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More on Bob Farrell’s rule #8

Posted By Prieur du Plessis On August 10, 2009 @ 9:38 am In Investment,Markets,Money | 2 Comments


I posted “Bob Farrell’s Rules for Investing [1]” 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 [2], provided a graphic illustration of Farrell’s three stages, as shown below.

Click on the image for a larger graph.

farrell-s [3]

Source: Gluskin Sheff & Associates – Lunch with Dave [2], 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.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail. [4]

More on this topic (What's this?) [5]
Measuring the Performance of the Ivy Portfolio [6] (Phil’s Stock World, 12/1/12)
The Secret to Long-Term Investing [7] (Investment U, 2/15/12)
These Four Investing Lessons Mean Everything Today [8] (Money Morning, 1/10/12)
Read more on Cheung Kong (HLDGS) [9], How To Invest [10], Food & Beverage [11] at Wikinvest [12]

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URLs in this post:

[1] Bob Farrell’s Rules for Investing: http://www.investmentpostcards.com../../../../../2009/08/07/bob-farrells-10-rules-for-investing/

[2] Gluskin Sheff & Associates: http://www.gluskinsheff.com/

[3] Image: http://www.investmentpostcards.com/wp-content/uploads/2009/08/farrell-b.jpg

[4] Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.: http://www.feedburner.com/fb/a/emailverifySubmit?feedId=921608&loc=en_US

[5] (What's this?): http://www.wikinvest.com/blogger/wikinvest_wire

[6] Measuring the Performance of the Ivy Portfolio: http://www.philstockworld.com/2012/12/01/measuring-the-performance-of-the-ivy-portfolio-77

[7] The Secret to Long-Term Investing: http://www.investmentu.com/2012/February/long-term-investing.html

[8] These Four Investing Lessons Mean Everything Today: https://moneymorning.com/2012/01/10/these-four-investing-lessons-mean-everything-today

[9] Cheung Kong (HLDGS): http://www.wikinvest.com/stock/Cheung_Kong_(HLDGS)_(HKG:1)

[10] How To Invest: http://www.wikinvest.com/wiki/How_To_Invest

[11] Food & Beverage: http://www.wikinvest.com/industry/Food_%26_Beverage

[12] Wikinvest: http://www.wikinvest.com

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