Ten Market Rules to Remember

Ten Market Rules to Remember by Bob Farrell

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 the experts and forecasts agree -- something else is going to happen.
10. Bull markets are more fun than bear markets.

Bob Farrell was the chief stock market analyst at Merrill Lynch for decades. He has seen all types of markets and his 10 market rules are considered classic investment advice.

Interesting to apply some of his thoughts to the crude oil market of today.

No comments: