There’s a reason for why Buffett says if he finds Howard published a new memo, he stops what he’s doing and reads it right away - yes, Buffett, probably the best to ever do it. But there’s also such a thing as opportunity risk: the likelihood of missing out on potential gains. In other words, no two cycles play out in exactly the same way, but they do all tend to follow the same repetitive pattern.

For instance, economic data is twisted in a positive or negative light depending on the prevailing emotion. Mastering the Market Cycle (2018) tackles a subject that’s often misunderstood, ignored or both: financial cycles. In investing, success teaches people that making money is easy, and that they don’t have to worry about risk—two particularly dangerous lessons. If we all have the same information, come to the same conclusions, act on it in the same way, then outperformance is unlikely. Writings by Marks and a select few other investment masterminds serve not only for learning but more importantly as a practical grounding tool to help you stay the course.To calculate the overall star rating and percentage breakdown by star, we don’t use a simple average. Economies, companies and markets operate in accordance with patterns which are influenced by naturally occurring events combined with human psychology and behaviour. But the force behind regression continues to exert itself, the momentum pushes the cycle past the midpoint to the next high or low. Though some guesses are more likely to be correct than others, an investor never truly knows what the outcome of an investment will be. This underlying trend in growth clearly follows a long-term cycle, although the short-run ups and downs around it are more discernible and thus more readily discussed.

Mastering the Market Cycles’ is an absorbing, authoritative investment book from a highly respected investor. Keynesian economics: Keynes believed the government should step in to prop up a weak economy through spending/running a deficit but reduce spending/running a surplus in a strong economy. Corporate management is not immune to the swings from risk-averse to risk-tolerant either (see the financial crisis). Mastering the Market Cycle reveals how cycles not only coincide with, but also cause, financial market risk and opportunity.

Extremes are not guaranteed for every swing, but cycles that reach extremes in one direction are often followed by an opposite extreme in the other direction. Investors try to position portfolios so as to profit from future developments rather than be penalized by them. Macroeconomic info (forecasting) fails one of those two, usually the latter because it’s not knowable, or not knowable consistently enough to produce long-term outperformance. Most raging bull markets are abetted by an upsurge in the willingness to provide capital, usually imprudently.

Likewise, most collapses are preceded by a wholesale refusal to finance certain companies, industries, or the entire gamut of would-be borrowers. Periods dominated by bad news, pessimism, and fear lead investors to be more risk-averse than normal. But rather the investor who bought the property from the bank amid distress and then rode the up-cycle.All these people see the same data, read the same material, and spend their time trying to guess what each other is going to say. You now have a general sense of short-term market cycles and the potential benefits of paying attention to your position within them.

In other words, while superior investors — like everyone else — don’t know exactly what the future holds, they do have an above-average understanding of future tendencies. Generally, the swings in the economy influence the rise and fall of corporate sales, which impacts profits. As far as I was concerned, there wasn't enough discussion about central banks and the way they have refused to let cycles take their natural course in recent years. Often underappreciated and usually poorly understood, cycles – whether in a particular market or an entire economy – are the linchpin of superior investment performance.Instead of scrolling through your social media news feed, this is a much better way to spend your spare time in my opinion. The pendulum careens from one extreme to the other, spending almost no time at “the happy medium” and rather little in the range of reasonableness. It should be adjusted as you move through a market cycle, assuming you can handle being wrong at times. Long-term economic growth is driven by the number of hours worked and productivity per working hour.