Mastering the Market Cycle: Getting the Odds on Your Side

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The long term economic cycle follows fundamental factors that produce a steady average growth rate over a longer secular trend. This cycle in investors’ willingness to value the future is one of the most powerful cycles that exist. Real estate development deals with delays, regulations, zoning issues, local approval, financial approval, and construction.

You now have a general sense of short-term market cycles and the potential benefits of paying attention to your position within them. The credit cycle is an example of lenders, borrowers, and investors swinging between risk-averse and risk-tolerant.Randomness makes recognizing the pattern in cycles more complicated and less predictable and dependable. Conscientious belief in the inevitability of cycles like I’m urging means that a number of words and phrases must be excluded from the intelligent investor’s vocabulary. 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.

An empty building (a) has a replacement value, of course, but it (b) throws off no revenues and (c) costs money to own, in the form of taxes, insurance, minimum maintenance, interest payments and opportunity costs. 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. Written in plain English, Howard Marks’s hard-earned wisdom will help readers tilt the odds in their favor.

This underlying trend in growth clearly follows a long-term cycle, although the short-run ups and downs around it are more discernible and thus more readily discussed. The credit cycle — the ability for businesses to borrow quickly and easily — swings from wide open to closed. Societies rise and fall, and they speed up and slow down in terms of economic growth relative to each other.