There is really no substitute for experience. I was in Mexico through the ‘Tequila crisis’, when upheaval in emerging debt markets threatened to destabilise other markets across the world. In 1994, one million people in Mexico City alone lost their jobs overnight. That is dramatic stuff. In Ecuador in the late 1990s, the country abandoned its currency for the US dollar. We had to issue cheques with the date and time on them because the devaluation was so extreme.
Adapting to change
The difference between those years and the present situation is that, previously, individual markets were hit. Now we have a regional downturn. My main concern is that many, perhaps most, investors are still quite complacent. People are ignoring the possible worst-case scenario.
I have lived through economic meltdown, as a businessman and as a family man. Bank lock-downs and currency devaluations are very unpleasant in real life. When things start to slide, it is not business as usual; you need to be alert, to see how you can adapt.
We advise clients to keep up to date with political and economic trends. Emerging markets have some lovely ups but they have some spectacular downs as well. The problem for people used to developed markets is they think they can put their money into something and then just forget about it. They may be informed but they do not act. That is their danger spot.
Although the region’s financial markets have developed hugely in the past 20 years, running a locally based business remains challenging. If you are new to the country, you cannot fail to be excited by an immediate sense of optimism and familiarity.
That can lead to a false sense of security; it is far more complex than it looks, but it is not impossible.
Global Index International is still growing, rather than letting staff go. We are using some of the team in different roles, which develops them as individuals and also contributes to the longevity of the firm. We are constantly improving our approach and techniques. Volatility ends, sooner or later… until the next cycle.
