Original post is here.

Let’s face it – most people don’t know when to sell a falling stock. So they’re frozen into inactivity, saying, “Should I just keep holding and hoping, or should I cut my losses now?”

This state of indecision is usually permanent, and often continues until you hear the all too familiar phrase, “well, it’s too late to sell now.”

One of my good friends lost it all following the “it’s too late to sell now” principle. He bought a ton of shares in a cable company based on his friend’s recommendation that it was supposed to take over the world. The shares soon tumbled in half, and his friend, who knows about the cable business, told him to buy more, so he did. The shares tumbled in half again, and he bought even more. He finally stopped buying when the shares hit a dollar a share. The shares eventually traded for pennies.

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1. Markets tend to revert 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 rapidly rising or falling markets usually go further than you think – but they do not correct by going sideways
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 chip names
8. Bear markets have three stages: sharp down, reflexive rebound, drawn-out fundamental downtrend
9. When all the experts and forecasts agree, something else is going to happen
10. Bull markets are more fun than bear markets