No Return: Adam Tooze on the Crises that Changed the World

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Ask any American of a certain generation where they were when they heard the news of President John F. Kennedy’s assassination, and chances are they will recall the moment with remarkable acuity. The same might be said for anyone working in finance or investing — or writing about it — if you asked them: Where were you when you learned Lehman Brothers had filed for bankruptcy?

The fateful day was Sunday, 15 September, 2008. Within a week, the entire American financial system was on the brink. Lehman’s collapse, as many have noted, is “portrayed as the pivotal event that converted severe — but familiar — disruptions in financial markets into a full-blown panic.”

The 10th anniversary of Lehman’s collapse occurred on 15 September 2018. There is no shortage of books covering the global financial crisis, also known as The Great Recession, and its aftermath, from “a blow-by-blow story of the events of the crisis when Lehman crashed,” to former Treasury Secretary Tim Geithner’s memoir of his experiences during the crisis. The number of articles is even larger.

One tome, published a decade after the crisis, has prompted a chorus of praise from critics: Adam Tooze’s Crashed: How a Decade of Financial Crises Changed the World (2018).

“’Crashed’ is an impressive narrative history, weaving together events from around the world with a light touch and a great deal of helpful explanation,” wrote the Washington Post. “Masterful,” said the Guardian. The New York Times, meanwhile, hailed it as “an intelligent explanation of the mechanisms that produced the crisis and the response to it” and called it a “nuanced and often counterintuitive narrative.” And Crashed recently scooped up the prestigious 2019 Lionel Gelber Prize.

In awarding the Lionel Gelber Prize, jury chair Janice Stein noted the monumental events precipitated by the events covered in the book: “The global financial crisis of 2007–2009 undermined global capitalism, exposed the failures of banks to manage their risks, almost broke the Eurozone and played a role in the Ukrainian conflict, Brexit and the election of Donald Trump,” Stein said.

Stein hailed Crashed as “a bold work of extraordinary range and ambition,” adding Tooze had “written the standard work on the crisis and its aftermath.” This is “a big picture book, covering developments in the United States, China and Europe, but Tooze never loses sight of the role of key individuals and the political context in which vital economic decisions were taken,” she said.

One of the central claims of the book is that “the financial crisis and the economic political and geopolitical responses to the crisis of 2008 are essential to understanding the changing face of the world today.”

Tooze, An economic historian and professor at Columbia University, framed the consequences of the financial crisis during a conversation with James M. Lindsay of the Council of Foreign Relations:

“Like any other shock like this, it has an enormous hangover. Things I just don’t think are ever going to be quite the same again. If you look at central bank balance sheets, for instance, they’re still at these extraordinarily inflated levels. And even if they managed to get them down, the act of so-called normalization will itself have huge ripple effect. So, we never really get back to the pre-crisis state.”

Taking the metaphor a little further, Tooze added: “To me the financial crisis is a bit like an earthquake and then, of course, that will knock some houses down, but others will remain perfectly intact. So, it crucially depends on, as it were, the underlying architecture and robustness of your political system.”

In its review of Crashed, the Guardian reminded readers that “the world is in spasm, and has been for years; so long, in fact, that it appears to have been going on for ever”. That is why, the writer noted, “you need to read Crashed.”

Better yet, hear from Tooze in person during his session at the 72nd CFA Institute Annual Conference in London.


All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit:  ©iStockphoto.com/erhui1979

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Disruption and Differentiation

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The theme of the 72nd CFA Institute Annual Conference is “Disruption: The New Reality in Investment Management.” For an industry that has been thriving for a half century, the prospect of significant disruption might seem overdue to some but still quite unlikely to others.

You are undoubtedly aware of the major factors that are at play: the declining ability of active managers as a group to add value over time, the increasing market share of index investing, technological developments that are reforming organizations and strategies, and all-in fees for end clients that are often too high for what they receive in return.

One factor that could make disruption more acute: a lack of differentiation in approach between investment organizations. The past success of existing operating models has led to standardization rather than experimentation, and most everyone in a particular category looking like everyone else.

A good example of this can be found by comparing investment advisory firms. If you pick a dozen at random and go their websites, many will have a page or a section that is titled something like, “We are different.” But if you look through the sites, you’ll find that most aren’t any different at all. The firms may fit into identifiable subsets based upon the regulatory rules under which they operate, but within them they look very similar.

That is also true of most asset management organizations. With a few notable exceptions, they offer nothing markedly different in terms of organizational design, culture, people, incentives, marketing, fees, or business models. The firms might take risks in the market, but they are reluctant to do so in other ways.

One such example is when asset managers try to win a mandate from an institutional investor. The process can unfold in a variety of ways, but in many ways it still resembles the “manager beauty contests” of yore. Four or five finalists in a particular asset class or strategy are asked to come before an investment committee to try to win the business.

After all the presentations have been given, there is usually not much to distinguish one from another. The decision is regularly swayed by the performance record of a manager and/or the persuasiveness of a particular presenter, neither of which is a good way to select a provider.

Even larger asset owners and consulting firms with their own analysts struggle to find true differentiation among potential managers, and the managers don’t go out of their way to help. Since adding value comes from doing something different — and having it pay off — you’d think that identifying those differences would be a priority not only for the managers but also for those allocating capital. In practice, most of the manager pitch books and allocator research reports fail to truly distinguish managers in meaningful ways.

To survive the disruption ahead, organizations will need to kindle a spirit of innovation. Sticking to the standard playbook has been a tenable strategy in the past. To succeed in a more challenging environment, they will probably need to write a new one.

At the 72nd CFA Institute Annual Conference, Tom Brakke, CFA, will lead an extended session on the Principles of Manager Due Diligence and Selection, including approaches for identifying true differentiation among asset managers.


All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit:  ©iStockphoto.com/retrorocket

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Improving Decisions to Evolve beyond Passive Management

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“Personally, it would be a lot of fun to be a portfolio manager in a world where 80% of the market was indexed, because there would be huge liquidity with dumb money.”

— Richard H. Thaler

Index funds have disrupted the status quo and passive strategies are expected to play an increasingly large role in the investment industry’s future. Yet some observers, like Nobel laureate Richard H. Thaler, think that future will be full of opportunities for active investment managers.

At the 70th CFA Institute Annual Conference in Philadelphia, Thaler pointed out that an environment dominated by passive indexing strategies holds greater opportunities for the smaller number of investors who remain active.

The question facing today’s portfolio managers is how they can survive long enough to see that future. Read More

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Where Should Investors Look in Times of Global Disruption?

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Peter Zeihan: The Geopolitics of a Fragmenting World

Geopolitical strategist Peter Zeihan has been predicting — and more recently, interpreting — a world that is fragmented by a failure of global stability. The work has kept him busy, and he is likely to get busier in the coming months.

International tensions and global disarray have given rise to stories about Brexit preparations that look more like people getting ready for Armageddon, the CFO of a Chinese tech company whose arrest has exacerbated international tensions, and rumors of Venezuelan gold ready to be spirited away from the country’s central bank.

From Zeihan’s perspective, these events are all symptoms of an unraveling global order. And he thinks that this disruption in the global status quo has been long overdue. Read More

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Time for Financial Professionals to Sharpen Their Saws

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Time for Financial Professionals to Sharpen their Saws

How can you improve your professional performance?

“Sharpen the saw,” says Stephen R. Covey, author of The 7 Habits of Highly Effective People. Covey uses the metaphor of a woodcutter, straining to fell a tree with a blunt saw, to illustrate the importance of taking time to develop our skills. When we step away from our immediate responsibilities and focus on our professional growth — turning away from the proverbial tree to sharpen our saw — we set ourselves up to do our jobs better and improve our performance over the long term.

Covey’s insights raise an interesting question for financial professionals: What specific actions can we take to do our jobs better? Read More

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These Are the Most Important Connections

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network concept

The most important connections in your network may not be the ones you think.

Economist and author Tim Harford has observed how professional connections can help with job searches, and it turns out that “the most irreplaceable social connections, paradoxically, are often rather weak or distant ones.” Read More

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An Evolving Asset Class: The Future of Cryptocurrencies

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The CFA Institute Annual Conference is an unrivaled opportunity to access high-quality, unbiased educational content that equips investment professionals with the latest thinking on critical industry issues. The 72nd CFA Institute Annual Conference will be held in London on 12–15 May 2019.

An Evolving Asset Class: The Future of Cryptocurrencies
Bitcoin and the broader universe of cryptocurrencies, initial coin offerings (ICOs), and other crypto assets have dealt with some enduring problems. But the endurance of those problems has demonstrated the endurance of those investments.

“This has been going on for about nine years going into 10,” said Sandra Ro, founder and managing director of Vector Crypto Capital. “Bitcoin’s died 900 times.”

Yet it continues to make headlines.

Ro has spent years building expertise at the intersection of cryptocurrencies and large-scale financial institutions. She serves on the Global Blockchain Business Council and was a founding board director of the Enterprise Etherium Alliance. At the 71st CFA Institute Annual Conference in Hong Kong, she shared her insights with an audience of global financial professionals. Read More

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INSEAD Professor: US to Lose Its Place as Top Spot for Venture Capital Next Year

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The CFA Institute Annual Conference is an unrivaled opportunity to access high-quality, unbiased educational content that equips investment professionals with the latest thinking on critical industry issues. The 72nd CFA Institute Annual Conference will be held in London on 12–15 May 2019.


China will surpass the US in terms of venture capital investments by 2019, says Claudia Zeisberger, Senior Affiliate Professor of Decision Sciences and Entrepreneurship and Family Enterprise at INSEAD. In the last four years, venture capital activity in China has exploded, and according to her, it will soon eclipse traditional hubs such as the Silicon Valley.

At the 71st CFA Institute Annual Conference in Hong Kong, Zeisberger explained how her base projection expects compound annual growth rates of 28% in China and 6% in the US; both forecasts are extrapolated from the growth rates she has observed in the last three years. Read More

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4 Ways Millennials Can Avoid Following Their Passion

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The CFA Institute Annual Conference is an unrivaled opportunity to access high-quality, unbiased educational content that equips investment professionals with the latest thinking on critical industry issues. The 72nd CFA Institute Annual Conference will be held in London on 12–15 May 2019.

Lauren Friese, director of Workforce Innovation at RBC, suggests that many millennials need to rethink their career management strategies to achieve professional success.

Friese rejects the “follow your passion” advice that was popularized in the 90’s. Instead, she says that young professionals should focus on the moments when they believe they have been at their best. By reflecting on their strengths, and examples of positive behaviors that they have exhibited, they can frame their careers around their peak performance. Friese describes it as “following your flow.” Read More

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Food for Thought: An Insight into Japan’s Outlook

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The CFA Institute Annual Conference is an unrivaled opportunity to access high-quality, unbiased educational content that equips investment professionals with the latest thinking on critical industry issues. The 72nd CFA Institute Annual Conference will be held in London on 12–15 May 2019.

At the 71st CFA Institute Annual Conference in Hong Kong, Kathy Matsui, Chief Japan Strategist at Goldman Sachs, presented an in-depth look at the current state and future prospects of the world’s third-largest economy. Read More

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