As the stock market continues it frantic rally from the March lows, I thought I'd throw in the distillations of a couple of other thinkers whose ideas about the capital markets are widely respected. Charlie Munger is widely regarded as the silent genius behing Berkshire Hathaway along with Warren Buffet, that other fellow you may have heard of. Bob Farrell was Merrill Lynch's chief market strategist from 1967-1992, a 25 year period featuring the "Go-Go" stock market years of the Sixties. I am presenting their ten rules of investing found in numerous places around the blogosphere because many of them bear repeating, especially the tidbits regarding Bull and Bear Markets. I am presenting them without editorializing upon them. I think it's an interesting exercise to take your OWN market experiences and to compare them to these timeless truths. In this way they become an iterative lesson and thereby part of your knowledge base as well. Enjoy!
Charlie Munger's Ten Rules
1. Measure risk
2. Be independent
3. Prepare ahead
4. Have intellectual humility
5. Analyze rigorously
6. Allocate assets wisely
7. Have patience
8. Be decisive
9. Be ready for change
10. Stay focused
Bob Farrel's Ten Rules
"10 Market Rules to Remember."
1. Markets tend to return to the mean over time
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
4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways
5. The public buys the most at the top and the least at the bottom
6. Fear and greed are stronger than long-term resolve
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names
8. Bear markets have three stages -- sharp down, reflexive rebound and a drawn-out fundamental downtrend
9. When all the experts and forecasts agree -- something else is going to happen
10. Bull markets are more fun than bear markets
No comments:
Post a Comment