Bob Farrell was Merrill Lynch's Chief Market Strategist from 1967-1992.
1. Markets tend to return to long-run averages over time
2. Excesses in one direction are usually followed by excesses in the opposite direction
3. There are no new eras
4. Exponentially 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 based and weakest when they narrow to a handful of blue-chip names
8. Bear markets have three stages - share down, reflexive rebound, and a drawn-out fundamental downtrend
9. When all the experts agree, something else is going to happen
10. Bull markets are more fun than bear markets
Another great investing rule coined by Don Coxe of Cox Advisors, LLC:
"Never invest on the basis of a story on page one, that is the efficient market. Invest on the basis of a story on page sixteen that is on its way to page one."
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