The Last American Pioneer

Richard Russell
Dow Theory Letters
Nov 28, 2011

November 25, 2011

I heard rehab for a broken hip was hard. That's a false statement. It's harder than hard. You have to build the strength in your good leg and both of your arms, to a point beyond your wildest fantasies. In other words, three of your limbs have to make up for the loss in strength in the leg that you can't use.

On another subject, I just had a lengthy conversation with my son Ryan. Ryan is building a self-sustaining farm on 40 acres, two hours north of San Francisco. He and his friends have built a large house, that is comfortable enough to withstand the toughest winters. Ryan has a well that provides his own water, and he also generates his own electricity. I call him the last American pioneer. He is growing a huge crop of vegetables and has planted all sorts of fruit trees. His next step will be chickens and perhaps a few ducks. [Editor's note: and don't forget a cow and a few little pigs.]

I told him he's in the right business for the future, which is a survival business. The stock market is just beginning to hint of the hard times that I see ahead. The almost insane world of debt is rolling close to the cliff and I see increasingly hard times ahead. Crumbling debt will act like a cement roller, crushing everything in its path. The occasional rebound or bounces on the lows will be sudden and short lived. As of now, both the Dow and the S&P are down for the year. I call this Stage One. Stage Two will occur if the Dow sinks into the 10,000 area. Stage Two Point Five will occur if the Dow starts trading below 10,000. I think if the Dow trades under 10,000, consumer sentiment will change from hope to fear and anxiety.

The big smart money is choosing diversity. Their problem, diversify into what? The answer may be to diversify into something that is life sustaining. My son Ryan may be on the right path. Sustaining may be a matter of food, water, and shelter. I know much of the above sounds outrageous, but in 1980 the Dow at 10,000 sounded outrageous. We're moving into a world that today's generations will be dealing with matters that they've never had to deal with before.

Continue to accumulate gold and 10 ounce silver bars. I'm sorry for young people now, their biggest move has been to move back into their parents' homes, back into the nest is the fated move today. As far as the economy is concerned, the phrase is "Don't be a pest, go back into the nest." This is what occurred during the 1930s, and it's in full bloom today. My best advice if your kid moved back in with you, make them pay some rent. They must realize that there is no free lunch, and there are no free living quarters. Next week I will go into detail as to why a giant storm is brewing.

I hope you had a delicious Thanksgiving, and be glad you weren't born a turkey.

Signing off,
Richard Russell

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Richard Russell
website: Dow Theory Letters
email: Dow Theory Letters
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