Blackwattle’s Lessons Learned Series: Mistakes make better investors & the importance of risk management

“Investing is a game of survival. Are you prepared for the next crisis?”

One of my most trying career moments came in early 2020 as COVID-19 began to spread. Financial markets were just waking up to the risk, but the Australian market was halfway through reporting season and focused on earnings.

At the time, the Fund I was managing had a significant, unhedged exposure to leisure stocks—Flight Centre and Webjet. We expected earnings upgrades in reporting season, and they did ultimately come. But the mistake? We were too focused on short-term fundamentals and not enough on tail risks unfolding in the background.

The Warning Signs Were There—We Just Needed to Listen

 Today in hindsight, the red flags were there:

While a similar series of events in 2025 would stir panic in the hearts of us all, at the time the idea of a global lockdown was completely foreign—something none of us had ever experienced before. 

By late January Flight Centre shares had dropped 13% to $35, a mildly painful but tolerable loss. By March, Flight Centre collapsed to just $9—a brutal 80% drawdown.

Lesson Learned: Respect the Share Price

One of my old bosses had a simple rule: "Respect the share price."

A stock moving sharply means someone knows something. It’s an invitation to dig deeper.

Western equity markets didn’t collapse until early March, but smart money was already reacting. Investors who picked up on price momentum in late January had a crucial window to reduce risk.

How has our investment process adapted?

At Blackwattle, we’ve made risk management a daily discipline, not a situational reaction. Risk management is deeply embedded in our culture and daily workflow.

Protecting against unknown risks might sound almost impossible. But in reality, it comes down to:

Final Thought: The Best Risk Management Happens Early

You can’t eliminate risk entirely. But had we acted in late January of 2020, we could have limited our downside significantly.

The biggest investing mistakes often come not from bad ideas, but from ignoring warning signs.

And effective risk management means that when the unexpected happens, the impact is manageable—not catastrophic.