A Wall Street legend's 10 market rules are still relevant decades later as stocks buckle under soaring inflation and higher interest rates, Bank of America says

Bob Farrell is a Wall Street legend who spent his entire career working at Merill Lynch after being taught by Benjamin Graham and David Dodd at Columbia University.

Farrell was considered a pioneer of technical analysis and outlined 10 stock market investing rules towards the end of his career. As the stock market declined from 2001 to 2003 as much of the rules he outlined rang true, it went unnoticed.

Farrell's 10 stock market rules are still relevant as investors navigate a period of high inflation, rising interest rates, and heightened economic uncertainty.

Mr. Farrell's rules seem to be relevant today as they were 20 years ago when he retired from Merrill Lynch.

Farrell has 10 stock market rules that investors need to remember.

1. Markets return to the mean over time.

When trends go too far in one direction, investors can prepare for a reversal in trend and a rise in interest rates after 40 years of decline.

2. Excesses in one direction will lead to excesses in the other direction.

Sometimes reverting to the mean isn't enough. The BofA analyst said that a basket ofcryptocurrencies were up 12x in less than a year before losing 77 percent in less than six months.

3. There are no new eras. Excesses are not always permanent.

When excesses get built up, we begin to hear the phrase "this time is different", and when investors talk about a new era, sentiment is too extreme for the move to continue.

4. Falling or rising markets do not correct by going sideways.

He saidbolic rallies, asset bubbles, manias and crashes fit this rule, and highlighted the 70% decline in Ark Invest's flagship fund as an example.

5. The public buys more at the top and less at the bottom.

Recent surveys from AAII show individual investors are the most bearish on stocks since the Great Recession, and that taking a contrarian view can pay off.

6. Long-term resolve is not as strong as fear and greed.

The analyst said that fear and greed can cloud our emotions and lead to poor investment decisions, such as selling at the bottom and buying at the top.

7. Markets are strongest when they are broad and weakest when they are narrow.

The breadth of the market is important. Broad-based rallies have the potential to continue, while narrowing rallies are prone to failure.

There are 8. There are three stages of bear markets: sharp down, reflexive rebound and a drawn-out fundamental downtrend.

The S&P 500 is in a bear market with a downside potential of 3,800 and 3,500.

There are 9. Something else is going to happen when all the experts and forecasts agree.

He said that the rule suggests that consensus among experts is often discounted in asset prices.

10. Bull markets are more fun than bear markets.

Bull markets are associated with economic expansions and a positive wealth effect, while bear markets are associated with recessions and a negative wealth effect.