Stock market cycle book for beginners: How to Read Market Flow review

While studying stocks, I read How to Read Market Flow (주식시장 흐름 읽는 법), one of the classics that many people recommend.

📖 Reading period: July 30 – August 3, 2026 ✍️ Author: Kunio Urakami 📚 Publisher: Hankyung BP

I opened it wondering, 'Is there a reason people keep reading this after more than 30 years?' The more I read, the more I felt it explains very easily that the market has seasons, too.

In particular, understanding the 'four seasons of the stock market' (the financial market, earnings market, reverse financial market and reverse earnings market) was the core of this book.

The market has seasons, too

One of the book's aims is to help readers understand how interest rates, corporate earnings and stock prices move through the flow of financial market ➡️ earnings market ➡️ reverse financial market ➡️ reverse earnings market. The first thing that came to mind as I read was just one question.

Where in the cycle is the stock market right now?

Maybe because the market has become harder to invest in than before, I feel that reading the market cycle now matters even more than simply buying good companies.

In the end, the truth doesn't change

The book uses seasonal food as an example. Just as in-season food tastes best and costs less, the most efficient investment is choosing the industry that fits the time. As I read, I thought,

The truth never changes, does it.

The market keeps changing, but what struck me was that human psychology and the flow of money don't change much.

The hardest principle

Everyone knows the saying 'buy low, sell high.' Strangely, though, in real investing many people do the exact opposite. Reading this line, I felt called out without meaning to,,, haha. I suspect many investors feel the same.

Which companies to watch in a bull market?

The book explains that in a bull market, cyclical stocks, materials industries and companies that had drawn relatively little attention often rise sharply. Reading that, I suddenly wondered, 'Which companies does that mean by today's standards?'

So I asked my friend GPT. 😂 GPT explained that the companies the book describes can be understood as

companies with weak financial structures and weak technology or market position, but whose earnings improve a lot when the economy recovers

It added that in the Korean market in 2026, this strategy often doesn't work the way it used to, because risks such as delisting and rights offerings (new share issues to raise capital) are much larger than before.

Even so, it named steel, chemicals, cement, paper, non-ferrous metals, construction, shipping, machinery and some auto parts as typical highly cyclical industries. Smart friend, as always. 😂

"This time is different"

'This time is different' are the words that have cost investors the most money to date.

It's very short, but I thought it was the scariest sentence in investing. It reminded me once again that history repeats and human psychology doesn't change much.

Three days at the top, 100 days at the bottom

The book also includes the famous saying "three days at the top, 100 days at the bottom." It explains how hard it is to sell exactly at the peak, so when the market starts to overheat, it advises building up cash rather than giving in to greed. I was also impressed by the point that if you hold for the long term, you should keep only top-quality companies that can endure two to three years or more.

Good news can be the most dangerous

The closer prices get to the peak, the brighter the news becomes. When you keep seeing only good articles, you start thinking, 'It'll keep going up even if I buy now, right?' But the book says that is exactly the moment to be most careful. Reading it, I thought, "History really always repeats,,,😂"

Diversification doesn't mean buying similar stocks

Last, this is the part I learned the most from. I too had often bought several stocks in similar industries and thought, 'I diversified.' But the book explains that real diversification means spreading across industries of different character. For example, holding stocks that move in different directions, like exporters and domestic-demand stocks, helps manage risk. This is something I definitely want to remember in my future investing.

Wrapping up

How to Read Market Flow was a book that builds a way of looking at the market. It was written 30 years ago, yet many of its principles still apply today, and I felt once more that investor psychology doesn't change much as times change.

Whether you are just starting out in stocks or have some investing experience, I'd recommend it as a stock book worth reading at least once.