Richard Russell 01 (May 08 - Dec 14)

[winston]

Richard Russell: The major development we need for a real market bottom
By Richard Russell in Dow Theory Letters:

It's clear to me that we are in a rally within a secular bear market (some will call it a cyclical bull market). In other words, it's coming within the confines of a long-term or secular bear market. Old timers saw this same situation during the 1966 to 1974 bear market. At that time we saw a series of cyclical bull markets, all coming within the framework of a long-term or secular bear market.

In the end, that secular bear market ended the way most bear markets end - amid black pessimism and with blue-chip stocks at great values or "below known values."

What was missing at the March 9 lows? Extreme pessimism was absent as were the great values in blue-chip, dividend-paying stocks sporting yields of 6% to 10%.

[winston]

Richard Russell: Rally is well within the confines of a bear market By Richard Russell in Dow Theory Letters:

We tend to forget that every move, large or small, in the stock market is entitled to a correction. I believe that the rise from the March lows is simply a correction of the huge bear market decline which preceded it.

Normally, a secondary correction will recoup one-third to two-thirds of the ground lost during the preceding bear leg. To refresh your memory, the preceding bear leg carried from 14164.58 on October 9, 2007 to 6547.05 on March 9, 2009 -- a total loss of 7617 points. A one-third correction would carry the Dow to 9083. A two-thirds recoup of the bear market losses could take the Dow back to 11619.

Subscribers should know that following the famous 1929 crash which took the Dow from 381 to 198, a correction took the Dow back to 294 in early 1930. That correction turned the entire investment community bullish. The public piled back into the market. However, the correction had nothing to do with an improving economy. In fact, the great 1929-1930 correction was followed by the greatest market wipe-out and economic depression in history.

[winston]

Richard Russell: Gold has officially broken to the upside

From 321 Gold:

The P&F chart of GLD (which is a reasonable proxy for gold) is well worth studying. As I write GLD is trading at 94.68. At 95 on the chart GLD will have broken out on the upside. A breakout from this formation would be very bullish and could take gold toward an attack on the highs.

Flash – as I finished this section GLD hit 95.12. This up-to-date chart shows the breakout. The breakout gives us a P&F “count” to 105. August gold closed up 10.90 to 967.50.

Good action, no dramatic surges, just steady quiet rises.

Hopefully, nobody’s noticing.

http://www.321gold.com/editorials/russe ... 80509.html

[winston]

The greater the world ocean of fiat paper, the higher gold goes. You see, gold is the secret, unstated world standard of money. Gold can't be devalued or multiplied out of thin air. So as the various currencies of the world decline in relation to each other, gold stands alone. It can't be cheapened or devalued or bankrupted.

– Richard Russell

[winston]

Richard Russell (Dow Theory Letters) said: “Some of the smartest and most successful men and women in the world disagree as to whether we are dealing with a correction in an ongoing bear market - or whether we are dealing with a new bull market. Nobody on the planet possesses the final, ultimate answer.

I happen to believe we’re dealing with an upward correction in an ongoing bear market, and that opinion is what keeps me on the edge of my seat. I’m worried about the economy, I’m worried about the future, and I’m worried about the market itself.

“Because this correction, so far, has been impressive, many analysts are calling it a ‘cyclical bull market’ instead of a bear market rally. I don’t care what you call it, if I’m correct, if, indeed, we are in a rally in a bear market, I want to be on my guard. I went through a number of these ‘cyclical bull markets’ during the 1966 to 1980 bear market, and I saw a lot of investors lose their shirts when those various bear market rallies unexpectedly topped out.”

[kennynah]

i think, it is important to manage position and size risks while investing/trading on an opinion....

i will be the first to admit, i put on too much -ve deltas in the last 20+ days and as a consequence of a tireless upswing, i suffered some damages...i had to mitigate my positions over time...

it is all important to be correct in our timing of our trades...something, we cannot know in advance if we were right or wrong, until in hindsight...hence, managing risks (or not over committing risks) is key in ensuring no risk of ruin occurs...

[winston]

Deflation

The battle to save economies goes on. The feared enemy is deflation. How do you conquer deflation?

Deflation, by definition, represents an insufficient amount of money dealing with too great a supply of goods. So the Bernanke solution is tried – create trillions in new money. Urge consumers to buy, buy, buy. And bury deflation in a rising tide of fiat money.

But wait - there's a problem. When you create all this new money you are also creating mountains of debt. How do you pay off this debt? You can renege on it (unthinkable) or you can refinance it (push the pay-off out to as many years into the future as possible) or you can systematically inflate it away. The easiest and time-tested way – inflate it away.

At some point, so much fiat "junk" money is created that people no longer trust it.

– Richard Russell,
Dow Theory Letters

[winston]

By Richard Russell in Dow Theory Letters:

…every year 17,000 people die on the road (cars) from alcohol-related accidents. But nobody bans alcohol, no, there's too much big money involved. Government figures claim that 435,000 people die annually from tobacco-related causes. What, ban tobacco? Forget it, too much money and too much in the way of taxes/collections are involved.

But the stupid "war against drugs goes on." And no politician has the guts to try to halt it. The useless war on drugs causes thousands of deaths every year, costs billions, and fills our prisons with nonviolent offenders who are really medical cases. The war on drugs is a testament to Washington's sheer stupidity and the cowardice of our politicians.

[winston]

Healthcare Plan

I received this in the mail today.

My first reaction was to laugh, but my second reaction was to shake my head and feel sad:

"Let me get this straight – Obama's health care plan will be written by a committee whose head says he doesn't understand it, passed by a Congress that hasn't read it, and whose members are exempts from it, signed by a president who smokes in secret, funded by a treasury chief who did not pay his taxes, overseen by a surgeon general who is obese, and financed by a country that is broke."

What could possibly go wrong?


– Richard Russell,
Dow Theory Letters

[winston]

The absolute best thing you'll read about gold this month
By Richard Russell in Dow Theory Letters:

Somewhere ahead I expect to see a worldwide panic-scramble for gold as it dawns on the world population that they have been hoodwinked by the central banks' creation of so-called paper wealth.

You can't create wealth out of a computer - you create wealth from the sweat, intelligence and risk-taking of men.

Gold comes from a gold mine. A gold mine represents the expenditure of capital, risk-taking, the sweat of hundreds of men - and courage. A gold mine's product, gold, has represented timeless wealth since Biblical times. No central bank has ever produced a single ounce of gold. Nor has any central bank ever produced a single element of true, sustainable wealth.

In their heart of hearts, men know this. Which is why, in experiment after experiment with fiat money, gold has always turned out to be "the last man standing."