From Last Lesson to New Ideas
What worked and what totally bombed.
August 25, 2010
Over the last three months, my blog posts have covered eight lessons from the financial crisis. These are lessons that were developed from reflecting on the experiences in managing a large institutional portfolio through the ‘Global Financial Crisis (GFC)’. The idea to draft these posts came from a list I started keeping on a sticky note on my desk — I hoped that the crisis was a rare event and as such I thought that there must be some value in reflecting on what worked really well, what worked out okay and what totally bombed.
Investment management practices are developed from ideas, research and experience. The GFC was a great test for our theories and practices, a real test, better than a back test or a financial model, a real life stress test with real results to examine. Some practices worked well, others were challenged, and some are being questioned and replaced.
The first step was to reflect on what worked and what didn’t work. Step 2 was to celebrate the things that worked – this step often gets skipped but celebrations are always important. Step 3 is to closely examine what didn’t work and hypothesize on improvements. My eight previous blog posts really only got this far.
Going forward I will continue to post on these topics and I plan to share the results and ideas from the next steps. What are the possible improvements? How can we test them? Will they help going forward or are they only a solution to yesterday’s problems?
Some of this is leading to meaningful changes that we are implementing to policy and practices at my fund and, as they unfold, I hope to share them here.
If you read the lessons, I sincerely hope you got some value for your time spent. I appreciate the feedback I received on the eight lesson blogs. Most has been positive, which was nice, but I have also appreciated the opposing views and have gained from the thought that they provoked.