The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails

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Entire books have been written about seasonal patterns, technical analysis, business cycles, and the reams of indicators that supposedly telegraph signals of this or that before it happens. They are all useful for anyone who likes following them or takes comfort in models. But they likely provide more information than anyone will ever use and who simply hopes to buy and sell stocks at propitious times. That is why ISM and seasonality are a type of practitioner’s shorthand for the primary cycles that influence stock trading. They are both powerful reminders that the stock market is influenced by forces beyond its control. Those forces can turn bull markets into bear markets and vice versa.

Let ISM data be a reminder of the importance of thinking in terms of three- to five-year investment and economic cycles. If you buy good stocks that pay dividends and make real products, and hold them for three to five years, or longer, and you are always evaluating them against market and economic realities, even better. That analytical exercise should help insulate most stock portfolios from the worst of the stock market’s woes, and provide comfort in the inevitably difficult stretches of the economy and stock market.

The key point with indicators and cycles is that they provide context to the stock market. The stock market is not static. It changes. The principles of motion and change are intuitively understood by most people in their nonfinancial lives, yet they often have great difficulty ...