Pilots spend a lot of time studying crash landings — not because they expect to crash, but because when things go wrong, preparation makes all the difference.
Investing works the same way. Big crashes are very rare, but when they do happen, it helps to know what has worked in the past (typically doing nothing on the assumption that you have planned for it)
I listened to a podcast with Mark Higgins, author of Investing in U.S. Financial History, who was explaining that most investors rely too heavily on their own life experience — and in doing so, miss the bigger picture. Markets are shaped by powerful cycles that repeat over time, and without understanding history, it’s easy to fall into the same traps again and again.
One of Higgins’s insights is that most modern crises are echoes of earlier ones. A single event might reflect multiple past episodes. For example, COVID-19 carried elements of the 1914 market panic and the 1970s inflation spike.
He also stresses the importance of regime changes — rare but pivotal shifts in the political or economic landscape. These tend to play out over decades, not months. Many believe we’re in one now:
- Debt levels are unsustainably high (South Africa is near 80% of GDP — but many countries are over 100%. The US debt to GDP is currently sitting at 124%)
- Central banks face mounting political pressure (Trump threatening the Fed; local politicians pushing the Reserve Bank)
- Trade tensions are re-emerging (Trump’s on-again, off-again tariffs)
Higgins says that it’s hard to identify regime changes in real time — but they matter deeply when designing long-term portfolios.
Another recurring theme is the danger of herd behaviour. A quote he cites from J.P. Morgan sums it up well:
“Nothing so undermines your financial judgment as the sight of your neighbour getting rich.”
From the dot-com boom in 2000 to Cathy Woods Ark Innovation funds, history is full of examples where investors chased hype at precisely the wrong time – bought high and sold low.
So, what are the main themes we can learn from?
- Don’t rely on your own lifetime of experience. Markets are older than any of us. Read, learn, and absorb the lessons of previous investors — especially the painful ones.
- Define risk by how you behave in a crash. Can you stay the course if your portfolio drops 30–50%? If not, your strategy may need adjusting now — not later.
- Avoid complexity and high fees. Higgins, who advises institutions, notes that alternative strategies often add cost and confusion without improving results.
- Have a plan — and stick to it. You don’t build a resilient portfolio for when things are easy. You build it for when they’re not.
There’s always a temptation to say “this time is different.” But most of the time, it’s not. And even when it is, the tools that get us through — diversification, patience, discipline, a plan — haven’t changed.
