Richard Russell – Fed To Stun The World With QE5
March 18, 2014
With continued chaos and uncertainty in global markets, today KWN is publishing another incredibly important piece that was written by a 60-year market veteran. The Godfather of newsletter writers, Richard Russell, warns that “gold is being outrageously manipulated,” as the Fed prepares to stun the world by opening up “the floodgates of liquidity” for “QE5.” He also discussed Putin, stocks, the Great Recession, and China.
Russell: “Success in investing includes a number of nonspecific items. Patience, avoidance of greed, desire for peace of mind, avoiding huge losses, experience and judgment. From the low of 2009, the major Averages have more than doubled, and have moved into overvalued territory in terms of book value, price to earnings and dividend yield.
My own judgment of the situation is that stocks in January to March have been overpriced, overloved and overbought. Furthermore, from a risk-reward basis, I have felt that if the market moved higher, which it could do, the risk would not be worth the reward, figured after taxes.
So much attention has been given to what the Fed will or won’t do. Two weeks ago, the Transports rose to a record high, unconfirmed by the Dow. This alone was not fatal, but I considered it an act that called for caution. I felt the need for caution increased when both Averages slipped lower the next day.
Since my largest position is in gold, I’ve watched the yellow metal’s action with extreme interest. As I’ve said before, negative action in the economy and the stock market is a plus for gold. My belief all along has been that the recession, which began subtly in 2007, and broke into the open during 2008 and 2009, never really ended. In other words, we are dealing with an extended cycle of deleveraging and deflation, a correction of the great bull market that started in 1980.