Friday, May 15, 2009

A Must Read From Richard Russell

DEEP THOUGHTS FROM RICHARD RUSSELL is and article on Pragmatic Capitalist that contains some recent exerpts form the latest Dow Theory Letters. It begins, "Now, I believe, we are in a primary bear market that will ultimately “clean house.” It will deleverage business, consumers, traders, nations and every other area that has been leveraged. The process will be extremely painful, as all bear markets are, and in the end it will bring stocks, assets, real estate, back to around the basic values that existed prior and just after WW II." I'll bet you click the link to go read the rest. Oh, give me a GOOD check before you go.

UPDATE - I think he's nuts. We'll see lower lows, but the SPX from '39 to '45 had a range of 7.50 to 13.50 and the DOW ranged from 160 to 90. Don't think so. If you chart the history of the DOW and lay a lower trend line on it (which I do not think will be broken), I can see the DOW sub 4,000 possibly stopping at support from '94 - '95 at 3.913.


  1. if you just do simple basic math and divide the growth of dollars into hard assets, gold has a chance to run up to $5000 an ounce sometime by 2015........the trade is set just looking for and waiting for the trigger to enter the trade

  2. Great posts this week, thanks!

  3. Russell should have said "inflation adjusted," which is the trendline.

    Gold is an asset, and will suffer with everthing else. It actually has little commercial value, as it's main application is jewelry. It's questionable to consider it a real safe haven imo, and a crowded trade which is never good.

    The only things that will have value are agricultural land where you can at least grow food which people actually need, and internet porn, also something people actually need. :-)

  4. shanky
    nice work today and past few days. definitely a differentiator blog with bringing insights from nice sources, plus your work on stockcharts and comments on kenny's.

  5. I interpret RR's comments as a return to the social values(not mkt values) that existed at that time,i.e.thrift,hard work,honesty in one's dealings,and concern for other's welfare and not being focused solely on getting money at any price as we seem to do these days.

  6. Thanks for the comments. They are great feedback.

    Anon1 - gold is going up IMO. Not sure how far, but I am waiting for an entry. I bought at 65 and sold at 92 and waiting to get back in.

    Thanks Linus and Brian.

    Anon2 - you may be right. I am going off Prechter's EWT worst case scenario count that has DOW possibly at 400. Thus, these people are nuts, but I can possibly validate slightly under 4k. Thanks.


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