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.
- Markets tend to return to the mean over time.
- Excesses in one direction will lead to an opposite excess in the other direction.
- There are no new eras – excesses are never permanent.
- Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.
- The public buys the most at the top and the least at the bottom.
- Fear and greed are stronger than long-term resolve.
- Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.
- Bear markets have three stages – sharp down, reflexive rebound and a drawn-out fundamental downtrend.
- When all of the experts and forecasts agree- something else is going to happen.
- Bull markets are more fun than bear markets.
Resource: Bob Farrell, Theme and Profile Investment report dated September 1998