Special Bonus Edition

July 28, 2017

Dear Daily Pfennig Readers…

It’s our pleasure to be here, filling in for our dear friend Chuck Butler while he’s on vacation.

To introduce ourselves, we’re Mary Anne and Pamela Aden. We write The Aden Forecast letter, and we’ve been happily doing this for 36 years. We cover the major markets, and we’ll be posting some of our articles here.

We also publish Dow Theory Letters. It was founded by the late great Richard Russell and, along with a team of top notch writers, we’ve carried on with his work. Some of these articles will also be posted during Chuck’s R&R.

And finally, you’ll also be receiving articles from GoldChartsRUs, our weekly trading service. Here our top trader covers what to buy, what to avoid, what to do about it and much more.

We hope you enjoy our articles while Chuck’s away.

Chuck’s transition is complete and we’re proud to have him as part of our Aden Group.

Best regards and here’s to good markets,

Mary Anne & Pamela Aden

Today we’re posting an article from Dow Theory Letters.


Richard’s Comments

In all my years of studying people and how they function, I believe one of the least understood areas is that of thinking vs. action.

Sigmund Freud knew a great deal about this area, and he proved it when he wrote, “Thinking is rehearsing.”

In therapy, as investing, people do a lot of thinking. A man goes to a psychoanalyst three times a week for five years. In those five years he talks and talks and dreams about his problems. At the end of the five years he may be surprised to note that not much has changed.

Why has so little changed? Simple, thinking doesn’t change anything (with the possible exception of the way you think). No, change is brought about not by thinking (rehearsing) but by ACTION.

For instance, I thought about quitting smoking for 18 years. I thought about my being hooked, I thought about how bad it was for me, I thought about getting lung cancer, I thought about burning holes in my shirts. It was unbelievably depressing.

Finally I stopped rehearsing. I threw away my last pack of cigarettes, and I have never had a cigarette in my mouth since. My smoking dependency ceased when I stopped thinking and rehearsing, and when I finally took action.

Let me put it another way. NOTHING CHANGES BY ITSELF; you change your life by acting. But why are people so resistant to acting rather than thinking about acting?

The reason is that the status quo feels SAFE, while acting feels DANGEROUS. Nine out of ten people opt for the status quo in their lives.

People in the slums are afraid to leave the slums, people who are workaholics are afraid to relax, people who over-eat are afraid to diet. A neurotic will give up anything as long as he can hang on to the one thing he treasures most — his neurosis!

But the fact is that the status quo is usually a bore and is often unsafe. Think about it: the classic bore is usually the person who is totally comfortable where he is, and he will not even relate to anything different.

All right, what has all this got to do with investing and the market? The answer is, everything.  How many times have you wished that instead of thinking about buying stock X (or selling it), you had actually acted, bought it or sold it? How many times have you cursed yourself because you saw some opportunity but instead of acting, you gave yourself ten reasons why it was better to sit tight and watch?

Successful people ALL have one thing in common–they are willing to act. Failures all have one thing in common, they think instead of acting.

So if you’ve learned anything from this section, you can start by thinking about it. But if you are to actually benefit from this section, you’ll have to comprehend the vast difference between thinking and rehearsing — and ACTING.

Now, on another subject, here are Richard Russell’s Comments on the News

Maybe it’s mean to say this, but I think it’s rather pathetic the way investment advisors, newspaper reporters, TV commentators and the so-called Wall Street gurus all try to explain away the day to day moves in the market.

Good or bad business news is announced and the market rises, stalls or sells off.

In fact, a common complaint is that “good news is bad news.” Strangely, nobody seems to grasp the concept that stocks do not sell on yesterday’s or today’s news — they sell on expectations for the future.

Based on Dow Theory, Wall Street is in a bull market, so the market’s expectations for the future are positive.

Actually, the current business news is mixed, with some areas doing well while other areas are not. This is characteristic of an economy that is tired.

Going back over past years it is instructive to note just how the market and the economy related, once the major stock averages had topped out. Here’s the record:

  •  The S&P topped in December ’72 and the economy turned down 11 months later.
  •  The S&P topped in November ’76 and the economy turned down 13 months later.
  •  The S&P topped in November ’80 and the economy turned down nine months later.
  •  The S&P topped in August ’87 and the economy turned down 17 months later.
  •  The S&P topped in April 2000 and the economy turned down at about the same time.
  •  The latest peak was in July ’07 and the economy turned down two months later.

The Exchange may institute “circuit breakers,” the President may tell us that everything is hunky dory, the Fed may hold back on raising interest rates, unemployment figures may drop to record lows — but the market couldn’t care less.

The market is looking ahead — six months out and beyond. And one way or another, the market is going to fully express itself, sooner or later.

For more information about Dow Theory Letters, click here.