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"Cycles" Subtitle: Investment Opportunities, Risks, Attitudes and Market Cycles Author: Howard Marks Publisher: CITIC Press
"Cycles" Subtitle: Investment Opportunities, Risks, Attitudes and Market Cycles Author: Howard Marks Publisher: CITIC Press
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Description
Introduction · · · · · ·
Every investor wants to figure out where they are in the cycle. In other words, people are eager to know whether they should make additional investments and stay in the market, or whether they should decisively sell and leave the market. Everyone knows that market cycles fluctuate, but most investors tend to only think about the first level of market cycle thinking. This book will take you into the second level of market cycle thinking, teach you to understand the past cycle patterns, see the current cycle position, see through the future cycle trends, and obtain the investment layout of a few winners who have survived the financial crisis and defeated the market in the long run.
Howard Marks is a value investor. He subdivided the cycle into economic cycle, government intervention economic cycle, corporate profit cycle, investor psychology and emotional pendulum, risk attitude cycle, credit cycle, non-performing loan cycle, real estate cycle, market cycle, and made a detailed explanation of each cycle. Among them, the author summarized his more than 50 years of investment experience and put forward a clear point of view: human decision-making has a huge impact on economic cycle, corporate cycle, and market cycle, and human decision-making is not scientific. He believes that people's tendency to go to extremes will never end, so these extremes will eventually need to be corrected, rather than the occurrence of cycles will change. Investors need to be wary of the idea that "this time is different." This means that if investors can understand the cycle, they can find opportunities to obtain high returns.
About the Author · · · · · ·
Howard Marks
Co-Chairman of Oaktree Capital and one of the core founders of the company. Author of the best-selling book "The Most Important Thing in Investing". He received a bachelor's degree in economics from the Wharton School of the University of Pennsylvania and later received an MBA from the University of Chicago. He is also a Chartered Financial Analyst (CFA).
As one of the world's top value investors, Max began writing investment memos to investors in the early 1990s. His memos were highly praised by Wall Street, including his good friend, investment guru Mr. Buffett. Mr. Buffett wrote an inscription for his first book, The Most Important Thing in Investing: "This is a rare good book."
Table of contents · · · · · ·
Translator's Preface IX
Preface XIX
Chapter 1 Why should we study the cycle in investment? 001
If we understand the cycles, we can follow the trends of the cycles and make better investments: when the winning side is more favorable to us, we can increase our bets, invest more money to buy assets, and improve the offensiveness of the portfolio; on the contrary, when the winning side is unfavorable to us, we can exit the market, take the money back from the gambling table, and enhance the defensiveness of the portfolio.
Chapter 2 Characteristics of the Cycle 015
The events that occur during a cycle should not be seen as just one event after another, but rather as one event causing the next event to occur. This is very important for analyzing the causal relationship between cycle events.
Chapter 3 The Law of Cycles 035
Past events are heavily influenced by randomness, so future events will be too, and we certainly cannot predict them with complete accuracy. This is unpleasant because randomness, or what we usually call luck, makes our lives unpredictable, hard to make rules for, and hard to be safe.
Chapter 4 Business Cycle 043
Many factors are prone to change, causing the economic growth rate to vary from year to year. Even if the annual average level of economic growth rate is in line with the long-term trend line, the economic growth rate level will vary from year to year.
Chapter 5 Government Intervention in the Business Cycle 065
Since cycles can go to extremes, the tools to deal with extreme cycles should be countercyclical, and people can use them according to their own cycles. Ideally, the cycle of the economic cycle intervention tool is just the opposite of the trend of the economic cycle.
Chapter 6 Corporate Profit Cycle 073
The process of determining a company's profitability is complex and varied. Economic cycles have a significant impact on the sales of some companies, but a much smaller impact on the sales of other companies. This is mainly due to the different levels of operating leverage and financial leverage of companies.
Chapter 7 Investor Psychology and Emotional Pendulum 083
Business cycles, financial cycles, and market cycles all tend to go too far in the up phase, and inevitably, they tend to go too far in the down phase. The phenomenon that these cycles tend to go too far is the result of excessive swings in the investor's psychological pendulum.
Chapter 8 Risk Attitude Cycle 105
During bull markets, we hear many people say, "Risk? What risk? I don't think it's going to go wrong: So far, so good. Risk is my friend anyway, and the more risk I take, the more money I'm likely to make." Later, when markets turn sour, many investors completely change their tune and adopt a simpler statement: "I don't care if I can make a penny more in the market. The only thing I care about is not losing money."
Chapter 9 The Credit Cycle 145
Great investments come not from buying good assets, but from buying assets that are good value for money—good assets at low prices, with high potential returns and limited risk. The phase of the credit cycle when the door is slammed shut is the most conducive to creating a situation where bargains are everywhere, more than any other factor.
Chapter 10 The Bad Debt Cycle 173
In their sober moments, lenders and bond buyers insist on margins of safety large enough to ensure that borrowers can repay their principal and interest even if things go badly. As the race to the bottom begins, lenders are eager to get loans out quickly, financing loans to less worthy borrowers and accepting less robust debt structures, resulting in new bonds without sufficient margins of safety.
Chapter 11 Real Estate Cycle 181
The impact of these widely popular myths is particularly prominent in the case of buying a house. But what people eventually learn is that no matter how correct these myths are, they cannot protect your investment from losing money, because if the cost of your investment is too high, then no reason will work.
Chapter 12 Market Cycles—All Cycles in One 199
For those outsiders who do not understand investment, it is inevitable that their investment will end in a tragic ending, because if this process based on misjudgment is not allowed to go to extremes, the market will not rise to the highest point of the bull market, which is also the starting point of the market reversal and decline. Similarly, the market will not fall to the lowest point of the bear market, which is also the starting point of the rebound.
Chapter 13 How to Deal with Market Cycles 225
The key to your investment performance is not what you buy, but how much you pay for it. The purchase price you pay, that is, the market price of the security and its valuation level relative to its intrinsic value, depends on the psychology of investors and the resulting investment behavior.
Chapter 14 Market Cycle and Investment Layout 269
Whether you can successfully position your investment portfolio to cope with future market trends depends first on what you do, whether to concentrate more forces on offense or more forces on defense; secondly, it depends on when you do it - based on your excellent understanding of the future market trends predicted by the cycle.
Chapter 15: The Coping Cycle Has Limitations 287
It is perfectly reasonable to want to improve long-term performance by changing your portfolio based on your understanding of market cycles, but you must understand that this requires a high level of skill and is very difficult to achieve.
Chapter 16 Success itself has its own cycles 297
Good assets become bad assets, and bad assets become good assets again, that is the cycle. The key to successful investment is to understand the cycle. Everything has a cycle, so there will definitely be ups and downs and repeated cycles within the cycle.
Chapter 17 The Future of Cycles 315
The tendency of people to go to extremes will never end. Therefore, these extremes must eventually be corrected, not the cycle. The economy and the market have never been a straight line, and they have not been in a straight line in the past, and they certainly will not be in a straight line in the future.
Chapter 18 Cycle Essentials 325
I have selected some passages from the book and put them together because I think the content of these passages is very important and can greatly help you understand the cycles, the causes of the cycles, and how to deal with the cycles.
