Echoes: How to avoid becoming a market dinosaur

Loomis Sayles’ bond market veteran, Lynda Schweitzer, recalls the GFC and Covid to explain why analysts today need a healthy appreciation of game theory and behavioural finance, and why her team’s internal debates are often a microcosm of broader markets.

When you reflect on the past 25 years in markets, is there a single moment that shapes how you view investing today?

Lynda Schweitzer (LS): The Global Financial Crisis stands out. I’m sure others have mentioned it. Its legacy runs deep across banking regulation, the shape of credit markets, and investor psychology.

I joined Loomis in 2001 and was a newly promoted PM as the GFC hit. Having weathered previous shocks while trading Russian and Brazilian bonds, I had seen volatility up close, but nothing compared to the GFC’s breadth and impact. It wasn’t just an asset market correction – it was a systemic reckoning that tested every assumption about liquidity, risk, and investment philosophy.

The next decade became defined by the aftershocks: the sovereign debt crisis, zero or negative yields, shifts in bank behaviour. Whatever you feel from a moral standpoint, the fact is investors came to expect that central banks would always be there to backstop the fallout. And they still do.

That must have been a baptism of fire, being thrown into the GFC as a relatively new portfolio manager. How hectic was it?

LS: It was intense and exhausting. Markets were moving far faster than usual, and so was information. Since I was just stepping into bigger decision-making, my portfolio management instincts were still forming, and I leaned heavily on conversations with senior portfolio manager colleagues like Ken Buntrock and David Rolley. I’d seen liquidity crises on trading desks, but this felt existential at the portfolio level. We had long debates about which investments were truly impaired and which could hedge risk if things got worse.

Perhaps the biggest lesson was scepticism. There’s that famous line ‘this time is different’, which mutual-fund legend Sir John Templeton said were the four most dangerous words in the English language. They are always a red flag. In the run-up, people said house prices only go up, subprime is a minor problem, technology is invulnerable. The same arguments play out in every bubble.

So, I learned to trust my intuition: if it sounds too good to be true or defies basic finance rules, wait for reality to return. But markets can stay irrational longer than you expect, and narrative-driven momentum can persist for years before the reckoning comes.

Why do many investors seem so regularly surprised by the turn in narrative?

LS: Several reasons. First, there’s often limited visibility – the incestuous lending structures that led to the GFC were nearly impossible to pin down from the outside, even if you suspected trouble. Second, because of performance pressure or fear of missing out, investors struggle to stick to discipline when chasing returns becomes the norm. It’s incredibly hard to do nothing and remain patient, especially as valuations defy logic and your defensive strategy means clients lag market benchmarks.

This tension is as real now as ever. When everyone’s chasing momentum, or the next en vogue sector, resisting that urge demands courage and inner strength. Explaining that discipline – defensive, value-focused, downside-aware – is often difficult if clients are impatient, but it’s vital for long-term results.

We’ve all encountered the dinner party bragger, who’s been making a fortune in day-trading crypto and is showing off the spoils with the latest wristwatch, a new house or a sports car. How do you respond in such situations, where there seem to be those who are always ahead while you defend cautious fundamentals?

LS: The temptation is always there to chase fads, but philosophy and process matter most. Clients know our style is opportunistic and patience is required over the full economic or credit cycle.

Sometimes we've been too defensive too soon and learned from it, but our role is protecting the downside as well as generating returns. I’m upfront about why we aren’t momentum investors. Some clients really value that reassurance, even if it means missing some short-term wins. Others may want more excitement, but that’s not what we offer. My job is to walk each client through our rationale.

Did the GFC change how you explain your investment style when engaging with clients?

LS: Absolutely. The GFC forced me to get comfortable having hard conversations – explaining poor performance, impairments, and uncertainty face-to-face rather than hiding behind numbers. It helped to shape me and refine how I communicate with clients – being honest, empathetic, and direct – which pays off every day. Those tough discussions during crises won me trust, and now clients know I’ll bring them the truth, good or bad.

What about Covid? Did that require another evolution in how you approach client concerns?

LS: Covid was a unique challenge. It introduced even more uncertainty, disrupted existing models, and made us look at new data – from pandemic curves that determine the outbreak's likely mode of spread, to the web metrics and modelling provided by the John Hopkins website. Suddenly, you had to account for epidemiology as well as macro and financial factors in your market analysis.

It reminded me that as markets evolve, so does the input set for any decision. More factors are in play now than ever before. And it’s this complexity that makes investing intellectually rewarding but also relentless. What I love is that no two days are the same; what’s frustrating is that you can never learn it all.

Given endless new inputs – macroeconomic, technical, behavioural – how do you help your team to balance conviction with flexibility?

LS: I encourage both humility and curiosity. Behavioural finance and game theory are critical, especially now, when political polarisation worsens market volatility. We engage in open debate within our strategy meetings, welcoming opinions from all team members. Sometimes, younger staff challenge our assumptions with fresh data, and it keeps us honest. Ideally, our internal debates are a microcosm of broader markets. So, every view matters.

Some truths endure: fundamental analysis, valuation discipline, and risk sizing. But I also push for psychological awareness – recognising biases, understanding market mood, and accepting that external surprises will always force us to adapt.

Looking at all the uncertainties conflating the outlook for 2026 – whether it’s market concentration, sovereign debt, unpredictable policy or the ambiguity of AI – how worried are you about the future?

LS: Cautious… maybe a little worried… but not paralysed. It’s true that there are many more moving parts now than ever – political games, eroded institutional norms, policy uncertainty. And what’s especially difficult to gauge is motivation; globally, the lines between country-first policy and self-interest have blurred.

The AI question is particularly difficult. Certainly, AI is real, though perhaps short-term over-invested. Its impact could be as profound as the internet, ushering in long-term changes and surprises, and posing untested risks to conventional wisdom.

Broadly, I try not to become a market dinosaur, always insisting that this time isn’t different. Some things do change, but patterns and cycles rhyme. New technologies, like ETFs and algorithms, add to complexity and risk. Ultimately, crises test new systems in ways textbooks can't predict.

Textbooks can’t replace experience, but for those who have only known low rates, low inflation and dependable central bank support, how do you explain the time before the GFC? And on the flipside, how do you avoid ‘market dinosaur’ thinking and ensure new ideas are incorporated into your team's decision-making process?

LS: Experience matters, but younger perspectives can highlight new truths. I work hard to explain to newer colleagues what volatility, inflation, and real downturns feel like – what investing ‘before the GFC’ meant. We’re clear: patient, long-term thinking drives our process, and while models and philosophy keep us grounded, being too rigid risks irrelevance.

Data diversity is now part of every analysis. The Covid era made everyone a multi-disciplinary researcher overnight – tracking health statistics, global supply chains, and social trends. It’s no longer enough to look only at the financials and fundamentals.

What’s your closing advice for investors, particularly those wrestling with today’s paradoxes and complexities?

LS: Maintain core discipline but adapt with humility. Trust fundamentals, but don’t ignore technicals and psychology. Embrace complexity by broadening your toolkit, and never underestimate the stress-testing power of crises.

Be transparent with clients. Hard times build real relationships and lasting trust. Accept that frustration is inherent in investing – market puzzles will never be fully solved. But every cycle, every crisis, every change offers a new lesson.

Finally, keep learning. The biggest mistake is assuming you’ve seen it all – markets always surprise. Stay curious, stay human.

Interviewed in November 2025