Richard Russell 01 (May 08 - Dec 14)

[winston]

Richard Russell – “After the calm comes the storm” by Prieur du Plessis

I often quote Richard Russell, the 85-year-old writer of the Dow Theory Letters, in my blog posts. Although I may not necessarily always agree with his views, they are always stimulating and important to consider when piecing together the financial puzzle.

Here is the latest from the long-timer:

(1) Goldman Sachs, the “smartest guys on Wall Street,” are under siege. What’s the complaint? These guys sold poisoned pill-products to their customers, and then made billions of dollars selling short the products they sold to their customers. Goldman has to decide whether to plead dumb and innocent or smart and sleazy. Of course, they’ll plead dumb and decent (“they had no idea of what was going on”).

(2) Gold is no longer seen as “just another commodity,” but increasingly it is accepted as the “only safe currency” (this is increasingly the big money view).

(3) The Greek situation is far from being solved. Should Europe and the IMF bail out Greece? Germany is taking a hard stand against a bailout without very harsh new disciplines for Greece. Germany’s lady leader, Ms. Merkel, is proving to be one tough baby, and she’ll do what, in the end, is best for the fatherland. If Greece is bailed, will Portugal and Italy and Ireland be next?

(4) Managers of sovereign funds don’t know where safety is. They know it’s not in euros, and they suspect it’s not in US dollars. What’s left? Could it be gold? China and Russia think it is. And Richard Russell thinks it is.

(5) My suspicion is that the stock market is tracing out a major top is becoming stronger. The stock market is loaded with amateurs who have been hoping to recoup their losses. If the stock market is actually topping out here, the public is going to turn black bearish.

In the past month or two, many Americans have returned to the stock market, and others have bought foreclosed property under the belief that real estate has hit bottom and finally turned up. The Russell opinion – if the stock market is topping here, I believe that the real estate market will sink to new lows (and this time we’ll see the commercial real estate market collapse along with the housing market). If you’re thinking of buying a real estate bargain, wait a while.

(6) Since March 2009, the stock market has staged a dramatic recovery. Thinking that a new bull market has started, many Americans have leveraged up again, while others have loaded up with stocks for the first time. A major stock market decline now would play havoc with the still shaky US economy.

(7) If the stock market turns down here, unemployment will rise again. This will drive the Obama administration up the wall and scare hell out of every Democrat. The odds of cutting the national deficit will then be zero.

(8) The action of gold during this period is superb. I’ve asked my subscribers to be in gold and cash, and to await developments. That’s still my preferred position – cash and gold.

(9) The reason I’m so focused on the stock market now is that if the market is topping, it’s doing so in the face of rosy news in every area (except for employment). There’s nothing more ominous than a stock market turning down in the face of a “bright” economy. At such times, nobody is ready or positioned for a sudden reversal (I hope this is NOT the case with my subscribers).

(10) Gold is rising in the face of weakening oil. It would be dramatic and bullish if gold detached itself from oil and all other commodities.

(11) I also note the high number of “distribution days” – available in Investor’s Business Daily every day. Latest on distribution days. 6 for the NYSE. 5 for S&P Composite, 4 for the Dow and 2 for the Nasdaq. That’s too many for comfort.

(12) I’ve been saying, “After the calm comes the storm.” We’ve had the calm with VIX sinking into the 15 area. But very recently, the VIX has risen to the 21 area, and this may be the early start of a coming storm.

Final message – gold and cash, cash and gold. This is not the time to be “cute”.

Sourcw: Investmentpostcards.com

[kennynah]

This is not the time to be “cute”.

i like this phrase best

[winston]

Richard Russell: The super-wealthy are terrified of a currency collapse
By Richard Russell in Dow Theory Letters:

By the way, a 1935 Picasso just sold for an all-time record of $106 million. The opening bid price was a mere $56 million, and at that price bids came in from all over the world.

Big money is gobbling up jewelry and works of art as fast as it can. Why? They want intrinsic wealth instead of fiat junk money. And remember, these cats didn't get rich by being stupid.

How does a "poor man" like you and me protect ourselves from the ultimate collapse of fiat junk money? Gold, baby, gold. Coin by coin -- coin by coin.

[winston]

Richard Russell: Get out of stocks now
From Richard Russell in Dow Theory Letters:

Just as for years I asked, cajoled, insisted, threatened, demanded, that my subscribers buy gold, I am now insisting, demanding, begging my subscribers to get OUT of stocks (... not including golds) and get into cash or gold (bullion if possible). If the [Dow Jones Industrials and Transports] violate their May 7 lows, I see a major crash as the outcome...

... Do your friends a favor. Tell them to "batten down the hatches" because there's a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don't need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won't recognize the country. They'll retort, "How the dickens does Russell know -- who told him?" Tell them the stock market told him.

[winston]

Richard Russell: Don't be fooled by bear market rallies By Richard Russell in Dow Theory Letters:

After a panic comes a bounce, and I believe that's what we're seeing now. As I write Mr. Dow is up 111 points and Trannies are up 95. This makes everyone feel better, makes them believe that the damage done so far was "all a mistake."

Again, I'll bring up my thesis that the bear is playing with our minds. The bear's strategy is to take the greatest number of investors and funds down with him. And how will he do that? He'll do it with a bit of "bear psychology." I call it "the psychology of HOPE." Keep them hoping all the way down, and if they become skeptical give them a bear market rally.

I liken it to someone on an up-escalator having dropped his wallet and hoping that the up-escalator will suddenly halt and for that reason turn down. It's not going to happen.

[kennynah]

i like u W...

人 you are.... 鬼 you also are

have u ever been diagnosed as having a dichotomous personality ? wahahahaha..... joke only lah...

[winston]

Richard Russell: "This market has nowhere to go but down"
From Richard Russell in Dow Theory Letters:

[If] we've seen top and the highs, this market has nowhere to go but down. And down it will go. The only question in my mind is the form or pattern this bear market will take as it makes its way down to its inevitable bottom.

At the bottom, assuming that the US is still in "functioning" condition, we'll see blue-chip stocks selling at incredibly low prices. The problem -- will we have the cash and the guts and the understanding to buy the bargain blue-chips?

Remember, now is your final and best place to raise cash. And if cash (Fed notes) are worthless by the time this bear market reaches its low, then we have gold. You can't devalue gold. You can't eliminate its value.

Since pre-Biblical times, gold has been the one standard of value. "Why is that?" you ask. And the answer is that gold is imbedded in the DNA of man. Nothing else has ever been discovered or developed to take gold's place. Nor has any argument or rationale diminished man's eternal lust and desire for gold.

[kennynah]

gold has been the one standard of value. "Why is that?" you ask. And the answer is that gold is imbedded in the DNA of man.

[winston]

I still dont understand why Obama made a statement about the employment situation last week. Was he trying to score some cheap brownie points ? I thought he was above that. Anyway, he lost a lot of brownie points instead. And The Universe is very fair. When you try to manipulate situations to your benefit, it will blow in your face

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Richard Russell: The terrible costs of Obama's and Bernanke's ignorance
From Richard Russell in Dow Theory Letters:

[Last Friday's] unemployment report is going to inspire the Administration to come up with more stimulus plans and more general spending. The total cost of the Obama-Bernanke plan to halt or reverse this bear market is becoming bizarre or fantastic.

I warned that the primary trend of the stock market cannot be halted. Now we are seeing some of the fearful results of Obama's and Bernanke's ignorance. It shows you what can happen when professors face the real world. Yes, Obama and Bernanke were both professors.

[winston]

RICHARD RUSSELL: WE’RE IN THE “DEAD ZONE” 16 June 2010 by TPC

Richard Russell has been very vocally bearish of late. He’s not the only notable investor who has turned increasingly bearish in recent months. Currently, Russell believes we are in the “dead zone” – a sort of no man’s land for the market where we could potentially meander for a while, attempt to regain our footing and then get knocked flat on our backs:

“We’re in the area that I call the “dead zone.” I’ve been here before, and it’s not easy to write in the dead zone. The dead zone tends to appear after a period of dramatic and clearly-defined action. After such periods the market will often act like an exhausted prize fighter who has been knocked down to the canvas.

He gets to his feet, but he is unsteady on his feet, and he’s playing for time — until his head clears. He’s fending off the other fighter as best he can, and he’s depending on his experience. Will he make it to the end of the round? But what kind of shape is he in for the next round?

To be more specific, the last significant low for the Dow was recorded on June 7 at 9816, Transports 4038. I want to watch these two points for indications of further strength or weakness.

The Lowry’s figures are important at this juncture. Their Selling Pressure Index at 707 is 462 points above their Buying Power Index which stands at 245. Thus Selling Pressure is in the dominant position, which suggests that the market should work sharply lower at the drop of a dime.”

Source: Dow Theory Letters

http://pragcap.com/richard-russell-were ... -dead-zone