Market Rules to Remember explained

Market Rules to Remember is a list of ten cautionary rules for investors that was written in 1998 by the then-retired Chief Market Analyst at Merrill Lynch, Bob Farrell. The rules became iconic on Wall Street and are frequently reprinted in leading financial advisory publications.[1]

Background

In 1955, Robert "Bob" J. Farrell graduated from Columbia University with a master's in investment finance, where his teachers included Benjamin Graham.[2] After 2 years of service in the US Army, Farrell joined Merrill Lynch in 1957.[3] By 1967, was made Chief Market Analyst (CMA) at Merrill, a title he held for over 25 years until stepping down in 1992, then aged 60.[4] For the 16 of his last 17 years as CMA at Merrill Lynch, Institutional Investor voted Farrell as America's best analyst in forecasting equity market direction,[4] [3] and he was inducted into the "Hall of Fame".[2] Farrell is considered a pioneer of technical analysis, and he is noted as being the first to incorporate "sentiment analysis" into financial forecasting.[3] In 1970, he was made the first president of what became the CMT Association.[5] [6] [7]

After stepping down as CMA, Farrell stayed with Merrill as a senior investment officer writing regular reports for clients.[4] In September 1998, as the dot-com bubble was nearing its peak, Farrell published a list of ten "Market Rules to Remember" on the back of one of his reports. The rules received little attention when they were first published, and Farrell retired fully in 2002 after 45 years with the firm. Merrill Lynch chief North American economist David Rosenberg re-published the rules in 2003, after the dot-com bubble burst, and they have been quoted by financial advisors ever since.

Rules

In 1998, Farrell laid out his "Market Rules to Remember" as follows:[8]

Legacy

In 2020, CNBC said: "Some would say Farrell was immortalized by his rules of investing that remains widely quoted today".[9] In 2021, Morgan Stanley said to their clients about Farrell's rules: "... they are pinned to the wall or taped to the screen of market professionals all over the world. A Google search of “10 Market Rules to Remember” reveals 305 million results. They are timeless".[10] In 2022, Bank of America wrote to their clients saying: "You can't change human nature and Mr. Farrell's rules seem as relevant today as when he retired from Merrill Lynch 20 years ago".[11] Farrell's rules are not only used on Wall Street, in 2020, India's The Economic Times said: "Although Farrell retired long back, his years of wisdom summarized in his famous book, titled 10 Market Rules to Remember, has lived on and is always referred to when investors get into difficult market situations".[12]

See also

External links

Notes and References

  1. Web site: . This Wall Street legend has lived through every bear market since the 1950s. He says the one coming could hit the S&P 500 with a 30% loss . Jonathan . Burton . 14 May 2022 . 3 June 2023.
  2. Web site: Institutional Investor. Francis . Denmark . 13 October 2011 . 4 June 2023 . Hall of Fame 20 - Robert Farrell.
  3. Web site: Robert J. “Bob” Farrell, First President CMT Association . 2023 . 4 June 2023 . CMT Association.
  4. Web site: . Merrill's Legendary Analyst Is Leaving After 25 Years . 19 December 1992 . 2 June 2023.
  5. Web site: . Learn a lesson -- before you get one . 11 June 2008 . Jonathan . Burton . 4 June 2023.
  6. . Tracking The Trends Of Technical Analysis: Bob Farrell . John . Sweeney . July 2001 . 4 June 2023 . 19 . 7.
  7. Web site: . Esteemed Market Guru Is One Of A Kind. Greg . Hebberline . 22 September 1996 . 5 June 2023 .
  8. Web site: . These 10 timeless investing rules offer guidance for today’s markets . 3 June 2022 . 3 June 2023 . Scott . Barlow.
  9. Web site: . This Wall Street legend’s 10 rules for investing are very applicable to today’s bull market. Maggie . Fitzgerald . 11 February 2020 . 2 June 2023 .
  10. Web site: . Thoughts on Bob Farrell’s Market Rules to Remember . 23 September 2021 . Douglas . Behnfield . 3 June 2023.
  11. Web site: . Matthew . Fox . 29 May 2022 . 3 June 2023 . A Wall Street legend's 10 market rules are still relevant decades later as stocks buckle under soaring inflation and higher interest rates, Bank of America says.
  12. Web site: . Bob Farrell's 10 thumb rules to deal with market uncertainties . Anupam . Nagar . 24 October 2020 . 3 June 2023.

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