The Book ‘Mastering the Market Cycle’ is written by well known market guru Howard Marks
I am a huge fan of Howard Marks and his memos and I enjoyed reading his previous book ‘The Most Important Thing’
In this Book, Howard Marks talks about market cycles and how one should understand/profit from them.
He has coined a phrase to describe the forces at work:
“There are three ingredients for success-aggressiveness,timing and skill-and if you have enough aggressiveness at the right time, you don’t need that much skill”
So successfully positioning of a portfolio depends on what you do (turn aggressive/defensive) and when you do (depending on the stage of the market cycle)
The Book covers the regularity of cycles, the economic cycle, the cycle in profits, the credit cycle, the real estate cycle, investor psychology, the cycle of success etc
In the Indian context, I have found the one big difference between experienced and rookie investors is the ability to understand cycles and therefore to book profits.The rookie investor assumes the good times will last forever and doesn’t exit on time.
The Book mentions that 80% of understanding market cycles comes from 14 words : “What the wise man does at the beginning, the fool does in the end”
Buffett has reduced the essence of market cycles to just 9 words:
“First the innovator, then the imitator, then the idiot”
I would recommend this Book to those wanting to understand market cycles.