POITOU, FRANCE – Guess what U.S. stocks did yesterday…
They went up, of course. Just like they always do.
Some people have expressed wonder… and doubt… that the equity value of America’s businesses can increase so much even while national leadership is in so much disarray.
Republicans can’t work with Democrats. Democrats can’t work with the president. And Republicans can’t work with the president, either… or each other.
Together… they can’t work at all.
At the start of the year, analysts explained stock market gains as a “reflation trade.”
The idea was that lower taxes and more infrastructure spending under the new Trump administration would set off an economic boom with higher growth rates, higher sales, higher inflation… and, of course, higher stock prices.
None of those things happened – except the higher stock prices.
We wish our old friend Richard Russell were still alive to help us figure it out.
Richard studied the stock market, day by day, for over half a century in his newsletter, Dow Theory Letters. He started his career in New York and ended it in La Jolla, California, keeping his eye on the stock market all the time.
Until the end of his life, his instincts were sharp.
It was Richard who introduced us to the idea of big, long movements in stock prices – what he called the stock market’s “primary trend.”
Yes, the market goes up and it goes down… apparently at random. But over the long run, it also follows patterns – moves that you can only see from a distance.
The idea is to buy near the bottom and sell near the top. Everything else is detail.
Ringing the Bell
After World War I, gold – real money – flowed into the U.S. France and Britain had…