On Investing

From today's remarks by the estimable Richard Russell, author (only for the last 50 years) of the Dow Theory Letter:

Two of the greatest attributes an investor can possess are --

(1) Phenomenal patience. Most amateurs are impatient and they demand action. The desire for action has probably cost more people more money than anything else I know of...

(2) A knowledge of history, and an appreciation of risk. The great fortunes in the stock market have been made in the BUYING. There is no substitute for buying great values. Great values usually present themselves at true bear market bottoms at a time when nobody will touch them.

Have we seen a bear market bottom in this cycle? Says Russell:

[C]lassic bear market bottoms [are]when sentiment regarding the market is black-bearish and when blue-chip stocks are selling at incredible bargain prices (i.e. dividend yields are above 6% and P/E ratios are below 6. And yes, that does happen). The last time we saw such great values was at the 1974 lows and again during the lows of 1980 and 1982.

What does the 85-year old veteran market watcher think lies ahead?

The difficulty in coming years is going to be in making money; it's going to be even more difficult in coming years to avoid losing money. In other words, the hard part will be to hang on to your money and assets over the next decade. There will be many so-called opportunities to make money, but most of them will prove to be false or very risky.

I have no idea if Russell is right. But if if you believe age and experience trumps youth and skill, you might want to give him his due.