Bob Farrell’s 10 Market Rules to Remember

by | Jan 31, 2018


Bob Farrell was chief strategist at Merrill Lynch for 25 years and a Wall Street legend. Bob developed ten maxims on the stock market that have become quite famous in investment circles and are good for investors to keep in mind – especially at market extremes.  Here they are:

  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 rising and falling markets usually go further than you think.
  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.
  8. Bear markets have three stages: (1) sharp down, (2) reflexive rebound and (3) a drawn-out fundamental downtrend
  9. When all the experts and forecasts agree, something else is going to happen (this is my favorite).
  10. Bull markets are more fun than bear markets.

Here’s an article fleshing out these maxims in more detail:


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