Dow Theory for the 21st Century includes everything that the serious investor needs to know about the stock market and how to become financially successful. Expanding upon Charles Dow’s 20th century stock market theory, author Jack Schannep provides readers with a better understanding of the ingredients that make up the world of finance, specifically the American stock market, in order to help them achieve investment success.
Charles H. Dow wrote those words over 100 years ago on January 31, 1901, and they are as true for the twenty – ﬁ rst century as they proved to be for the twentieth century. No book on the Dow Theory should start or ﬁ nish without his classic quotation, as it is the very essence of the theory . For the record, the rest of the quote that appeared in the Wall Street Journal that day continued: “ The aver-age of twenty stocks is the peg which marks the height of the waves. The price – waves, like those of the sea, do not recede at once from the top. The force which moves them checks the inﬂ ow gradually and time elapses before it can be told with certainty whether high tide has been seen or not. ”
I wrote this book so that a serious investor will be able to ﬁ nd almost all he or she needs to know about the stock market and how to become ﬁ nancially successful in one place. I don ’ t pretend to know all there is to know about either subject, but I have been an avid market student and successful personal investor all my profes-sional life. If you have aspirations to know the important things about the stock market and are not interested in the ﬂ uff, then this book is for you.
You will soon recognize that most of this book is not sexy or even exciting, and some of it may not even be interesting to you, but it con-tains a wealth of valuable insights, historical precedence, and useful and usable information. I am not a writer by trade, so I apologize up front for any shortcomings in that department. I have spent a lifetime with the stock market, starting in college and extending through a short military career, a full ﬁ nancial business career, and even longer “ working ” retirement. I started writing a market timing letter to col-leagues in the stockbrokerage business in 1977 at the behest of sen-ior ofﬁ cers in my ﬁ rm, a letter that I continued after I retired. Out of that grew an Internet subscription letter that has attracted subscribers from most of our United States and numerous foreign countries.
The purpose of my market letter and of this book is not to make money personally — the Web site www.TheDowTheory.com is owned by other members of my family who are occasionally surprised by a dividend. My wife and I have been fortunate to have been ﬁ nancially secure for many years, and now it is time to share the “ family secrets ” with the rest of you.
Do not be afraid to skip over segments of the book (such as the background of Charles Dow or William Peter Hamilton ’ s Editorial, or my own, and other perhaps tedious subjects); you can always come back to them. Concentrate on the big picture and review those areas that don ’ t at ﬁ rst sink in. In the end, I think you will feel much bet-ter prepared to face the stock market than ever before. I sincerely hope this book will show you the way to a better understanding of the ingredients that make up the world of ﬁ nance, speciﬁ cally the American stock market, and that understanding will lead you further to great investment success.
- By Way of Background
- Signals Described
- A Look at the Record
- Give-and-Take about the Theory
- Bull Markets
- Bear Markets
- Bull and Bear Markets of the Twentieth and Twenty-First Centuries
- Capitulation: The Selling Climax
- The Heart of the Theory
- Schannep Timing Indicator: The Other Major-Trend Indicator
- “Three Tops and a Tumble”: Leading Topping Indicators
- Bonus Indicators
- The All-Inclusive Composite Indicator
- Practical Uses: Putting It All Together