I find it a bit odd when the 4th of July falls on a Wednesday, the middle of the week. Instead of the traditional long weekend celebration we have two very short work weeks sandwiched around one day of grills, parades, fireworks, and the 2012 special – blistering heat.
My favorite Independence Day quote comes from the man who made it all possible, King George III. On July 4, 1776 he wrote in his diary "Nothing important happened today." So if you wish, sit back and relax. Celebrate our American Independence and the freedom for which so many have given so much.
But just in case you want to work on a little financial independence, I thought I would share something I rediscovered while working on the upcoming quarterly client letter.
Bob Farrell's 10 Market Rules to Remember
Bob Farrell joined Merrill Lynch in 1957 after studying under Benjamin Graham at Columbia University. In 1967 he assumed the role of Chief Market Strategist, a post that he held for 25 years; for 16 of the 17 years prior to that, he was the top ranked Wall Street analyst in predicting the overall direction of the stock market. Farrell continued to write and make public appearances after stepping down as Chief Investment Strategist. He is best known for his 10 Market Rules to Remember, published in 1992.
- Markets tend to return to the mean over time.
- Excesses in one direction will lead to an opposite excess in the other direction.
- There are no new eras — excesses are never permanent.
- Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.
- The public buys the most at the top and the least at the bottom.
- Fear and greed are stronger than long-term resolve.
- Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names.
- Bear markets have three stages — sharp down, reflexive rebound and a drawn-out fundamental downtrend.
- When all the experts and forecasts agree — something else is going to happen.
- Bull markets are more fun than bear markets