Part 4/8:

The Importance of Cycles

A core element of Marks' approach is understanding market cycles, defined as alternating periods of expansions and contractions. A detailed understanding of these cycles allows investors to make more informed decisions regarding asset pricing.

For effective investing, one must recognize where the market stands within the cycle. Marks categorizes this cyclical behavior into three stages:

1. Early Stage: Few recognize an improvement, often leading to low asset prices.

2. Mid-Stage: More investors acknowledge improvement, resulting in rising prices.

3. Late Stage: Over-optimism predominates, pushing prices to inflated levels, often setting the stage for future corrections.