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Tuesday, May 18, 2010

Richard Russell Sell Signal

Richard Russell, octogenarian editor of the Dow Theory Letters, says "sell everything liquid."
May 18, 2010:  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.
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 (including C and BYD, but not including golds) and get into cash or gold (bullion if possible). If the two Averages violate their May 7 lows, I see a major crash as the outcome. Pul - leeze, get out of stocks now, and I don't give a damn whether you have paper losses or paper profits!
Should we listen?  Here is what he wrote when the market bottomed and the new bull market began:
March 9, 2009: I don't see anything in my work that hints of an important bottom. .... I'm looking at the market now. The Dow is at 6512. At this price, the Dow has lost more than half of all its gains since its lowest point in the Great Depression, which was 41.22 recorded in July 1932.

The stock market doesn't live in a vacuum. This huge decline in less than two years is telling us (me) something. It's a warning. I think it's a warning of very hard times to come, maybe as difficult as those times we saw during the Great Depression.
I believe this bear market will go to the extremes. At the end, the market and the economy will be worse than even the bears envision.
To his credit, he said gold is "promising" a year ago at $933.29 but the market is up more than gold.
click image to see full size

The chart shows gold is up 30% while the DJIA is up 60% since Russell said March 2009.
Charts for

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 159% (a double plus another 59%!!) vs. the S&P500 UP a tiny 8.6% vs. NASDAQ UP a tiny 3.5% (All through 12/31/09
In 2009, "Kirk's Newsletter Explore Portfolio" gained 33.5% vs. the DJIA up 18.8%
As of  now, 5/14/10, the explore portfolio was up 4.5% YTD vs. DJIA up 1.8%
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