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Richard's Wisdom

June, 2016 Archives

Richard's Thoughts on Dow Theory

By Mary Anne and Pamela Aden and the Dow Theory Team

 

Richard's Comments

 

I consider the Dow to be the most important of all U.S. stock averages as far as trend analysis is concerned. The reason I accord such importance to the Dow is because the Dow includes thirty blue chip stocks that are analyzed, followed and bought by the institutions.

 

Ever since I first started writing Dow Theory Letters back in 1958, I've had to defend the validity of the Transports as a valid gauge of transportation.

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Richard's Thoughts on the Dow & Moving Averages

By Mary Anne and Pamela Aden and the Dow Theory Team

 

Richard's Comments

 

Moving averages (MAs) constitute one of the oldest and most useful areas of technical analysis. Every analyst I've ever met seems to have his own favorite brand of moving average.

 

Some use simple moving averages, others use front-weighted moving averages, while still others use exponential mean moving averages. Length of MAs vary with the analysts, some preferring 13-day or 55-day and others preferring monthly or -- well, the variations are endless.

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Richard's Thoughts On Changes

By Mary Anne and Pamela Aden and the Dow Theory Team

 

Richard's Comments

 

I know from my own experience how difficult it is to move, to make fundamental changes where investing is concerned.

 

When people spend most of their lives believing one thing, it's seemingly impossible to get them to see change, to see the other side of the coin.

 

For instance, we have the folk lore about, "America, the invincible, America, number one forever." Well, nothing's forever, and we might as well face it.

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Richard's Thoughts on Keeping an Open Mind & Words From the Greats

By the Dow Theory Team

 

Richard's Comments

 

One of the most difficult things to do in this business is to keep an open mind, which is to say -- to avoid preconceived notions and well-defined scenarios.

 

Some men have been brilliant about looking into the future, but this too has its dangerous side. William Hamilton, the great Dow Theorist of the 1920s wrote, "The graveyards of Wall Street are filled with the bones of men who were right too soon."

 

If you are to survive in the investment business, you have to have humility. This boils down to one procedure -- you must be willing to let the market tell its own story.

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