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Richard's Wisdom

May, 2016 Archives

Richard's Thoughts on Making Money

By the Dow Theory Team

 

Richard's Comments

 

There are thousands of ways to make real money, and I've spent a lifetime studying and analyzing many of them. Making real money entails, (1) intelligence, (2) a strategy, (3) a certain amount of courage, depending on the strategy used, (4) persistence, usually single-mindedness, often to the point of being obsessive, (5) a knowledge of one's own psychological make-up, (6) the ability to sacrifice -- a lot, if need be, for one's ambition, and last but not least, (7) a modicum of luck.

 

Most of the huge fortunes of today have been made utilizing a great deal of chutzpah, a powerful spirit of acquisitiveness (which is not necessarily bad), and an ability to borrow massive amounts of money. With this we better add a portion of luck or at least a streak of fortuitous timing.

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Richard's Thoughts On News, Trends and Phases

By the Dow Theory Team


Richard's Comments

 

Analysts and commentators scrutinize every news-bite, every fuzzy word, every Washington rumor, every squib in the Wall Street Journal -- for hints as to the direction of the stock market. I can tell you, however, that they're wasting their time.

 

Investing in the market on the basis of the President’s latest pronouncement, or the next story out of Congress is the royal road to losses. News events don't make the primary trend, nor do articles from Business Week, nor do tips from your favorite TV announcer. The primary trend is the great tidal force of the market and the economy, and it isn't set by the news of the day or the wishes of any group.

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Richard's Thoughts on Valuations

By the Dow Theory Team

 

Richard's Comments

 

I want to stress one point about Dow Theory, and the original works of Charles Dow. Dow was originally a financial reporter. Later Dow owned a seat on the NYSE.

 

With this unusual background, Charles Dow was well grounded in both corporate fundamentals and market psychology. But most important of all, Dow was a student of values.

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Richard's Thoughts on Investing

By the Dow Theory Team

 

Richard's Comments

 

In the Wall Street Journal, Charles Dow wrote a paragraph which will live in the annals of investment philosophy:

If people with either large or small capital would look upon trading in stocks as an attempt to obtain 12% per annum on their money instead of 50% per week, they would come out a good deal better in the long run.

 

Everybody knows this in its application to his private business, but the man who is prudent and careful in carrying on a store, a factory or a real estate business, seems to think that a totally different method should be employed in dealing with stocks. Nothing is further from the truth.

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