Bob Farrell and his 10 investment rules were discussed, which elicited several email questions asking,I often forget how old I have become, and the investing legends of my youth are no longer there and are lost to the sands of time. While I have written several articles discussing the investing legend’s famous rules, which have served us well. the last time I had a deep discussion of Bob’s rules was in 2016; much has happened since then.
cutting rates and instituting a massive QE program following COVID-19, to rate hikes to combat inflation. The question worth exploring is whether Bob’s rules still hold today. That is the subject of this week’s discussion.The downfall of all investors is ultimately “greed” and “fear.” Investors repeatedly fail to sell when markets are near peaks, nor do they buy market bottoms. However, this does not just apply to individuals but also to many advisors, which is why many promoteWhile buy-and-hold strategies work well during trending bull markets, they can be devasting during larger corrections and bear markets. This is why Bob Farrell’s rules are so important for navigating markets over the long term. Such is particularly the case today, with expectations elevated, valuations high, and sentiment extremely bullish.Bob was a Wall Street veteran with over 50 years of experience crafting his investing rules. Farrell obtained his master’s degree from Columbia Business School and started as a technical analyst at Merrill Lynch in 1957. Even though 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. Farrell became a pioneer in sentiment studies and market psychology. His ten rules on investing stem from personal experience with dull markets, bull markets, bear markets, crashes, and bubbles.With that said, let’s dive into Bob Farrell’s famous rule