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More on Bob Farrell’s rule #8
I posted “Bob Farrell’s Rules for Investing” a few days ago, and these words of wisdom turned out to be popular reading material. Given the debate as to as to whether the US stock markets are experiencing a primary (secular) bull market or a rally within a primary bear market, i.e. a so-called cyclical bull market, Farrell’s rule #8 has caused a fair amount of food for thought: “Bear markets have three stages – (1) sharp down, (2) reflexive rebound and (3) a drawn-out fundamental downtrend.” In an attempt to put these stages in perspective, David Rosenberg, chief economist and strategist of Gluskin Sheff & Associates, provided a graphic illustration of Farrell’s three stages, as shown below. Click on the image for a larger graph. Source: Gluskin Sheff & Associates – Lunch with Dave, August 7, 2009. Whether stock markets will enter a drawn-out downtrend remains to be seen, but given the magnitude of the rebound a pullback certainly looks likely. Caution seems to be in order. 2 comments to More on Bob Farrell’s rule #8Leave a Reply | |||||||||||
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Thanks again, Prieur! You do a good conscientious job of presenting us with materials designed to educate us financially using both written and visual materials.
Or the reflexive rebound occurred after the October 2008 trough and the subsequent downtrend ended in March 2009???