Bob was a research analyst at Merrill from 1957; Head of Research for nearly a decade from the mid-80s and regarded by most macro people as an old school legend.
- Markets tend to return to the mean over time. (If you go back in history, every market is mean reverting.)
- Excesses in one direction will lead to an opposite excess in the other.(Oil is the classic example)
- There are no new eras, excesses are never permanent.(Remember “peak oil” and the “new economy”)
- Exponentially rapidly rising and falling markets usually go further than you think, but they do not correct by going sideways. (Chinese equities and home prices!)
- The public buys the most at the top, the least at the bottom.(Emerging markets!)
- Fear and greed are stronger than long term resolve. (Markets bottom when the public throws in the towel)
- Markets are stronger when they are broad and weakest when they narrow to handful of blue-chip names.
- Bear markets have three stages: sharp down, reflexive rebound and a drawn out fundamental downtrend.
- When all experts and forecasts agree, something else is going to happen.
- Bull markets are more fun than bear markets