Excellent article on Investor psychology & Market cycles based on Howard Marks' "Mastering the Market Cycle".

cc: @dmuthuk @Gautam__Baid

My fav pts 👇
continued...
Excellent pts 👇

✔️Mania and risk
"The combination of feedback loops and irrational exuberance, where newfound expectations and enthusiasm, encourages investors to bid up and rationalize extraordinary growth in asset prices.
By contrast, during periods of fear and pessimism, many face difficulties with identifying potential future value beyond the immediate-term.

An understanding of where attitudes to risk sits within the current investor psychology cycle can be a useful knowledge advantage.
Markets may misprice assets on a risk-adjusted basis as society swings along the pendulum of psychology.

Marks believes that the biggest source of investment risk is when investors believe that there are no risks at all.
✔️Contrarianism
It is helpful to consider the extent to which optimism or pessimism is incorporated into current asset prices. Skepticism is needed when mass optimism or pessimism is in excess. Contrarianism at the right moments is an important ingredient for successful investing
The rational, analytical and unemotional investor that finds balance between defensiveness and aggressiveness, particularly during periods of mania, is more likely to find success."
My 2 cents - For individual investors, it's a futile effort to predict the Macro but there's a lot we can glean from what is already happening in the Mkts, and how we can posture our Portfolio for offense/defense (on the edges), especially when there's excessive fear/froth in Mkt
Inability to predict the Macro shouldn't stop us from learning more about Business, Credit & Economic cycles and being aware that they can affect Markets in both directions, and impacting the discount/premiums to the Valuations of Companies (far away from their intrinsic values).

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Phenomenal book summaries of "The Best Investment Books Ever". h/t @Investbythebook 👏👏

cc: @dmuthuk @Gautam__Baid

I would add
@chriswmayer's 100 Baggers,
@Gautam__Baid's The Joys of Compounding and @morganhousel's The Psychology of Money
and this list would be near perfect.


Few of my favs from the list

✅Classics

✔️Common Stocks Uncommon Profits by Philip Fisher
https://t.co/E937mMZ5gH

✔️One Up On Wall Street by Peter Lynch
https://t.co/KwFObdEDvX

✔️The Intelligent Investor by Benjamin

✔️The Most Important Thing by Howard Marks
https://t.co/NSMlErGnxM

✔️The Essays of Warren Buffett by Lawrence Cunningham
https://t.co/IAdVxIn54d

✔️Poor Charlies Almanack by Charlie Munger
https://t.co/NPIXqociQQ

✔️Margin of Safety by Seth

✅Psychology

✔️Reminiscences of a Stock Operator by Edwin Lefèvre
https://t.co/RxOo45NZor

✔️The Crowd by Gustave Le Bon
https://t.co/paZKS8pQYr

✔️Thinking fast and slow by Daniel

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