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Bob Farrell’s Ten Market Rules to Remember

In a bear market, perspective is key. With that in mind, I have always found Bob Farrell’s 10 Market Rules to Remember (by way of David Rosenberg) very useful:

  1. Markets tend to return to the mean over time
  2. Excesses in one direction lead to an opposite excess in the other
  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, and 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

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