 Good day, fellow investors. I recently listened to an interview with Howard Marks and he says and I concur, you cannot predict what will happen next. But what's very important, you cannot predict a crash or something. But what's very important is you can check where we are now in the stock market cycle, in a sector cycle, in a business cycle, in a relationship cycle. And then you can see, okay, based on where we are now, you can probabilistically estimate where will the cycle go over the long term. When you can buy it below the cycle average you invest. And you know, okay, over the long term, I'll do well because I'm buying cheaper value. If you buy too high in exuberance, you know, okay, the risk is high, it might go low, and the upside is low. So it's all about risk and reward. In this video, I want to discuss, okay, first the stock market cycle, then make a selection between sectors and then stocks, how you can really be selective, focus on businesses and give you three examples of high exuberant stock market cycle, a mid-cycle, and perhaps something at bottom of the cycle. Let's start. So an example of a top of the cycle, late part of the economic cycle, I think, is the automotive industry with vehicle sales being flat for a while in the U.S. It's hardly unlikely that car sales will grow, for example, in the U.S. There is the slow growth globally, but it's hardly unlikely we see a boom in the U.S., which relates to U.S. car manufacturers. So what does this tell us? Given the stability in good economic times shown historically, these three very stable selling points, I would argue that things can hardly get better, but can easily get worse. Interest rates on car loans, according to Deutsche Bank, went up 2% over the last two years, significantly increasing the cost of buying a new vehicle, especially as two, three, four years ago, you could buy a vehicle at 0% interest rates. Now it's a little bit more expensive, the debt burden, personal consumption loan that is increasing and it makes harder to sell cars and creates more downward pressure. The conclusion for the car industry is simple. Upside, over the, let's say, medium, long term is limited, short term, anything can happen, but the downside is pretty open. Let me explain this on an example in this case, Ford. So Ford stock, as I take a look at Ford, I know it looks attractive to many given the high yield, low price earnings ratio and low price to book. The dividend yield, 6.5%, very good in this environment, price earnings, very cheap compared to the market, price to book again, very cheap. But if you keep in mind the cycle, you would see that the nice earnings Ford enjoyed in the last five years at peak auto sales with low interest rates might soon turn south. So average earnings over the last five years were between 1 and 1.84. If I sum up the last five years and let's say that if we have a slowdown recession, Ford loses, I don't know, $3 per share over three years or $3 per share over two years, then I get an average earnings per share of 6.15 over eight years. So the average yearly would be 0.45 in earnings per share over an average cycle. How much would you pay for that is up to you, but it gives you an indication, okay, Ford stock price is 10, 50 cents earnings. So price earnings ratio average long term cycle is 20. So we are back to market averages. Similar company to Ford is store industry that I discussed in another video. So you can click it on the card on YouTube. However, the cycle peak has already passed there, something that still has to happen for Ford. A stock that I discussed in another video also in the card is Archer Daniel Midland and that's a food processing business. And it's also cyclical and it depends on food prices. But it's much less volatile than automotive stocks. However, if you look at food prices, you can see, okay, food prices are, let's say still a little bit depressed and earnings per share grow constantly as demand for food increases, but they have their ups and downs. So we have had three positive years, one downturn, positive two years, two years down, and now we are two years up, but higher lows and higher highs. So we can expect more good things over the long term. And I would say Archer Daniel Midlands is now somewhere at the middle of the cycle. So for the bottom of the cycle, I want to improve the comment section. So please, if you know a cycle, a sector, a country, a stock that's really at the bottom of the cycle and you think it will over the long term pick up or it deserves a higher average cycle price, please share it in the comments below. As for me, one sector that is pretty much unloved or the exuberance has passed. So now it might be still under pressure is the solar industry sector. Solar industry sector down the ETF in this case, 44% over the last five years. I made the mistake to invest in the solar industry in June 2018, just before China decided to give less subsidies to the industry. But, and he would get again back to the selectivity, there is the stock market, there are stock sectors and there are businesses. And if you focus on businesses on good business model, I invested in a company that did pretty well and pretty much better than the solar ETF. Difficult to understand who will win in the technology, but you never know. Therefore, if you want to bet on the sector is perhaps better to bet on everything. But if you want to spend time and you look for the best business models, you can find great business models or you could find them when I did the research on the company, a skeptic solar that I found when I looked at the complete solar sector more than 50 stocks. So the main message of this stock market news is, okay, the stock market, if we look at from a cycle perspective, the valuations average valuations are high. But if you're selective, you go into the sectors, you can see, okay, some sectors are high, some are at mid range point and some will always be at the bottom. And this is also, I think Howard Marx's message, you try to buy what is cheap that cannot go lower, you limit the risks of investing and you increase your long term rewards. No matter where we are in the long term cycle, some things are uncorrelated. So if you focus on risk, limit the downside, you can find good, relatively good investments. Looking forward to your comments about which sectors are aware now in the cycle. Looking forward to seeing you in the next video. And if you like this kind of content where we analytically analyze what's going on from a value investing perspective, rationally try to determine the upside and the downside, please subscribe.