TOL - 18th Jan, 2024
How Olev Rahn helped Bankers Trust survive the 1987 crash (and where he sees markets in 2024)
How to spot a bubble with a market veteran who saw the big one coming in 1987
In 1987, Olev Rahn was pounding the streets of New York's financial district, meeting with Wall Street's best strategists. Rahn, who was running BT Financial's institutional business Pendal, felt distinctly uneasy about the exuberance gripping financial markets. It felt like a giant bubble, and the deeper he dug, the more convinced he became that a reckoning was just around the corner.
Rahn's instincts proved spot on as markets cratered on October 19th 1987 (what we now call Black Monday). A combination of put options and futures selling saw BT breeze through the '87 crash while others crumbled. From that moment, BT was the main game in town. Billions flowed into the coffers and it was the number one money manager in Australia. Rahn remained a key force until BT Australia was sold to the principal group for $2.1 billion in 1999.
In this episode of Success and More Interesting Stuff, Rahn discusses the growth of BT Financial in Australia, the key figures that were instrumental in building the firm, and how he, and his colleagues, navigated the 1987 crash. Rahn also shares his views on markets in 2024 and why he is happy to have some cash at hand.
Time stamps
- 0:00 - Introduction
- 3:10 - Early life and leaving Estonia
- 8:15 - Developing an interest in economics
- 9:49 - An opportunity with Ord Minett and the XYZ method of research
- 15:13 - A move to London on the back of booming markets
- 20:03 - A call with Chris Corrigan and bringing active management to Australia
- 25:05 - Good performance leads to rapid growth Keating
- 30:41 - Kerr Neilson and Jillian Broadbent join BT as it becomes a powerhouse
- 34:15 - 1987 and the era of corporate excess
- 38:54 - The strategies Olev Rahn used to protect BT from the crash of 1987
- 42:00 - The signs of exuberance prior to the 1987 crash
- 47:39 - A golden era for Bankers Trust
- 50:00 - Olev Rahn’s views on markets in 2024
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Matthew is the Principal and Portfolio Manager at Centennial Asset Management. Prior to this, Matthew was the CIO at Wilson Asset Management between 1998 and 2011, achieving 18% p.a. over the period.
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Matthew is the Principal and Portfolio Manager at Centennial Asset Management. Prior to this, Matthew was the CIO at Wilson Asset Management between 1998 and 2011, achieving 18% p.a. over the period.
Expertise
Matthew is the Principal and Portfolio Manager at Centennial Asset Management. Prior to this, Matthew was the CIO at Wilson Asset Management between 1998 and 2011, achieving 18% p.a. over the period.
Expertise
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