We Study Billionaires - The Investor’s Podcast Network TIP562: How to Cope With Market Cycles
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Jul 2, 2023 Discover insights from Howard Marks’ book on mastering market cycles. Explore the emotional rollercoaster of bull and bear markets, and learn how historical bubbles, like Isaac Newton's misfortune, can teach us valuable lessons. Understand why timing market bubbles is risky and why success can sow the seeds of failure. Get tips on when to adopt aggressive or defensive strategies in your portfolio as markets evolve. Stay informed by recognizing investor psychology's pivotal role in navigating economic fluctuations!
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Real Estate Cycles
- Real estate cycles, driven by credit and psychology, follow predictable patterns of optimism, increased activity, rising prices, and eventual reversal.
- Leverage and inflexible supply amplify real estate cycles, making them more pronounced than other asset classes.
Avoid Generalizations
- Avoid broad generalizations in investing, especially in real estate.
- Don't use words like "never," "always," "forever," as they often signal excessive optimism or pessimism.
Newton's South Sea Mishap
- Isaac Newton lost a fortune in the South Sea Bubble despite initial success.
- FOMO drove him to buy back in near the top, highlighting the difficulty of resisting market euphoria.
