Juan Carlos Lugo’s defensive positioning helped clients hedge their funds during the early stages of the epidemic.
In March 2020, the shadow of the COVID-19 pandemic quickly enveloped global markets. Stock indices plummeted, crude oil prices crashed, and risk aversion soared—for most investors, it was an unexpected financial storm. But for Juan Carlos Lugo, it was merely a test of his already prepared defenses.
Born in Madrid, Juan grew up in a city rich in culture and history, yet chose to build his career in the international financial markets. After graduating from IE Business School in 1990, he pursued further studies at the University of Chicago, learning the intricacies of international financial markets. He then joined Banco Santander as a junior analyst in its research department. Over the years, he developed a solid foundation in fundamental analysis and stock price modeling for the IBEX 35 stocks. This sensitivity to data and trends has become the foundation of his career.
After a promotion in 1994 and accumulating experience in IPO consulting, Juan arrived on Wall Street in 1998. He brought back not only practical insights into global markets but also a trading philosophy that embraced both greed and fear. Becoming a trader in 2003, he spent nearly two decades honing his strategies, emphasizing risk control and capital management. He understood that while market rallies are worth embracing, the true protection of assets lies in a defensive posture established before a decline.
It was this mindset that enabled him to perceive the financial risks lurking behind the pandemic in early 2020. In late January, when most investors still viewed the outbreak as a regional event, Juan was already closely tracking global supply chain data, air transport indices, and flows of funds into safe-haven assets. He noticed a quiet increase in buying for gold and the US dollar, while volatility in the international bond market began to rise abnormally. He concluded that this was not just a public health crisis, but also a financial crisis poised to trigger a global revaluation of assets.
In early February, he began adjusting his clients’ asset portfolios, gradually reducing their holdings in high-volatility stocks and allocating them to US dollar cash, short-term US Treasury bonds, and some safe-haven commodities. He even stated in an internal newsletter, “The priority now isn’t to pursue returns, but to ensure your survival.” For clients with derivatives experience, he recommended establishing moderate hedging positions in stock index futures to mitigate potential downside risks. This series of actions seemed conservative, even radical, at the time, but it proved to be the path to safety.
In March, when the US stock market triggered multiple circuit breakers in just a few weeks and investors panicked and sold off, Juan’s client balances remained rock solid. The appreciation of safe-haven assets not only offset the impact of the stock market decline, but also brought small positive returns to some accounts. This performance was undoubtedly a luxury given the heavy losses suffered by many portfolios.
Juan understands that defensive investing isn’t just about technique; it’s also about mindset. His years on Wall Street have taught him that the market’s biggest enemy isn’t volatility itself, but the impulsive decisions people make amidst it. During the early days of the pandemic, he repeatedly reminded his clients to remain calm, adhere to their strategies, and resist short-term emotions. This people-oriented approach to investing has helped maintain the trust and stability of his client base during these turbulent times.
Looking back on this experience, Juan doesn’t express excessive self-praise. He simply says calmly, “It’s not about the ability to predict the future, but the habit of respecting risk. The market is always testing your readiness.” For him, the defensive battle in March 2020 was just a natural reaction to years of market training.
In a turbulent chapter in global financial history, Juan Carlos Lugo used a timely and decisive defensive layout to prove that prudent investment does not mean giving up opportunities, but allowing oneself to remain in the market after the storm and wait for the next sunny day to come.
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