Macro investor Alex Gurevich explains why every crisis is always different

This week, Opto Sessions talks to Alex Gurevich, the founder and chief investment officer of HonTe Investments. The former JPMorgan trader shares his thoughts on how traders and investors can navigate market shocks, whatever the cause.

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Russia’s war in Ukraine sent markets tumbling, with the S&P 500 down a total of 7% since 24 February, the date of the invasion. It also marked the third economic crisis that Alex Gurevich, founder of HonTe Investments, has traded through.

“When I look at these things, I see more differences than similarities,” he says. “Crisis never happens on schedule, and every crisis is always different. The market reaction is always different.”

While the pandemic resulted in a sharp selloff of stocks followed by a sharp reversal, Gurevich says he is observing almost the opposite in today’s market climate. “We’re experiencing a protracted bear market,” he says.

But there are some guiding principles that traders can use to navigate turbulence, no matter what the crisis is and whether the outcome is at all predictable.

It “all comes down to liquidity”, says Gurevich, meaning that traders should look at which types of assets are being abandoned, and which are falling back in favour. “I observed this many years ago and it helped me to navigate 2020. Stock markets go down in recessions not because recession somehow depresses stock market valuations,” he says. “If you really think it through, specific recessions hit specific sections of the stock market.”

During the financial crisis, it was logical that banks would suffer because these institutions were the ones holding piles of debt. Likewise, in the pandemic, hotels and airlines that could no longer welcome guests struggled. These insights can help investors find some clarity amid the noise.

Gurevich’s intuitive knowledge of the markets has been honed in over his more than 20 years in the trading business. He started his career at Deutsche Bank after obtaining a PhD in mathematics from the University of Chicago. A stint at JP Morgan followed, where he became a managing director in charge of global macro trading and became known as the bank’s star trader.

In 2015, he founded his own investment firm, HonTe Investments, which invests across developed and emerging markets and focuses on long-term returns. He is also a best-selling author, with his book The Trades of March 2020 detailing his approach to investing during times of uncertainty.

The name HonTe is a reference to a move in the Japanese board game Go, which Gurevich has played since he was in high school. “It means a move that is not flashy, and not something which achieves immediate victory. It’s long, planned and maybe even a little slow and cautious — but it gives the best long-term results,” he explains.

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