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Good Reads

A personal note on a dear friend Niall Coffey.

Written by AitkenAdvisors

Posted on February 22, 2024

niall coffey
[Sent to my clients the morning of July 13th, 2022]
Good morning,
We have much to ponder: CPI; rates; energy; duration; volatility; market structure and now the lunacy of a Spanish windfall tax on banks, before the windfall of higher rates has been harvested.
All of these are important matters to which, like you, I’ve been giving much thought.
But today I want to talk about a dear friend of mine, Niall Coffey , who has died at the age of 46.
We met in September 2006: he as Chief Dealer of Foreign Exchange within the markets group at the FRBNY; me with strong opinions on my former employer (AIGFP), balance sheets, repo, collateral, counterparty risk and systemic/plumbing risk in general.
An Irishman and an Australian, brought together by a shared concern that we were headed for big trouble.
As Niall Coffey always teased me, I opened that first chat by explaining why I thought his home country, too, was going to implode and so began a non-stop, sixteen-year conversation about markets, economics, policy and life. As I have surveyed our voluminous correspondence, I am reminded of his passion, intensity, intelligence, and kindness. His eagerness and enthusiasm to explain his opinions sometimes came with a cantankerous edge: this did not always endear him to his consensus-building FRBNY colleagues, nor others but that style was just the survival instinct he learned growing up in Portmarnock.
As he wrote to me in March 2010: ‘James, honestly now. I was 28 years old with 5 years’ experience at AIB, Dublin. And I became Chief Dealer of FX at FRBNY? It’s not lost on me, believe me. It’s been very much to my benefit, but it shouldn’t have been me, by all logic and rights. I’m just a scrappy kid from the streets of Dublin who ended up sitting at the table with Geithner and co., while frequently wondering how the hell it happened or why they wanted to listen to me.’
There could be no doubting Niall’s heart of gold, and good intentions: he was always an immensely generous and thoughtful friend. Not long after our first conversation, Niall insisted I add a vast number of his (often very high office) Federal Reserve colleagues to my distribution list. I was nervous of that, but he assured me they needed to hear what I knew, and I owed it to the financial system to try: ‘we need to expand your sphere of connectivity’. Thanks entirely to Niall, from early 2007 onwards I also found myself briefing many of his FRBNY Markets Division colleagues, and then important people at The Board. I shall forever be grateful to him for having such an opportunity, during a time of immense consequence.
Niall did not come up with the dollar swap lines in 2008, but he and his colleagues facilitated them, at scale and with speed. That they were able to do so was not just down to the wisdom and guidance of Don Kohn, nor the important if overlooked global coordination role of Guy Debelle: it was also down to the relationships Niall and his colleagues had built with their global peers.
And there was no relationship more important than The Bank of Japan’s New York office, located across the road from the FRBNY. Thanks to Niall Coffey, I still think of that small office as the most systemically beneficial central bank branch.
Not that markets knew it then- nor do they know it now – but the financial system remains indebted to Niall’s passion and intelligence during 2008. There are precious few people of whom that can be said, but Niall is one of them.
He was also a great patriot: as Chief Dealer of Foreign Exchange at the FRBNY, of course he was, but let me explain. He shared many general anecdotes from his experiences at the FRBNY, but not once, not ever across sixteen years did he betray any confidences. Sure, there were many disappointments but unlike one of his former bosses, there was no gossip, there were no leaks. He took his job immensely seriously, and woe betide anybody who dared critique dollar hegemony, or the rule of law or deep, generally liquid financial markets that (still) underpin that hegemony. From time to time, I’d tease him by asking whether the renminbi could be a reserve currency, or whether some sort of digital coin could replace the dollar. He knew I was teasing him, but the vehemence of his response was something to behold. Alongside many impressive, still unknown and now largely retired women and men, the FRBNY had acted forcefully to underpin the western financial system. Niall could never understand why, within a year, speculators showed their gratitude by coming up with bitcoin. His contempt for it knew no bounds. Likewise, perhaps scarred by certain experiences, he was scathing about the prospects of the renminbi as a reserve currency. He would be both delighted and unsurprised that the euro is once again testing parity.
Every conversation with Niall Coffey reminded me that what we in markets see, and what we transact in is just the tip of an enormous, institutional iceberg that underpins the financial system. We live in the age of machines, to execute, to invest and yes even to speculate, but it is people who keep the lights on. Not just on the funding and markets side, but also in critical payments infrastructure as well. Think of all those women and men who worked tirelessly and anonymously for us in 2007 and especially 2008, often at great personal cost. Not all of it was perfect, but how could it have been? They tried and continue to try their best: while we will continue to aggressively critique their decisions and actions, I am always grateful for the Niall Coffeys in this world.
His favourite wine was Cos d’Estournel, which he sometimes gifted to his friends. He’d correctly identified it was both well made, and decent value. The next time you’re out for dinner, you may spot a bottle. Savour it, and perhaps take a moment to reflect on everything all the unheralded, unknown central bankers try to do for us.
Numbers drive our business: is the price going up, is the price going down, what’s not in the price? It is price that determines our performance, capital accumulation then long-run capital preservation. I wonder whether we sometimes forget, though, that finance is actually a people business: who do you trust? Trusting Niall was an easy decision; but by trusting me, and by introducing me to so many important people, he honoured me – and gave me – so much more.
Niall’s funeral [was on July 14th], in Dublin. A few of us [were] there to remind his father, Eamon, his brother Gerard and his oldest friends how loved and respected he was. As hard as that will be, please focus your thoughts on Niall’s twin daughters, Emma and Adelaide, aged six. When they are older we will ensure they are fully briefed about their amazing Dad.
The last three years have been a non-stop test of resilience: some of us have lost parents, too many of us have lost friends. It’s been relentless.
Unexpected silence from a voluble friend and voluminous correspondent could be a sign of trouble: check in on that friend, today.
Do chara,
JA

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How to Improve Investment Skills: The Ultimate Secret

Everyone wants to know how to invest better. Make more money. But a lot of people haven’t (yet) got what it takes – hyper performance. If you’re reading this, you might be one of them, and that can change today.

The key to better investment

Oftentimes when people wonder “How to better invest my money”, they expect concrete answers. Track this website, watch these stocks, invest this amount or that amount, and so on and so forth. And that’s certainly what a macroeconomic consultancy like Aitken Advisors will help you with. But one thing that plenty of aspiring investors overlook is actually the fundamental thing for all success, not just investment success.

Do you know what it is? Have a hunch, perhaps?

It’s the one prerequisite for a good approach to just about anything: the right mindset. You can only reach peak performance if you truly commit. Let’s explore a few key points that’ll help you become a better investor.

1. Don’t fixate on the past.

To err is human. You’ve surely made mistakes with investments in the past, but dwelling on them won’t get you anywhere. Rather than constantly thinking about what you could’ve done, focus on what you can do now and in the future. Interestingly, a study by the University of Pennsylvania has revealed that our brains think about future tasks by default.

So, if your brain’s own default state is prospection, why push for retrospection? By doing so, you’re essentially locking yourself in a cage with fear.

Fear is one of the most powerful and, in this case, most inhibiting states of the human mind. It can cloud your vision and judgment. Letting it take over will stop you from taking necessary risks and moving forward.

Instead, go ahead and imagine yourself doing better, reaching peak performance and maximising your investments. The mind’s ability to take you in the right direction is incredibly underrated, so make sure to make the most of it.

As James Aitken likes to say: “Good judgment is usually the result of experience, and experience is frequently the result of bad judgment.”

2. Remember that certainty is an illusion.

One of the main ideas behind Aitken Advisors as a macroeconomic consultancy is narrowing down uncertainty. But narrowing down can never mean completely eliminating. Certainty as such is virtually non-existent. There can only be, as we mentioned above, good judgment, based on tremendous amounts of market data and experience.

In short, be sure to understand that you can never go into a particular investment completely certain that it will be a success. While doubt is an uncomfortable state, there will always be at least 1% of it in any decision you make. What you can do is accept this fact and be prepared, which also brings us to the next point.

3. Always aim to know more.

“If I had one motto, it would be ‘I want to be less wrong.’” That’s one of the things Aitken Advisors’ founder enjoys reiterating frequently. And that’s what investment really boils down to.

The idea is to strive to learn more, know more, be better. When you think about it, it’s in line with both of the previous points.

Firstly, bettering yourself and your investment decisions can only mean going forward, never backward. Secondly, if there’s always more bettering to do, then there definitely is no such thing as certainty or perfection.

4. Create consistency.

The daily habits you create can make or break your path to success. Think of the world’s best tennis players, for example. Do you think they become champions by working hard one day, then lounging the next, and just winging it on the third? Of course not. Federer, for example, follows the exact same steps every time before even hitting a ball.

What that comes down to is that building a routine paves the way for excellence. If you only take huge steps, they’ll be few and far between, having little impact on your strategy success. It’s small changes and tweaks that ultimately lead to peak performance – when done consistently.

Another instance is the way we’re encouraged to learn languages. A little bit of learning every day is set to go a longer way than several hours one day a week.

If you’re looking for an example more relevant to investment, you’re in luck. About two and a half decades ago, there was a huge fund manager who insisted on something many would consider odd or even obsessive. He insisted all his offices around the world be completely identical, the minutest details included.

And what did that help him accomplish? It fed into his routine, his consistency. This meant that he could tick all the essential boxes for better investment skills, no matter which office he entered.

Those boxes would be calmness, focus, confidence, energy and intensity. All these are necessary in order to be anticipatory and remain in control – and that’s something investing can’t do without.

The bottom line

If you’re looking to find out how to improve your investment skills, look no further than yourself. Take a step back and think about these four points above. What can you do to make small changes to your mindset that will bring you incremental gains and significant results? Remember, the path to a peak performance mindset is paved with routine, discipline, constancy and consistency.

If you want a more comprehensive look into how to improve investment skills, make sure to go over to the Library section. There you’ll find the full text this blog’s been based on – “Peak Performance: Ascending the Power Curve” by James Aitken and Dr. Tonya Hoffman.

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