An Interview with Elliott Prechter Of Elliott Wave International
I had the pleasure of interviewing Elliott Prechter
Elliott Prechter, head of computer analysis at Elliott Wave International.
Elliott Prechter’s fascination with technology led him to attend MIT in 2002 and ultimately to join Microsoft in 2006. His interest in financial markets intensified during the 2008 crash, and he left Seattle in early 2011 to help start an algorithmic hedge fund in Las Vegas. In late 2012, he joined Elliott Wave International’s EWAVES department, which develops artificial intelligence techniques to automate Elliott wave analysis. The department was recently spun off into a separate company, Qualitative Analytics. The firm’s technology powers Flash, a subscription service that provides real-time buy and sell alerts as opportunities arise in futures and equities markets. Prechter also writes the open-access publication, EWAVES Flash, which discusses trading theory and updates readers on program developments.
Thank you so much for doing this with us! What is your “backstory”?
I grew up in Georgia with a passion for music and technology. As a teenager I built a 3D graphics engine which inadvertently won fifth in the Siemens Competition, helping me get into MIT. From there I worked at Microsoft, helped start a hedge fund in Vegas, and now am at Elliott Wave International.
Can you tell me about the most interesting projects you are working on now?
I’m building an expert system that performs Elliott wave analysis. It’s a new approach to model-building, because it is pattern-based, not quant-based. Slowly but surely, we have been codifying basic as well as nuanced aspects of R. N. Elliott’s model of the price structure of financial markets, and amalgamating it all into a single coherent algorithm. By year-end, we hope to be using it in our analytical services.
What are some things that most excite you about crypto? Why?
- Cryptocurrencies are decentralized, which means users’ money cannot be manipulated by central planners.
- Many cryptocurrencies have supply caps. A stable currency supply allows goods and services to become increasingly affordable, encouraging savings instead of debt. In contrast, the massive currency creation and credit expansion that central banks have historically engaged in leads to the loss of purchasing power and systemic indebtedness.
- Smart-contracts, such as those supported by Ethereum, have the potential to automate many affairs currently under the thumb of the lawyer monopoly. Competition in this area could radically reduce fees.
- Some new cryptocurrencies support anonymous transactions, making them resistant to censorship. This allows citizens even in totalitarian regimes access to a global market.
What are some things that worry you about crypto? Why?
- Blockchains have severe scalability issues due to their monolithic architectures. Transactions are prohibitively expensive and slow. As one blogger put it about crypto’s fundamental utility, “the emperor is wearing no clothes.”
- Investors have been exhibiting mania psychology. In online clubs, “newbie” investors await the “time to lambo,” meaning to hold crypto-coins until their value soars enough to buy a Lamborghini. Some have mortgaged their houses to buy cryptocurrency or quit jobs to trade them full time.
- Many useless altcoins have been bid up, a situation reminiscent of the indiscriminate purchasing during the 1720 South Sea Bubble of shares of suspect enterprises — such as “a company for carrying out an undertaking of great advantage, but nobody to know what it is.”
- I first recommended Bitcoin to Elliott Wave International subscribers in 2010 when it was selling for 6 cents. No one knew about it. Now everyone knows about it. Under the Elliott wave model, Bitcoin completed five waves up from its starting price to its high at $20,000. That means the mania is over. The burgeoning bear market should correct the entire price history of cryptocurrencies since their inception.
What things would you advise to someone who wanted to emulate your career?
The best thing about software is that there are no artificial barriers to entry. It is precisely because of this that it is the most innovative sector in the US.
To participate, the formula is simple: pick a project that intrigues you and go for it! It could be a website, a game, or a tool that helps you with your math homework. You will learn a lot, and this knowledge will become paramount in later professional projects. And as Marc Andreessen said, “software is eating the world.” It’s also allowing programmers to eat. So, expect increasingly more opportunities in this industry.
Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might just see this. with, and why? He or she might just see this.
Seamus Blackley, physics programmer and the first to integrate rigid body mechanics into PC games. He represents that rare combination of both creative and technical genius. He was my hero as a kid and inspired me to become an innovator.
Watch full interview below: