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Richard's Wisdom

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Richard’s Thoughts on Human Nature

Richard’s Comments

 

I spent the weekend re-reading my collection of Robert Rhea's Dow Theory writings and also re-reading William Hamilton's great book "The Stock Market Barometer." Hamilton (a Brit) was Dow's understudy and fourth editor of the WSJ. Talking about Dow Theory, Hamilton writes, “But the pragmatic basis for the theory, as working hypothesis if nothing more, lies in human nature itself.”

 

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Richard’s Thoughts on the Most Famous Market Calls in History

Richard’s Comments

 

One of Dow's early Wall Street Journal editors was a brilliant fellow, born in England, named William Hamilton.  Hamilton was Dow's understudy, and he listened carefully to all of Dow's comments.  Hamilton took notes when Dow said anything regarding the market.

 

Hamilton noted that there was more to the market than Dow's comments and emphasis on values.  Hamilton noted that the Industrial Average and the Rail Average tended to move together during healthy or harmonious market movements.

 

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Richard’s Thoughts on Corrections and the VIX

Richard’s Comments

 

What are the two most difficult things to do in this business?  Here they are: (1) Buy early in a primary bull market and then ride the bull market all the way to near its completion.  (2) Sell out on a Dow Theory bear signal, and then stay out of the bear market until it's nearly completed.

 

Why are those two actions so difficult?  They're difficult because a bull market tries in every way to frighten you out of its clutches.  And a bear market tries in every way to draw you back into its grip.  In both situations, both the bull and the bear markets make full use of secondary reactions.

 

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Richard’s Thoughts on the Impossible Happening

Richard’s Comments

 

Many years ago, when I was still living in NYC, I had a subscriber, a Swiss man named Jay Pfister.  Jay owned a chemical company.  During the early 1930s Jay sold his company to American Cyanamid.  That sale made Jay quite wealthy, and he had a home in NYC and one in La Jolla.  

 

It was Jay who first told me about La Jolla.  Jay suggested that I leave Manhattan and enjoy "a better life" in La Jolla.  I thought a lot about Jay's advice.  In 1961 I followed his advice, and it proved to be one of the best pieces of advice I've ever received.

 

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