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how to make money in stocks and how to get rich_42 Navigation: Main page » how to make money in stocks and how to get rich Author: how to make money in stocks and how to get rich The Dow Theory is another method used by some to predict the beginning of a new bull market. I do not recommend its use because it is just The Dow Theory, it must be remembered, was created around the turn of the century when the railroad industry was a booming growth sector of the American economy. The theory simply states that you must always analyze the industrial and railroad averages together. For investors interested in pursuing the matter in more detail, William Peter Hamilton, in 1922, published the classical work entitled The Stock Market Barometer. Robert Rhea, in 1932, wrote an updatedtreatise on the subject, entitled The Dow Theory.General Philosophy and Observations To many people, it seems prudent or fashionable to say or believe they are long-term investors. Their policy is to stay fuly invested through thick and thin. Inded, some institutions folow this philosophy. This inflexible strategy can atimes bring tragic results, particularly for individual investors. Individuals and institutions alike may get away with this nonmovement in several relatively mild bear markets that decline 20% or les. However, many bear markets are not mild, and some down rightdevastating. The problem is always at the beginning when you first start to sense an impending bear market. You canot, in every case, project how bad economiconditions might become or how long they could linger. For example, Vietnam, inflation, and tight money helped turn the 1969—1970 corection into a two-year decline of 36.9%, whereas prior bear markets typically averaged only nine months in duration with a 26% market downturn. |
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