"People are absolutely not positioned for hard times," Richard Russell told the crowd Saturday night. "The present bear market will get much tougher." Richard Russell famously called the bottom for stocks in December 1974. He told readers of his newsletter, Dow Theory Letters, to buy... after stocks had fallen roughly in half in the preceding two years. During those two terrible years, Richard recommended his readers hold 100% of their money outside of the stock market.  On Saturday night, I attended a tribute dinner for Richard, who's been writing his newsletter since 1958. I figured it'd be a small affair... an occasion for investment newsletter writers like me to acknowledge the guy who taught us all how to do it right. Turns out, over 400 people showed up. Newsletter writers came to California from as far as South Africa and Europe to show their respect. It was a "who's who" of newsletter writers over the last 50 years. Richard shined during a question-and-answer session after dinner. Famous newsletter writers quizzed him like star-struck kids. The 84-year-old showed he's still at the top of his game in the investment world. One writer asked how he "knew" we'd hit bottom in late 1974... even though everything looked terrible. And he asked how that time compared to today. Russell replied... 

The psychology was right... When I turned bullish, I got angry letters from people telling me I was wrong. The psychology today is totally different. People are very quick now to turn bullish, as we've seen lately. In a real bear market like '74 or the Depression, people don't think it can get better like they still think now.

 

I lived through the Depression. You could not get a job no matter what you tried to do. Today it's a lot easier. You can get a job. The last three generations haven't seen hard times. They're not prepared.

Richard remembers bread lines stretching for many blocks. He remembers the Empire State Building going bankrupt. He has good memories, too... seeing Babe Ruth hit a home run... and sneaking out to see now-legendary jazz musicians. He got the biggest cheers with his answer to this question: "If you were in charge of the country, what are the top three things you'd do to turn this country around?" Richard replied, "I wouldn't do a thing. I'd let the bear market take its course. The fixes won't work. They prolong and compound the problem. And they're costing us trillions." The crowd went nuts. Russell and the newsletter crowd are strong believers in taking personal responsibility and in saving your money. Today's government "fixes" go against both of those beliefs. Bill Bonner is behind the world's largest investment newsletter publishing business (including my publisher). Bill gave Russell the ultimate compliment... He told the crowd:  "I still read rich Richard every day. I feel like I don't really know what's going on in the financial world if I haven't read him." Richard Russell is a hero in our little business. In 1974, he called the bottom of the bear market. Here in 2009, we now have a bear market worse than 1974. Russell is not calling the bottom here yet.  Last month, I told you "permabear" Jeremy Grantham was turning bullish, calling for stocks to rise over the next seven years. He may be right… but it's a bold call to go up against Richard's 50 years of Wall Street experience. Good investing, Steve P.S. Richard's two essays "Rich Man, Poor Man" and "The Perfect Business" are must-reads. You can find them on his websitewww.dowtheoryletters.com. (Scroll down just a bit to find the links. They are free to non-subscribers.)