The essence of Dow Theory, and this may shock a lot of amateur so-called Dow Theorists, is VALUES. In his writing, Charles H. Dow stressed values above everything else. William Hamilton and Robert Rhea put a lot of emphasis on the action of the Averages (which Dow did not do), and later during the '70s George Schaefer went back to basics and re-emphasized values.
"To know values," wrote Dow, "is to know the meaning of the market." Dow advocated buying stocks when stocks represented great values, and then selling stocks when they became overvalued. As for value, Dow placed his main emphasis on yields or the return on the investment.