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Mastering The Market Cycle: Getting the Odds on Your Side Kindle Edition
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A NEW YORK TIMES, WALL STREET JOURNAL, AND USA TODAY BESTSELLER
The legendary investor shows how to identify and master the cycles that govern the markets.
We all know markets rise and fall, but when should you pull out, and when should you stay in? The answer is never black or white, but is best reached through a keen understanding of the reasons behind the rhythm of cycles. Confidence about where we are in a cycle comes when you learn the patterns of ups and downs that influence not just economics, markets, and companies, but also human psychology and the investing behaviors that result.
If you study past cycles, understand their origins and remain alert for the next one, you will become keenly attuned to the investment environment as it changes. You’ll be aware and prepared while others get blindsided by unexpected events or fall victim to emotions like fear and greed.
By following Marks’s insights—drawn in part from his iconic memos over the years to Oaktree’s clients—you can master these recurring patterns to have the opportunity to improve your results.
- LanguageEnglish
- PublisherHarper Business
- Publication dateOctober 2, 2018
- File size4540 KB
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Get to know this book
What's it about?
This book teaches you how to identify and master the cycles that govern the markets, providing insights into the patterns of ups and downs that influence not just economics, markets and companies, but also human psychology and investing behaviors.Popular highlight
“What the wise man does in the beginning, the fool does in the end.”1,116 Kindle readers highlighted thisPopular highlight
The events in the life of a cycle shouldn’t be viewed merely as each being followed by the next, but — much more importantly — as each causing the next.1,037 Kindle readers highlighted thisPopular highlight
Warren Buffett once told me about his two criteria for a desirable piece of information: it has to be important, and it has to be knowable.898 Kindle readers highlighted this
From the Publisher
A Note to Readers from Howard Marks, author of Mastering the Market Cycle
Investors clearly could do much better if they knew what lies ahead. But they can’t. Few people can accurately predict what the future holds in store for the economy and markets, and fewer still know enough about these things to out-think and thus out-invest the general consensus of investors whose views are incorporated into – 'discounted by' – the market prices of securities. But we know economies and markets follow an up-and-down pattern called a cycle and, importantly, knowing where we currently stand with regard to the economic cycle and the market cycle can give us a better idea of what lies ahead. This is a process through which investors can get the odds on their side.
When the economy is just beginning to recover from a slowdown and the markets are picking themselves up off the floor after a bust, it’s highly likely that security prices haven’t been lifted to precarious levels by large doses of investor optimism.
Pleasant surprises are more likely to lie ahead than disappointments; investors will probably come to be persuaded of these things over time and thus become buyers; and their buying should cause security prices to rise. At such a point – when economies and markets are low in their cycles – good things are more likely to lie ahead than bad things.
Since security prices aren’t inflated, buying at that point is likely to make for significant appreciation and entail little risk.
And on the contrary, when the recovery and bull market have been rolling for a while, investors are likely to be feeling good, and their optimism is likely to be incorporated in security prices.
Thus prices may be at risky highs; disappointments are more likely to lie ahead than good news; and thus risk may be high and appreciation hard to come by. All these things mean that when we’re high in the cycle, the odds are against you. When others feel good and drive prices to highs, it’s time to cut risk and take some of your money off the table.
In all these things, the operative words are 'likely' and probable.' So while we can’t know what the future holds, we can have a better idea whether the wind is at our back or in our face. The best investors have a sense for where we stand in the cycle and thus whether it’s time to build more aggressiveness or more defensiveness into their portfolios. This book will teach you what cycles are, what causes their rise and fall, and thus how to tell what investment moves are most likely to succeed.
Editorial Reviews
Review
“Howard Marks, among the world’s most successful investment managers as well as an intellectual leader of the profession [has written a new book]. Mastering the Market Cycle is…wise…A careful reading can make us better investors and protect us from the all too frequent errors that ruin investment results.”—Burton G. Malkiel, Wall Street Journal “Howard Marks’s Mastering the Market Cycle is a must-read, because the cycles covered in this book are important and because Howard is one of the investing greats of his generation.” —Ray Dalio, Co-Chief Investment Officer and Co-Chairman, Bridgewater Associates “I always say, ‘There’s no better teacher than history in determining the future.’ Howard’s book tells us how to learn from history . . . and thus get a better idea of what the future holds.”—Charlie Munger, Vice Chairman, Berkshire Hathaway “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.”—Bill Gurley, General Partner, Benchmark “Mastering the Market Cycle reveals how cycles not only coincide with, but also cause, financial market risk and opportunity. Written in plain English, Howard Marks’s hard-earned wisdom will help readers tilt the odds in their favor.”—Jeffrey Gundlach, Founder, DoubleLine Capital ”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.” —Carl C. Icahn, Chairman, Icahn Enterprises Praise for Howard Marks’s THE MOST IMPORTANT THING “When I see memos from Howard Marks in my mail, they’re the first thing I open and read. I always learn something, and that goes double for his book.” —Warren Buffett, Chairman and CEO, Berkshire Hathaway —
About the Author
Product details
- ASIN : B078977BRM
- Publisher : Harper Business; Reprint edition (October 2, 2018)
- Publication date : October 2, 2018
- Language : English
- File size : 4540 KB
- Text-to-Speech : Enabled
- Screen Reader : Supported
- Enhanced typesetting : Enabled
- X-Ray : Enabled
- Word Wise : Enabled
- Sticky notes : On Kindle Scribe
- Print length : 350 pages
- Best Sellers Rank: #215,023 in Kindle Store (See Top 100 in Kindle Store)
- Customer Reviews:
About the author
Howard Marks is chairman and cofounder of Oaktree Capital Management, a
Los Angeles-based investment firm with $80 billion under management. He
holds a Bachelor's Degree in finance from the Wharton School and an MBA
in accounting and marketing from the University of Chicago.
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Customers find the book contains tons of useful insight and an in-depth, invaluable look at how investors should view and evaluate. They also describe the reading experience as worth it and great insights. Opinions differ on the writing style, with some finding it easy to read and understand, while others say some passages are repetitive.
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Customers find the book contains tons of useful insight, making it essential reading for investors. They also say the points are well-taken, inspiring, and valuable. Customers also mention the book is easy to read, thoughtful, and timeless.
"...But I found it concise, not verbose, and one of the better books on investing I've read. I got a lot from reading this." Read more
"...But it’s still a really inspiring book on an important and under-discussed area that I will put to good use immediately...." Read more
"...Definitely worth reading and probably worth reading twice. Lots of great information." Read more
"...Thing' had an enormous impact on me because of its crystal clear ideas and messages and I finished it eager for more...." Read more
Customers find the book worth reading, interesting, and insightful. They also say the author is successful.
"...This is a great read that can really improove your understanding of the market and help you become a better investor." Read more
"...Definitely worth reading and probably worth reading twice. Lots of great information." Read more
"...It still a very interesting and insightful book, but as more focused it ends up a little more repetitive...." Read more
"...Nonetheless, this is a fantastic book that has definitely made me a wiser investor." Read more
Customers are mixed about the writing style. Some find the book easy to read and understand, with practical insights. They say the ideas are brought in a simple manner and are easy to get the information. However, others say some passages are repetitive and redundant at times.
"...set by the author’s investment letters some passages of the book are a bit repetitive with their long and recurring chains of cause-and-effects and..." Read more
"...This book was definitely not a quick read for me. But I found it concise, not verbose, and one of the better books on investing I've read...." Read more
"...interesting and insightful book, but as more focused it ends up a little more repetitive...." Read more
"This is a great book with tons of details and explanations of how the economy runs through cycles in all the areas not just the stock markets...." Read more
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Top reviews from the United States
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A fundamental cornerstone for the author is that financial markets cannot be predicted with any practically usable precision in the short to medium term. This doesn’t mean that all market outcomes are equally probable at all times. By looking to current conditions and by this forming an opinion on where we are in the market cycle an investor, according to Marks, can tilt his portfolio to take advantage of what is more likely to happen in the years ahead. It’s both about what one thinks will happen depending on where one is and about the probability of this happening compared to other scenarios. If an investor is good at this game it should pay off in the long run and he tilts the odds for success in his favor. Prepare, don’t predict. I think he is totally spot-on in this respect.
Another key basis in mastering the cycle is to understand that things don’t just happen one thing after another in – unfortunately irregular – cyclical patterns. What happens in one stage of a market cycle is instead causing it to move on to the next stage. Cycles are chains of cause-and-effect relationships. After a pair of introductory chapters the main part of the book is devoted to describing a large set of interrelated and parallel such cycles: the economic cycle, the profit cycle, the risk attitude cycle, the credit cycle and so on. Underlying all these is the cyclical patterns in investor psychology – a topic clearly nearest to Marks’ heart. To a large extent Marks reads various psychological markers and positions himself in the cycle by these. Next comes one chapter that tries to assemble all the above cycle inputs into the full mosaic of the market cycle. The book finishes with a few concluding more practical chapters and a needlessly cut-and-paste type of summary.
It is honestly a luxury to have 50 years of hard won experience condensed in such a graspable format. Marks is a simply superb writer. Much like Warren Buffet the language can be deceptively simple, causing fairly complex issues to sound like child’s play. Make no mistake – this is investment thinking on the highest level. Still, compared to the high standards set by the author’s investment letters some passages of the book are a bit repetitive with their long and recurring chains of cause-and-effects and some newly written chapters that don’t build on previous investment letters, but are required to make an coherent story, are perhaps slightly less inspired than the others.
There are clearly others who have made contributions to the understanding of market cycles such as Hyman Minsky, various Austrian economists, the books from Marathon Asset Managed edited by Edward Chancellor plus many others. However, since Marks is so focused on reading non-fundamental and non-economic signposts I think the most complementary book might be Big Debt Crisis by the more Borg-ish Ray Dalio with his “economic machine”-concept, who obviously mostly zeros in on the central bank dominated cycle of monetary policy.
When it comes to books on market cycles this is a must read – but it could have been even better.
This is a review by investingbythebooks.com
Nonetheless, this is a fantastic book that has definitely made me a wiser investor.
Top reviews from other countries
A must have piece of literature art in the top shelf
This helps you get a good understanding of the 2008 GFC , and hopefully - that’s the book’s objective anyway - will help you understand where you’re standing now in the market cycle.
The book is well-written, trying too avoid too technical jargon so I’d say it’s addressed to a rather large public. I would recommend it to anyone who’s interested in investing in the stock market, professionally or personally.
The preacher simply replied.."I will give keeping the sermon until everyone gets it!"
I will have to admit that I do not think that I fully did get 'it' (the explanations of the market cycle), in the beginning of the book, but by the end I did get message.
This is not the first lesson I received from Mr. Marks, I also appreciate the continued sermon on risk vs reward. He did write on it again in this book as well. As risk and reward is different at different stages of the cycle.
Higher risk does not equal greater reward, unlike what they taught him in school. In fact Michael Milken taught him the reverse lesson, that lower risk can equal greater reward. Mr. Mark then used this new perspective to buy distressed debt (junk bonds) at low prices to gain great gains for his funds. You have to ask yourself "At what price does it get so low that it reduces the risk?"
To give an example..In 2019, Oaktree Capital (Mr. Marks fund) bought 500,000 plus shares in a company for 10-20 cents each. He manages $200 Billion. The investment is an estimated $100,000. At that price, what is the risk? There is uncertainty with this company, it could go bankrupt and therefore he could lose the investment, but that would not make a dent in his portfolio. Whereas the upside is that the company has the potential to battle back, and it definitely is working hard. It might take ten years or more, but by then it could build itself back to a $10 per share company. It is nice to see a portfolio where the investor practices what he preaches.
Low risk vs High reward. Due diligence on the company and its potential future. Investing with a long time horizon.