Mastering the Market Cycle: Getting the Odds on Your Side

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Learning so much from this book as I am in 6 chapters, can relate so much to my own actions both negative and positive. But whenever the pendulum is near either extreme, it is inevitable that it will move back toward the midpoint sooner or later. Keynesian economics: Keynes believed the government should step in to prop up a weak economy through spending/running a deficit but reduce spending/running a surplus in a strong economy.

For instance, economic data is twisted in a positive or negative light depending on the prevailing emotion. These questions should help determine the tilt of a portfolio: more aggressive when the odds are in our favor and more defensive when the odds are against us.When investors are in a pessimistic mood and can’t see more than a few years out, they can only think about the negative cash flows and are unable to imagine a time when the building will be rented and profitable. More than anything else, clients want to know how to position themselves within the current market cycle, where they stand within it and how it will play out. And not the banker who loaned the money for its construction and then repossessed the project from the developer in the down-cycle. Any opinion on the future should be based on: 1) what’s going to happen, and 2) the likelihood of being correct.

All these people see the same data, read the same material, and spend their time trying to guess what each other is going to say. There’s a range of outcomes, and we don’t know where [the actual outcome is] going to fall within the range. When a company files for bankruptcy the equity shareholders are wiped out and debt holders become the new owners of the company.Both are determined by one ticket (the outcome) being pulled from a bowlful (the full range of possible outcomes).

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. Can’t argue with the chap, he’s a serious thinker on the subject but I realised early on I didn’t want to argue with him or hear anymore on economic theory. 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. Operating Leverage: Most businesses have a combination of fixed and variable costs, meaning costs will fluctuate. This book is simply a must-read for all investment professionals, short-time traders or long-term savers alike.People who are successful run the risk of overlooking the fact that they were lucky, or that they had help from others. The wisest investors learn to appreciate these rhythms and identify the best opportunities to take actions which will transform their finances for the better.