdom and offers alternative investment options. Bond, real estate, collectibles, stocks, and commodities are high-risk investments during a depression and should be avoided. Instead, invest in cash, precious metals, and safe cash equivalents like short-term U.S. Treasury debt. The book recommends investing in assets that are not only safe but also appreciate in a deflationary crisis.

Investing Safely in Uncertain Times

When it comes to making financial investments, it’s essential to be prudent and diligent about your choices. Experts advise being confident in the professional advice you receive and researching the companies you’re working with to ensure they’ll continue to operate in difficult economic times. Large-name banks and investment firms aren’t necessarily the safest, so it’s crucial to seek out those who keep substantial cash reserves on hand. Big banks in the US and Switzerland and Singapore’s government-backed debt sectors are the safest.
Economists have a poor track record of forecasting economic crises, making it challenging to predict significant downturns and bank runs that can happen if only a few depositors want to withdraw their money. To be prudent, it’s essential to investigate the possibility of cashing out retirement plans and examining insurance policies’ soundness to avoid losses. Most importantly, it’s critical to be cautious and not invest hastily in companies and opportunities that may not perform well in the long run or could lead to significant financial losses.

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