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Cluster Family Office Blog

The stress of the test

In mid-2010, some well-known Spanish banks were sending us investment proposals in Greek sovereign debt. The reports and analyses we kept receiving insistently said that it was foolish not to take advantage of the yield differential between the bonds of Eurozone countries. They argued vehemently that we should not forget that, after all, this was an EU country, and that the Greeks would never be allowed to default, not even if their bonds depreciated by much more than they did at the time, with yields still hovering around 6%. In other words, little more than the yield on Spanish debt today. The arguments put forward were reasonable and reasoned, except for one small detail: They forgot that two and two are four. (more…)

A world without credit rating agencies (2)

«What would happen if credit rating agencies ceased to exist? It is a question that few of us ask ourselves today, but one that leads to some fascinating reflections.»That’s how it began" the article which we published over a year and a half ago. Unfortunately, this debate is now dominating the media headlines for very sad reasons, as the role of the credit rating agencies is being called into question solely because they have downgraded Portugal’s rating. In other words, because their ratings are a thorn in the side of those of us who are still members of the Eurozone. We invite you to re-read that short article from 16 December 2009 – it feels like it was only yesterday – and afterwards we’ll offer some thoughts on the matter. (more…)

John Mauldin's predictions for the second half of 2011

It is clear that, in the current climate, predicting what will happen in the second half of the year is risky, to say the least. But despite this, it remains our duty as wealth advisers – and, ultimately, as a family office. Reading or listening to the macroeconomic views of people such as John Mauldin o Ray Dalio, undoubtedly shed light on this sea of financial darkness. His experience and the fact that he has already fought in almost every bullring also lend weight to his interpretation of the past, present and future of the world of finance and investment. (more…)

There are still lessons… Negative Pledge.

«Why have issues such as the Hellenic Republic’s €150,000,000 Floating Rate Notes due 2012 performed so well recently, whilst the rest of the debt has been plummeting?»This is the striking and apt question that opens the excellent article published in the Blog: Right to the Bottom by Juan Ramón Caridad and Jacobo Zarco in FundsPeople. And the authors’ immediate response is the difference between local regulations and English regulations. (more…)

The Future of Social Media

Last month, I was asked to speak at a conference at the School of International Business on social media. Whilst researching this topic, I came across some insights into what I anticipate will be the next big thing in the world of social media.

Here are my ten points of view:

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Blame it on the Eurosystem

A couple of weeks ago, Alberto Artero from Cotizalia wrote an excellent article which, in my view, has gone largely unnoticed given the significance of its content, and on which I had hoped to see more responses in the specialist press. It refers to the four-page study by the Monetary Research Department, carried out by John Whittaker of the Lancaster University Management School (UK) which is well worth seeing. I recommend you read it by downloading it here and then we’ll move on to some reflections on the distortions of the Eurosystem.
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Tricking Mr Market: Am I the King of the World?

As ever, under cover of darkness and with malicious intent – that is to say, at the weekend whilst the markets are closed – the European finance ministers are meeting yesterday and today to try to square the Greek circle. The aim is to «persuade» private and public holders of Greek IOUs not to demand payment of their bonds upon maturity, but rather to «voluntarily» accept an extension of the maturity date that is as uncertain as the Greek state’s creditworthiness.

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The Technology Entrepreneur and the Family Office

Por the technology entrepreneur, everything moves very fast. Unlike the entrepreneur in any conventional, non-technology related business, for whom years or decades are part of the evolution of their business, in the technology company it is the quarters that precipitate events and their success or demise.

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Who's Moved My Risk?

The concept of risk, as it relates to long-term wealth preservation, has undergone a widespread and extremely dangerous shift since the bursting of the credit bubble. And our duty as a family office is to warn and protect our clients and followers from the risk that is taking hold of assets which, until recently, were considered (and are still considered by most) to be «safe».

When, at one of our conferences, we mention that in this new financial world (The New Normal) in which we find ourselves, the concept of risk and capital preservation has changed radically; some of those present look at us sceptically. But when we tell them that risk is taking over traditional fixed-income asset allocation and that, in this ‘new normal’, wealth preservation must be achieved – now more than ever – by buying good, undervalued companies on the stock market, their scepticism turns to widespread disbelief. And their question—or rather, exclamation—is as follows: How can there possibly be greater risk in a bank deposit, a guaranteed product, subordinated debt or public and private bonds than there is on the stock market?

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Hayek vs Keynes Rap: Round 2 (subtitled in English)

As A promise is a promise, here’s the subtitled version of the brilliant video we posted last month. It’s not to be missed – congratulations to the lads at EconStories.tv

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