Ideas in the Wild: Alex Gurevich On What We Can Learn From The Market Turbulence In March 2020
For those who wondered what happened in the command control of a global macro hedge fund when U.S. stock markets plunged 35 percent in just three weeks, welcome to the mind of Alex Gurevich, Founder and CIO of HonTe Investments. As tragic events unfolded around the world, the pandemic ruptured the sequence of price action and devoured financial markets like a black hole. Through Gurevich’s personal narrative and the team’s actual Slack messages, The Trades of March 2020 follows their frenetic efforts to survive the crisis.
From the first terrifying days of loss, both personal and professional, to the team’s redoubled attempts to identify emerging opportunities, this account of crucial, in-the-moment decisions is a faithful record of the trading moves made in the unprecedented month of March 2020.
I recently caught up with Gurevich to learn more about his new book.
What happened that made you decide to write the book? Obviously, the events in March 2020 were the catalyst, but what was the exact moment when you realized you needed to write your book? What themes and ideas were you most interested in sharing?
The original idea was meant as a joke: at the end of March 2020 I said, “this trading month was so long, someone should write a book about it.” A few months later I realized there was nothing funny about that idea. I knew that this was a story worth telling and that I had the rare advantage of having been in the command control center when the astonishing events of 2020 in the financial markets were unfolding.
Hedge funds are often “mystified,” “glorified,” or “vilified” by the media. Even firsthand accounts are tainted by unreliable memory and narrator biases. I saw that I had the unique opportunity to invite readers to be “a fly on the wall,” of my hedge fund because I had a complete and faithful record of all our transactions and conversations to share with the audience. The book uncovers what was really happening inside the command control center of our hedge fund — with all the insights, confusion, errors, celebrations, and expletives.
Writing communications about the events of 2020 and our strategies for my investors, I was able to connect the decisions (both good and bad) that we made, with the principles I outlined in my first book, The Next Perfect Trade: A Magic Sword of Necessity. This sparked me to share, with an even wider audience, how my magic sword performed when the greatest battle of our time occurred. The Trades of March 2020 is a natural sequel, but with a very different flavor. The story of navigating the pandemic crisis is different from trading through other dramatic market events because it overlaps with intense personal stress and challenges.
In the later part of 2020, I was able to get perspective on the initial market reaction to the pandemic and the subsequent rebound in asset prices. It paralleled the descent and rebound of my personal health and well-being. I realized that this was not just a story of navigating financial markets, but of a personal journey through stress and uncertainty, which would have a much broader appeal.
Your book depicts the journey you and your team went through during March 2020. What do you think is the biggest lesson you learned throughout that time?
The biggest life lesson I learned from the tumult of March 2020 is about the fragility of our well-being, both personal and financial. In this way, it is somewhat similar to my memories of 9/11. Those of us lucky enough to be privileged with financial security tend to assume that feeling safe and comfortable in our health and financial situation is a permanent, immutable state.
In The Trades of March 2020, I illustrated, through my own personal struggles, how this sense of well-being can deteriorate very rapidly. One of the main purposes of writing this book was to share my story of personal distress and of returning back to balance.
Problems always resolve one way or another, but one can’t hope for problems to resolve on any particular schedule. Every mistake I made had to do with me hoping that certain things would improve by a certain date, and every correct decision was due to structuring my investments so they would capitalize on improvement of the situation whenever it occurred.
This patient long-term approach to investment is an aspect of my “shield against uncertainty’ and is inseparable from long-term managing of personal health and well-being.
How will you apply the themes and lessons from March 2020 in your life moving forward?
When I think of lessons, the first thing that comes to mind is the lessons I learned from trading through 9/11 and the Global Financial Crisis, which I was then able to utilize to navigate March 2020. One common lesson is that even when it feels like the world is ending — it probably is not — and that moment of greatest despondency could also be the moment of greatest opportunity. Much of my financial career has been shaped by having the courage to step forward at such moments.
On the flip side, the pandemic taught me a lesson on hubris. Those of us with a good education and who enjoy material successes are liable to think that we are experts at everything. Throughout the pandemic, I formed many opinions about medical issues (on which I have no expertise) and was proven almost invariably wrong. Fortunately, I haven’t shared those opinions broadly and stuck to what I know — portfolio management.
March 2020 reinforced the precept of navigating uncertainty by focusing on things that are certain, such as “the pandemic will pass, but the liquidity will stay.” Understanding liquidity became my main theme for 2020. It allowed me to have “a shield against uncertainty,” which became my book’s subtitle. With this shield in place, I was able to capitalize not only on the descent into the pandemic chaos, but also on the rebound.
