Trading Rules – Bob Farrell
Posted on 22 April 2009
From the legendary Wall Street equity strategist whose career spanned 1950′s to 1990′s…ten lessons on the markets
1) Mkts 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 the 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 are narrow to a handful of bluechip names
Bear markets have three stages – sharp down, reflexive rebound, and 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
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