{"id":6047,"date":"2019-06-27T07:23:07","date_gmt":"2019-06-27T07:23:07","guid":{"rendered":"https:\/\/www.foxymonkey.com\/?p=6047"},"modified":"2019-06-27T07:31:22","modified_gmt":"2019-06-27T07:31:22","slug":"most-important-thing-book-review","status":"publish","type":"post","link":"https:\/\/www.foxymonkey.com\/most-important-thing-book-review\/","title":{"rendered":"The Most Important Thing Book Review &#8211; Howard Marks"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"6047\" class=\"elementor elementor-6047\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-2f4e6ad elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"2f4e6ad\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-no\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-0abda4c\" data-id=\"0abda4c\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-inner-section elementor-element elementor-element-c22c312 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"c22c312\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-50 elementor-inner-column elementor-element elementor-element-83b0add\" data-id=\"83b0add\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-a1f7459 elementor-widget elementor-widget-image\" data-id=\"a1f7459\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.foxymonkey.com\/recommends\/the-most-important-thing-marks\/\">\n\t\t\t\t\t\t\t<img fetchpriority=\"high\" decoding=\"async\" width=\"322\" height=\"500\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/the-most-important-thing.jpg\" class=\"attachment-medium_large size-medium_large wp-image-6055 lazyload\" alt=\"The most important thing - Howard Marks book\" data-srcset=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/the-most-important-thing.jpg 322w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/the-most-important-thing-193x300.jpg 193w\" sizes=\"(max-width: 322px) 100vw, 322px\" \/><noscript><img fetchpriority=\"high\" decoding=\"async\" width=\"322\" height=\"500\" src=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/the-most-important-thing.jpg\" class=\"attachment-medium_large size-medium_large wp-image-6055 lazyload\" alt=\"The most important thing - Howard Marks book\" srcset=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/the-most-important-thing.jpg 322w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/the-most-important-thing-193x300.jpg 193w\" sizes=\"(max-width: 322px) 100vw, 322px\" \/><\/noscript>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t<div class=\"elementor-column elementor-col-50 elementor-inner-column elementor-element elementor-element-61ef3e4\" data-id=\"61ef3e4\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-6e4365c elementor-widget elementor-widget-text-editor\" data-id=\"6e4365c\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div>It\u2019s interesting that <em>The Most Important Thing <\/em>book was written because Howard Marks used to repeatedly say this expression in client meetings. He would usually tell clients <em>To become a successful investor, \u00a0the most important thing is A,B,C<\/em>.<\/div><div>\u00a0<\/div><div>So after many years of successfully managing lots of money, he put all these guidelines in this book (<a href=\"https:\/\/www.foxymonkey.com\/recommends\/the-most-important-thing-marks\/\" target=\"_blank\" rel=\"noopener\">Amazon link<\/a>).<\/div><div>\u00a0<\/div><div>If you don&#8217;t know who Howard Marks is, he&#8217;s an American investor known for his respectable\u00a0<a href=\"https:\/\/www.oaktreecapital.com\/insights\/howard-marks-memos\" target=\"_blank\" rel=\"noopener\">memos<\/a>. These are\u00a0economic insights he writes every quarter or so.\u00a0He has been writing them for 30 years.<\/div><div>\u00a0<\/div><div>This is not a book review per se, but more like my own commentary on the most important points of the most important book :)<\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-52d43e6 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"52d43e6\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-fee13ce\" data-id=\"fee13ce\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-1bc2dfb elementor-icon-list--layout-traditional elementor-list-item-link-full_width elementor-widget elementor-widget-icon-list\" data-id=\"1bc2dfb\" data-element_type=\"widget\" data-widget_type=\"icon-list.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<ul class=\"elementor-icon-list-items\">\n\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Price is what you pay, value is what you get<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Understanding and recognising risk<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Markets always move in cycles<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Roughly know where we stand in the cycle<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Being stingy pays off in investing<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Being a contrarian gets rewarded but it's hard<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Patience is gold<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Not everything is skill - luck plays a role too!<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-1c2cfff elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"1c2cfff\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-f0e4d7a\" data-id=\"f0e4d7a\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-794b77c elementor-widget elementor-widget-heading\" data-id=\"794b77c\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">1. Price is what you pay, value is what you get<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-0b1bf1c elementor-widget elementor-widget-text-editor\" data-id=\"0b1bf1c\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><!--?xml version=\"1.0\" encoding=\"UTF-8\"?--><\/p><p>The relationship between price and value is probably what separates superior investors from below-average ones. It&#8217;s not an easy task and the relationship changes over time.<\/p><p><!--?xml version=\"1.0\" encoding=\"UTF-8\"?--><\/p><p>Take flights for example. I fly on 7A and have paid \u00a3200 when the person at 7B has paid \u00a3140 for the same exact flight. Maybe they booked it earlier, maybe not. Maybe the airline\u2019s algorithm determined that in my area people are more wealthy and it should charge them more! It doesn\u2019t matter. What matters is that I paid more for the same value.<\/p><p><!--?xml version=\"1.0\" encoding=\"UTF-8\"?--><\/p><div><p>More extreme examples come to mind, such as\u2026 Bitcoin. Has the Bitcoin improved <span style=\"font-style: italic; font-weight: bold;\">so<\/span> much between 2014 and 2017 to justify a 7000% increase?\u00a0Probably not. People changed and learned more about it which is why hype combined with supply and demand worked out the new price.<\/p><p>Now you <span style=\"font-style: italic;\">could<\/span> argue that because of the bitcoin network being available to more people it is now more valuable as a product. But I doubt most people buying it were using it for what it is, a currency, rather than a way to make a quick buck. So was I!\u00a0<\/p><p><!--?xml version=\"1.0\" encoding=\"UTF-8\"?--><\/p><div>All these apply so much to investing as well as life in general. Figuring out what an asset is worth and comparing to its cost gives us an idea of whether it\u2019s a good investment or not. Gives us a <span style=\"font-style: italic;\"><b>margin of safety<\/b><\/span> as Graham would put it.\u00a0<\/div><div>\u00a0<\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-7edd818 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"7edd818\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-f597f6b\" data-id=\"f597f6b\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-fe68487 elementor-widget elementor-widget-image\" data-id=\"fe68487\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"1024\" height=\"661\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/scale-price-value-1-1024x661.png\" class=\"attachment-large size-large wp-image-6063 lazyload\" alt=\"scale-price-value\" data-srcset=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/scale-price-value-1-1024x661.png 1024w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/scale-price-value-1-300x194.png 300w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/scale-price-value-1-768x496.png 768w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/scale-price-value-1.png 1280w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><noscript><img decoding=\"async\" width=\"1024\" height=\"661\" src=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/scale-price-value-1-1024x661.png\" class=\"attachment-large size-large wp-image-6063 lazyload\" alt=\"scale-price-value\" srcset=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/scale-price-value-1-1024x661.png 1024w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/scale-price-value-1-300x194.png 300w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/scale-price-value-1-768x496.png 768w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/scale-price-value-1.png 1280w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/noscript>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-2743b1a elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"2743b1a\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-c288a52\" data-id=\"c288a52\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-72f9992 elementor-widget elementor-widget-text-editor\" data-id=\"72f9992\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div><p>I was trying to convince a colleague that buying Amazon\u00a0because it\u2019s a great company\u00a0doesn\u2019t necessarily mean it\u2019s a good investment. It\u2019s\u00a0the price\u00a0you pay for Amazon that matters, not only Amazon as a company. there are no good or bad stocks. Any bad company can be a good investment at the right price.<\/p><\/div><div>People say London is not where you want to invest right now. But what if I manage to buy at a 20% discount? What about 40%? You get the gist of it. Understanding the relationship between price value allows us to understand risk.\u00a0<\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-bf586fd elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"bf586fd\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-35e7ef9\" data-id=\"35e7ef9\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-06d2c11 elementor-widget elementor-widget-heading\" data-id=\"06d2c11\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">2. The most important thing is recognising risk<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-9a68270 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"9a68270\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-5bd993b\" data-id=\"5bd993b\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-2a9527d elementor-widget elementor-widget-text-editor\" data-id=\"2a9527d\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div style=\"-en-clipboard: true;\"><p>Each asset like stocks bonds and property have specific expectations.<\/p><p>Most people think that by making riskier investments they should get higher rewards. It certainly doesn\u2019t always work this way, otherwise risky investments wouldn\u2019t be risky!<\/p><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-69c91c7 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"69c91c7\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-e0aa17e\" data-id=\"e0aa17e\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-0f081b0 elementor-blockquote--skin-border elementor-blockquote--button-view-icon-text elementor-blockquote--button-skin-classic elementor-blockquote--button-color-official elementor-widget elementor-widget-blockquote\" data-id=\"0f081b0\" data-element_type=\"widget\" data-widget_type=\"blockquote.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<blockquote class=\"elementor-blockquote\">\n\t\t\t<p class=\"elementor-blockquote__content\">\n\t\t\t\t<span style=\"white-space: normal;\">\"And when risk bearing doesn\u2019t work, it really doesn\u2019t work and people are reminded what risk\u2019s all about.\"<\/span>\t\t\t<\/p>\n\t\t\t\t\t\t\t<footer>\n\t\t\t\t\t\t\t\t\t\t\t<cite class=\"elementor-blockquote__author\">Howard Marks<\/cite>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/twitter.com\/intent\/tweet?text=%3Cspan+style%3D%22white-space%3A+normal%3B%22%3E%22And+when+risk+bearing+doesn%E2%80%99t+work%2C+it+really+doesn%E2%80%99t+work+and+people+are+reminded+what+risk%E2%80%99s+all+about.%22%3C%2Fspan%3E+%E2%80%94+Howard+Marks&amp;url=https%3A%2F%2Fwww.foxymonkey.com%2Fwp-json%2Fwp%2Fv2%2Fposts%2F6047\" class=\"elementor-blockquote__tweet-button\" target=\"_blank\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i aria-hidden=\"true\" class=\"fab fa-twitter\"><\/i>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-blockquote__tweet-label\">Tweet<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t<\/footer>\n\t\t\t\t\t<\/blockquote>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-64b55d0 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"64b55d0\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-f51b6cf\" data-id=\"f51b6cf\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-1b43511 elementor-widget elementor-widget-text-editor\" data-id=\"1b43511\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div style=\"-en-clipboard: true;\"><p>Also, most people believe that <strong>quality<\/strong> is what determines the riskiness of an investment. I\u2019ve certainly heard:<\/p><\/div><ul><li><div>I\u2019ve bought Amazon, this is a low-medium risk investment,<\/div><\/li><li><div>Can\u2019t go wrong with central London Buy To Let<\/div><\/li><\/ul><div><div>So recognising risk is all about understanding the expectations vs reality of an investment.\u00a0Low quality companies can be great investments and high quality ones can be very risky! <span style=\"font-weight: bold;\">It all depends on the price you pay for them.<\/span><\/div><p><!--?xml version=\"1.0\" encoding=\"UTF-8\"?--><\/p><div>So recognising risk is all about understanding the expectations vs reality of an investment.\u00a0<\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-a5928da elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"a5928da\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-b2a0500\" data-id=\"b2a0500\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-51c7ef1 elementor-widget elementor-widget-heading\" data-id=\"51c7ef1\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">3. Market Cycles Matter!<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-3714164 elementor-widget elementor-widget-text-editor\" data-id=\"3714164\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div>Cycles exist in investments. Not everything goes up smoothly as World&#8217;s productivity &#8211; GDP. Why? It&#8217;s because people are sometimes greedy and sometimes fearful. Therefore they stretch good expectations for too long and they become very pessimist than needed sometimes.<\/div><div>\u00a0<\/div><div>In fact, most of the times, the markets swing between these 2 extremes, according to Marks. That&#8217;s what he calls <em>The Pendulum<\/em>.<\/div><div>\u00a0<\/div><div>Markets don&#8217;t spend much time in the middle!<\/div><div>\u00a0<\/div><div>Therefore, as investors we can benefit from the irrational behaviour of others and <i>be greedy when others are fearful<\/i> as Buffet likes to say. Now that&#8217;s easier said than done. And as a true passive investor I ask myself: <strong>Isn&#8217;t this a form of market timing? Of course it is!<\/strong><\/div><div>\u00a0<\/div><div>To an extent&#8230; Which is why &#8220;The Most Important Thing book&#8221; aims to teach us how to achieve superior returns, not just the average. I&#8217;ll tackle that point a bit later.<\/div><div>\u00a0<\/div><div>So yeah, investors are emotional animals and get excited (or depressed) too quickly. I quite liked this image from Forbes on investor&#8217;s emotions:<\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-a71f9f0 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"a71f9f0\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-2e38122\" data-id=\"2e38122\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-f92de4e elementor-widget elementor-widget-image\" data-id=\"f92de4e\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t<figure class=\"wp-caption\">\n\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"960\" height=\"628\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/cycle-market-enojis.jpg\" class=\"attachment-large size-large wp-image-6066 lazyload\" alt=\"market-cycle-emotions\" data-srcset=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/cycle-market-enojis.jpg 960w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/cycle-market-enojis-300x196.jpg 300w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/cycle-market-enojis-768x502.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><noscript><img decoding=\"async\" width=\"960\" height=\"628\" src=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/cycle-market-enojis.jpg\" class=\"attachment-large size-large wp-image-6066 lazyload\" alt=\"market-cycle-emotions\" srcset=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/cycle-market-enojis.jpg 960w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/cycle-market-enojis-300x196.jpg 300w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/cycle-market-enojis-768x502.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><\/noscript>\t\t\t\t\t\t\t\t\t\t\t<figcaption class=\"widget-image-caption wp-caption-text\">Market Cycle Emotions<\/figcaption>\n\t\t\t\t\t\t\t\t\t\t<\/figure>\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-973ed57 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"973ed57\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-46e6d8b\" data-id=\"46e6d8b\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-afca92f elementor-widget elementor-widget-text-editor\" data-id=\"afca92f\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><a href=\"https:\/\/www.youtube.com\/watch?v=PHe0bXAIuk0\" shape=\"rect\" style=\"background-color: rgb(255, 255, 255);\">This video<\/a> by Ray Dalio (that I have linked in <a href=\"https:\/\/foxymonkey.com\/tag\/gemfinder\" target=\"_blank\" rel=\"noopener\" style=\"background-color: rgb(255, 255, 255);\">Gemfinder<\/a> numerous times) explains the economics of market cycles very clearly.<br><\/p><p>Now you, like me, may be wondering: Where are we <b>now<\/b>?<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-95078e9 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"95078e9\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-668dff0\" data-id=\"668dff0\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-b137d48 elementor-widget elementor-widget-heading\" data-id=\"b137d48\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">4. Having a sense of where we stand in the market cycle<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-d61fcb8 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"d61fcb8\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-9a084bd\" data-id=\"9a084bd\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-c3115d1 elementor-widget elementor-widget-text-editor\" data-id=\"c3115d1\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div>We may not know where we&#8217;re going but we know where we are. And that gives us a good-enough direction for the future. Nobody can predict the future but people can make educated guesses.<\/div><div>\u00a0<\/div><div>One way to understand where we are is to look around us.\u00a0<\/div><div>\u00a0<\/div><ul><li>Are investors optimistic or pessimistic?<\/li><li>Are they pouring market into the markets or are they avoiding it?<\/li><\/ul><div>Remember the Bitcoin frenzy in 2017? That reminds me what being optimistic means. &#8220;BTC can soon reach $100k and there&#8217;s only a limit to how many of them can exist&#8221;.<\/div><div>\u00a0<\/div><ul><li>Are the current price-to-earnings metrics higher or lower compared to history?<\/li><li>What about yield spreads?<\/li><\/ul><p>For example, as I&#8217;m writing this article in June 2019, the <a href=\"https:\/\/www.multpl.com\/shiller-pe\" shape=\"rect\">Shiller PE<\/a> ratio sits around 30 &#8211; almost double its historical value! As we enter the 10th consecutive year of the bull market this metric tells us that the\u00a0US market looks expensive compared to 100 years of history. The rest of the world looks fairly valued for now.<\/p><p>What about yield spreads? Currently, the US bonds offer a very low real return &#8211; around 2%. The spread between short-term lending (1 to 2-year bonds) and 10-year ones is very narrow.<\/p><p>That&#8217;s very strange as it means lenders want to lend for longer term which pushes the 10-year prices up and their yields down. They believe the 10-year yield will become lower in the future so better buy now. This usually happens in economic slowdowns or recessions.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-b90af23 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"b90af23\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-8c1aa77\" data-id=\"8c1aa77\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-5ac6b6d elementor-widget elementor-widget-image\" data-id=\"5ac6b6d\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t<figure class=\"wp-caption\">\n\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/US-treasury-yields-21-6-19.png\" data-elementor-open-lightbox=\"yes\" data-elementor-lightbox-title=\"US-treasury-yields-21-6-19\" data-e-action-hash=\"#elementor-action%3Aaction%3Dlightbox%26settings%3DeyJpZCI6NjA3MCwidXJsIjoiaHR0cHM6XC9cL3d3dy5mb3h5bW9ua2V5LmNvbVwvd3AtY29udGVudFwvdXBsb2Fkc1wvMjAxOVwvMDZcL1VTLXRyZWFzdXJ5LXlpZWxkcy0yMS02LTE5LnBuZyJ9\">\n\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"1019\" height=\"579\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/US-treasury-yields-21-6-19.png\" class=\"attachment-large size-large wp-image-6070 lazyload\" alt=\"US-treasury-yields-21-6-19\" data-srcset=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/US-treasury-yields-21-6-19.png 1019w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/US-treasury-yields-21-6-19-300x170.png 300w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/US-treasury-yields-21-6-19-768x436.png 768w\" sizes=\"(max-width: 1019px) 100vw, 1019px\" \/><noscript><img loading=\"lazy\" decoding=\"async\" width=\"1019\" height=\"579\" src=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/US-treasury-yields-21-6-19.png\" class=\"attachment-large size-large wp-image-6070 lazyload\" alt=\"US-treasury-yields-21-6-19\" srcset=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/US-treasury-yields-21-6-19.png 1019w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/US-treasury-yields-21-6-19-300x170.png 300w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/US-treasury-yields-21-6-19-768x436.png 768w\" sizes=\"(max-width: 1019px) 100vw, 1019px\" \/><\/noscript>\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t\t\t<figcaption class=\"widget-image-caption wp-caption-text\">US Bond yields (21-6-19)<\/figcaption>\n\t\t\t\t\t\t\t\t\t\t<\/figure>\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-b046710 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"b046710\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-4212e93\" data-id=\"4212e93\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-c15cd46 elementor-widget elementor-widget-text-editor\" data-id=\"c15cd46\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><!--?xml version=\"1.0\" encoding=\"UTF-8\"?--> The UK yield curve is not much better &#8211; yielding 0.8% for 10-year gov bonds and 0.64% for 2-year ones. Another indicator of a low return environment is the dividends companies pay. For US companies (which represent around half of the global market nowadays) that&#8217;s around\u00a01.86% at the time of writing.\u00a0<\/p><p>This is much lower compared to the historical 4-5% companies used to pay. That&#8217;s partly because companies today prefer to buy shares back (which as a result\u00a0increases\u00a0their share price) than pay out dividends. Also the high concentration of tech companies in the US stock market can partly explain why!<\/p><p>So if you&#8217;d ask me, where do we stand in the cycle? I&#8217;d say the 10-year recovery from the most recent financial crisis has had a great run. We&#8217;ve borrowed future returns and at some point, the music will stop. Obviously, this doesn&#8217;t mean we should not invest any more money.<\/p><p>We don&#8217;t really know when prices will become lower &#8211; Australia hasn&#8217;t had a recession for 28 years! But it means two things:<\/p><ol><li>we can invest more defensively than we otherwise would<\/li><li>we should expect lower than average historical returns for similar portfolios<\/li><\/ol><div><div>I&#8217;d focus on cutting down my exposure to\u00a0lower quality assets\u00a0(such as my p2p\u00a0lending and\/or junk bonds) that the business-friendly environment has allowed to\u00a0perform well. I&#8217;m increasing my exposure to more defensive assets such as short-term global <a href=\"https:\/\/www.foxymonkey.com\/does-anyone-own-bonds\/\" shape=\"rect\">bonds<\/a>, <a href=\"https:\/\/www.foxymonkey.com\/recommends\/pp-aberdeen-mit\/\" target=\"_blank\" rel=\"noopener\">university accommodation rentals<\/a>\u00a0and cash.<\/div><\/div><div>\u00a0<\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-5a58aa1 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"5a58aa1\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-a849f07\" data-id=\"a849f07\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-5b9bc6c elementor-widget elementor-widget-heading\" data-id=\"5b9bc6c\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">5. Bargain Hunting<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-057dd5f elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"057dd5f\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-bd0f65c\" data-id=\"bd0f65c\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-100d4b5 elementor-widget elementor-widget-text-editor\" data-id=\"100d4b5\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The Russians have a saying: &#8220;Stingy always pays twice&#8221;. When it comes to investing, I don&#8217;t fully agree with it. I like stingy! I like value and it&#8217;s my job as an investor to always pay less than what I&#8217;m buying. This is where the highest returns come from!<\/p><div>So many times we&#8217;ve heard:<\/div><div>\u00a0<\/div><div><div><em>&#8211; Look, that&#8217;s so cheap!<\/em><\/div><div><em>&#8211; Well, it&#8217;s cheap for a reason.<\/em><\/div><\/div><div>\u00a0<\/div><div><div>Being sceptical will save you from dropping off an aeroplane when someone says it&#8217;s safe. But being too skeptical makes you so pessimistic that you will miss out on some great opportunities that will come your way.<\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-ca802de elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"ca802de\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-bb343ab\" data-id=\"bb343ab\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-1779dcc elementor-blockquote--skin-border elementor-blockquote--button-view-icon-text elementor-blockquote--button-skin-classic elementor-blockquote--button-color-official elementor-widget elementor-widget-blockquote\" data-id=\"1779dcc\" data-element_type=\"widget\" data-widget_type=\"blockquote.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<blockquote class=\"elementor-blockquote\">\n\t\t\t<p class=\"elementor-blockquote__content\">\n\t\t\t\tWe make money not because an item is being loved by everyone, but because nobody wants it enough so that its price is now worth buying!\t\t\t<\/p>\n\t\t\t\t\t\t\t<footer>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/twitter.com\/intent\/tweet?text=We+make+money+not+because+an+item+is+being+loved+by+everyone%2C+but+because+nobody+wants+it+enough+so+that+its+price+is+now+worth+buying%21&amp;url=https%3A%2F%2Fwww.foxymonkey.com%2Fwp-json%2Fwp%2Fv2%2Fposts%2F6047\" class=\"elementor-blockquote__tweet-button\" target=\"_blank\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i aria-hidden=\"true\" class=\"fab fa-twitter\"><\/i>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-blockquote__tweet-label\">Tweet<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t<\/footer>\n\t\t\t\t\t<\/blockquote>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-309b2be elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"309b2be\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-0d5969d\" data-id=\"0d5969d\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-63c962b elementor-widget elementor-widget-text-editor\" data-id=\"63c962b\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div>Therefore, when I see a flat trading at a -15% discount I buy &#8211; as I did recently on <a href=\"https:\/\/www.foxymonkey.com\/recommends\/pp-birmingham-mit\/\" target=\"_blank\" rel=\"noopener\">this Birmingham property<\/a>.<\/div><div>\u00a0<\/div><div>And buying cheaper than its value will eventually pay off if I&#8217;m right. But finding underpriced assets is not easy. How do we go about finding value?<\/div><div>\u00a0<\/div><div>Marks suggests we focus on some certain characteristics such as:<\/div><ul><li>Items not fully understood or known by everyone<\/li><li>Controversial buys<\/li><li>Not proper buys for &#8220;high-quality&#8221; portfolios<\/li><li>Unloved and unpopular<\/li><li>Poor historical returns<\/li><\/ul><p>When I look at some great money-making investments in the past few years a lot of those characteristics come to mind! Everyone was afraid that renewable energy will take over oil plus OPEC disagreements brought its price down to 28$ a barrel in 2015.<\/p><p>Looking back, obviously we&#8217;re still using oil and that would&#8217;ve been a screaming buy.<\/p><p>Another one: Some areas in London like Peckham that were the least favourable a decade ago, only to appreciate so much lately. I&#8217;m looking at you unpopular Glasgow that you haven&#8217;t reached your 2008 house price levels yet.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-acd1777 elementor-blockquote--skin-border elementor-blockquote--button-view-icon-text elementor-blockquote--button-skin-classic elementor-blockquote--button-color-official elementor-widget elementor-widget-blockquote\" data-id=\"acd1777\" data-element_type=\"widget\" data-widget_type=\"blockquote.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<blockquote class=\"elementor-blockquote\">\n\t\t\t<p class=\"elementor-blockquote__content\">\n\t\t\t\tLarge amounts of money aren't made by buying what everybody likes. They're made by buying what everybody underestimates.\t\t\t<\/p>\n\t\t\t\t\t\t\t<footer>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a href=\"https:\/\/twitter.com\/intent\/tweet?text=Large+amounts+of+money+aren%27t+made+by+buying+what+everybody+likes.+They%27re+made+by+buying+what+everybody+underestimates.&amp;url=https%3A%2F%2Fwww.foxymonkey.com%2Fwp-json%2Fwp%2Fv2%2Fposts%2F6047\" class=\"elementor-blockquote__tweet-button\" target=\"_blank\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i aria-hidden=\"true\" class=\"fab fa-twitter\"><\/i>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-blockquote__tweet-label\">Tweet<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t<\/footer>\n\t\t\t\t\t<\/blockquote>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-b8a6da7 elementor-widget elementor-widget-text-editor\" data-id=\"b8a6da7\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>I&#8217;m also thinking of some more niche investments that I could have made.<\/p><div>For example, buying into AWS, the Amazon Web Services than now make\u00a0<a href=\"https:\/\/www.zdnet.com\/article\/in-2018-aws-delivered-most-of-amazons-operating-income\/\" shape=\"rect\">more than half of Amazon&#8217;s operating income<\/a>! I certainly spotted the trend of the whole IT industry trusting amazon to run its services back in 2014. That was probably little known to the world out of the IT sphere.<\/div><div>\u00a0<\/div><div><div>Now everyone knows about AWS and how Amazon has had some great success turning this product into a money-making machine for its business.<\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-60d7782 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"60d7782\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-8222751\" data-id=\"8222751\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-2366858 elementor-widget elementor-widget-heading\" data-id=\"2366858\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">6. The most important thing is\u2026 Being a contrarian<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-fc1f176 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"fc1f176\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-3b6bbbb\" data-id=\"3b6bbbb\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-2b471bd elementor-widget elementor-widget-text-editor\" data-id=\"2b471bd\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div>Being a contrarian is quite a hard thing to do. Not only you have to do the opposite of what people are doing, but you also need to understand why they\u2019re wrong. Plus psychologically, it\u2019s double the effort to lose when most people are winning.<\/div><div>\u00a0<\/div><div>Selling when everyone around you is getting richer is easier said than done.<\/div><div>\u00a0<\/div><div>This ties up nicely with the bargain characteristics. Underestimated, unpopular areas turned out to be great places to invest a few years ago.<\/div><div>\u00a0<\/div><div>It&#8217;s not what we like that gives the best returns, but what is cheap compared to its future value.<\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-f8d851d elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"f8d851d\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-28cbad5\" data-id=\"28cbad5\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-fa04b65 elementor-widget elementor-widget-heading\" data-id=\"fa04b65\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">7. Being patient<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-199502e elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"199502e\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-a12bd65\" data-id=\"a12bd65\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-642a13b elementor-widget elementor-widget-text-editor\" data-id=\"642a13b\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div>If we, as individual investors have an edge over professional managers, is that <strong>we have the option\u00a0of doing nothing<\/strong>. For the majority of the time, doing nothing is the best course of action. And by the way, doing nothing itself <i>is<\/i> a course of action.<\/div><div>\u00a0<\/div><div><div>Professional managers have targets to meet, and activity to show. Doing nothing seems irresponsible, after all why are we paying you. To\u00a0study all day and not take action?<\/div><\/div><div>\u00a0<\/div><div><div>But in investing, <em>patient opportunism<\/em> pays off well. Buffet used to sit on $100bn of cash for a long period of time recently until they started buying more AAPL. Usually, waiting for motivated people to sell than going out hunting for them is beneficial to the individual investor. Gives them the upper hand.<\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-533f520 elementor-widget elementor-widget-image\" data-id=\"533f520\" data-element_type=\"widget\" data-widget_type=\"image.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t\t\t\t<figure class=\"wp-caption\">\n\t\t\t\t\t\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/park-doing-nothing-1024x576.jpg\" class=\"attachment-large size-large wp-image-6087 lazyload\" alt=\"Best course of action most of the time\" data-srcset=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/park-doing-nothing-1024x576.jpg 1024w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/park-doing-nothing-300x169.jpg 300w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/park-doing-nothing-768x432.jpg 768w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><noscript><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/park-doing-nothing-1024x576.jpg\" class=\"attachment-large size-large wp-image-6087 lazyload\" alt=\"Best course of action most of the time\" srcset=\"https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/park-doing-nothing-1024x576.jpg 1024w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/park-doing-nothing-300x169.jpg 300w, https:\/\/www.foxymonkey.com\/wp-content\/uploads\/2019\/06\/park-doing-nothing-768x432.jpg 768w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/noscript>\t\t\t\t\t\t\t\t\t\t\t<figcaption class=\"widget-image-caption wp-caption-text\">Best course of action, most of the time<\/figcaption>\n\t\t\t\t\t\t\t\t\t\t<\/figure>\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-82676ea elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"82676ea\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-1365764\" data-id=\"1365764\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-c1ab32a elementor-widget elementor-widget-heading\" data-id=\"c1ab32a\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">8. Respecting luck<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-dedf0b4 elementor-widget elementor-widget-text-editor\" data-id=\"dedf0b4\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>If I learned something from the book <a href=\"https:\/\/www.foxymonkey.com\/recommends\/thinking-in-bets\/\" target=\"_blank\" rel=\"noopener\">Thinking in Bets<\/a> it\u2019s that we, humans like to judge the correctness of a decision by its outcome. But this can be very misleading. Unfortunately, that\u2019s how people assess our life decisions.<\/p><p><!--?xml version=\"1.0\" encoding=\"UTF-8\"?--><\/p><div>In poker, this is called <i>reasoning<\/i>. You may have made the perfect play given the facts and still lose in the end.\u00a0This doesn\u2019t mean that your play was wrong. It means that luck plays an important role too and we shall respect that.\u00a0<\/div><div>\u00a0<\/div><div><div>In life as well as in investing we never have <b>all<\/b> the facts before making a decision but we still need to make one. Call it chance, randomness whatever you want. It\u2019s still something we cannot control but we have to factor in.<\/div><div>\u00a0<\/div><\/div><div>Some great ways to reduce the role of luck when investing are:<\/div><ul><li><div>Have many years of history before trusting something<\/div><\/li><li><div>Judge by a longer time horizon<\/div><\/li><li><div>View the future as a probability distribution\u00a0<\/div><\/li><li><div>Invest defensively to minimise regret rather than maximise return<\/div><\/li><\/ul><div>When times are good, the highest returns go to investors who take the most risk. But this doesn\u2019t mean they\u2019re the best investors. <i>There are old investors and there are bold investors. But there are no old bold investors.<\/i><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-328435b elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"328435b\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-0834167\" data-id=\"0834167\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-e118f65 elementor-widget elementor-widget-heading\" data-id=\"e118f65\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Final Thoughts<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-7a366aa elementor-icon-list--layout-traditional elementor-list-item-link-full_width elementor-widget elementor-widget-icon-list\" data-id=\"7a366aa\" data-element_type=\"widget\" data-widget_type=\"icon-list.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<ul class=\"elementor-icon-list-items\">\n\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Price is what you pay, value is what you get<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Understanding and recognising risk<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Markets always move in cycles<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Roughly know where we stand in the cycle<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Being stingy pays off in investing<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Being a contrarian gets rewarded but it's hard<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Patience is gold<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t<li class=\"elementor-icon-list-item\">\n\t\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-icon\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<i class=\"fa fa-check\" aria-hidden=\"true\"><\/i>\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/span>\n\t\t\t\t\t\t\t\t\t\t<span class=\"elementor-icon-list-text\">Not everything is skill - luck plays a role too!<\/span>\n\t\t\t\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t<\/ul>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-d83f37c elementor-widget elementor-widget-text-editor\" data-id=\"d83f37c\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<div>I\u2019m writing all these not as an advocate of market timing. Reading through <i>The Most Important Thing<\/i> book I\u2019ve found myself tempted to time the market and go all out or all in which is obviously wrong if I want to succeed as an investor. No-one can time the market perfectly. That\u2019s not the point.<\/div><div>\u00a0<\/div><div><p>But understanding risk, where we stand in the cycle and how markets have worked in the past allows us to be a little bit more conservative or more aggressive when needed. It also helps set our expectations and not be disappointed when &#8220;10% per year from stocks&#8221; are not delivered.\u00a0<\/p><p>For example, as we enter the 10th consecutive year of the bull market, maybe getting a sure return by <a href=\"https:\/\/www.foxymonkey.com\/should-i-pay-down-my-mortgage-or-invest\/\">overpaying our mortgage<\/a> is better than investing the difference. One gives a sure return, the other relies on an expensive market to do so.\u00a0<\/p><\/div><div>But overall, &#8220;The Most Important Thing&#8221; is a book about achieving greater returns than the market. To achieve such returns, our perception about how much things are worth has to be better than the others. That in itself is a very hard thing to do.<\/div><div>\u00a0<\/div><div>If you&#8217;d rather invest every month into a global tracker (such as <a href=\"https:\/\/www.vanguardinvestor.co.uk\/investments\/vanguard-ftse-global-all-cap-index-fund-gbp-accumulation-shares\" target=\"_blank\" rel=\"noopener\">FTSE Global All Cap<\/a> or <a href=\"https:\/\/www.vanguardinvestor.co.uk\/investments\/vanguard-lifestrategy-60-equity-fund-accumulation-shares\/overview\" target=\"_blank\" rel=\"noopener\">Lifestrategy 60\/40<\/a>) and move on with life, I don&#8217;t blame you. That&#8217;s going to give the market returns which can certainly be enough. <a href=\"https:\/\/www.foxymonkey.com\/how-to-be-happy-and-enjoy-life\/\" shape=\"rect\">Money is not everything<\/a>\u00a0and percentages are as good as the stories we tell ourselves.<\/div><div>\u00a0<\/div><div>The book could easily be half the size and Marks is repeating himself at times. But overall, it was a pleasant read and I definitely learned from it.<\/div><div>\u00a0<\/div><div>Let me know your thoughts in the comments!<\/div><div>\u00a0<\/div><div><i>Disclaimer: This is not investment advice. As always, do your own research. This post may contain affiliate links.<\/i><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>It\u2019s interesting that The Most Important Thing book was written because Howard Marks used to repeatedly say this expression in client meetings. He would usually &#8230; <a title=\"The Most Important Thing Book Review &#8211; Howard Marks\" class=\"read-more\" href=\"https:\/\/www.foxymonkey.com\/most-important-thing-book-review\/\" aria-label=\"More on The Most Important Thing Book Review &#8211; Howard Marks\">Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":6055,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[207,194,151],"class_list":["post-6047","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-book-review","tag-books","tag-investing"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Most Important Thing Book Review - Howard Marks - Foxy Monkey<\/title>\n<meta name=\"description\" content=\"This is a book review of Howard Marks&#039; book: The Most Important Thing. 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