E. George Schaefer and Gold Stocks

E. George Schaefer is most synonymous with Dow Theory and its modern application.  However, E. George Schaefer was also known for his work in the selection and timing of gold and silver stocks.  As a bit of background on E. George Schaefer, in 1960, he wrote a book titled How I Helped 10,000 Investors to Profit in Stocks.image

The book was about Dow Theory and its application.   According to Richard Russell:

“…Schaefer started his ‘Dow Theory Trader’ service in 1948.  this analyst possesses a ‘feel’ for the market and an instinct for the big picture second to none.  He is one of the very, very few men who fully comprehend the concept of the primary trend.  A warning: if you have ever heard Schaefer speak, do not be fooled by his ‘hoosier-country boy’ style of delivery.  For Schaefer has been way ahead of the city boys on Wall Street for a long time.

“Schaefer provided his readers with many important technical studies during the late 1940’s and early 1950’s, and he has always labeled himself a ‘modern Dow Theorist.’ Schaefer has combined many technical considerations with his reading of the Averages, and I have found his thinking along these lines to be sound.

“In my library is a copy of Schaefer’s June 18, 1949 report, in which he predicted a major new bull market.  His reasoning was brilliant, and if he had never written anything else, he would rate a ‘superb’ on this one alone.  Personally, I wish that Schaefer had continued with his earlier technical studies, but those were written when the technical approach (and, in fact, almost any approach) was rare, and it is possible that he is now a bit tired of the ‘teaching’ approach which was a feature of his earlier letters.”

Our personal favorite by E. George Schaefer was a Barron’s article dated June 22, 1959 titled “Final Bullish Upsurge In Many Stocks Just Starting?” This article stands as a lone beacon for how modern Dow Theorists can understand the distinction between a bull and bear market as part of the primary trend.  We note that at the time, Richard Russell was of the view that the stock market was due for a bear market and called a bear market in 1961.  Schaefer was sticking to his 1959 call and told investors to hold onto their positions which was rewarded with another +40% increase in the Dow Jones Industrial Average.

Schaefer and Gold Stocks

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U.S. Dividend Watch List: November 21, 2014

Top Five Watch List Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from November 22, 2013 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Symbol Name 2013 Price 2014 Price % change
ED Consolidated Edison 55.92 62.37 11.5%
CAT Caterpillar 82.88 106.45 28.4%
IBM IBM 181.30 160.92 -11.2%
PM Philip Morris International 86.95 87.00 0.1%
ERIE Erie Indemnity Company 69.79 85.41 22.4%
      Average 10.2%
DJI Dow Jones Industrial 16,064.77 17,810.06 10.9%
SPX S&P 500 1,804.76 2,063.50 14.3%

Watch List Review

Our watch list was on par with the Dow but fail to keep pace with the S&P 500.  IBM (IBM) was the worse performer of the top five companies falling 11.2%.  One would recall that we didn’t believe that IBM was trading at great discount so it doesn’t surprise use to see the stock down slightly year over year.

We said that Consolidated Edison (ED) wasn’t a bargain trading at 16x its earnings.  It turned out that the company was able to exceed the expectation and grew net income above what the street had estimated.  As such, shares were up 11% and is now trading at 14x trailing earnings.

Lindsay (LNN) peaked our interest last year.  This farming equipment company was a recent addition to the Dividend Achiever list thus has potential for long-term growth.  The stock gained 13% excluding dividend year-over-year.

U.S. Dividend Watch List: November 21,2014

Below are 40 companies that are worth considering on our watch list. Continue reading

Gold Stock Indicator: November 21, 2014

Personally, I have no idea whether the 103.50 low of August 25 [1976] was THE LOW for gold or not. I would guess, since many experts are now freely predicting a drop below 100, that the 103 level represent the bottom (Russell, Richard. Dow Theory Letters. September 15, 1976. page 5).”


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Canadian Watch List: November 14, 2014

Looking back at the watch list from November 2013 we had the following performance:

Symbol Name Nov-13   Nov-14   % change
D-UN.TO Dundee REIT 28.04   27.87   -0.61%
CUF-UN.TO Cominar REIT 18.09   18.79   3.87%
CAR-UN.TO Canadian Apt Properties REIT 20.77   25.55   23.01%
EMA.TO Emera Incorporated 29.81   37.60   26.13%
FTS.TO Fortis Inc. 31.56   37.83   19.87%
CJR-B.TO Corus Entertainment Inc. 23.91   21.24   -11.17%
CWT-UN.TO Calloway REIT 25.43   27.56   8.38%
AX-UN.TO Artis REIT 14.3   15.77   10.28%
REI-UN.TO Riocan REIT 25.11   26.71   6.37%
FCR.TO First Capital Realty Inc. 17.68   18.81   6.39%
TRP.TO TransCanada Corp. 47.12   55.80   18.42%
SAP.TO Saputo, Inc. 24.27   32.99   35.93%

The entire watch list gained as much as +12.24% which was above the Toronto Stock Exchange Composite index gain of +10.13% from November 22, 2013 to November 14, 2014.  Additionally, the top five stocks gained an average of +14.46% in the same time.  Surprisingly, the REITs gained far more than we had anticipated.  From the list above, only Dundee REIT (D-UN) turned in a negative return.