The more I try to understand market cycles, the more intrigued I get and the more I realised how clueless I was one year ago. Aggressively buying alts in a downtrending market when the signs are clearly there. NGMI move
Let me mention a few worthy points that I have gained from reading this book
- There are only 2 ways to position your portfolio. Either you’re aggressive or defensive. So the next question is when do you know which side should you be on?
- Credit cycle is key. When there’s euphoria all around, capital is easily available. In these sort of environment, cash is abundant due to loose financial regulations. The symptoms of these euphoria conditions includes low interest rates, risk on behavior, meme coins doing 10-100x, euphoric behaviors and etc. These are the conditions where you should prepare to be more defensive. Easy said than done but there are guidelines for that in his book.
3. Next, everything happens in ascendency be it depression or euphoria which will then be reflected on the charts.
4. Good investing comes from diligently assessing where we are in the cycle and then responding appropriately
5. Cycle positioning: Process of deciding on the risk posture of your portfolio in response to your judgement regarding the principal cycles
6. Asset selection: Process of deciding which markets and specific securities or assets are overweight and underweight
7. IT DOES NOT MATTER whether or not you bought a quality asset, but what matter is HOW MUCH YOU PAID FOR IT (This is key to me)
8. Aggressiveness: The time to be aggressive is during intense depression, during these periods forget about the potential drawbacks and start focusing on the potential missing opportunities
9. Have an intrinsic value for the product that you are investing in and compare it its current market price, does it align? (This is important as it will guide your take profit targets in the far future)
Times are difficult now, but eventually greed will take over fear again. Buy in times of fear and you will reap the rewards when the time comes.
Even though previously I did buy in times of fear. But, I was not buying at the right part of the cycle. That was my downfall. My action plan forward is to nail the accumulation phase and bet with reasonable size during these periods.