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Richard Russell - 60 Years Later And Still Running Strong

With the US dollar struggling, stocks moving higher and gold & silver still consolidating, the Godfather of newsletter writers Richard Russell had this to say in his latest commentary, “I wish I could calm my subscribers' fears with some believable fairy tale that I dreamed up last night. I can't -- but I offer something better and more trustworthy. What I offer is an interpretation of the markets with the help of six decades of experience.”

Russell continues:

“There are times when the market is "saying" something definite and specific. I'd say that occurs maybe 40% of the time. The other 60% of the time the market is in the shadows, where nobody knows exactly what's taking place.

Currently, the Averages had every opportunity to break below their last secondary lows. The Averages refused to break down -- instead both Industrials and Transports rallied above their preceding June highs. I took this action to be bullish, and with a bow to the advertisers of "The dollar crash," (who I discussed above), I can say that a dollar crash is not going to occur any time in the near future. If the crash was near, the D-J Averages, in their uncanny wisdom, would have sensed it and given us the news by breaking below their June lows.

So is it really a bull market? I think it is. Then shouldn't we be up to our necks in stocks? I choose not to be, mainly because I don't like the values. Dividend yields are low in my estimate, and I'm in no hurry to rush into the arms of an anxious and waiting Wall Street.

I know that the potential for great and safe profits in the stock market are created when one buys stocks when they're on the "bargain counter." When the Dow's' dividends are below 3%, then historically the Dow is far away from the bargain counter.

Sure the Dow and stocks can rally from here. But like the batter who is facing a gifted and clever pitcher, I prefer not to swing on this pitch. So be it, I guess I'm just a stubborn old fool who has too much respect for RISK and values.

Today QE2 ends, and supposedly the Fed steps back. The Treasuries are now on their own, and the Fed has stopped buying. The smart boys are sticking to this scenario. With the Fed no longer buying Treasuries, the Treasuries start falling while interest rates rise. This tends to throw the economy into the dumps. The Fed will watch for a while as the edge is taken off inflation. But as the economy worsens, the Fed will be forced to stimulate again. Once stimulation is back, the precious metals will boom. That's the line and scenario that I hear.

The Russell reaction -- It bothers me that it's all so pat and so widely accepted. So far, the Treasuries are acting according to script and so is gold. The stock market is acting as if something better is riding on the winds of the future. Could something be amiss with the accepted scenario? Could Bennie Bernanke have it right? And why is Treasury Secretary Geithner ready to say "bye" to the administration? What can he see ahead that he doesn't like? Geithner's been Obama's leading economic confidant. Certainly, an unusual time to exit.

June went out like a lion and today another powerful 90% up day. As the old song goes, "Who could ask for anything more." Hopefully, today's verdict of the Averages are a forecast of better times ahead. But in this business, it's always wise to stay alert. With the planet staggering under the greatest load of debt ever seen in human history, anything can happen and probably will.

A very smart writer who I follow says two things are inevitable (1) devaluation, and (2) war. Another brilliant writer says he is only sure of one thing -- lowered standards of living in the USA in coming years (at least for a decade).

I read in yesterday's USA Today where "More children now live with grandpa and grandma. The latest census figures show that in 2009 7.8 million children in the US live with at least one grandparent, up from 4.7 million in 1991.

This whole process is now an off-shoot of the new, difficult economy. Everybody is short of money; everybody is in a financial squeeze. And it's going to get worse. Like the Depression days, kids are moving back with their parents out of necessity. But what about parents and their children reuniting with their grandparents? It's happening more frequently now, and I'm all for it, even in my own life. It's a healthy return to the old days of America when families tended to remain together -- not only in the same city but in the same house.”

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Eric King

KingWorldNews.com

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