Home > Richard Russell: Tweleve (12) Important Tips For The New Normal (GLD, SLV, GDX, ZSL, AGQ)
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Richard Russell: Tweleve (12) Important Tips For The New Normal (GLD, SLV, GDX, ZSL, AGQ)

September 14th, 2011

By Cullen Roche:  Few investment legends have weathered more than Richard Russell.  Born in the Great Depression, Russell knows what it’s like to live in hard times.  And in this new normal he has some survival tips.  The following are courtesy of Russell’s Dow Theory Letters:

1 — Be a skinflint. Cut down on your spending. And be very nice to your boss, assuming you still have a job.

2 — Think in terms of NOT losing money. Forget about easy Wall Street profits. There aren’t going to be any easy profits — not without a huge new infusion of borrowed money.

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3 — Be sceptical of everything you read. The media is desperate for circulation, and it will slap on the cover of its magazine or newspaper any damn fool statement that it thinks will sell.

4 — Have faith in your gold. As confidence in the whole monetary system slowly fades, the desire for gold will heighten.

5 — Remember, there’s often a large correction prior to the final speculative gold run.

6 — This time there may not be a “final gold rise,” because large interests may just decide never to sell their gold. They’ll keep their gold as a symbol of “eternal wealth” that can’t be destroyed of go bankrupt.

7– Check out carefully the Permanent Portfolio (PRPFX). So far, it has done well and held up well. It’s actually up so far this year, which is extraordinary. YTD return is 7.33%.

8 — Be very cynical about those “fabulous” money-making ads you hear on TV. Money is hard to make these days and risk in just about everything is high.

9 — Cut out expensive discretionary spending. Instead of eating at your favorite local restaurant, eat home and save many bucks. Supermarkets now stock endless “heat up” frozen dinners. Or better still, starting from scratch make your own dinners. Cooking is coming back.

10 — Take the long view. With stock dividends below 2.5%, the odds are that holding stocks “for the long run” is going to be discouraging or a loser.

11 — Money is made in the BUYING. When you buy anything at the right (low) price, the odds are that you’re going to make money through the passage of time.

12 — Wall Street is suffering. When the Street suffers, its natural tendency is to come up with new “ideas.” The ideas are usually risky (i.e., mortgage-backed packages). Be very sceptical of new Wall Street ideas and products.

Source: Dow Theory Letters

Related Tickers: SPDR Gold Trust (NYSE:GLD), iShares Silver ETF (NYSE:SLV), ProShares UltraShort Silver ETF (NYSE:ZSL), ProShares Ultra Silver (NYSE:AGQ), Market Vectors Gold Miners ETF (NYSE:GDX).

Pragmatic Capitalism was founded by Cullen Roche in the midst of the financial crisis of 2008.  Mr. Roche foresaw many of the events that led up to the crisis and felt that the government was slow to react and when it did finally react, responded with the wrong medicine.  While also providing relevant news and indicators the website remains very much a sounding board in which the various authors (and readers) can voice their opinions on markets, economics and public policy.  In addition to regular commentary by Mr. Roche the website is a collaborative work from many different financial experts.  Mr. Roche is the founder and CEO of an investment partnership.  His primary areas of expertise include global macro portfolio construction, quantitative risk management and behavioral finance. Prior to establishing his own business, Mr. Roche worked at Merrill Lynch Global Wealth Management where he helped oversee $500MM+ in assets under management.  Mr. Roche is a Georgetown University alumnus, growing up in the DC area and now living in Southern California.


NYSE:AGQ, NYSE:GDX, NYSE:GLD, NYSE:SLV, NYSE:ZSL


 

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  1. BursaGambler
    September 14th, 2011 at 15:17 | #1

    The smartest thing I’ve ever heard — but I would add in #4, “Have faith in GOD”, not just gold. It’s time to get back to a simpler life and enjoy it. Use your money more creatively.
    Regarding #12, wall-street is not an exception. That is true to stock-exchanges around the world. I closed-out most of my positions. New money goes to CDs, pension plans, life-insurance, funds, you name it. That’s 90% of my money. The few stocks I hold with the remaining 10% are what I believe to be bargains (I will not name stocks to avoid being taken for a spammer) and will sell them when time is right.
    The crisis has given some opportunities, but when time to sell has come, I will leave the stock-market for good.

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