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The Most Important ThingUncommon Sense for the Thoughtful Investor$
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Howard Marks

Print publication date: 2011

Print ISBN-13: 9780231153683

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231153683.001.0001

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PRINTED FROM COLUMBIA SCHOLARSHIP ONLINE (www.columbia.universitypressscholarship.com). (c) Copyright University of Minnesota Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CUPSO for personal use.date: 20 September 2021

The Most Important Thing Is … Being Attentive to Cycles

The Most Important Thing Is … Being Attentive to Cycles

(p.67) 8 The Most Important Thing Is … Being Attentive to Cycles
The Most Important Thing

Howard Marks

Columbia University Press

This chapter considers an important requirement for successful investing: being attentive to cyclicality. In investing, values can evaporate, estimates can be wrong, circumstances can change and “sure things” can fail. However, there are two concepts we can hold to with confidence: first, most things will prove to be cyclical, and second, some of the greatest opportunities for gain and loss come when other people forget the first rule. Objective factors play a large part in cycles, but it is the application of psychology to these factors that causes investors to overreact or underreact, and thus determines the amplitude of the cyclical fluctuations. Ignoring cycles and extrapolating trends is one of the most dangerous things an investor can do.

Keywords:   cyclicality, cycles, psychology, investors, cyclical fluctuations

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