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A framework for the analysis of unfolding financial crises
Wesley Phoa
Solutions Portfolio Manager

 


Novel financial events happen quite frequently. While these events are unique, the financial crises they may trigger have many features in common. In this article, Capital Group solutions portfolio manager Wesley Phoa offers a framework for investors navigating a financial crisis from its buildup to its aftermath.

  • The most financially relevant novel events are those that lead to financial crises. But while novel events are all different, financial crises have much in common. So, in dealing with novel risks, investors can be guided by the patterns of past financial crises.

  • A crisis is not a single event but rather an unfolding sequence of events. Investors should seek a framework that can guide them as they navigate the whole crisis as well as its consequences, making a whole sequence of portfolio decisions along the way.

  • Such a framework should enable investors to understand the buildup to a crisis, the crisis itself, and the aftermath as a connected whole. In this way, investors can ground their decisions on a long-term perspective.

 


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Wesley Phoa is a solutions portfolio manager with 30 years of industry experience (as of 12/31/2023). He holds a PhD in pure mathematics from Trinity College at the University of Cambridge and a bachelor’s degree with honors from the Australian National University.

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