Reading Minds and Markets: Minimizing Risk and Maximizing Returns in a Volatile Global Marketplace

1. The Year of Investing Dangerously

The odds are that a few decades from now, when I’ve retired from the business of managing money—and if I’m still alive—young money managers will ask me, with awe, what it was like to be a professional investor during the Great Financial Markets Meltdown of 2008.

I already know what my answer will be. It was a nightmare—and the ultimate challenge to any investor and any investment strategy, including me and mine. When the first signs of real trouble appeared in 2007, culminating in the collapse of Bear Stearns and its last-ditch purchase by J.P. Morgan, most of us figured that we were experiencing the worst that another economic and market cycle could deliver. This, we all figured, was just another bump in ...