Investment Lessons from the Global Financial Crisis

Historical comparisons can be useful in thinking probabilistically. On most valuation measures, the global equity market still appears on the expensive side

Dan Kemp 22 November, 2018 | 8:37AM
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Few investors had the foresight in March 2009 to predict where we would be today after a nine-plus-year bull market. In fact, if you knew in 2009 what lay ahead, your level of disbelief may have been as strong as if someone told you in September 2017 that the market would soon lose half its value before turning around.

This has many inherent lessons, but none more than the avoidance of short-term thinking and the power of starting valuations.

Lesson from the Decade Since the Crisis

Let’s rewind to March 2007 momentarily. This was considered to be a goldilocks period as the world looked as healthy as ever, although, as we now know, this assessment of economic health was grossly inaccurate.  A false sense of prosperity can be illustrated in a myriad of ways, however one of the more compelling is to reflect on the March 2007 Monthly Bulletin from the European Central Bank (ECB):

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About Author

Dan Kemp

Dan Kemp  is Chief Investment Officer, Morningstar Investment Management EMEA