Good advice from a master

Bob Farrell was a legend at Merrill Lynch & Co. for several decades.  He retired as Chief Market Analyst at the end of 1992, but he will always be considered one of the greats.  I came across his “10 Rules for Investing” the other day and think they are well worth re-visiting, particularly because of the trying markets and unstable times we find ourselves in:

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