Richard Russell 01 (May 08 - Dec 14)

[winston]

Many banks refuse to mark their mortgage collections to market, meaning that many banks are still loaded with toxic junk mortgages.

Thus, the banks want to build up reserves rather than lend out money. In the old days, bankers used to lend. Now bankers want to speculate and boost their profits so they can pay out the big bonuses. Of course, when a big bank screws up and loses tens of billions on speculating or trading, the bank is called "too big to fail," where upon the government led by Wall Streeters lends it the money to keep it alive.

Too big to fail? I say if they're too big to fail, they're too big to exist. Or just let the bastards fail, the US has survived big bank failures before.

Source: Richard Russell, Dow Theory Letters

[winston]

Richard Russell: Gold should move higher no matter what happens
By Richard Russell in Dow Theory Letters:

Question -- What would it mean if Industrials and Transports broke out to joint new highs?

Answer -- I think it would mean that the Bernanke Fed was beginning to win the war against deflation, and assets were once more beginning to inflate. In that case, gold should move higher.

Question -- What would it mean if this advance topped out, and the bear market was taking over again?

Answer -- I think it would mean that the Fed had lost its battle against inflation. If that was the case, I believe the Fed would spend even more, there would be even more stimulus programs and interest rates would remain at zero "for the duration." In that case, gold should move higher.

[winston]

Lofty Valuations

“Long-term profits depend largely on your original buy price. Today, as I write, stock valuations are extremely high. For instance, the price-earnings (PE) ratio for the Dow is now 18.02. The dividend yield for the Dow is a thin 2.67%.

For the S&P 500 the PE is 86.20; the dividend yield is a mini 1.96%. In the face of these valuations, the odds of building impressive profits over the next decade are very poor (unless, of course, there’s a crash and a new bull market).

“The great fortunes in stocks are made by buying stocks at true bear market lows. At today’s bloated values, profits in stock over the coming decade will probably not be any better than the percentage increase (if any) in the GDP over the same time period.”

Source: Dow Theory Letters

[winston]

Richard Russell: After the rally could come a vicious collapse
From Richard Russell in Dow Theory Letters:

As subscribers must know by now, I haven't liked the stock market. I can't tell with any certainty at this time, but this bear market rally could be in the process of topping out. If it is, I think we're in for a vicious collapse.

Remember, rallies in a primary bear market are movements against the main force or tide of the market. In other words, during a rally, the bear forces have been held back. When a bear market rally breaks up, the market tends to make up for lost time. That means the declines tend to be rapid, violent and vicious.

As I said, I can't tell with certainty whether the advance from the March low is breathing its last. But if it is -- watch out; it's not going to be pretty.

By the way, IF the advance from the March low is topping out, here are the implications. It would mean that all the Fed's machinations and efforts to halt the deflation have gone to waste.

Furthermore, if the March lows are violated (and nobody believes they will be) we will probably be in the final and most costly and frightening leg of this bear market.

[winston]

Richard Russell: The US has mortgaged the future
By Richard Russell in Dow Theory Letters:

How will America handle its multi-trillions (and counting) of debt? The US will have to renege on part or all of our debt. Or the US will have to try to print us out of our debts (but supposing the dollar loses its reserve status?). Or America will have to raise taxes and hunker down into a massive saving and low-consumption posture.

Any way you look at it, we've spent it. We've spent it in a wild effort to beat the primary bear trend. But have we really beaten the bear? How to pay off the debt or even carry it will be a huge question. But neither Bernanke nor Geithner will have to answer that question or even deal with it.

The problem will fall to future generations -- your kids and mine, or our grandchildren.

Which is why I say the current generation will be the first in US history that will NOT be able to say, "My kids will enjoy a better life than I had."

[winston]

Nothing on gold today ?

=======================================

So why not load up with stocks? I guess the same thing bothers me as bothers the institutional money. It bothers me to put my money in a market that I think is being manipulated with stimulus projects.

And frankly, if I bought stocks here I wouldn't feel like an investor, I'd feel like an in-and-out trader who's trying to scalp the market with the help of what I considered temporary stimulus plans.

Remember, the great profits in the stock market are made in the buying. And by buying I mean; buying when nobody wants stocks, as per the years 1942, 1949, 1974, and 1980. It's been a long time since we've seen a great bear market bottom, actually almost 30 years. I think another great bear market bottom is overdue. I'm not impatient, I'm waiting for that bottom.

– Richard Russell,
Dow Theory Letters

[winston]

Hmmm.... no mentioned of gold nowadays

===================================

The most worrisome development in the stock market right now
From Richard Russell in Dow Theory Letters:

The recent market action has been characterized by many days of divergence when the Industrials rise and the Transports fall or vice-versa. Robert Rhea wrote that two or more successive days of divergence usually suggests distribution. And speaking of distribution, the action of the last 30 days has been characterized by many "distribution days" when the market declined on rising volume (that is rising volume over the volume of the preceding day).

The latest count of distribution days over the past two weeks is ominous and highly unusual. There were 6 distribution days for the Nasdaq and the S&P 500 and the NYSE Composite. There were 5 for the D-J Industrial Average. That's far too many distribution days for a healthy market.

[winston]

Richard Russell: “We’re on the path for fireworks in 2010″ by Prieur du Plessis

Many commentators have over the past few days churned out lists of 2010 predictions. Although never one to produce best and worst lists at the turn of the year, Richard Russell, 85-year-old doyen of newsletter writers and author of the Dow Theory Letters, did express a major concern, as quoted below:

“I’m thinking that we’re on the path for fireworks in 2010. The reason I say that is because the federal deficits are running into the trillions of dollars. The roll-over of debt coming up in the next two years defies comprehension. For instance, in the next two years the US must roll over $2.5 trillion. Worldwide, banks during the coming two years will have to roll over $7 trillion.

On top of that commercial real estate in the US has $750 billion to roll over. Whether all this debt can be successfully rolled over is doubtful, but one thing is clear - interest rates will go up. This will have an immediate impact on housing. Nobody can negotiate a mortgage now - and worse, nobody has the money to buy a house for cash.

“In the face of the deflationary events described above, the Fed will have to create a massive torrent of money. This should be highly inflationary - on top of the forces of deflation and semi-depression. Thus the base will be set for an inflationary depression, during which time the very viability of the dollar will come under suspicion.

“Since the dollar makes up a part of almost every nation’s reserves, the worth of every fiat currency will come into question. There will be a frantic search for a currency that will preserve the purchasing power of one’s wealth and assets. The money that can do that is gold. Consequently we may see a total panic for physical gold. Secondary beneficiaries will be silver and platinum, which may be ‘reclassified’ as monetary metals.”

http://www.investmentpostcards.com/2009 ... ahoo!+Mail

[winston]

If I recalled things, 2000 is when gold were the lowest. Why not use 15 or 20 years for comparison ? Why not compare gold to real estate ? Or gold to Chinese Stocks ?

And when you see a title like "the only thing you need to know", you know there's some BS coming ...

=====================================


Richard Russell: The only thing you need to know about gold and the stock market
By Richard Russell in Dow Theory Letters:

It's easy to be deceived by the near-term picture. By that I mean it's easy to lose perspective when you are struggling with the daily and even the weekly market action.

Over the long-term, the big fundamental picture will often reveal itself. For instance, consider this. In January 2000, the Dow was selling for just over 11000. At the same time gold was selling for about $280 an ounce.

Today the Dow is selling for about 10500, actually below its year 2000 price. Gold is selling for over 1100, four times its year 2000 price. So what does that tell us? Gold has represented the standard for wealth for over 5000 years. Consequently the above tells us that the Dow and the stock market have failed to conserve our wealth.

It tells us something else. Since the year 2000, the Fed, the know-nothings, and many analysts have been bad-mouthing gold, which some still call the "barbaric relic." In the face of all the bad-mouthing, how is it that gold has risen from 280 to 1100? Clearly, some investors have been buying the precious metal, all the while ignoring the nonsense spewed by the anti-gold elements.

[iam802]

Ever since Richard Russell started on talking about GOLD...I have been ignoring his articles.

He is moving away from the 'DOW Theory focus'... which I think will be more interesting.

Maybe there is nothing to write anymore.