Richard Russell has made a name for himself as some kind of psychic for investors planning to stay a step ahead of the stock market. Russell, in his latest Dow Theory Letter prediction Tuesday, projects a catastrophic stock market crash that will render The United States unrecognizable by the end of 2010. Also forecasting a crash are some other pundits who make an effort to divine future events by analyzing and comparing stock market trends.
Article Resource: Richard Russell to investors: get liquid before the crash
Richard Russell's Dow Theory Letters
Richard Russell's Dow Theory Letters have gained a huge following in financial circles for the author's comments, observations and stock market philosophy. Russell covers the U.S. stock market, precious metals, commodities, foreign markets, bonds, politics and economics. As outlined by Business Insider, Russell, in the latest Dow Theory, is instructing investors to escape the stock market altogether, keep away from extra cash, eliminate debt and covert all wealth into liquid assets:
Do your friends a favor. Tell them to "batten down the hatches" because there's a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and do not need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won't recognize the country. They'll retort, "How the dickens does Russell know -- who told him?" Tell them the stock market told him.
Global Macro Investor agrees
Richard Russell has a kindred spirit in Raoul Pal -- although Pal thinks the stock market apocalypse will happen in a matter of days or weeks, instead of months. Pal authors the Global Macro Investor, an independent research publication, and is a former Goldman Sachs executive. According to its claims, Pal has apparently been observing a classic pattern within the stock market that has resulted in historical financial disasters -- a sharp decline followed by an unsuccessful rally followed by a collapse.
A take a look at the Dow Theory forecasts
Given that April, Richard Russell's Dow Theory forecasts call attention to a corrosion within the stock market, regardless of improving business news. Shoring up the Global Macro Investor prediction, Russell presents a narrative that discloses recent April highs within the Dow and S and P Averages, followed by a sharp drop in both Averages to May 7 lows, followed by a short rally. Basing their finds on historic data, the Dow Theory forecasts is that a market collapse is inescapable if the two Averages again turn down to fall below their May 7 lows.
Stock market crash unavoidable?
During the four days that ended May 7, the Dow Jones Industrial Average sunk to the lowest level since Feb 26, 10,380.43, falling 6.9 percent. The San Francisco Chronicle reports that the transportation gauge closed at 4,298.12, down 11 percent in four days. Downgrades of Greece, Portugal and Spain helped set off the fall as the prospect of a sovereign default in Europe undermined investor confidence.
Market listens when Russell speaks
The Dow Theory Letter from Richard Russell is taken quite seriously by investors. Chances are his prediction of a stock market crash will encourage a stock market sell-off and a run on cash and gold. Russell claims to have been the first to recommend gold stocks in 1960. Russell claims to have forecasted it all - the 1949-66 bull market, the foot of the great 1972-74 bear market and also the start of the great bull market that started in December 1974. In 1958, Russell began publishing Dow Theory Letters. Dow Theory Letters in not just the longest-running investor newsletter, but it is also the longest investor newsletter that has been written by a single person in the financial industry.