STREET DOGS: Farrell
At one time Bob Farrell was considered one of the best strategist on Wall Street, and his ‘10 Lessons Learned,’ are as relevant today as they were in 1992
Bob Farrell was considered one of the best strategists on Wall Street and his 10 Lessons Learned are as relevant today as they were in 1992: 1. Markets tend to return to the mean over time, meaning trends that get overextended in one direction or another tend to return to their long-term average. 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, meaning there will always be a hot group of stocks, but these fads don’t last forever. 4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways. Translation: a strong trend can extend for a long time. Or, as John Maynard Keynes put it: "The markets can stay irrational longer than you can stay solvent." Once this trend ends, however, the correction tends to be sharp. 5. The public buys the most at the top, the least at the bottom. 6. Fear and greed are stronger than long-term resolve....
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.