May 18, 2016
Richard’s Wisdom by the Dow Theory Team – "Richard’s Thoughts on Valuations"
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.
In those early days around the 1900s, Dow used the yield on the Dow as his criteria for when stocks were cheap and when they were expensive. In other words, Dow was interested in the RETURN on the INVESTMENT.