With continued wild trading action taking place in major markets around the world, the Godfather of newsletter writers, 90-year old Richard Russell, covers everything from gold to major markets, and also confessed he missed out on being a billionaire.
Russell: "When I was young, around age 21, I decided to plan out my life. I bought a book of compounding tables and sat down to figure out how to be rich and retired at age 65. Unfortunately, nothing I planned worked out the way I thought it would. Bull markets came, only to be followed by bear markets. By age 65 I had still not accumulated the money I needed to retire.
Of course part of the problem was that inflation changed the basis of my computing. Back in the sixties, I bought a few shares of Berkshire Hathaway, mainly because I wanted to read Buffett’s sage annual statements on investing. Had I put all my money into BRK at the time, I would now be a billionaire. Who knew.
Last night I finally saw that outlandish movie, The Wolf of Wall Street. The movie was basically a fantasy. The movie presented Wall Street, and more particularly the bucket shops, as an impossible fraud. Investors were portrayed as morons. In the end, we learned that most crime does not pay.
In real life, matters often do not turn out as predicted. For instance Russia was thought to be a menace a year ago, but the scenario has changed. The ruble has collapsed, and oil has caved in. There is now a surplus of oil being produced in the world. Economists were talking about peak oil — being at a point of maximum possible production which would soon fall — only a few years ago. They are now wondering what the world can do with its massive oversupply of oil.
I’ve been talking about a huge speculative third phase to this bull market. People ask me where the impetus for this third phase will come from. The three basics of life are water, food and energy. And I might add a fourth, which is medicine. The twentieth century gave birth to all manner of inventions and discoveries. My thinking is that that was just a preamble to the inventions and discoveries that lie ahead.
Q: How will gold do in your coming third phase?
A: The third phase will stir up inflation. The public at this point has almost no gold, but as the third phase become wildly speculative, people will sell dollars, and with those dollars they will buy stocks. Thus during the third phase the dollar will tend to decline and gold will have its day.
Fracking has put the US at the forefront of energy production. But fracking requires huge quantities of water. Thus the water industry will mean that science will have to create access to huge additional quantities of water. With the world population expanding, there will be an urgent need for new sources of food. Thus the frontiers of food, water and energy will be fertile grounds for new thinking and new discoveries.
I’m convinced that we are on the cusp of seeing more new ideas, new discoveries and new inventions that will change civilization. I have a daughter who has contracted muscular dystrophy, which up to now has been considered a mystery and an incurable disease. I receive the literature from the MS Society, and I’m convinced that in my lifetime, a cure will be found for MS. MS is not a small problem. It is estimated that 30,000 to 49,000 people in the US have contracted this autoimmune disease. To know the truth about something is to cure it. As Jesus said, "The truth shall make you free."
Turning to the stock market, by midday, the Dow is up 134 and Transports are up 106. Gold, as I write, is selling at 1179.7. And this while the dollar is selling higher.
With the US still in semi-recession, people may wonder why the Dow Averages are continuing to push higher. My answer is that the faithful averages are discounting a new and wondrous world which will be led by geniuses who incorporate fantastic ideas that are now only dreamed of.
Even as I write, we are moving quietly but most definitely into the great third phase of this bull market. My thinking is that the stock and bond markets will produce sights that are now only dreamed of. God does not mean our current difficulties to be the stalemate or the end of the human race. God means only the best for us humans. Man has free will, and what we are seeing is the rise of universal spiritualism.
Lastly, I want to talk a bit about my daughter, Daria Doering. Daria came out of nowhere and took over Dow Theory Letters. Daria is a terrific learner, an excellent writer, and a wise judge of people. At the age of 90, running Dow Theory Letters and writing almost every day is too much for me. Daria stepped in and took over the business from one end to the other. Daria shocked and surprised all of us with her prodigious work ethic and her ability to learn.
Through Daria’s efforts, the business is now expanding and it’s a better business now than it ever was before. So I want to boast about my daughter and tell subscribers that if Daria had not stepped into the breach, I would have closed Dow Theory Letters. For over 60 years, I considered Dow Theory Letters my baby. That’s changed. I now consider Dow Theory Letters Daria’s property. I only work here and Daria is my boss."
King World News note: Nice work Daria! KWN readers may remember that earlier in the year we highlighted Daria's fantastic write-up on the John Mauldin conference. She's on a roll. Thank you Daria for making it possible for the world to continue reading legendary Richard Russell's thoughts on life, the markets, and the unprecedented times we now find ourselves living in. To subscribe to Richard Russell's Dow Theory Letters CLICK HERE.
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