There are a lot of ways to invest. Value investing is the most counterintuitive, in that value investors are often better prepared to seize opportunities during market drawdowns. It’s also why it’s so hard to follow.
2008 was an extreme example of this. It was, potentially, the worst-case scenario. The crisis had multiple possible outcomes and on October 2nd of 2008, every outcome was on the table.
Only a week before, Wachovia and Washington Mutual were “saved” through forced acquisitions and the first attempt at a financial bailout plan failed in a House vote. A week before that, Lehman collapsed. Then the next day, October 3rd, Congress came to its senses, passing the Emergency Economic Stabilization Act — the bailout — which President Bush signed later that day.
That was just in the U.S. It was global and only the beginning. The timeline of events is extraordinary. Continue Reading…