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Mastering The Market Cycle: Getting the Odds on Your Side Hardcover – Illustrated, Oct. 2 2018
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A NEW YORK TIMES, WALL STREET JOURNAL, AND USA TODAY BESTSELLER
Named one of the Best Business Books of 2018 by Business Insider
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.
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.
“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
- Publisher : Harper Business; Illustrated edition (Oct. 2 2018)
- Language : English
- Hardcover : 336 pages
- ISBN-10 : 1328479250
- ISBN-13 : 978-1328479259
- Item weight : 499 g
- Dimensions : 15.24 x 2.82 x 22.86 cm
- Best Sellers Rank: #5,428 in Books (See Top 100 in Books)
- Customer Reviews:
About the author
Top reviews from Canada
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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.
Master Thy Self
This book by Howard Marks can easily replaced 'rational consumer' Economist text of Econ 101 thru 205 ; You want to be a trader and understand the macro effects on the markets? Get this book
5 thumbs up fellow future mulit-millionaire (self aware) traders !
Top reviews from other countries
One of the most important things needed to achieve investment success is to clearly define your investment philosophy and diligently act upon that philosophy. 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. His books and memos should be reread periodically especially at the later stages of a cycle. His coherent writing and logic provide a sounding board while you are in the markets.
His encouragement to set aside emotions, diligently ‘take the temperature’ of the market, and act upon it, is what can set you apart as a successful investor.
Despite being one of the most accomplished investors of our age, Marks has risen above the ranks by following seemingly simple rules, detailed in this book with his usual proficiency, unique insight and, eminently, in plain English.
Coming in late 2018, Mastering the Market Cycle addresses some of the most topical questions for investors, providing not just insightful thoughts that relate to our current times, but a conclusive framework that could have been valid at any point in history, empowering readers with the tools they need to find the right balance between risk and opportunity and between prudence and aggressiveness. This book is simply a must-read for all investment professionals, short-time traders or long-term savers alike. And one of the few books to be always held at hand for all of us who are inevitably presented with great abundance of investment decisions throughout our lives.
I’m already looking forward to his next book.
Marks' writing style is very good but lacks content to keep the reader curious and engaged.
It's a good intro for beginners but nowhere near enriching. No details, very little technicals and super general statements about everything and anything.
Would recommend to a first year undergrad.
The only downside is that it does all get a bit repetitive after a bit. Of course, repeating key points can help you remember them but there is a limit and, in my opinion, Mr Marks crosses it. It could have been two thirds as long and twice as good.
That said, the book is bound to make you re-evaluate your investment portfolio and ask yourself whether you’re thinking for yourself or following the herd. We all love to imagine ourselves to be independent-minded and maybe a little bit contrarian but truth is, with a few rare exceptions, almost everyone is guilty of joining in with all the other bulls and bears.
Maybe this book will make us all reflect before joining the stampede. Certainly, nobody could accuse Mr Marks of not doing his level best to make us think.