Once you accept the duality of waves, now you will see the investment not as a straight line but as a wave that must go up and down. This wave will have highs and lows, profits and losses, elation and correction, and crests and valleys. The next exciting adventure of the intelligent investor is to find out when and at what point the wave will correct itself or ascend upwards. In other words, when will it become negative and positive and how long will it stay negative or positive. To achieve that knowledge, one must first understand “Time.” As I have said in previous writings, without TIME there can be no waves. At zero time all waves cease to exist and the energy of that wave is just a dot (a point). From the dot, (or particle) rises the wave according to time.

Figure 4

The key is to find when the correction will come. If a person follows the seasonal changes on Earth they will observe how seasons are wavelike motions of the Earth which causes life to exist in a balanced way. Waves are like the patterns of the weather. First we have spring, then summer, and then autumn. After these 3 mild and enjoyable seasons of weather, then there is the 4th weather pattern called winter when all the trees begin to shed their leaves and the animals hibernate, the land is bare and cold and the plants wait until spring comes again. Like Elliott waves, the first 3 waves are positive and the 4th wave is negative just like the weather patterns.

During winter, we cannot harvest anything except what we stored (profits), what we have kept so that we can survive until spring again. Just before spring, we plant (buy) our seeds and wait for the seeds to take growth in spring. As the summer arrives, we begin to reap some profits and then arrives autumn and sometimes we have good harvest of crops (profits) or lose it because of bad weather, hurricanes or pests etc (losses). So as you can see, just like the universe, the waves of the stock market have their own patterns over time.

Sometimes the winters can be short or the summers can be short, so also the correction can be a long or short time. If the harvest or planting period comes and no action is taken, the fruits of your action will all be lost and you will have to wait for winter to finish before you can start planting again. So the key is that an investor must learn to harvest his investment just like a farmer reaps the profits from his planting. It will be ignorant and stupid for a farmer to grow its crop and not pick the fruits or harvest his grains when the right time arrives. All his efforts will be in vain, he should have never planted any seed.

As you can observe in the pattern of the weather, the waves of Elliott and Fibonacci follow them exactly. There are 3 postive waves and one negative. These not only apply to the stock market, but also to human experiences.

A standard human pattern that maintains the survival of the universe is the process of being born, getting married and having children. Observe that the 1st wave of life is that of youth or singularity, then he or she gets married (duality) and then have children (triplicity). If that’s not an ideal sequence of Fibonacci, I would be surprised. The correction comes after that when now he not only has to feed two mouths but he also has to work harder to feed three mouths, Therefore this requires a correction: he has to build a larger home and so a foundation must be laid before he enters the 5th leg of his life which would be when he would enjoy his children and his larger family and home.

 The 5th wave in his life would be up to him, he can stay with his family and build a larger foundation (i.e. have more children) or find another wife, in which case his correction can be one that will take him upward in life or go back to square one, find a new wife. If he decides to find a new wife the 6th correction will be a drastic fall and all that he has worked for will fall to zero. He will lose everything that he was worked for. However if he is dedicated to his wife and children and enjoys them in the 5th wave, then he will reap the profits of his dedication. Then the 6th wave will achieve a higher status in his life and instead of being negative, it will be positive.

Before we get into the 7th and 8th waves we need to understand from the move how the investor should look at his investment using the Elliott waves and the analogy of human life progress as described above as well as the way the weather patterns work in a similar manner to the first 5 waves of Fibonacci sequences. As Elliott has shown the first 3 waves are upward, we can see that happening in basic human progress and the weather patterns. As an investor, you must understand that in any investment if you have found the starting point of an investment, you must go along with the first 3 waves and take your profits at the end of these 3 movements in price and time (harvest). In the 4th wave you will have to rebuild your foundation (plant) and then take your profits in the 5th wave (enjoyment). The 6th wave will be hard to decide as it depends on your greediness, or your humility in the 5th wave. If you used your profits to help in the progress of the world (the family) then you will see a positive 6th wave in your investment. So we can illustrate the waves as follows….

 Figure 5 – MOVEMENT OF 6 POSITIVE WAVES FOR WISE INVESTORS

Figure 6 – MOVEMENT OF 6 POSITIVE WAVES FOR GREEDY INVESTORS

In the next chapter as we go past the movements of the 7th and 8th waves in human life as well as other aspects of the stock market waves we will cover the 9th wave. Elliott covered his research of 8th waves of Fibonacci but he missed the major questions about Fibonacci sequences which everyone seems to ignore, and that is: Why do the sequences of numbers skip the number 4, 7 and 9? Why did Fibonacci himself not question that and how come R.N Elliott did not notice or explain why the sequences skipped the numbers 4, 7 and 9? In another chapter, we will address these questions and you will be surprised at the answers when you find out. These missing numbers in the sequence are the very keys to life as we know it and to the way the waves in a stock market graph behave. In that chapter, you will also learn that Elliott only had 8 waves in his calculations when there really should have been 9, after all Leonardo Fibonacci brought from India 9 numerals not 8. That is what is missing, the 9th wave. This is why the Elliott waves are still not accurate predictions of the stock market.

The duality of the universe is expressed in the stock market in such a glorious way that it becomes an illusion to a greedy investor who will not be able to recognize it. How can an intelligent man not realize that the universe has an order and that duality is in its nature? That is, there are positive and negative forces constantly at work and without them even the stock market cannot exist. Every wave, every price movement, every correction is a result of the duality of the stock market. The reason why investors lose is because they think in a singular manner not in a dual way of thinking.
The singular thinking investor thinks that the wave of his investment is going to climb higher and higher and higher and never fall. This is the foolish investor who does not remember the old saying, “whatever goes up must come down”. For anything to exist it must have what investors call a “correction.” Just like darkness and light, night and day, hot and cold so also the waves of an investment have their dual life. They cannot go up and up forever; they must come down like everything else in the universe. When he or she plays the market he is not playing a straight line, or else there will be no players. He is playing the market because of its duality and the faster the intelligent investor realizes that, the richer he will be mentally as well as materially. When he realizes that a correction is imminent, he will quickly move to take the profits at the ascending point of the wave. Corrections are brothers of profits; they allow the buyer to get in the game. A down market is a divine invitation, but surely not for the greedy investor.