The Dow Theory as Interpreted by Richard Russell
Friends of mine know that I am a genuine "fan" and student of the Dow Theory. I have read past writings by Charles H. Dow, William P. Hamilton and Robert Rhea, and I believe today's premier interpreter of the Dow Theory is Richard Russell (see article below).
I believe the primary consideration for the Dow Theory is VALUES. Following the bullish primary trend is all about buying stocks at a great value at the beginning of the bull market (that will be 1982) and holding on until the end of the bull market (early 2000). Everything else is secondary.
According to Richard Russell, the greatest bull market in history ended in September 1999 (he called it back then - not now). He also states that we are nowhere near the end of the current bear market (which I would independently agree with even before reading his commentaries). When this bear market ends, common stocks would be trading at "great values."
So how does one define "great values?" S&P 500 P/E ratio 10? 8? 6? Dividend yields of 5%? 7%? Dow Jones Industrials at 1,500 or 3,000? Dow-to-gold ratio at 1?
To see the entire article, please go to:
http://www.marketthoughts.com/dowtheoryrichardrussell.html About the Author
Henry To, CFA is the managing member of Independence Partners, LP, a SEC registered hedge fund. He is also editor of the investment website, www.marketthoughts.com.