timwest
Short

DOW INDUSTRIALS MONTHLY 100 YEARS CHART TELLS US TO ....

INDEX:INDU   DOW Industrials [Test]
1963 32 25
BUY STOCKS , INDIVIDUAL STOCKS , NOT THE MARKET. But I explain this at the end.

First, thanks to TradingView user russ             .brown.52 for putting up your long term trendlines chart on the DJIA             . I decided to add some internal trendlines (in green) that capture the movement within the extremes of price. You can see that those internal trendlines are just under the current market from 14000-9000, but rising steadily.

I then added some important points about how the FED has acted strongly to avoid the DISASTER that we experienced in the post 1974 environment for the stock market where inflation ripped apart the values of stocks by over 64%. Although most people argue that current inflation rates are much higher than are reported, keeping rates lower than historically normal has kept the system afloat and awash in cash and credit.

I then added the market cycles from 1942-1981 and 1981-present are very similar and fortunately for me I found the pattern in 2001 and have been able to find innumerable comparisons and unreal similarities of those two time frames. Although I missed publishing a book to announce to the world, I did present my findings to hundreds of people through my investment group, presentations direct to hedge funds and many individual investors over the past 13 years. I encourage you to read the books by Harry Dent. His books go a long way towards explaining the population cycles that drove this pattern. In short, we face the headwinds of people leaving the workforce in the next 10 years and the costs of caring for our elderly population. We also face the lack of spending from large family households going forward, which will restrain economic activity for well over a decade.

I hope you can take away from this chart that it is important to understand the long term cycles driving the market. I would add that it is important to begin to hedge any risks associated if the market were to return to its long term trends. The market is poised to drift sideways to up 30% for another 10-20 years and confound a majority of people. This chart shows us that we need to find other ways to grow our retirement portfolios because the average stock is not going to generate a big enough return. We have to find growth stocks that can increase by multiples as opposed to earning 3%-6% at best in the stock market for the next 10-20 years.

So, thank you to the FED for doing everything you could to keep from repeating the pattern of the past. And sorry to the savers and the retirees who have had to suffer because reported inflation is not keeping up with real-world price increases and for not being able to earn a decent return from your savings in the bank.

Thank you to those that fostered and encouraged the growth in the internet and all the technologies that support it. The internet is simply the greatest wealth building "FOUNTAIN OF WEALTH" since the internal combustion engine and electricity.

Tim West
Subscribe to my indicator package KEY HIDDEN LEVELS $20/mo or a discount for a year and join in the trading room KEY HIDDEN LEVELS here at TradingView.com
Futuraman PRO
2 years ago
Thanks Tim. Nice work and I totally agree. For me FOREX and individual stocks are the way to go.
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timwest PRO Futuraman
2 years ago
Yes. Anything but "the market" overall.
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snapshot


Coming up on 4 year anniversary of Flash Crash
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timwest PRO QuantitativeExhaustion
2 years ago
I remember it well. I took a picture of my tradingscreen right at the bottom too. It was a very exciting opportunity indeed. Every 10 years the market gives you a handout but you have to be ready for it. 1987 crash, 1989 crash, 1990 crash, 1991 crash, 1994 tbond crash, 1997 Asian meltdown, 2000 crash, 2001 9/11 and post 9/11 bounce (to sell short)....
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2use
2 years ago
Nice one. Saying thank you is not enough for the detail you provide and time you take to provide the description. If you can, would you please share with us what is your portfolio looking like now (do you invest in separate stocks more, or trade funds, bonds, gold?). Are you an investor (long term) or more of a trader (short term)? If this type of info is provided some where with some biographical information about you i would love to read it :)
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timwest PRO 2use
2 years ago
Thanks for the questions 2use. I'll consider publishing my portfolio as it is constructed now and discuss the why's and how that it will change over time. I believe in a long/short portfolio where half the positions are longs and half are short positions. Longs for me include silver, silver mining companies, drug stocks, consumer staples, banking issues, select technology names, oil stocks. Shorts include banking, Russell 2000, Homebuilding & related companies, airlines, S&P500, Internet bubble stocks. I trade in and out of Bond Funds, up to 10% of the portfolio. My silver and silver related positions are 20% of the account. I trade on all time frames because in order to see what is going on you have to be in the market and watching what is happening to the market and how does it react to news. If the market is moving dramatically, I will trade more often as I can capture more swings and exit stocks that get overbought and replace with oversold ones. I love to look for stocks after a period of bad news because that makes people justify selling their shares at what usually turn out to be low prices. Often times though, this strategy lags when a bull market is in full swing because you don't have stocks that are oversold. There is no one right way to trade - it is only important to know yourself and how you react to losing and winning. We all need to understand ourselves and I think it takes a long time to learn your deeper motivations and what your financial goals are. As for my background, I have watched markets since the 1970's when the price of sugar shot up to the sky and I since I loved sugar, I thought I could have made a fortune had I figured out it was going to go up like that. Also in the 1970's we had the oil crisis and since then I've been interested in economics, which I studied at college. I graduated in 1987 and traded the stock market with some money I had inherited at the time. I wanted to learn more so I went to Wall Street and became an investment advisor. I recommended portfolios of Apple Computer, Microsoft, Abbott Labs, Merck, Lilly and a few other stocks. I felt that those had the best long term growth opportunities. I learned that it wasn't easy dealing with everyone and trying to get people to give me their money to manage when I was just a kid out of college, but I still have a client to this day that held onto that Microsoft and it has compounded their account from $200K to well beyond $3 million since 1988 (11% compounded return, versus 8% for the S&P500 since then). I then wanted to learn the business of trading so I got a job on a tradingdesk on Wall Street. .....(to be continued) I'll make a better bio here at TradingView that will go into my background and how I've come to learn what I know.
Thanks again for asking.
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2use timwest
2 years ago
That would be great, as it does not just give more credibility, it is interesting to know. 2 questions though
1) drug stocks - which ones do you mean? Biotech included or excluded? Marijuana? or large cap pharmacies?
2) 20% in silver - isnt that a huge position? I mean sounds like a lot of eggs in one basket. I assume you firmly believe in an upside (and i assume materials and gold as well?) and you have invested a lot in it?
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timwest PRO 2use
2 years ago
Hello 2use. I have waited to reply to your questions as my personal portfolio. I don't want to give specifics on my personal holdings. I take most of the trades I put in here at TradingView for 10-50% of my portfolio. However, I wasn't sure how I wanted to answer you about the question about too many eggs in one basket. But here is my answer: I like silver. I think 20% is conservative. 25% is a good target and 33% would be a bit too much. The way people measure risk is interesting and non-sensical, but let's go over it. Let's change the usage of the word "risk" a little in a sentence and see what we get. Here's my best definition of risk: "Risk is doing something you don't know". Pure and simple. So, what most people are taught to do is to spread your risk around, assuming you know nothing. How logical is that? Now you are doing more things and having even less knowledge per investment. This makes it so doing more risky things (outside the area of expertise) is taking a chance that each thing will hurt you less. But if you don't know what you are doing, doing more different things is MORE risky. I realize this is a different way of looking at it. But it is far less risky to have and know 4 investments and accept the volatility of those investments, then it is to have 40 investments that you have only a general understanding of. What I am saying is that Volatility is not risk. Volatility is a measure of price change. The most volatile investments in price can have either the greatest downside potential and also the greatest upside potential. Volatility is more dependent on how much knowledge people have when making a decision on the company and how uncertain the company's future is. The more uncertain the business environment is, or how unpredictable sales are for the company, or how unpredictable the earnings are because of huge expenses by the company, well, by the nature of volatility, the higher the volatility of the investment. Low volatility of an investment just means that either everyone is extremely knowledgeable that invests in the investment and/or that the information regarding the investment is very stable and predictable. Now, that may sound like a very low-risk investment, but that doesn't sound like an investment I want to make. Investing low-risk is a sure loser over the long term, like T-Bills or T-Bonds for that matter.
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2use timwest
2 years ago
It will take me more than one read to get this in its entirety. Deep thinking here :)
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timwest PRO 2use
2 years ago
Thanks 2use. Maybe a good title for this is "RISK is a four letter word".
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elcololp timwest
2 years ago
If you look oversold stocks, what do you think about PBR¿?
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broken87
2 years ago
Hey I have to tell your work is FANTASTIC....but I have to ask where do you get these charts from? Their is so much data in that chart stretching back 100 years, my ThinkorSwim only goes back 20 years, any help would be much appreciated . Thank you sir for everything you do
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timwest PRO broken87
2 years ago
TradingView charts. You are on the TradingView website. Charts are free and premium services are available, from live quotes to powerful indicators.
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BuboWaveTrader
2 years ago
https://www.youtube.com/watch?v=8AGnceEERNk&list=TLZGkL5rPIULgd5Mm2LjE5wUHstQgJKRTC
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timwest PRO BuboWaveTrader
2 years ago
Before I click on your link - can you let us know what this is first?
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timwest PRO BuboWaveTrader
2 years ago
I went ahead and looked at it. You say in "2020, there will likely be another bull market".... Well, that is 6 years off. I would like to post some videos like you have made to discuss charts and describe how to interpret them. Thanks for posting, but feel free to type out comments so we can see what you are thinking and not have to listen to 3 minutes of video to get 5 seconds of information.
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2use timwest
2 years ago
I approve that. And, it would be quite awesome if you posted videos. Im sure you have an audience that will grow
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timwest PRO
2 years ago
Is anyone appreciating how volatile the end of the 1970's was? We need to look at "inflation-adjusted charts" to really see what was going on. These NOMINAL charts hide the devastating bear market that was going on under the surface.
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broken87 timwest
2 years ago
No Tim I am not appreciating the volatility on a percentage basis, because I had no idea until you just mentioned it. Is their anyway to change the chart from a NOMINAL to a "inflation-adjusted" in TradingView?
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timwest PRO broken87
2 years ago
I think so. Find a series in the INDEX section and take the instrument and divide it by that. I'll look. The only problem is that we have systematically taken inflation out of the equation with the adjustments we have made to our CPI calculation. For people living on a fixed income, they can report having one level of inflation and every age group consumes different baskets of goods, so they have different inflation rates too.
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russ.browne.52
2 years ago
Hi Tim, Thanks for the mention regarding my original dow chart.

The other things that you have to consider is the western nations building debt crisis that Martin Armstrong has been predicting for over 3 decades, as governments have dropped interest rates to near zero to save on debt service charges (70% of debts are from compounding interest) they have become desperate for returns for the pension funds and those monies have been fueling the stock market rise, also as government start do 'bail in' actually taking people's money out of their bank accounts to pay for government then people are trying to stop the government from getting their money so owning stocks is a way to do that and as Europe is on its way to imploding capital is desperately seeking shelter in various investments.

2016 has been called the year from hell by Armstrong as the debt problems will intensify by then and he thinks people will realize there are no pensions, just debt and will take to the streets again as in 2008-2009 but this time the protest will turn violent. Gold will eventually go to at least $5000 after it final flush which should happen in 2015 as confidence is lost in western governments and the idea that huge debts can be piled up indefinitely will be proven to be very wrong.... socialism is going to die as its brother communism already did.
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G13Man
2 years ago
Nice to hear of another Harry Dent follower .
I also agree on silver since- it has more uses then Gold - including medical - and it is being used up rather then being stored ...
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timwest PRO G13Man
2 years ago
Yes - Harry Dent has nailed a lot of major market calls. I saw him on NPR in 1989 and he outlined his demo-econometric-models and I was hooked. His work presaged many great market observations for me. I've given many presentations on his work over the last 13 years... Most people still don't believe what he is saying, which is a shame, but it is becoming more mainstream as each day passes. 46 year olds do set the pace for the economy and the birth rate plunging from 1964 to 1975 and flattening out from there really suggests flat economic performance for many years (decades) since 1964 = peak of 2010 and 1975 = trough in 2021 = another 7 years of rough going. Population rates stay flat from 1975 forward.
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timwest PRO timwest
2 years ago
Additionally, the peak birth rate was 1958 and it plateaued until 1964 and plunged in 1965. 1958+46=2004 peak. So, the midpoint between 1958-1964 was 1961+46 years or 2007, where the economy and markets peaked, thanks to spiking oil prices and a severely over leveraged financial system with 40:1 ratios in the banks at that time... a recipe for disaster....
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G13Man timwest
2 years ago
plus he has been adding other cycles to his demographic cycle ,, some interaction will help , others will make it worse
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timwest PRO
2 years ago
I could add a little clarity = "Thanks Banks (NOT)" for robbing everyone blind to cover up your hundreds of billions in losses from "portfolio holdings of real estate mortgages". Banks charge 4% interest to people borrowing to buy mortgages and pay zero to savers who leave their money in banks. Brutal reality. Either borrow and buy assets to make a higher return or get zilch for lending your money to the bank.
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Justiceisfalse
2 years ago
Small caps, venture cap and private start ups seem like all the places to look for outperforming alpha when the market markets go sideways...
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Tim, I would like to THANK YOU SOOOO MUCH for what you do here on the Tradingview. I've been on the site for about a month and I am following you and I feel so lucky that somehow I found this site and especially you.
Keep up the good work and please know that we very much appreciate your hard work.
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charttrader PRO misha.spiridonov.79
2 years ago
+1
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harsha.imperial
2 years ago
Hey Tim, I've got a Question . In order for the market to return to it's Bull Uptrend , Should The Cycle Repeat Itself , implying that New Technologies have to be invented & new businesses have to be created.
If I understand you correctly , you are saying that this time round The Cycle restart may be delayed because of Fed's Action & The Demographic Cliff that Harry Dent is warning us ! Am I right ??
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timwest PRO harsha.imperial
a year ago
Thanks for your question. I believe the overall market will have limited return but individual growth names still have a chance. You have to wander out into growth areas to profit. It means you have to look for real growth and not just "population and inflation" growth to help grow your portfolio. Technology is what creates the biggest moves in the market in my opinion and demographics is right up there next to it in importance. The Gov'tsof Japan and now China understand this and have been pushing as hard as possible now to grow their population since many nations are facing a demographic downslope going forward. In order to make profits, you have to find a long term growth stock and take some risk because the future is always uncertain with growth names thanks to competition and new technology. Tesla is a great example: It's a massive growth trend, but you have to invest while they are losing money. Look at AMZN also, it has been growing very fast and barely profitable, but the stock is growing strongly because they are actually free-cash-flow profitable (which most people don't seem to notice). You have to have a long term time horizon AND be willing to suffer large drawdowns in the paper value of your portfolio to be successful. Watch the core or sales, cash-flow and working capital in your stocks and make sure they are staying lean financially and disregard the stock price all together. As for Harry Dent - the demographic cliff is holding back the economy.
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Harsha_Kumar timwest
a year ago
Thanks for ur Analysis Tim !
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