Mastering the Market Cycle: Getting the Odds on Your Side

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Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present. A host of independent developments — management decisions, technology changes, regulations, taxation, geopolitical events, natural disasters, etc.

Written in plain English, Howard Marks’s hard-earned wisdom will help readers tilt the odds in their favor. 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.If you're uncertain as to whether there will be a correction in the market - or if you think there's no reason to worry because 'it's different this time' - you have to read this book before you make a move. Long-term economic growth is driven by the number of hours worked and productivity per working hour.

When risk tolerance takes over and lenders compete avidly for opportunities, the bidding is likely to become overheated. 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. Well, he’s someone whose job is to invest in a range of assets, comprising a package known as a portfolio, which he hopes will increase in value as the years pass.Thus an overheated auction in the credit market—as elsewhere—is likely to produce a “winner” who’s really a loser.

It not only explains what cycles are, how they tend to act and what influences them, but how best to position yourself within them to deal with risk and the current market environment. While most investment professionals take the standard out - that 'you can't time the market' - in Mastering the Market Cycle Howard Marks, a living investment legend, takes the contrarian point of view that not only can you time markets, but it's imperative that you do so. Howard Marks, among the world's most successful investment managers as well as an intellectual leader of the profession [has written a new book].The less prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs. But the force behind regression continues to exert itself, the momentum pushes the cycle past the midpoint to the next high or low. The greatest lessons regarding cycles are learned through experience…as in the adage ‘experience is what you got when you didn’t get what you wanted.

In investing, there is nothing that always works, since the environment is always changing, and investors’ efforts to respond to the environment cause it to change further. If people (or companies) believe there’s a recession on the horizon, they spend less (companies hold off on new projects), and the economy inevitably slides into a recession.

Likewise, most collapses are preceded by a wholesale refusal to finance certain companies, industries, or the entire gamut of would-be borrowers.