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10 market rules to remember

Bob Farrell was a legendary analyst for Merrill Lynch from 1967-1992. As this MarketWatch article summarized, "Over several decades at brokerage giant Merrill Lynch & Co., Farrell had a front-row seat to the go-go markets of the late 1960s, mid-1980s and late 1990s, the brutal bear market of 1973-74, and October 1987's crash. Out of those and other experiences came Farrell's 10 "Market Rules to Remember."

Here they are:

1. Markets tend to return to the mean over time
2. Excesses in one direction will lead to an opposite excess in the other direction
3. There are no new eras — excesses are never permanent
4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways
5. The public buys the most at the top and the least at the bottom
6. Fear and greed are stronger than long-term resolve
7. Markets are strongest when the are broad and weakest when the narrow to a handful of blue chip names
8. Bear markets have three stages — i) sharp down, ii) reflexive rebound, iii) a drawn-out fundamental downtrend
9. When all the experts agree, something else is going to happen
10. Bull markets are more fun than bear markets

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Posted by Mark at 10:33 AM | Comments (0) | TrackBack
Category(s): Current Market Events, Investing Principles
Tag(s): christian investing, current market events, investing, investing principles

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