If you invest the goal is to have more and the easiest and hardest way is to buy low, hold on to your investments for a period of time, sell some of it when it is high and buy more when it is low. That is a cycle. The way a cycle works is when you look backwards, it is easy to see. When you look forward it is very hard to know what and when the top or bottom is. One person who has tried to use cycles as an investment philosophy is Howard Marks, the founder of Oaktree Capital Management. Mr. Marks has written a number of books and every once in a while, he publishes his thoughts on Oaktree Capital Management website. Mr. Marks has made money buying low and selling high and wrote a book called Mastering the Market Cycle, published by Houghton Mifflin Harcourt Publishing Co, NY, 2018.

The reasons why you study the cycles is to:

Cycle positioning – the process of deciding on the risk posture of your portfolio in response to your judgements regarding the principal cycles

Asset selection – the process of deciding which markets, market niches and specific securities or assets to overweight or underweight

Aggressiveness – the assumption of increased risk; risking more of your capital; holding lower quality assets; making investments that are more reliant on favorable macro outcomes; and/or employing financial leverage

Defensiveness – the reduction of risk: investing less capital and holding cash instead; emphasizing safer assets; buying thing that can do relative well in the absence of prosperity; and/or slamming leverage

Skill – the ability to make these decisions correctly on balance through a repeatable intellectual process and the basis for reasonable assumptions regarding the future.

Luck – what happens on the many occasions when skill and reasonable assumptions prove to be of no avail

A market will do what it will do.

At Oaktree we strongly reject the idea of waiting for the bottom to start buying:

1st, there is absolutely no way to know when the bottom has been reached. The bottom can only be recognized only after it has passed.

2nd, it is usually during market slides that you can buy the largest quantities of the thing you want, from sellers who are throwing in the towel and while the non-knife catchers are hugging the sidelines. Soon the selling dries up and would-be buyers face growing competition.

What you need to do is continually do your homework and consider what are good values for stocks and bonds which you are interested in. If you are correct, values will rise and you will be wealthier.

Linking to dividend paying stocks, when you bought your stocks you bought them for a reason. When markets decline, the stocks you own you likely know best and what values are good because you are a long-term holder. If you can buy more that is a good thing, because you can use the dividend to reinvest in the stock for you or average down. In the meantime, if the dividend is safe along with profits, there is always opportunity no matter what the cycle is.

There are more questions than answers, till the next time – to raising questions.