Bob Farrell, chief market strategist at Merrill Lynch until 1992, penned this particular list. Pretty much a summary of the collective wisdom on markets that every investor should understand.

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 rising and falling markets usually go further than you think.
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-chips.
8. Bear markets have three stages.
9. When all the experts and forecasts agree - something else is going to happen.
10. Bull markets are more fun than bear markets.

Reprinted from The Big Picture

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