By James Dines
The Dines Letter
It has taken us decades to think out some of the market's deepest and most elusive secrets, culminating in the 64 Dinesisms and other principles laid out in your editor's book Mass Psychology and the Video Instructional. We have also recommended MacKay's book Extraordinary Popular Delusions to be read alongside Mass Psychology, its modern version. Some of our principles fly in the face of the so called "consensus" and "current wisdom." For example, we credit MacKay's work, and also your editor's friend Humphrey Neill whose Theory of Contrary Opinion helped lead us toward the Dines Theory of Positive Negativism (Dinesism #12, DITPON).
Specifically, TDL has been writing about the unusually frequent declines in Octobers, a phenomenon of which the public first really became aware in the 1980s, but these days is widely bruited on business TV. Yet, even now the Mass still has it wrong: declines usually end in Octobers, which is why TDL has always called it "the bear-killer month."
For the record, we note that there is still not even the slightest public awareness of Dinesism #29 (DINPIVOT) discussed in the Mass Psychology book. The most important "rule" in the stock market is that there are no rules. However, there are guidelines, which is all that Dinesisms are, playing percentages like any good poker player, better than nothing in the trackless wilderness of hauntingly lonely, being first, stock-market forecasting.
1. Stocks: We count that the Dow in the 57 Octobers since 1950 has been up 33 times (58%) and down 24 (42%). As noted above, we baptized Octobers (beginning the fourth quarter of the calendar year) as "bear killers." The up months were very significant indeed. October has been the upturn point after fourteen bear moves: 1946, 1957, 1960, 1962, 1966, 1974, 1987, 1990, 1992, 1997, 1998, 1999, 2000 and 2002. In the year 2000 for example the DJI hit bottom on 18 Oct at 9,655, a classic as it subsequently rose by 1,380 points through Feb 01. To this day the Dow's Bottom at 7,197 on 10 Oct 02 still stands. Since then, it has risen 95% (6,825 points) to 14,022.
2. Precious Metals: For the past 26 years, both the Dines Gold Stock Average (DIGSA) and Dines Silver Stock Average (DISSA) have been bearish in Octobers, 81% and 73% respectively. DIGSA was up 5 and down 21 times, while DISSA was up 7 and down 19. Octobers are usually around a good time to start buying them on declines, before gold's seasonally bullish first quarter.
Editor's Note: James Dines is editor of The Dines Letter, P.O. Box 22, Belvedere, CA 94920, 1 year, 17 issues, $195. www.dinesletter.com.
