James Dines, one of the world's foremost financial forecasters
A contrarian is born
James Dines has become legendary for having made correct forecasts that were in complete contradiction to the rest of the financial community.
In an industry where it takes courage and conviction to go against the crowd, Mr Dines defiantly warned investors of the "invisible crash" that would bring down stocks in 1966, the unexpected gold boom of 1974, the Internet revolution of 1996, and the market top in 2000. And now, he warns of "The Coming Uranium Boom" that is steadily approaching.
His subscribers to The Dines Letter have profited so much that subscriptions are handed down to second generations.
From military intelligence to market brilliance
Mr Dines' ability to see markets so clearly began during his days as a National Honor Scholar at the University of Chicago, where he worked toward his doctorate, before having served in Military Intelligence. That duty aside, he then became a Junior Security Analyst with the Wall Street brokerage firm of Auerbach, Pollak & Richardson. It took him only 2½ years to earn the title of Senior Security Analyst at AM Kidder & Co.
In an early exhibition of the brilliance that would propel him to the top of the financial world just a few years hence, after 6 months, Mr Dines was promoted to write Kidder's weekly market letter—at a time when few very young men were permitted to hold responsible positions on Wall Street.
After just a year, the publication was renamed The Dines Letter, a reflection of his successful predictions and unique style. Mr Dines was also admitted to the prestigious New York Society of Security Analysts.
The courage to be right
The financial community was starting to sit up and take notice of Mr Dines. They saw that not only was he a brilliant analyst, he was also one of the most courageous forecasters to come along in years. Indeed, he risked his meteoric career by insisting that what was then called "the almighty dollar" would be devalued—considered a "treasonous" view at the time. He also predicted that gold would rise in an "historic bull market" from government-fixed levels of $35 to "over $400."
Mr Dines refused to be censored, and began publicly recommending gold stocks in The Dines Letter. In those days being called a "goldbug" was to be called a dirty name, so Mr Dines defiantly claimed the title of "The Original Goldbug," based on his having been the first Wall Street security analyst to have consistently and very outspokenly recommended precious metals assets. In fact, his outrageous-looking prediction of $400 gold was seen to have been conservative when gold soared to $850!
Subscribers to The Dines Letter began stacking up their profits from Mr Dines' recommendations. As his number of correct calls increased, so did subscriptions, and soon The Dines Letter was one of the most successful investment newsletters on the market.
The death of a Wall Street firm and birth of a legend
Mr Dines was also the first Wall Street security analyst to predict that without a link to gold and silver, the dollar would lose its integrity and suffer a massive devaluation—a prediction that unfortunately has come true.
In those days, the peer attitude to gold was so hostile that it destroyed Mr Dines' opportunities for advancement within corporate Wall Street. But Mr Dines refused to recant, and was fired by AM Kidder for his bullish gold predictions. After gold and silver soared as predicted, AM Kidder & Co went defunct, and James Dines' reputation became even more the stuff of legend.
Mr Dines then chose to warn the world of "The Coming Gold Crisis" by publishing The Dines Letter independently. He alerted subscribers to an imminent gold boom, with silver following suit. The investment community scoffed, claiming that "gold is dead" and silver is "an industrial metal."
Subscribers who listened to Mr Dines, though, enjoyed a 2,025% growth in gold in 7 years and 1,639% growth in silver.
Hailed by Barron's as a "classic"
By establishing his own philosophy, going his own way and repeatedly having been proved right, Mr Dines was creating a whole new way to approach the markets. He began putting his unique investment analysis and strategies on paper, and spent a total of 14 years writing what was to become a groundbreaking treatise on Technical Analysis—one of the very earliest books on the field—that would help investors for many years to come.
Called Technical Analysis, the book was immediately hailed as a "classic" when Barron's Magazine's reviewer wrote,
"It is the most comprehensive text ever written on the entire arcane field of investment analysis. This book was deliberately designed to attract the novice and then turn him into a pro. The established pro could learn much from it. We wholeheartedly recommend that you read the book."
What's more, Lex Column of the London Financial Times commented that "Mr Dines has done for Technical Analysis what Graham & Dodd has done for Fundamental Analysis." Unfortunately, this out-of-print "classic" is sold out and The Dines Letter has none for sale, but it is available in the rare-books markets for around $1,000 a copy!
Forecasts: "How does he know?"
Mr Dines moved from Wall Street to San Francisco because he foresaw a "time of troubles" for Europe and deflation in the Eastern United States in the early 1980s. At the same time, he predicted there would be great growth in Asia. In 1980, he further predicted the collapse of communism and that the 21st century would someday be called "The Chinese Century." This was at a time when China was among the poorest nations in the world.
At the start of 1980, The Wall Street Journal wrote, "Metals mania vindicates such economic Cassandras as James Dines, who for years have urged investment in gold as a safe hedge in an inflation-weary world."
Barron's editorialized, "...his prediction—that the price of bullion would some day cross the Dow Jones Industrial Average—begins to look like one of the most fantastic investment calls on record."
Kevin Boden, on his Moneyline radio show on June 4, 1981, said Mr Dines is "one of the most extraordinary men in America today; a man with a long and glorious reputation in being one of the first people to call real turns in the strategic moves that happened in our marketplaces over the years. He was the man to first pull the plug on the stock market when the Dow hit 1,000. He was the first person to recommend in a forceful manner that we buy gold and continue buying it."
Subscribers continue to reap huge profits
Of course, gold did not rise forever, and James Dines once again broke from the crowd on June 15, 1982, when he told subscribers to "sell gold!" The gold and silver index soon began its 70%, 3-year decline. Subscribers to The Dines Letter, though, had already locked in 10-fold profits in gold.
What's more, the world was stunned when, on June 15, 1982, James Dines flashed a Major buy signal when the Dow Jones was at 796. The New York Times said, "It was a truly magnificent call. The DJIA ultimately reached its 27-month closing low on August 12, 1982, at 776.92."
Continuing his prescience, Mr Dines said in 1994 that the Internet would revolutionize the world. Investment professionals again scoffed, claiming that the Internet would take 10-20 years to catch on. But as we all know, the Internet took off in the biggest boom in history, and Mr Dines' recommended stocks climbed thousands of percentage points in the next 6 years.
Not blinded by "irrational exuberance"
As good as the Internet run was, though, Mr Dines' famous forecasting ability protected subscribers to The Dines Letter by having seen the imminent top. On December 3, 1999, he told subscribers about his concern that professional money managers and new Internet mutual funds were pouring into the market, and that this was strongly signaling a market top. Stating, "We are never more uncomfortable than when too many investors agree with us, as it requires an iron will to avoid being swayed by lemming stampedes," he went on to say, "accordingly, note our carefully placed stops in the Supervised Lists."
As predicted, stocks began to fall just 60 days later; in the biggest crash we've known. Subscribers, though, had been protected by Mr Dines' well-placed stops, and were able to get out with the huge profits that others missed by mere weeks.
Continued correct calls, despite mind-numbing volatility
In the period since 2000, most investment analysts have called the market no more correctly than blind guessing would produce. Even a child—or a monkey—could call the market correctly 50% of the time.
Yet in the last 21 years, Mr Dines has correctly forecasted the Dow's major market turns 19 out of 21 times—a success rate of over 90%!
Recently, Mr Dines successfully called the 1997 Asian currency crisis, the 1999 euro's plummet, the crash of the Toronto Stock Exchange, and the NASDAQ bottom and subsequent rise to 2,000. Indeed, his call of the market bottom was only 5 days off target. Subscribers who bought stocks according to that signal were set to gain 30% before the market began to fall again. Now, Mr Dines is urging subscribers to buy select uranium mining stocks.
What's next? Only Mr Dines knows
As Mr Dines continues to publish his newsletter, The Dines Letter, subscribers continue to profit.
It's hard to know what the market will bring next. But one thing's for certain—whatever it is, Mr Dines will probably be among the first to see it, and his subscribers will continue to profit, as they long have.