A Geneva Corridor

The boutique where I learned credit had a corridor on the third floor, narrow and over-long, with a door at each end. One door led to the room where new money was raised. The other led to the room where bad loans were quietly resolved. The corridor between them was the same corridor; only the direction of traffic changed.

Senior people walked it slowly. They had been to both rooms. The juniors — and I was one — moved quickly, certain that the door we were walking toward was the only door that mattered. This is, more or less, the entire theory of capital cycles. Money does not become reckless because people are greedy. It becomes reckless because the people who remember the other room have retired.

The depreciation of memory

A capital cycle is usually told as a morality play: greed, hubris, fear, capitulation. I find the accounting story more useful. Institutional memory is an asset, and like all assets it depreciates. A senior risk officer who lived through the last default wave is a depreciating store of caution. When she leaves, the firm does not write down the loss. But the loss is real, and it shows up — always — at the next junction.

The cycle is not a wheel that turns. It is a corridor that empties of the people who have walked it before.

This is why cycles feel both inevitable and surprising. Inevitable, because the corridor never moves. Surprising, because by the time the traffic reverses, almost no one in the building remembers the trip.

What patience actually looks like

Patience is not waiting. Waiting is passive; patience is structural. It means building a book that can survive being early — which, in markets, is the only form being right ever takes. The senior people walked slowly not because they were cautious by temperament, but because they had priced the corridor correctly. They knew it had two ends.

I left the family office in 2024 to write these letters partly because I wanted to walk the corridor at my own pace, and to describe it honestly to people who suspect, correctly, that they are somewhere in the middle of it.