No rules about the stock market are 100% valid. In fact, a great many rules and sayings are flat out false, but there is just enough to juice in a few of them to keep, and just enough fund in a few others to keep them around. There’s the Santa Claus Rally, and Sell in May and Go Away, among others.
Bob Farrell’s 10 Rules for Investing
One of the rules, or set of rules, which keeps floating around due to both their perceived truth, and the fact that several of them are either obvious or broad enough to mostly always be true are Bob Farrell’s 10 Rules for Investing.
Bob Farrell’s 10 Rules for Investing are time tested, even if not 100% correct.
The most interesting of all Bob Farrell’s ten rules right now is number eight.
Bob Farrell’s #8 Rule for Investing: Bear markets have three stages – sharp down, reflexive rebound, and a drawn-out fundamental downtrend.
Depending on how you want to look at your bear market, could this be considered the reflexive rebound? It’s actually trickier than it sounds because, unlike what it might feel like, the market has not come straight down. There have been several rebounds since the beginning of the year. For this one to be the reflexive rebound, it would have to be bigger. Otherwise, it’s just another part of sharp down.
How do you like your arrows? Tops, bottoms, lows…
Author – Brian Nelson
Brian is a former Certified Financial Planner and financial advisor. He writes for Finance Gourmet and other financial publications. The material provided on this website is for informational use only and is not intended for financial or investment advice. At the time of publication, Mr. Nelson did not own any securities mentioned above, however, that may change at any time without notice. Neither ArcticLlama, LLC, FinanceGourmet.com, nor Brian Nelson assumes any liability for any loss or damage resulting from one’s reliance on the material provided. Consult with your own finance and tax professionals whenever making decisions regarding your financial or investment options.
