Global Investment Strategy | Global Financial Services

Every seasoned investor has scars - some wear them like medals, while others let them dictate every future move. But here's the paradox at the heart of professional investing: the market rewards memory, but punishes emotional baggage. So, by all means, use the past as a compass, but don’t see it as a chain of connection.

In the post-2008 world, we saw portfolios overweight in caution and underweight in conviction. In the aftermath of COVID, fear of another “everything bubble” became an investment thesis in itself. Today, as we navigate a world of shifting rates, sticky inflation, and geopolitical realignment, the temptation to reach for past playbooks is stronger than ever.

However, the past is not a strategy; it’s a context.

Pattern Recognition vs. Pattern Paralysis

As any investor knows, there’s a fine line between experience and entrenchment. The best investors use history to spot patterns, not to assume outcomes.

Yes, inflation recently echoed the 1970s, and we’ve seen tech bubbles before. However, pricing the future based solely on history can close your eyes to what's structurally different today: the speed of capital flows, the power of AI, and the role of geopolitics in energy markets.

In fact, many missed the 2023–24 AI-led equity rebound precisely because it felt “too much like 1999”. That’s not pattern recognition, that’s pattern paralysis.

The real cost of over-learning

Overfitting to past pain points can introduce new blind spots. Take liquidity for instance: scarred by the GFC, some allocators held excessive cash during the low-rate decade, missing out on generational returns in equities and private markets. Others avoided credit risk altogether, assuming every spread widening was a signal of systemic stress, not just noise.

In the name of prudence, they eroded long-term performance because risk wasn’t managed; it was misdiagnosed.

The irony? Trying to avoid the last crash can leave you unprepared for the next one.

Leaving the past behind… without forgetting it

So how should professional investors actually learn from history?

The answer lies in reframing memory as a risk input - not a rulebook. That means:

· Using past scenarios to test, not limit, current ideas: What would this allocation have done in 2008? In 2020? Not to scare you off, but to pressure-test its durability.

· Updating priors, not calcifying them: If you believed energy was uninvestable post the ESG boom, did 2022–23 change your view? If not, is that because of evidence or inertia?

· Balancing institutional knowledge with individual clarity: Many teams inherit caution from past CIOs or past mandates. But markets change and culture shouldn’t fossilise strategy.

This isn’t about being reckless. It’s about knowing when yesterday’s lesson has outlived its usefulness.

Behavioural bias in institutional clothing

There’s another layer to this: organisational memory.

The longer a team has worked together, the more likely they are to adopt inherited biases.

· “We don’t do crypto”

· “We don’t touch China”

· “We never go overweight small-caps”

These rules often stem from past pain, but they rarely get revisited when conditions shift. At best, they protect reputations. At worst, they limit returns.

Sophisticated investment processes must be able to distinguish between genuine risk management and institutional superstition.

A framework for moving forward

We’ve worked with teams who approach this well - not perfectly, but thoughtfully. Some of their habits include:

· Conduct regular “bias audits.”

Review decisions not just by outcome, but by the assumptions behind them. Which ones came from the current environment and which came from a past one?

· Assign a devil’s advocate.

For any investment idea rejected due to “past experience,” assign someone to argue the opposing case. It forces the team to separate fear from fact.

· Keep memory in the model, not the meeting.

Let data reflect past outcomes, but don’t let narrative overwhelm present-day signals. Your portfolio doesn’t care what happened in 2008 - it cares what’s priced today.

· Use history as an accelerant for judgment, not a substitute for it.

Context sharpens decisions. But the best investment calls come from being situationally aware, not historically haunted.

Conclusion: Experience is an input, not a hedge

Investors shouldn’t forget the past, but we must stop worshipping it.

The markets of 2026 are not the markets of 2008, 2020, or even 2022, because while cycles rhyme, they don’t necessarily repeat. However, the goal isn’t to erase hard-earned experience; it’s to apply it with precision, not fear.

Put simply:

Let memory be your edge, not your excuse.

Even though we can’t predict the next crisis, we can choose not to overreact to the last one. What’s still in your portfolio that reflects history, not the future?