Mastering the Market Cycle: Getting the Odds on Your Side

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THE NEW YORK TIMES BESTSELLER Named “Wall Street’s Favorite Guru” by Barron’s (March 2013), Howard Marks provides practical insight and keen analysis on how to understand, track, and react to the ups and downs of market cycles. Basic necessities (consumer staples) like food and medicine are less responsive to the economic cycle.

Not knowing the future means being prepared for things that may not go as planned from a portfolio perspective.Of course, repeating key points can help you remember them but there is a limit and, in my opinion, Mr Marks crosses it. 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.

But it helps to know that being wrong is inevitable and normal, not some terrible tragedy, not some awful failing in reasoning, not even bad luck in most instances.A simple metaphor relating to real estate helped me to understand this phenomenon: What’s an empty building worth? But few of them pay sufficient attention to what the information they glean says about their position in the current investment environment. Company profits follow a cycle similar to the economy but not all companies follow the same pattern. A host of independent developments — management decisions, technology changes, regulations, taxation, geopolitical events, natural disasters, etc.