Four Lessons for Investing in the Current Market Environment

Bob Browne of Northern Trust said the current market environment is “nothing like 1998,” except perhaps for this similarity: “so much risk but so much opportunity.” Speaking at the CFA Institute 6th India Investment Conference, he opined: “the decisions you make in this environment are the ones that make you wealthy.” Drawing on his experience, and particularly investment in Russian Federation bonds, he offered four lessons for investors in the current market:

  • The importance of timing: Browne pointed to his experience with Russian Federation bonds, noting that timing was crucial to the difference between a “disastrous” investment and a “once-in-a-lifetime” investment.
  • “Make sure that your risk taking is aligned with that of your investor base.”
  • Be aware of decision-maker priorities: Browne observed that a “cycle of investing” occurs “where risk takers put the trades on, then the risk managers take over.”
  • Be aware of differing investor goals: “Think about how different segments of investors are optimizing for different goals, and that those goals can change over time and the influence of investors can change over time.”