The Godfather of newsletter writers, Richard Russell, had a number of interesting thoughts regarding gold, stocks and growing old. Here is what Russell had to say: “A lot of my subscribers are over 60 years of age, and no doubt many of you are looking forward to your 80s. So I thought the following might be of interest.”
“I'm just getting used to being 88 years old. The first thing I notice is that I get tired easily, and I mean really tired. I talk to my sister, Kate, who lives in Greenwich, Connecticut. Kate is 84. Her favorite expression is, ‘Growing old is not for sissies.’
I ask Kate if she gets tired too. She says, yes, she does get very tired. One thing she's learned is that she can only do one thing a day. In other words, if Kate goes to the market to shop for food supplies, that about does it. She comes home really tired, sits in her easy chair for the afternoon, and watches TV, usually the news.
I've discovered that Kate is right. I tell myself I can do two or three things in the morning, but if I do that, then I'm exhausted for the rest of the day. ‘One errand a day’ is my new motto. Also, one alcoholic beverage a day, and that's it. Two and I'm out of commission.
Late Notes -- I've dealt with a lot of strange and difficult markets over the last half/century, but this one may deserve a prize. Today, instead of rallying above its May 1st peak, the D-J Industrial Average sold off an hour before the close. The sell-off left the Dow around 70 points below its May 1st peak.
I felt that the negative action was almost as if the Dow had already closed above 13,279.32, unconfirmed by the Transports-- and down it went. The Dow was jumping the gun on a fantasy non-confirmation.
My only conclusion is that something evil and bearish is bubbling in the guts of this market -- and it's giving the market a severe case of indigestion. Of course, I could say that with a yield below 3%, the Dow is classically overvalued, and any rally would just render the Dow more overvalued.
I hear neophyte-analysts stating that compared with bonds, ‘good dividend-paying blue chips are a buy,’ but what do these neophytes know? They've never had to learn about Dow's Theory or how to read and understand the actions of the market. And talk is cheap -- and quickly forgotten.
Bill Gross, founder of giant PIMCO, states that ‘the cult of equities’ is over, meaning that stocks are not priced for decent profits over the coming years. Worse, Gross warns that stocks and bonds will not create enough profits to fund the needs of thousands of pension funds over coming years.
There have been many years when the only profits from stocks came from fat dividends. With a dividend yield of 2.57% on the Dow today, the fat-dividend years of the past are now just a memory. (S&P div. yield is 2.28%)
I was thinking, the market has been dull and listless and hardly moving. Maybe the market is telling us that nothing of importance is going to occur. There are countless terrible events that could occur at any time. Israel could bomb Iran. The US could go over the fiscal cliff. Unemployment could suddenly become worse. The market could crash.
Maybe the motionless stock market is telling us that none of these horrendous events is fated to occur. Maybe we face an eventless number of months.”
Russell also recently made this comment regarding gold: “Gold is looking promising. Gold has broken out topside of the triangle and needs to close above 1630 to give it a boost -- possibly to 1700. Gold is now trading above its 50-day moving average. The news that Paulson and Soros have increased their positions in gold is bullish for the yellow metal. At last the gold miners are showing signs of accumulation.”
Well, today Russell and gold got a close over $1,630. This up-move off of the lows in gold is advancing in a very quiet and bullish manner, with virtually everyone looking on in total disbelief. This advance in gold is not how counter-trend bear market rallies take place, but how new bull moves begin.