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Richard's Wisdom

September, 2016 Archives

Richard's Wisdom On Psychology of the Crowd

Mary Anne and Pamela Aden's Comments

 

As long-term subscribers know, Richard often quoted the greats in this business. His favorites were William Hamilton, Robert Rhea and E. George Schaefer.

 

Each of these analysts added something to, and developed the Dow Theory. They were Richard's mentors and he followed their work closely. In fact, Richard took over Schaefer's work and built on it, all of which has improved Dow Theory for more than 100 years.

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Richard's Thoughts on Optimism

Richard’s Comments

 

HOPE:  It's human nature to be optimistic. It's human nature to hope. Furthermore, hope is a component of a healthy state of mind.

 

Hope is the opposite of negativity. Negativity in life can lead to anger, disappointment and depression. After all, if the world is a negative place, what's the point of living in it? To be negative is to be anti-life.

 

Ironically, it doesn't work that way in the stock market.

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Richard's Thoughts on the Investment Line

Richard's Comments

 

The great Dow Theorist, George Schaefer, wrote his Dow Theory Reports during the period of 1948-1974. Nobody influenced me more in my studies of the stock market and Dow Theory.

 

Before he died in 1974, George Schaefer asked me to carry on his work with Dow Theory.

 

Schaefer introduced a number of studies, such as short interest, the 50 percent principle and the 200-day moving average in his analysis. But all his efforts were directed at detecting the direction of the primary trend of the market, and keeping investments in harmony with the great primary trend of the market.

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Richard's Thoughts On Dow Theory Confirmations

Richard's Comments

 
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. For a long time the Transportation Average consisted of railroads only.

 

But in January of 1970 Dow Jones & Co. revised the Transportation Average, adding trucks and airlines. The railroads, it was thought, were an outmoded industry and didn't deserve to be the only stocks making up the 20 D-J Transportation Average.

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Richard's Thoughts On the PTI

Many of you have been asking about the PTI. So even though we've discussed it several times in recent weeks, we feel it again warrants attention. So here's the latest, along with a new way of looking at the PTI...

 

Richard's Comments

 

I developed my Primary Trend Index (PTI) in the late 1960's and early '70's for the purpose of aiding me in identifying the major or primary trend of the market.

 

As you know, it's consistently been very reliable and accurate, and it's always best to go with it.

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