Richard Russell – I’m Afraid We Will See Blood In The Streets
July 29, 2014
At 90 years old and still going strong, the Godfather of newsletter writers, Richard Russell, warned that he’s afraid will see blood in the streets of the United States. The 60-year market veteran also discussed black swans, war, global markets, inflation, and included some fascinating charts.
Russell: “This is not the same market that we dealt with a year ago. That was a market that lived on buys and sells of the public. Today’s market is run by the hedge funds. This morning my old broker from E.F. Hutton came over to talk to me. He told me that the quickest way to lose a customer is to keep them out of a rising market. The public will stomach a loss, but will not forgive you if you keep them out of an advancing market.
That applies to today’s action. Hedge funds and money managers must be in this market; they cannot afford to be out. The money managers ignore bad news and above all they remain in the market. As a result, the stock market continues to rise regardless of the Ukraine, Gaza, or any other negative news. The question is, how high will the tree grow? At some point, and nobody knows when, the stock market will become top-heavy, at which point it will fall of its own weight.
From my own standpoint, my position is to focus on preservation of capital rather than the risk of striving for capital appreciation. I have picked silver and gold as my form of capital preservation. Both are trading solidly in fixed ranges, which is fine with me. If the stock market drops 25% and a money manager is down 23%, he considers it a good performance. That’s not the way I see it. If the stock market is down 25%, and gold remains in its trading range, I consider that an excellent outcome.
Any fool can be in this stock market and ride the waves. 60 years of experience tells me that being in this market is not worth the risk.