The Biggest Lesson Investors Should Have Learned From the Crisis

Joe Weisenthal (0:09)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:15)

And I'm Tracy Alloway.

Joe Weisenthal (0:16)

So Tracy, I'm a little worried that the next few years are gonna be kind of annoying.

Tracy Alloway (0:20)

Annoying in what sense, Joe?

Joe Weisenthal (0:23)

Well, you know, it's like we're coming on 10 years since the financial crisis, and so every day, it's gonna be another story about 10 years since this went under, and 10 years since this went under, and everyone's gonna be retelling war stories about where they were, and journalists are gonna be talking about how they were in the office till 2 a.m. I'm already kind of dreading it all a little bit.

Tracy Alloway (0:46)

Really, but I mean, aren't those fond memories? As a financial journalist, you know, 2007, 2008, those were the sort of glory years. People couldn't even keep up with the news flow. There was so much happening.

Joe Weisenthal (0:59)

No, see, I'm excited about telling my stories. I just don't wanna hear everyone else's. You know, I'm just very selfish. I just, I love my memories. I just don't wanna hear everyone else's stories.

Tracy Alloway (1:08)

Well, I applaud your honesty, Joe.

Joe Weisenthal (1:10)

Yeah, that being said, despite the fact that, you know, we're gonna have all these anniversaries coming up over the next couple of years, it has been obviously an extraordinary time. And I think all of us have learned a ton about how markets and economics work during this period.

Tracy Alloway (1:28)

Yeah, you could definitely say that. I guess you could also argue it the other way and say that the financial crisis and the period after it were so special or so unprecedented that we've all learned massively new things, right? Like how many people were really experts on QE before 2009? And I mean, I guess you could argue there aren't that many people who truly understand it now, but in any case, at least people know what it kind of is.

Joe Weisenthal (1:56)

Maybe we've just exposed how little we know. I frame it this way because today we're going to be talking to a long time industry veteran, someone who worked for the IMF, who's involved in mutual funds, who's been a global macro trader for several years, and someone who has sort of cataloged all of the things that we should have learned since the crisis.

And I think that his perspective and sort of what he's observed has sort of been an extremely, offers some extremely important lessons from the last 10 years.

Tracy Alloway (2:31)

So Joe, I think I know who you're talking about. And if it's who I think it is, I'm very excited. He's the guy who's very active on Twitter and he has a great blog as well. And we all read it.

Joe Weisenthal (2:42)

Yeah, we're going to be talking to Mark Dow.

Anyone who's involved in finance Twitter has certainly seen him. He has this awesome blog called Behavioral Macro, where he talks about big macro topics. He recently wrote a post about 15 things that every investor should have learned from the financial crisis and its aftermath. And we're going to be talking through a few of those things.

Tracy Alloway (3:06)

That sounds great.

Joe Weisenthal (3:17)

Mark Dow, thank you very much for joining us.

Mark Dow (3:19)

Thanks for having me, guys.

Joe Weisenthal (3:21)

Before we get started, many of us in media and finance Twitter have interacted with you for a long time, read your stuff, read your tweets, talked to you on TV or whatever. But for those of the people who don't know who you are yet, why don't you give us the very brief bio?

Mark Dow (3:39)

Yeah, the thumbnail sketch is, I started my career at the Treasury Department as an international economist working on financial disasters in emerging markets primarily. That's where they were then. And then I moved to the International Monetary Fund, where I worked on a lot of different countries and the same kind of debt sustainability issues.

After that, I managed money at a mutual fund for a number of years, fixed income, primarily emerging markets. And then I moved to a global macro hedge fund for about seven years and basically ran part of the book. I had my own portfolio where I ran risk in all kinds of asset classes, primarily currency in emerging markets, interest rates, commodities, that kind of thing. And now I run a glorified family office from my hometown in California.

Joe Weisenthal (4:28)

What strikes me as important about your background before we get into the various lessons is that you've seen the eco side and the trading side. And often the two sides can't really speak to each other very well. A lot of traders can be very good, but they don't really understand economics.