Thursday, November 13, 2008

10 Market Rules to Remember

Bob Farrell’s (Merrill Lynch chief market strategist from 1967-1992) 10 Market Rules to Remember (link):

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 they are broad and weakest when they narrow to a handful of blue chip names.

8) Bear markets have three stages — sharp down — reflexive rebound —a drawn-out fundamental downtrend.

9) When all the experts and forecasts agree – something else is going to happen.

10) Bull markets are more fun than bear markets

Source: Dennis Gartman of "The Gartman Letter"


mike hegedus said...

I was a broker with Merrill Lynch in Denver during the '70's. Each morning Bob Farrell would talk live with all the offices. It was a fond memory to read your recount of Bob's Rules. Thanks, Charlie.
Mike Hegedus, Lawyer Nursery, Montana.

Martha said...

Perfect blog entry for this week in which the emotions prevailing are fear and anxiety.