Although this article is dated Tuesday 22 January 2008, I can assure you that we wrote it over the weekend. In fact, it has been sitting in the «drafts» folder for three days now, and I imagine the Rankia administrators can confirm this. Following the events of this Black Monday (or perhaps Grey Monday, depending on how Tuesday and Wednesday turn out…), we considered updating it. But we believe it is far more revealing to publish it exactly as it was written, with its original photos included. Exactly as it has been sitting in the «drafts» folder for three days. So here it is, without any changes, the post we had planned to publish on Tuesday 22 January 2008:
In my view, we are not experiencing a crack at in the strictest sense, but rather a major, widespread crisis that comes as a surprise only to those who are uninformed. A crisis that has existed for many months but which only becomes visible to most people when their stock market investments fall, or when the news reports and amplifies on television the sharp declines in the world’s major equity indices. The sharp sell-off of shares worldwide is nothing more than a reflection of the macroeconomic crisis that has been building up unmistakably for some time. It is one of its many knock-on consequences.
To analyse this development, I think it is worth re-reading articles (both our own and those by others) in the light of the past 8 or 9 months of global financial turbulence and upheaval. We do not in any way claim to possess the gift of prophecy. There are no crystal balls, but there is a certain amount of experience and common sense that sometimes (and only sometimes) helps us take steps in the right direction in anticipation of future events. Most texts stand up very poorly to being reread with the passage of time (try it with your most admired financial authors), and of course our posts are no exception. But when some of our analyses stand up to this re-reading in such a turbulent environment, we feel proud, to say the least. Here are some interesting examples in chronological order:
- Crisis? What crisis? (23 June 2007)
- A historic opportunity or a global economic collapse. Chapter 1 y Chapter 2. (12 and 17 August 2007)
- Fasten your seatbelts. (14 September 2007)
- Managers’ tactics. Each to their own. (30 September 2007) Take note of the forecasts and insights from Gustavo Trillo Garrigues, Head of Asset Management at JP Morgan Asset Management for Spain and Portugal; or those from Alberto Espelosín, Head of Research at Ibercaja Gestión. The most The curious thing is that they’re still in their posts and admired by many, without so much as breaking a sweat or blushing.
Perhaps there were few ideal options eight months ago for responding in the best possible way to the situation looming over our assets. But no one should be taken by surprise, nor should they absolve themselves of all responsibility for their losses. There was, there is and there will be room for manoeuvre, not only to minimise the damage, but also to take advantage of the opportunities offered by the storms, even if these are perfect.
We find ourselves in an environment where we see a great many falling knives, and I’m not referring solely to share prices. But we must not only scrutinise the market to identify the golden opportunities and grit our teeth in an attempt to seize them; the hail of knives is such, and will be so prolonged, that we must also be on the alert for those that may fall directly upon our heads, whilst we search for golden glimmers with our liquidity in hand.
Here’s a chart showing the emotional cycle of the average investor. Take note of the adjectives used and the typical thoughts associated with each stage of the cycle: just like real life.
Whilst the scale of the tragedy seems, in the eyes of many, even greater than anticipated, known or acknowledged, we have always maintained that a good investor must recognise opportunities in critical situations and changing circumstances. Undoubtedly, looking back at past events is a good exercise in self-criticism, especially during such times. Why, in the same scenario 
where most lose, but some win? If we blame a black swan or at random never We will learn in order to improve, and our losses will never turn into investments.
As we have said on previous occasions, the apparent chaos is nothing more than a new order that we do not yet understand, for which familiar timings and cycles no longer apply. It would not even be of much use to apply lessons from other historically critical moments in the global financial system. That is why we must be even more humble and cautious in our predictions and analyses. In a nutshell: Strategy and Humility. And, of course, plenty of caffeine to keep our eyes wide open so we can spot opportunities and avoid getting stabbed in the back.
Whatever our best wishes may be, your happiness and prosperity in 2008 remains in your hands. I love this game!