Investing advice for stock market crashes from $736 billion investor

Martin
Gilbert
Aberdeen Standard
Investments

• The collapse of Lehman
  Brothers in September 2008 tolled the bell for the global
  financial system as we knew it. 
• Martin Gilbert, the co-CEO of Standard Life Aberdeen, a $736
  billion asset manager and the largest active manager in the UK,
  helped his firm survive the crisis by spotting the red flags
  early enough.  
• He recently
  shared with Business Insider three things that investors
  can learn from that experience — especially those who weren’t
  there. 

Every September for the rest of time, Wall Street will reflect on
the surreal crisis of 10 years ago. 

It will mark the anniversary of the demise of Lehman Brothers,
the giant investment banks that folded as America’s housing
market and several investment products tied to it collapsed. Like
Bear Stearns, many other firms were forced to make deals or shut
down.

Aberdeen Asset Management, now Aberdeen Standard Investments
following a merger in 2017, was one of the firms that survived
that period.

It can partly thank its CEO, Martin Gilbert, for his decision to

sound the alarm on collateralized debt obligations before the
risky financial product helped plunge the global financial system
into chaos. 

“I have to say though, the atmosphere in the office was not one
of panic,” Gilbert, now co-CEO of the $736 billion asset manager,

told Business Insider of the days after Lehman Brothers filed
for bankruptcy on September 15, 2008. 

He added: “It was stressful and intense, but it was all
about keeping a cool head in those days and weeks in the
immediate aftermath.” 

[Read:
The CEO of a $736 billion asset manager that sidestepped the most
toxic casualty of the financial crisis warns of the big risk in
markets right now.]

Gilbert recently shared with Business Insider via email three
things he learned from that tumultuous time, particularly for
investors who were not professionals then:

“Don’t sell at the point of maximum pain. The
scale of the great financial crisis was really something else but
there are common threads running through all crises.
Markets have a habit of bouncing back and you have to do
whatever you can to take a step back.

Another lesson is to stick to the basics. Invest
in
what you understand, spread your risk and know that if
something looks too good to be true, it almost certainly is. The
products that the banks were churning out in the run-up to the
crisis were ever more complex and built on even shakier
fundamentals.

This relates to another lesson, and that is that the
nature of a globalized economy makes neatly apportioning blame
very hard.

Banks have rightly taken a lot of the blame for the crisis, but
it was a failing at all levels by governments, regulators,
investors, rating agencies, and the banks. When the crisis hit,
each party spent quite some time pointing the finger at everyone
else.
No one party was to blame, but they were all culpable.”

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