Bob Farrell’s 10 Rules for Investors

September 1998

Farrell spent decades as the head of market strategy at Merrill Lynch and gain universal respect and admiration his insights and market wisdom have stood the test of time.

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 and a drawn-out fundamental downtrend.
9. When all of the experts and forecasts agree- something else is going to happen.
10. Bull markets are more fun than bear markets.

Resource: Bob Farrell, Theme and Profile Investment report dated September 1998