Rules of Speculation

Says Doug Casey, "There are certain rules that will likely be just as good in the future as they have been in the past because they're based on human nature, and that hasn't changed much over the thousands of years. I've listed five signals that should be present before you enter a market. You may never find a situation where they're all there, but the more that are, the more the odds are tilted in your favor."

Casey's five signals are

1. A Climactic Bottom
   
2. Period of Accumulation
   
3. Relatively Low Bottom
   
4. Historically Low Prices
   
5. Pessimism in the Market

Though Caseys mentions these rules as applicable to "speculation", it sounds to me that they could be applicable to general contrarian investing. Furthermore, using the term speculation may throw people off. Casey says it's actually a low-risk strategy and Investopedia says it should not be considered purely gambling.

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[1/6/06] Isn't buying stocks gambling?