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The Most Important Thing IlluminatedUncommon Sense for the Thoughtful Investor$
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Howard Marks

Print publication date: 2013

Print ISBN-13: 9780231162845

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231162845.001.0001

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The Most Important Thing Is … Being Attentive to Cycles

The Most Important Thing Is … Being Attentive to Cycles

(p.81) 8 The Most Important Thing Is … Being Attentive to Cycles
The Most Important Thing Illuminated

Howard Marks

Columbia University Press

This chapter looks at another vital ingredient for successful investing: being attentive to cyclicality. Objective factors such as quantitative relationships, world events, environmental changes, technological developments and corporate decisions 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. Understanding that cycles are eventually self-correcting is one way to maintain some optimism when bargain hunting after large market drops. This chapter includes comments and insights from four renowned investors and investment educators.

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

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