R. N. Elliott's Masterworks

R.N. Elliott's Masterworks, edited by Robert Prechter, Jr., is a must read for aficionados of the Elliott Wave Principle. The book includes a a biography and a collection of Elliott's written works:

A Biography of Ralph Nelson Elliott
The Wave Principle
The Financial World Articles
Selected Essays
Nature's Secret - The Secret of the Universe

You may buy the book from the Elliott Wave International bookstore.

Review of R.N. Elliott's Masterworks

I read the March 2005 edition of the book just after I read Elliott Wave Principle by A. J. Frost and Robert Prechter, Jr. That sequence worked for me because after reading about Elliott waves I really appreciated learning about Elliott's life and times and how he discovered the Elliott Wave Principle. Overall the book is an enjoyable read even with lots of repetitious Elliott wave information. I particularly liked studying the charts from the 1920s and 1930s because those were such turbulent years for stock investors.

Biography of Ralph Nelson Elliott

Ralph Elliott is a role model for many Americans gearing up to experience several careers. When young, he worked on railroads in Mexico; he was fluent in Spanish. Then he became an accountant and ultimately held executive positions in railroad companies for twenty five years in Mexico, South America and Central America. In his fifties Elliott became a business consultant in New York city to large companies including restaurants, cafeterias and tea rooms, the equivalent of coffee shops today. He join the editorial staff of Tea Room and Gift Shop, a monthly business magazine, where he wrote a monthly column on sound business practices. Later he held positions with the U.S. government and did private consulting work.

In 1932, while recovering from a serious illness, Elliott began his study of the fluctuation of stock prices. His work resulted in The Wave Principle, a monograph published in 1938, which included the tenants of Elliott waves. At age 75 he completed Nature's Law - The Secret of the Universe, his seminal work on the theory of the Wave Principle. He died in 1948.

The Wave Principle

I like the title of "Discoverer" that Elliott gave himself on the title page of his 1938 monograph. After years of thought, research and discussion he did indeed discover the Wave Principle. The following quotation captures the essence of Elliott's thinking: "But the market has its law, just as is true of other things throughout the universe. Were there no law, there could be no center about which prices could revolve and, therefore, no market." He goes on to expand the reach of his theory, " The Wave Principle is a phenomenon that has always functioned in every human activity." I am not so sure about this sweeping assertion but it's basic to his arguments.

His stock market examples are very interesting and informative. He shows the Grand Super Cycle that ran from 1857 to 1928 consisting of five Super Cycle waves. He breaks down the 1896 to 1928 Super Cycle wave to show its five Cycle wave structure. Next he shows the the five Primary waves that compose the fifth Cycle wave. These price charts let you easily see the wave within a wave structure of price fluctuations.

He continues on to present many examples of wave characteristics, applications, and rarities for stocks from 1929 to 1938. These charts are fascinating particularly when you compare them with the charts of the technology bubble in the late 1990s to 2000 and its crash.

The monograph ends with a cursory glance at applying the Wave Principle to other fields including steel output, gasoline consumption, population movement and more.

The Financial World Articles

In 1939 Elliott had his "discovery" published in a series of articles in the Financial World magazine. In announcing the series called Introducing "The Wave Principle", the editors said, "During the last seven or eight years, publishers of financial magazines and organizations have been flooded with 'systems' for which their proponents have claimed great accuracy in forecasting stock market movements." And they conclude, "All have been looked upon by Financial World with great skepticism." Except for Elliott's work, which was published in 12 parts.

Selected Essays 1940 - 1942

The Basis of the Wave Principle, the first of four essays, talks about the rhythm of cycles in nature and "the immutable natural law that governs all things." I accept many the Elliott wave principles regarding stock price patterns, but I have difficulty accepting that Elliott's findings explain the workings of the natural world and human behavior on a grand scale. The analysis of price patterns using the wave principles works without establishing an over arching philosophical basis. You can look at price patterns, and if they show wave formations, that's enough reason to use the Elliott waves. You don't need a broad theory that attempts to explain how the universe operates to use waves as a technical tool.

In Two Cycles of American History Elliott presents a chart showing an upside wave from 1942 to 2012. Readers will find this chart quite intriguing.

Also check out the nifty chart by Robert Prechter, Jr. that shows stocks prices from 1700 to 1994.

Nature's Secret - The Secret of the Universe

Elliott's monograph, published in 1946 and reproduced in its entirety as the last chapter, was the culmination of his work on waves and how they form. This work includes the foundation for all future work with Elliott waves. I did not read it word for word but I did find many valuable charts.

R.N. Elliott's Masterworks is a book that I highly recommend. To purchase it and other Elliott Wave based books please visit the Elliott Wave International bookstore.

Also, be sure to view History's Hidden Engine, a free entertaining and informative video all about the Elliott Wave Principle and much more.

Reviewed by Richard Howard.

Posted December 17, 2006.