Watching for the Canary in the Coal Mine
Like most investors, the experience of the financial crisis left an indelible mark on me as an evaluator of risk.
By Hard Assets Alliance Team
By Joe Yasinski, for the Hard Assets Alliance
Like most investors, the experience of the financial crisis left an indelible mark on me as an evaluator of risk. Like most of you, I spent countless late-night hours reading, consuming the details of the crisis in real time as events unfolded. As I more intimately acquainted myself with vaguely understood terms like "credit default swap" and "collateralized debt obligation," I vigorously directed my energies toward grasping the true scope of what was unfolding, and more important, what the official reaction would be.
Unbeknownst to me was that experience would lead me to a completely new philosophy of counterparty risk, money, savings, wealth, and diversification. And after the immediate volatility had subsided, I did an autopsy on all my mistakes before and during the crisis, big and small. The biggest question I had to personally answer to myself is why I didn't see it coming. At what point during that period were the warning signs so glaring that I should have been better prepared for what was approaching?
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