Here are some deep thoughts from the great Richard Russell that will give the bears something to chew on for a while:

“I talked with my good friend, Joe Granville, over the weekend, and Joe is as bearish as I’ve ever seen or heard him, based on his OBV volume figures. This checks with my own work and studies.

While fundamentalists scour the news for indications of bullish news, the internals of the stock market continue to deteriorate. Even the action of the stock market is bearish as the market rallies on dull volume but declines on higher volume. Furthermore, rising breadth is narrow on rallies while declining breadth is broad when the market heads down.

I don’t know what more I can do or say to convinced subscribers that we are seeing the resumption of the bear market. This means that we should be OUT of all stocks. As for gold mining stocks, this is a personal choice. In due time, I expect gold to fully express itself with a huge upside blow-off. At that time I expect gold mining stocks to follow, but between now and then gold mining shares will probably be hit like every thing else by the fury of the bear market.

I should add that I am expecting this bear market to be far worse than most people expect or are prepared for. The fact is that I don’t believe that Americans expect any thing more than a temporary spate of difficult times, an annoying patch that should be over in a year or so. This is not what I am expecting or predicting.

Once the Dow breaks under 10,000, I believe that the analysts and the PUBLIC will become frightened and start to cut back on their buying. The newspapers will halt their bullish stance, and a great stillness will envelope that land. That stillness will be the result of shock as it dawns on Americans that they are seeing something far different than what they were expecting.

By the way, the Dow is now trading below its 200-day moving average, which stands at 11,938. The 50-day MA is bearishly below the 200-day MA (50-day is 11,811).

Spiritual — While in rehab and after my hip operation I had a lot of time to think. And I wondered why I was still alive. I had survived combat in World War II. I had survived two heart attacks and a stroke. I had survived a mastoid infection and operation. I had survived 50 years of riding motorcycles with one dangerous crash. I had survived two divorces. I have survived (and believe me it was survival) a severely autistic daughter who almost drove me mad. I have survived the years, since I will be 88 (the Chinese lucky number is 8).

So why, I ask myself, am I still here with my brain still functioning. My conclusion, arrived at after a lot of hard thinking, is that I’m supposed to be the messenger of changing times. I have 8,034 subscribers. What percentage of these ladies and gentlemen take me seriously and follow my advice, and what percentage of this group think I am a self-opinionated loonie I don’t know.

In other words, some body wants me to hang around. I know this based on e-mails and kind letters I have received from many subscribers. My advice over the years on gold and various bull and bear markets has resulted in changing some lives for the better. Which is a source of great satisfaction to me.

So that’s my story. I’m afraid it may sound prideful or mystical, but it is what I think, and when a man is 87 years old, he’s long past the need or the desire to lie.

Messenger of changing times sounds more like the messenger of doom….Let’s hope Richard Russell is wrong.  Unfortunately, it’s hard to ignore a man with more market cycles under his belt than just about anyone around….

Source: Dow Theory Letters


Got a comment or question about this post? Feel free to use the Ask Cullen section, leave a comment in the forum or send me a message on Twitter.

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

More Posts - Website

Follow Me:

  • VII

    My recommendations are free… the SPX at 990 Q1 of 2012.
    Fade the rally around 1220-1250
    Buy it at 850-875 Q1 2013… Go long.
    Bear Markets last awhile . The ultimate bottom is not 2013…but will come some time around 2016-2018. This will get clearer as we get. Closer.

    Joe Paterno had a long career. Im sure he thought their was a reason to continue to coach. Sometimes god has plans that arnt what we thought. I wonder what advice he would have for you Mr. Russell.


    Even Russell will be surprised at the magnetude of the bomb that will hit the global economy

  • BHB

    Can’t we all just evaluate equities by putting historical P/E and book value multiples on them? Seems the world has reverted to these measures once again

  • http://. Octavio Richetta

    I like the Spiritual stuff best. He is most definitely more than just a survivor. Could someone please post something on his track record? I am not a big believer of technical analysis. But agree with him in this case since there is a lot more to the a argument than just TA.

  • http://. Octavio Richetta

    His market forecasting does not get him very high marks

    Apparently, he did better during the great bull market. If you run the same analysis on Shilling he will also do poorly, but there is. BIG difference. Shillings forecasts mainly the economy, I take his market forecasts with a grain of salt. On the other hand, Russell makes a living out of forecasting exclusively the stock market which is nearly impossible to predict with a high degree of certainty.

    Notice, however, that not being ale to predict the market with certainty does not mean that one cannot evaluate longer term odds of where the market may be headed. Like for example, the odds of the sp500 going significantly under 1200 given significant deterioration in fundamentas we have had since last Xmas when the index was more or less where it is now….

  • Alberto

    I do always try to not be caught in the confirmation bias trap but when everything is against a strong market well it’s better not playing that game. I don’t know how long the uber bear market lasts but for sure 2012 will not be a good year. The only one useful definition of risk is “risk = permanent loss of capital” so I will try my best to finish 2012 with my capital intact.

  • Jack

    With this, hasn’t Russell just anointed himself as the divine messenger of capital markets? So now we know God subscribes to the technical school….wow.

  • http://. Octavio Richetta

    I am taking it a day at the time, yesterday, I bought SPX Jan 21 2012 puts at 32 when the market was still positive with the idea of holdin for some time but market started gong own so I sold at 32. I am now 9.03% YTD and I not want o mess that up. Let’s see how strong the day turns out to be. Bias is to stay out/buy puts again but will buy if today’s bullish sentiment carries on until Santa’s day.

  • http://. Octavio Richetta

    Ups! Should have written sold at 35.

  • Midwest FA

    I think we can safely all agree the bear market is not over. Markets are below their 200 day MA’s and those MA’s are rolling over to down. Not good. Nothing in this market feels like it’s done reacting badly to bad news.

    That said, Richard Russell is more or less a perma bear, and it is very telling that his good buddy is THE perma bear of all time, Joe Granville. Granville got bearish in 1982 and never changed. Talk about being unwilling to admit it when you’re wrong!!

    The question is, how valuable is it to follow the advice of perma bears like these, David Rosenberg, Rubini, et al? They will be right as long as we are in a bear market but they won’t be able to see the change to a bull market until…, well in Granville’s case maybe never.

  • geoff

    Russell has been bullish on gold for at least 10 years–if you were to use gold price as a proxy he probably did well being out of general equities and in gold. To say the least

  • Midwest FA

    PE’s and book value multiples have one very huge problem. Both earnings and book value change. It makes the whole analysis from that perspective very difficult. But the current environment has brought both measures down to levels not seen in a generation, or more. If the time until the next recession extends through most of 2012, it seems likely there will come a moment when greed will swamp this market. If that moment comes, I would expect it to run hard to the upside. It is the fear of missing that which is keeping buyers in the market, so we may have to wait until we wash the over optimistic and too early buyers out of here. One more run down below Dow 10,000, maybe even below 9000 should do it, I think.

    But, BHB, make no mistake, there is a compression of value going on out there that will eventually launch a huge, long, sustaining bull. The problem is, none of us has any idea when this will come.

    My focus has been to try to own companies with no or low debt, strong cash flows, low PE’s, good dividends and dividend growth history, and, ideally at or below book value. It’s still hard to find all those things in one company, but not impossible. It would have been impossible at almost any previous time since 1982. But because there is likely a fair bit of time until that bull, be slow and selective about your choices. Keep lot’s of cash on the side for the occasional fabulous bargain.

    BTW, those fabulous bargains pretty much show up when the occasional panic hits. If you are seeing everyone terrified, and you are too, get out your calculator and start looking.

    Most people know Baron von Rothschild’s advice to buy when the streets of Paris were running with blood. But almost no one knows that when people acted like that was crazy, he said, “Do you think that if the streets of Paris were not running with blood, that you could buy at prices like these?”

    Good luck BHB

  • http://. Octavio Richetta

    The strike price yesterday was 1220. Today bought spx jan puts again. The 1225 at 28.30 and the 1200 at 19.10. iMO, price was cheap. I have 23 trading days to expiration. Invested 3% to get leverage equivalent to about 130% net short since I have a negligible equity position to hedge.

  • David W. Young

    Mr. Russell, on his way to the 90’s, is right as rain. Americans in many matters keep their blinders on until the horse cart has already run off the road. And this cart is firmly within a very deep ditch and the driver and passengers are under the cart, literally. Any human occupied planet cannot have $10’s of Trillions of worthless debt still on the books of its financial system, public ledgers, and central banks and expect to get away from a very severe depression unscathed. We The People need to fire most of the clowns that profess to be running things for us lowly peasants starting with Obama and Bernanke and put in leaders that have actually run a business of some sort during their careers. No lawyers need apply. STAY AWAY FROM STOCKS, AND THAT INCLUDES THE MINING STOCKS. Sold 95% of my gold and silver mining stocks in March, 2008 when I came to the realization that the stock market was topping AND THE MINING STOCKS HAD ONLY DONE WELL DURING A BULL PHASE IN THE OVERALL MARKET. When the DooDoo hits the fan, before the cherry blossoms adorn the Mall in Washington, the mining stocks will stink up the place along with the rest of the rotting heap. Yes, they are cheap relative to bullion, BUT THEY WILL GET CHEAPER AS THE S&P 500 CRATERS BACK TO 666 AND BELOW. 500 FOR THE 500. Just ask Will Rogers about return OF principal versus return ON principal.

  • stilo

    Mr. Russell is very transparent and honest about what he sees. On the spiritual side, I wonder if he’s looked into the bible and its predictions. The four horsemen of the apocalypse, being the first of the seven seals, are world conquest followed by war and famine. “A measure of wheat for a penny!”(a day’s wage: inflation). The rider on the white horse isn’t Christ, but Antichrist. This doesn’t end well, if we are realistic about the insurmountable 100 or so trillion due. It’s complex and all pretty mirky unless the reader is spiritually renewed by new birth. One must recognize that we have messed up royally at the macro level and a personal level and are a sinner in need of a Savior: Yeshua Messiah– just call on the Name. This IS the divine economy we are in.

  • Kevin Mc

    Not to discredit Mr. Russell’s message, but since when does Joe Granville have any credibility, and to lay the madness comment at the feet of your autistic daughter is not appropriate. Very classy to blame one of your children.

  • Ditchdigger

    Perhaps Russell thinks God needs to look back to see where to move the market in the future-

  • SC

    Richards a little older than me ,but I’ve got the years, the coronary crap etc etc,but unlike Richard I know that what I know is shit which is why I would never “recommend” anything nor try to see the future in the way he and indeed so many people do.This Industry is so much like Astrology it’s untrue .That isn’t a compliment because they are both crap and reliant upon a very large audience of people who don’t know how to do one thing and fortunately Ricard should know about this thing…it’s called uncertainty.People hate uncertainty so much they’ll pay people to try and remove it for them at least to some degree.The only recommendation I would ever make is improve your ability to manage living with financial uncertainty and for your own sake don’t think because anyone at all called something right once ,or twice this proves that they can see the future better than you..isn’t so,never will be so.This is why the majority outcome is and always will be an inability to beat the market.Actually a piece of advice,IF you ever get really lucky ‘big’ just once then accept you were lucky,bank it and go away.
    In summary,afer a life time in business I started in retirement from business to reserach fulltime this Industry of ours and my conclusion is I wouldn’t pay fo it in buttons,but I can understand why so many do. However ,the closer you get to the end the more you should understand this is mostly all a mindgame.
    I’m not out to offend anyone,but likewise I don’t really mind if I do.

  • Matt

    Russell is a joke. He’s just a ranting, raving old man. As Kevin Mc notes, anyone who considers Joe Granville worth listening to hasn’t been paying any attention for the past 20 years. Let’s not forget that Russell has predicted the end of civilized life more than once. Have you all so soon forgotten this crap from 18 months ago?

    “Tell them that Richard Russell says that by the end of this year they won’t recognize the country.”

  • billy-bob

    Awesome SC, simply awesome! Thanks so much for your words of wisdom and perspective.

  • Mike Bell

    Fear not…Richard will change his mind if the market rallies over a period of a week or two. He always does.

  • Mike Bell

    You speak the absolute truth. Gee, I thought I was alone. Nice to see. BTW, I’ve been a financial advisor for over 20 years, which gives me an inside view that most retail “investors” (as if) will never have.

    I like this website. I appreciate Cullen’s efforts. But I know that I read all of this stuff not for insight as far as market direction or trading/investing, but truthfully to give me pleasure and fill up some time.

    Every “predictor” is lying. They make money by pretending. And millions upon millions watch, read, and listen. The honest ones don’t predict. Total charade, farce, and scam.

    I do admire the VERY few, like Kyle Bass, who thought they saw something, bet big on it, and nailed it. I am truly envious. But as you said, it is a huge mistake to think that they’ll nail the next one too. Nobody knows.

  • Mogens Tholstrup

    Feature Barrons
    MONDAY, MAY 5, 2008
    A Rally With Serious Muscle

    Technical indicators suggest the great bull market that began in the early 1980s is still intact — and new highs are coming in the months ahead.

    Need I say any more?

  • Will

    I remember Richard Russell from the sixties. Don’t tell him but we used to share in the office a subscription of his letters. I went overseas in 1975 and it’s only in recent years that on the internet I get to see anything from him; but I never forget his letters of the sixties. I tell all the doubters that Russell tought me enough about technical charts that when I pay attention to this it keeps me out of trouble. Have a good year in 2012, Richard. I know you will!

  • ront

    With the FED, BoE, BOJ, ECB, China and soon every other country with their own currency, printing money at will …. I mean look ay this, where is the discipline and respect for money and contracts? The banks have sold and leveraged and resold every asset thet could possibly declare valuable ( even leverging and gambling their own depositers money ) If this is not bad enough it is just the start they, the banks then releveraged the paper that was already leveraged ( i.e. sold the worthless paper again ) and then insured that paper against loss.

  • Raymond

    I wonder why there are still got some people who do not believe the wise one, the experience one? Year 2012 will not be a good year to ALL of us. Hopefully those who do not believe this economic catastrophe will not suffer to themselves. May GOD bless u all.

  • mike

    Amen brother.

  • Pete

    Having been a trader for over 30 years I have found there are two types of prognosticators in the stock market. There are those who don’t know what’s going to happen and those who don’t know they don’t know whats going to happen.

  • james clary

    you go boy, you got it right!!!!!!!!