Most investors say they’re “long-term.”
But when markets swing, they behave like short-term tourists.
That’s why Howard Marks built a career by doing the opposite of what the market felt comfortable doing — especially during extremes.
Markets move in cycles.
Most investors don’t.
So today, I want to walk through 5 real examples of how Howard Marks used market cycles to make his best investments — and how you can apply the same thinking.
Let’s break them down.
→ Example 1: He bought aggressively when fear dominated headlines. Marks leaned in when pessimism felt obvious.
• Distressed debt during recessions
• Assets selling below intrinsic value • Forced sellers creating artificial prices
• Capital scarcity, not abundance
He didn’t wait for “clarity.”
He waited for fear. The best returns rarely feel comfortable at the time.
→ Example 2: He reduced risk when optimism felt effortless.
When markets became euphoric, Marks did the unpopular thing.
He lowered exposure not because prices were guaranteed to fall, but because future returns were mathematically compressed.
When everyone is confident, risk is usually hiding.
Cycle awareness beats prediction.
→ Example 3: He treated risk as cyclical, not static.
Risk is not constant. It expands and contracts.
• Loose lending increases fragility
• Tight credit creates opportunity
• High leverage magnifies mistakes
• Low leverage increases survivability
Marks focused less on forecasts and more on positioning.
Risk ignored during good times gets paid for during bad ones.
→ Example 4: He avoided binary bets and survived downturns.
Marks built portfolios that could endure mistakes.
Instead of swinging for maximum upside, he prioritized resilience. That allowed him to invest through multiple cycles without being forced out at the worst moment.
Survival is the first requirement for compounding.
→ Example 5: He acted when others froze.
During market stress, most investors wait.
Marks understood that the greatest opportunities appear when decision-making feels hardest. He didn’t rush — but he didn’t freeze either.
In cycles, speed of courage matters.
Final thought:
Howard Marks didn’t win by predicting markets.
He won by understanding where he stood in the cycle and behaving accordingly.
Most investors study companies.
The great ones study psychology.