My father had never heard of R.N. Elliott, nor of Robert Prechter (until I brought him to my father's attention in the mid-1980's). But he was investing exactly as those two gentlemen would have suggested he invest at the time.
This is a chart from Robert Prechter's, Conquer the Crash (extended samples reviewable through Google Books). Look at the years that my father was Mr. Buy & Hold. From about 1940 through his death in 1987, he rode the waves, first a Wave III, then he held through the sideways Wave IV and then through the first half of Wave V.
Here is a another perspective showing how my father was fully margined and invested during major phases of expansion and growth in the U.S. Economy. Note how throughout most this entire time stock prices went up, a little sideways, and then mostly straight up again.
From this perspective, Buying & Holding from the late 1940's on was the only game in town and my father, through insight or just plain dumb luck, rode the waves up like the champion surfer that he was, always in, always fully invested, always on his board waiting for the big one. He didn't have the benefit of these charts, nor was he a proponent of The Wave Principle. He was just at the right place, with the right attitude and at the right time. When it comes to investing, it just doesn't get better then that.
Or does it? Take another look at the last chart above. It it a Grand Supercycle Chart of the entire 300 year bull market, roughly correlating to the rise of America on the global scene. If the Wavesters are correct that this Grand Supercycle Degree Bull Market has ended and that we are in a "Wave 4" correcting the nearly 300 year advance, where is this market going?
A major guidline of Elliott Wave is that, "Wave IV ends when it is within the price range of the previous subwave four of 3" Frost and Prechter, The Elliott Wave Principle, p.87 Now look at where the previous wave IV ends on all of the above charts.......
Yes, that's right, under 1000 on the DJIA.
Whether or not we get that low, if one accepts the basic tenants of Elliott Wave theory, that social mood drives society and that social mood can be measured with uncanny accuracy by stock prices, there's trouble ahead in River City (and all other cities). The perfect investment stance then is the exact opposite of my father's steady Buy & Hold brilliance on the way up. That would be taking a Sell & Hold position for the ride down (or at least that part of the ride down we will experience in our lifetimes).
"Sarah and Alana, if you are reading this after my time is up, remember what your grandfather built for you and your Dad. Now look back on your Dad's trading during the next 25 years and ask yourself, how did it work out? I suspect you will now know what to do with all that I have left you."
As for you, my loyal readers, I recommend you learn this stuff. Just click on any of the Elliott Wave content on the right side of my Blog. Much of it is free. Some of it an incredible bargain ($20/month for Robert Prechter's Elliott Wave Theorist). For those of you who reject it just because of the seemingly outrageous conclusion, do yourself a favor and learn it first. Even if you still reject it, as events unfold in the years ahead, at least you'll know where it was first above written.