Global Shocks

Drawing on years of hands-on experience in financial markets, the author offers investors a practical set of tools and guiding rules for protecting their money during periods of market stress. Ten case studies trace the story from the collapse of the Bretton Woods fixed exchange rate system to the present debate over whether China might be heading for an asset bubble. Each episode is examined in the same way: how the crisis developed, how policymakers and markets reacted, and which portfolio positioning made the most sense. The aim is to pass on these lessons so that investors are more ready for the next upheaval.

The first chapter asks whether interest rate and exchange rate movements follow recurring patterns that an investor could profit from. A conceptual framework is introduced to explain why such patterns tend to appear in traditional currency crises but are harder to find in asset bubbles. The closing chapter brings the cases together and looks at how financial crises have changed since Bretton Woods ended, including the reasons that policymakers and investors often fail to spot a bubble before it bursts.

The author also argues that markets which have been sold too far offer investors a second opportunity to come out ahead. Taking advantage of it, however, requires a plan to limit losses during the sell-off and a way to benefit when prices recover.