the success of any investment depends in large part…

Keyword cycles the success of any investment depends in large part on where you are in the cycle when you make it. Cycles can have a major impact on the growth trajectory of a business, the valuation, and of course the potential rate of return. Market tops a relatively easy to recognize. Buyers generally become overconfident and almost always believe this time is different. It's usually not. There is always a surplus of cheap debt and leverage levels escalate compared to historic leverages and buyers will accept over optimistic accounting adjustments and financial forecast to justify taking on high levels of debt. Unfortunately most of these forecasts then not the materialize once the economy starts decelerating or declining. Another indicator is the number of people who start getting rich and the number of investors who are claiming outperformance. Smart investors perform well through a combination of self-discipline and sound risk assessment even when market conditions

— from Leadership & Business (Leadership/Business) · What it Takes, Lessons in the Pursuit of Excellence

In the book

Find the margin of safety: the gap between a thing's intrinsic value and its price, in something non-obvious, alongside people you believe in. Respect cycles, because where you are in the cycle when you buy matters enormously, and market tops are easy to spot if you're honest — everyone is overconfident, leverage is everywhere, and a crowd of people are suddenly getting rich. One of the wisest investors I know says he approaches every single investment as if he were stupid: he worries about what could go wrong, and lets the upside take care of itself. — Leadership & Business (Leadership/Business)

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