Bob Farrell’s 10 Rules for Investing

Bob Farrell is a Wall Street veteran who draws on some 50 years of experience in crafting his investing rules. After finishing a masters program at Columbia Business School, he launched his career as a technical analyst with Merrill Lynch in 1957.

Even though Mr. Farrell studied fundamental analysis under Gramm and Dodd, he turned to technical analysis after realizing there was more to stock prices than balance sheets and income statements. He became a pioneer in sentiment studies and market psychology. His 10 rules on investing stem from personal decades of experience with dull markets, bull markets, bear markets, crashes, and bubbles. In short, Bob Farrell has seen it all and lived to tell about it.

Bob Farrell spent decades as the head of research at Merrill Lynch, establishing himself as one of the leading market analysts on Wall Street.

His insights on technical analysis and general market tendencies were canonized as “10 Market Rules to Remember” and have been distributed widely ever since. Here, we review these timeless axioms and how they can help you achieve better returns.

1. Markets tend to return to the mean over time

When stocks go too far in one direction, they come back. Euphoria and pessimism can cloud people’s heads. It’s easy to get caught up in the heat of the…