Echoes: When the pandemic broke the pattern

When the world went into lockdown in early 2020 in response to the Covid-19 pandemic, investors reached instinctively for the old playbook. Central banks would step in, markets would wobble then recover, quality would be rewarded, disinflation would quietly resume.

For a while, it looked like history might repeat on cue. Then the echoes started to distort. Covid didn’t just trigger another crisis; it snapped some of the ‘rules’ investors had spent a decade internalising.

We spoke to three investors, each from affiliates of Natixis Investment Managers, who experienced the chaos from very different vantage points – global equities, fixed income and real estate:

• Sanjay Ayer, Portfolio Manager at WCM Investment Managers
• François Collet, CIO and Portfolio Manager at DNCA Investments
• Christina Ofschonka, CIO Europe and Head of Germany & Central Europe at AEW

Each find themselves asking the same question: what still rhymes with the past, and what genuinely changed? They remind us that the binary framing of “this time is different” is too simplistic. It’s more subtle and more demanding. Covid proved that pattern recognition works… right up until the moment history fails to repeat itself.

When the playbook stops working

“If I had to pick one market moment from the last 25 years, I’d say the post-Covid period has been the most transformative,” says Sanjay Ayer.

It is not that the Global Financial Crisis or eurozone sovereign debt turmoil didn’t matter. But they were continuous with the regime that preceded them. From the GFC up to 2020, “you could apply a relatively stable set of rules and thrive,” he argues. Covid was a structural break, “strategies that worked for over a decade suddenly became liabilities if you didn’t adapt.”

WCM responded in a very un-quanty way: they built an app “called Everest that’s effectively a team journal for tracking our views,” Sanjay explains. It logs views in real time, forcing the team to record their “hot takes” so they can see, with hindsight, how wrong or right they were. The aim wasn’t to outguess markets in the moment, but to build a culture that remembers its own overconfidence.

Covid gave them plenty to study. Early in the crisis, markets wrote off businesses like Shopify as pandemic roadkill. “As economies froze, consensus saw only disaster for online retail,” he recalls. Weeks later, demand exploded. The speed of that narrative whiplash – and the parallel with today’s AI hype cycle – underlined how quickly stories can outpace real insight.

Sanjay’s rallying cry was not to abandon WCM’s philosophy, but to double down on the right part of it. Portfolio managers leaned harder into “moat trajectory” and backed companies whose competitive advantages were still improving, even if the short-term story looked confused. “It’s about what the business will become, not just what it statically is or was,” he says.

The deeper lesson? Pattern recognition is useful right up until the moment it blinds you.

“Experience itself can be a liability; pattern recognition is helpful until history fails to repeat,” he says. “Every new era needs a careful distinction – you need to think about which patterns remain sturdy, and which must evolve.”

Covid forced that distinction in unexpected places. Luxury, for example. For years, the “obvious” rule was that only top-of-the-pyramid brands would win. Post-Covid, premium players with pricing power moved so far up-market that they left space underneath. “Accessible luxury” (names like Coach) suddenly had a much better runway than many models allowed for.

In short, Covid didn’t kill pattern recognition. It just made lazy pattern recognition dangerous.

The return of the disease inflation

If Sanjay thinks of Covid as a structural break in market psychology, François Collet thinks of it as a break in the macro regime.

“For me, the Covid crisis in 2020 was the most distinct,” he says. Earlier shocks, like Lehman Brothers or the eurozone debt crisis, “came with warnings or a background narrative”. You could at least see the clouds forming. “Covid struck with an abruptness that upended not only markets but also our way of working and living.”

Bond markets felt that violence first through liquidity. “It was just a rush to get liquidity,” François remembers. “Bond markets seized up overnight.” To find buyers, his team sometimes had to sell at 2am into Asian central banks or wait for brief windows when the Fed was active. These weren’t daily opportunities; “once or twice a week” might be it.

All the usual risk limits – volatility caps, historical correlations – blew out. “Covid blew through volatility measures in days,” he says. Things that had barely moved together in the past suddenly became highly correlated. Some fixed income instruments moved “ten times faster” than his experience had led him to think possible.

The response at DNCA was to stop treating risk as a one-metric problem. Volatility still matters, but it now sits alongside duration limits, exposure limits and liquidity constraints, all designed to cope with a world where correlations can go haywire. “The big lesson from Covid was that no risk model is truly ‘finished’,” François says.

If that was the short-term shock, the long-term surprise was what came next. After the GFC and euro crisis, huge policy interventions never really fuelled inflation. Many investors – François included – internalised that response pattern. Covid broke it. “After Covid, inflation finally materialised,” he points out. “So, in many respects, this time really was different.” For bond investors, he adds, “inflation is a disease worse than Covid".

The culprit isn’t just central banks; it’s politics. In democracies, “populism, fiscal expansions, and ‘gifts for all’ eventually sow the seeds for higher inflation – and possibly currency volatility.”

François worries less about a neat replay of the eurozone crisis and more about slow-burn Argentina-style outcomes in developed markets that spend too freely. His go-to warning indicator is simple: look at the currency. “If a government spends unsustainably, the exchange rate will eventually catch up,” he says. “Developed countries living beyond their means will see some combination of higher taxes, inflation, or both.”

Covid, in other words, didn’t just echo past crises. It flipped the script on one of their core ‘lessons’: that you could flood the system with liquidity without waking the inflation dragon.

Real estate, reality and the weight of responsibility

For Christina Ofschonka, Covid wasn’t her first crisis. She began her career in real estate in 2006, right at the peak before the GFC.

“As a trainee in a German real estate firm, everything moved quickly, with enormous deals and constant activity,” she recalls. Real estate felt solid – “bricks, mortar, due-diligence tours” – but the tempo “felt like something out of a trading room". Only later did she realise “how fragile things could be".

The GFC was her introduction to vanishing liquidity and distressed assets. Covid, by contrast, was an attack on everything at once. At the time, Christina was managing a retail portfolio across eleven countries. Overnight, shops closed. The team was at home. IT infrastructure suddenly mattered as much as location. On top of that, her household was hosting an au pair from Italy – so she felt the crisis “before it hit Germany” as Italian lockdowns began.

What stands out in Christina’s memory isn’t a killer trade or a dramatic price chart, but the weight of fiduciary responsibility. AEW manages third-party capital; its investors needed real-time answers about what was happening to their assets. “We chose transparency,” she says. The team produced weekly reports on each country’s rules and restrictions, vaccination rates and their own best guesses of how things might evolve. “Investors appreciated honesty, not false reassurance.”

Covid hammered home that data isn’t enough. “The lesson was to communicate proactively, to share what we knew – and admit what we didn’t know – and to act quickly in the face of ambiguity.” 

Christina has carried that into how she trains younger colleagues. Many arrive expecting tidy models and clear answers. Reality doesn’t oblige. “My first lesson: accept that you don’t know much. Stay humble,” she says. New joiners are encouraged to zoom out: beyond individual assets to patterns across countries, tenants and cycles.

Quick wins, Christina warns, often “mask deeper risks”, especially in real estate. Liquidity, covenant quality and tenant resilience matter more than spreadsheet IRRs. “Resilience is more than a buzzword: it’s the ability to adapt to new information and unexpected shocks,” she says. “Black swan events are impossible to predict, but you can always improve at being ready to respond quickly.”

AI adds a strange twist. Junior colleagues, she notes, “crave certainty”, and tools like ChatGPT or voice assistants can tempt them into thinking investing is a question-and-answer game. AEW’s antidote is exposure: bringing them into decision committees to witness “real discussions where multiple arguments and viewpoints are standard”.

Becoming a well-rounded portfolio manager, Christina estimates, takes about ten years. That’s not an echo of some nostalgic past; it’s a hard-won observation about how long it takes to acquire judgment in a world that keeps surprising you.

Echoes and breaks: what rhymes, what doesn’t?

So, what did Covid actually change – and what merely echoed earlier crises in a new key? Across these three perspectives, clear rhymes emerge:

• Liquidity still disappears faster than models assume. Whether in bonds, equities or real estate, all three describe markets that “seized up overnight” once fear hit. Access to cash – and the ability to be patient – remains the decisive advantage.
• Policy still drives outcomes. Massive monetary and fiscal interventions echoed 2008, but on a larger scale. The twist was that this time, inflation did show up – reminding investors that past non-events aren’t iron laws.
• Culture still matters more than cleverness. Whether it’s Sanjay’s Everest journal, Christina’s weekly transparency reports or François’ revamped risk framework, each are three versions of the same instinct: build organisations that learn, admit uncertainty and adapt fast.

But there have been genuine breaks from the past too:

• The forecasting horizon has shortened. For Sanjay, having a reliable five-to-seven-year strategic view is “harder than before”, making ongoing maintenance research and willingness to pivot more important.
• Inflation is back on the main stage. In François’ view, disinflation is the historical outlier, not the norm. Covid-era stimulus and politics have shifted the baseline risk for bond investors.
• Market structure has changed. Retail trading, thematic ETFs, AI-driven narratives and social media now move stories – and sometimes prices – far faster than fundamentals evolve. That doesn’t make fundamentals irrelevant, but it makes timing and behavioural awareness more critical.

Covid, then, is less a break from history than a break in our sense of how reliable history is as a guide. It exposed how easily we over-learn lessons from the last crisis and how much work it takes to separate useful echoes from misleading noise.

The post-Covid rulebook

Strip these experiences down and a set of post-Covid rules for investors starts to emerge:

1. Treat patterns as hypotheses, not laws.
   Use history, but don’t worship it. Build processes (like journals, red-teaming and debate) that make it easier to spot when a familiar pattern is starting to fail.
2. Design risk frameworks for the unmodelled event.
   Assume correlations can snap, volatility can multiply, liquidity can vanish. Multiple risk metrics and explicit liquidity planning are not luxuries; they are table stakes.
3. Stay humble in the face of uncertainty.
   Overconfidence and complacency were punished in every crisis before Covid; they were punished again during it. “Experience is the best teacher, but study matters too,” as François puts it. And both only help if you keep challenging your own assumptions.
4. Invest in culture, not just models.
   The ability to share doubts, change your mind and empower younger voices isn’t fluffy; it’s crisis infrastructure. Firms that handled Covid best did so by being transparent, collaborative and willing to admit what they didn’t know.
5. See complexity as an opportunity – if you’re built for it.
   Sanjay remains “optimistic, but realistically so”. Complexity shortens the forecast horizon, but it also creates more mispricing for those prepared to adapt. The risk of failing to adapt, he argues, is greater than the risk of failing to predict.

Covid was not the first crisis to redefine markets, and it won’t be the last. But it did something unusual: it broke the pattern investors had grown comfortable repeating.

The echoes of past shocks are still there: in liquidity panics, policy intervention and human overconfidence. The job now isn’t to ignore those rhymes, or to declare this time entirely different. It’s to hold both ideas in tension: to listen for familiar notes while staying alert to new chords.

In that sense, the real post-Covid lesson is less about predicting the next crisis and more about designing investment cultures that can live with the fact that the world is always changing.