Lessons from the 2007-2009 period

During this period, there were a few factors that contributed to the negative returns. One of the main factors was overconfidence, as the fund had experienced consistent positive returns for several years prior. This led to a sense of invulnerability and an overlooking of potential risks. Additionally, the housing bubble was not properly recognized, leading to investments that were dependent on a functioning financial system. When the financial system collapsed, these investments suffered significant losses. Another issue was being fully invested with no cash reserves, which impeded the ability to take advantage of undervalued opportunities during the downturn. These experiences highlighted the importance of holding cash, using checklists to avoid mistakes, and maintaining a realistic perception of risk.