Richard Russell is not only the preeminent expert on Dow Theory, he is one of the most prolific newsletter writers (Dow Theory Letters) and thanks to his epic longevity, will hopefully go one to break records for many years to come. The “Oracle of the Dow” is not omniscient, unfortunately. Otherwise, we mere mortals would simply follow his sage advice to riches.
He was definitely in fine form in the summer of 2000 when he prophesied that “we’re in the first phase of a bear market that could be long, tedious, grinding and very painful. Before it’s over, I believe we’ll see big pools of money moving out of stocks and into cash.”
But since then Russell has had an especially tough time with deciphering the stock market. Especially so these past few years. He was bearish for some time but then in May 2007 Russell switched to the bullish camp and pronounced that “an unprecedented world boom lies ahead.”
It would seem that Russell has basically given up on trying to time the market’s gyrations, writing recently that “the stock market is too unsettled, too questionable, for me or my subscribers to assume an all-out bullish or bearish position.”
But he continues to be an unabashed gold bull. This is the one market he has been pounding the table about for quite a long time and he has been absolutely correct. To my chagrin, it took me far far too long to realize that gold is indeed in a secular gold bull market. And of course, the next thought after that is the dread that it will be soon over.
Russell puts those thoughts to rest writing recently:
“I’m going on the thesis that the highly speculative phase of the gold bull market lies ahead. Now I’m depending on my experience with other bull markets:
- Most great bull markets go higher and further than almost anybody thinks possible.
- Most bull markets progress in three psychological phases.
- I believe the first phase of the gold bull market has passed. It’s over. This is the phase where students of great values take their initial positions.
- I believe we are deep into the second phase of the gold bull market. This is the phase where the institutions and funds join in the bull market show.
- Often, more money is made in the third or speculative phase of a bull market than is made in the first and second phases combined. This can mean that the late-comers to bull markets often make a fortune, more than those who had the courage to buy early in the game, but they have to have fortitude to sit in the highly volatile second/third phases.