What caught my eye this week.
I can’t believe it’s 10 years since those crazy weeks of 2008, when the fall of the US bank Lehman Brothers took the global financial system to the edge.
But I guess I have my own additional reasons to feel this way.
At the height of the financial crisis, my father was unconscious in intensive care. He’d had a massive heart attack, but somehow survived it.
In our last conversation he’d gently ribbed me with the news that Lloyds had swooped for HBOS. In the previous one I’d mentioned that I couldn’t get into the share dealing account I held with the latter because its entire website had ground to a halt.
“Oh well, it’s only money,” he’d said, more or less. Typically.
My then near-secret passion of the stock market and the runaway train of real-life had collided and blown up in front of me – in the headlines, in a hospital, in my portfolio, on my mind, all the time. For what seemed like an eternity but was only really a week or so, I was propped up at all hours distracting myself reading The Snowball in some hidden corner of the hospital. I’d buy a couple of newspapers from the reception area each morning – the FT and a changing companion – to keep track of the other drama going on in the world.
My dad’s heart machine bleeped, but that was about it. Day after day.
I count myself fortunate to have been away from any TV during 9/11, and I was also without Bloomberg or CNBC – or much of an Internet connection – for the worst days of this latest New York drama, too.
But I survived, as did the system.
As did my dad, for a little while longer, for which I’m grateful.
Making a model out of a mountain of debt
I share all this to say that for me the financial crisis really was a one-off.
Not so for famed fund manager Ray Dalio, though. Roaming through history and across the globe, the billionaire says he has found similar events all over. And he’s gathered what he knows in a new book, Big Debt Crises.
After repeatedly being bit by events I never encountered before, I was driven to go beyond my own personal experiences to examine all the big economic and market movements in history, and to do that in a way that would make them virtual experiences—i.e., so that they would show up to me as though I was experiencing them in real time. That way I would have to place my market bets as if I only knew what happened up until that moment.
I did that by studying historical cases chronologically and in great detail, experiencing them day by day and month by month.
This gave me a much broader and deeper perspective than if I had limited my perspective to my own direct experiences.
Dalio has now collected and condensed this unusual research for the edification of all. Big Debt Crises is huge, and stuffed with diagrams and data. I admit I’ve only skimmed it so far. It seems cheap at c.£12 on Kindle.
However the even better news is you can currently download it as a PDF for free!
Go to Dalio’s website, and scroll down to the appropriate box to submit your email address. You’ll be signed up for marketing emails, but you can immediately unsubscribe after downloading the e-book if you want to.
Dalio claims the models that his firm Bridgewater created on the back of this research helped it do well in 2008 when so many floundered.
Forewarned is forearmed and all that, but I hope we don’t have to test the thesis again anytime too soon.
Where were you during the financial crisis ten years ago, and what were you thinking? It’d be interesting to hear some more personal (and I guess ideally not political) recollections in the comments below.
Commercial property: What can we expect from this asset class? – Monevator
From the archive-ator: Wall Street made this mess, Wall Street must pay for it – Monevator
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1
Help to Save scheme finally launched – Sky News
Mike Ashley launches tirade against Sports Direct shareholders – Guardian
Millions headed for retirement poverty, despite pension record numbers – ThisIsMoney
US investors who bought the day before the Lehman Bros collapse are up 130% – CNBC
UK man loses 96% of his life savings trading cryptocurrencies – CNN
Is UK property still a good investment? [Search result] – FT
West Sussex named as top county for pensioners to retire to – ThisIsMoney
iPhone prices have increased, bucking the age-old trend for electronics – via Asymco
Products and services
Hargreaves Lansdown’ launches ‘pick and mix’ Active Savings service – Hargreaves Lansdown
Barclays’ new fixed-rate account pays 1.8%, unusually allows one monthly withdrawal – ThisIsMoney
Ratesetter will pay you £100 [and me a bonus] if you invest £1,000 with them for a year – Ratesetter
Why you might consider buying a home with Airbnb appeal – ThisIsMoney
Energy giant SSE blames price cap and hot weather for profit warning – Guardian
Fundsmith founder Terry Smith readying a small cap fund – ThisIsMoney
Comment and opinion
Long-term news… – Morgan Housel
…and more on long, long-term thinking – Of Dollars and Data
You do you: Passive investing edition – Abnormal Returns
Saving rate versus spending rate – Get Rich Slowly
Live local, think global – The Escape Artist
Why you shouldn’t pay too much attention to net worth – Oblivious Investor
Millennials dreaming of retiring at 30 have a math problem – Bloomberg
Is software eating value investing? – A Wealth of Common Sense
Does currency hedging reduce volatility? [US but relevant] – Pension Partners
The problem for active management isn’t indexing – Morningstar
A beginner’s guide to investing in companies for dividends [PDF] – UK Value Investor
Liquid superfood HUEL challenge – TheFIREStarter
The misleading lessons of history [For asset allocation nerds] – Flirting with Models
Kindle book bargains
The $100 Startup: Fire Your Boss, Do What You Love and Work Better To Live More by Chris Guillebeau – £0.99 on Kindle
Small Change: Money Mishaps and How to Avoid Them by Dan Ariely – £0.99 on Kindle
Body Language in the Workplace by Allan & Barbara Pease – £0.99 on Kindle
Your Money or Your Life: A Practical Guide to Getting – and Staying – on Top of Your Finances by Alvin Hall – £0.99 on Kindle
Day-to-day effects of a No Deal Brexit stressed in new impact papers – Guardian
10 considerations before going to cash over Brexit – The Evidence-based Investor
BOE Governor Carney warns house prices could be 35% lower in No Deal Brexit – BBC
Off our beat
Why we buy the things we buy – Vox
Elon Musk’s brain isn’t like yours [On genius] – Bloomberg
Where the Wild Things are – David Perell
The reality stars and Russian trolls of the brand new ‘Busytown’ [Illustration] – Topic
The iPhone franchise – Stratechery
AI is helping SETI researchers track down mysterious (alien?) radio bursts – Berkeley UC
“I don’t believe in panicking before it’s absolutely necessary but I came close to considering it on the morning of 7 October 2008.”
– Alistair Darling, Back from the Brink: 1000 Days at Number 11
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