«I have been reading your work for some time now, and although I have no doubt as to your professional integrity, I have a serious complaint to make.’.
Those of us who’ve been involved in the markets for a few years now are so scared and terrified this year that we don’t know what to think anymore.
All that talk about the time horizon, each person’s risk profile, and where my savings or investments are headed – whilst not entirely untrue – already sounds almost as hollow to me as any sales pitch from a high-street branch sales rep.
Mind you… I’ve used it too, because I’ve also been selling motorbikes in private banking.
What’s interesting for your readers – and I’m one of them – is how you’ve weathered the tsunami, or whether you’re just as badly hit as the rest of us; what you’ve invested in; how you’ve put your foot in it or managed to dodge the blow; what your medium-term outlook is; which stocks are undervalued… The rest is fine for a chat with clients to win over a few over a cup of coffee, or for the foreword to some McKinsey handbook that’s completely useless in the real world…»
As will be clear, Mangallous, I think the only thing we agree on is our admiration for Xavier Sala-i-Martin.
Mangallous, our worlds are different. «All this fuss», as you put it, is nothing more and nothing less than the vast difference between looking at the markets, the competitors’ benchmark and the return as at 31 December (your commendable and, I have no doubt, honest work); and ensuring the proper growth of a family fortune, as our Family Office does. It is a question of perspective: whether to look solely at the year-on-year return on stock market investments, or to work across a myriad of areas such as taxation, property, family circumstances, legacies for future generations, family philanthropy, corporate advisory services, coaching for heirs, the optimal legal structures for each fortune, asset relocation, and a loooooong etcetera that we have been discussing for years and in hundreds of articles which you seem not to have understood at all. And all of this, of course, without forgetting such an important aspect as the financial management of monetary assets, which is where the work of asset managers—such as yourself, for example—comes into play.
You’re, as you put it, «scared stiff, terrified or drenched» because you see your stock market portfolio as a whole universe. That’s why I’m telling you it’s a question of perspective.
It is no surprise, then, that we always protect the bulk of our clients’ assets through fixed-income investments, and always in accordance with the rigorous standards set by the Balance sheet Vital tailored to each individual. Consequently, the extent to which what you might consider a nightmare affects you is greatly minimised, as it should be. Furthermore, the selection of fund managers, funds or portfolios and other derivatives that may potentially be added, depending on the design of each BV, are selected according to criteria based on two fundamental concepts: The historical rigour netos (if any), and the absolute independence of interests, as well as, of course, all the investment selection criteria that are suited to the circumstances for each Customer, as we have already explained in the previous article. Only in this way – through high-risk investments and the proportion of one’s assets allocated to them – can we minimise losses in bad times and maximise profits in good times. But infinitely more important are all the criteria on which the rigorous design of a BV the detail involved in simply selecting the stock market assets that make up your portfolio.
The ups and downs you experience on the trading floor or on screen, in volatile markets, only have a negative impact on the smallest proportion of the portfolio that was jointly designed for this purpose with each client. We probably don’t know how to do your job better than you do (although, judging by your tone, I’d venture to say we may well have more years’ experience of following the markets). But bear in mind that you won’t get the answer you’re asking for, nor will you find it anywhere else, simply because there is no magic formula that guarantees profits in the equity markets these days. No one will give you a foolproof formula that will make money for you and your clients in the future, no matter what happens on the stock market. And anyone who claims to do so is deceiving you. Forget about finding the magic formula. SYou’ll only come across illusions that are extremely dangerous for you and, worse still, for your clients.
Managing a family’s wealth over the years goes far beyond simply year to date (year-to-date performance) or any other short-term performance of any fund or index that you monitor on a daily basis. EI hope you can see beyond the heads of those around you and understand this. 
I deeply regret that, as you yourself acknowledge, you have been «»selling motorbikes in private banking with empty sales pitches from high-street branch sales staff". And I don’t just feel sorry for you – who’s peddling motorbikes in a way that ought to be keeping you awake at night far more than it actually does – but I feel sorry, above all, for the customers who, over the course of your life, bought the motorbikes you sold them. For you, they were just small commissions and accolades that have propelled you to where you are now, but along the way you’ve ruined the efforts and hopes of many families who trusted you and your smart tie. Of course, you did help some of them make money, but Don’t kid yourself – they were merely collateral damage in your main objective, which was to sell indiscriminately the company’s products, for which you were paid a fixed salary plus a variable bonus. And in these extremely tough market conditions, the consequences for your career must be devastating.
But please don’t see this post as a personal attack on you. We don’t even know each other. What you’ve been doing in your job is common practice amongst bankers and other asset managers. But just because it’s common practice doesn’t make it any less shocking or reprehensible.
I know lots of people like you who, one fine day, insightful and memorable They ceased to be part of the armed wing of the banking and financial sectors. Most of them (though not all) saw their financial and career prospects cut short by this decision, but I take my hat off to them because they chose the difficult but right path. It is essentially a matter of personal and professional ethics, which is not incompatible with success, even if that path is longer and more winding than the financial fishmonger’s ‘motorway to heaven’.
To conclude, I’ll answer your questions: If you’re referring to RV, I have to say that at the moment we recommend holding only a very small amount in portfolios, provided that the BV consider this, placing greater emphasis on US non-financial value and blue-chip stocks. Although this depends on the approval of the mother of all rescues, there may be some financial opportunities. For those BV As for emerging markets, we are focusing on Latin America and Greater China. Our medium-term outlook (if you are referring to the global economy) is very negative, given that the fact that to ensure the system’s survival does not mean that this is not Let it be the Perfect Storm which could wipe out much of the economic growth and prosperity achieved over recent decades. As for the undervalued stocks you’ve asked about, I’d say there are countless examples these days. But only time will tell whether the current apparent undervaluation was not simply the start of these companies’ decline. Therefore, you should never invest more than the amount set out in the BV for value shares, no matter how much they’ve fallen. Even if they’re made of gold, they’re still knives falling from the sky. As you can see, you won’t find a miracle share that will definitely get you – and your clients – out of this situation. And I wouldn’t recommend taking a gamble, for the sake of the assets that depend on you. Readers – and of course you too – must remember that none of the above holds any universal truth without first drawing up your Vital Balance Sheets, and it is only in light of these that our recommendations make sense.
Fortunately, customer acquisition is now a thing of the past for us, and we have never sold our expertise, either on this blog or in any book. I would simply be satisfied if, through these reflections, I have managed to open your eyes a little and broaden your horizons beyond the losses