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Have you won the lottery jackpot? The first 5 decisions you need to make.

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12/17/2014

Most lucky lottery winners end up losing their entire fortune within a few years. This is a quasi-universal law that affects the vast majority of lottery winners, as bad decisions start as early as the first minute after the draw. Let's see how bad decisions can be avoided in the first days or weeks after being chosen by the goddess Fortune. We will summarise them in 5 essential decisions and present them to you in the usual chronological order in which they should be taken.

The first The golden rule would be maximum discretion. The fewer people who know that we have won the jackpot or any other lottery, euromillions, etc., the better, much better. Not only for security reasons, but also to avoid, as far as possible, becoming a tempting lure for fraudsters, tricksters and unscrupulous and unscrupulous investment hunters. And bankers should also be included in this bag, as they will immediately be on the lookout for their prey as soon as they smell the blood of the nouveau riche and its irresistible liquidity. However, some bankers will have to be told, since the winning tenth or tenths must be deposited in a bank for collection and the corresponding 20% withholding, in other words, the first tax bite from the State. But be careful, (more…)

Generating income in a scenario of expensive bonds and rising rates.

Generating income when rates can only go up, and doing so in an environment of recession or anaemic growth, is at best a pipe dream. The fact is that there comes a point at which trying to scrape a tenth of a yield by adding risk (and we are not talking about mere volatility but the dreaded insolvency) is not only reckless but also increasingly difficult to achieve. A few examples to illustrate this point: The Spanish 10-year sovereign bond, with government indebtedness of 100% of GDP and its persistent public deficit of -7%, offers an incredible yield of 1.96% per annum. Or the high yield corporate debt of companies in the developed world, as over-indebted as the countries, with yields that are less and less «high» and which will be mercilessly crushed by the rise in interest rates. And what can we say about Greece itself, the paradigm of insolvency and the impossible rescue by states also in need of a bailout, offering a ridiculous 7.79% for 10 years. In other words, the investor receives 7.79 per annum in exchange for Greece being able to pay back its euros intact in 2024... Insane. The sovereign debt that many investors have in their portfolios (ignoring the fact that there is life beyond traditional listed fixed income), which has risen as much as the Spanish risk premium has fallen in the last two years, reminds me a lot of the turkey sentiment before Christmas... (more…)

The 'tailored fund' scam

This is the latest trend in commission-based abuse by banks, and it seems to have emerged a few months ago and is here to stay amongst the most unsuspecting investors. The themed funds In short, these are funds of funds whose selection criterion is to maintain a mix of around half a dozen funds which, taken together, match the typical investor profile: Aggressive, Moderate, Dynamic, Conservative, etc. In other words, rather than the adviser at the relevant bank recommending that clients hold 4, 6 or 8 specific funds in their portfolio – replacing some with others when deemed necessary – they will suggest buying just one: the profile-based fund. And it will be the fund’s managers who buy and sell whichever funds they wish at any given time, without the investor even realising it. (more…)

Fixed Income 2.0

Traditional fixed-income investments, in the form of bonds issued by governments and companies, are going through a very difficult period. Excessive borrowing by developed countries – and increasingly by emerging economies too – combined with central banks printing money at unprecedented levels, is making fixed-income investments generally less and less reliable. If we create money out of thin air without anchoring it to anything, debt becomes mere digits whose solvency is increasingly called into question, as income and the ability to generate cash flows to repay it become increasingly paltry compared to the amount owed. And this applies to both companies and governments in so-called developed countries.

If we also add to this a policy of interest rates at virtually zero that has been maintained for years, and central banks’ absurd asset repurchase schemes, the result is that even the most creditworthy (sic) debt – such as that of Germany or the United States – is subject to negative interest rates. Consequently, the debt of other countries – which are, paradoxically, heavily indebted – also enjoys minimal risk premiums; in other words, they pay an extraordinarily low cost for borrowing money. (more…)

Losing as an investor what you have gained as an entrepreneur.

Being successful as an entrepreneur does not mean that you are also skilled at investing the money generated in the company. Neither in the management of surplus cash within the company itself, nor in the management of money already extracted outside the company. In fact, from our knowledge of many entrepreneurial families, we can assure you that usually the most brilliant entrepreneurs are terrible investors. (more…)

Peripheral bubble: The perfect storm.

Philippe Legrain is the author of several books, such as «Open World: The truth about globalisation«He has also been and is a very influential person in EU economic policy. Not for nothing has he been a senior advisor and head of the analyst team of the Bureau of European Policy Advisers for the President of the European Commission José Manuel Durao Barroso. And as such, has led the team that has directly advised the EU's strategic economic policy.

Well, from his privileged perspective, Legrain has recently published an article in the Financial Times entitled «.«Investors are ignoring eurozone risks«This is in line with our opinion, which we have reiterated in several articles about the mirage of bonanza that the markets are quoting with respect to the European peripheral economies: «...the European Union's peripheral economies are in a state of crisis.«Mátrix and the green shoots«, «The double standards of bubbles«and many others.

Below is a free translation and commentary of Legrain's article:

Peripheral bond yields are reaching bubble proportions. Markets awash with liquidity both camouflage and exacerbate long-term economic problems and insolvency. Investors and policymakers should have learned that lesson in the pre-crisis bubble years. Yet they have gone from hysterical panic to short-sighted complacency in less than two years. (more…)

Russia's motives

A través de la siempre recomendable newsletter de John Mauldin, hemos tenido acceso a un análisis, a nuestro juicio muy interesante y revelador, que realiza Louis-Vincent Gave, de Gavekal Research, sobre los motivos que han llevado a Rusia a actuar como lo está haciendo en el conflicto de Crimea. Y también nos ayuda a comprender las claves que pueden determinar la evolución de este conflicto y la geoestrategia general que de él se derive. Vamos a tratar de resumiros los principales argumentos de este análisis, así como haceros algunas reflexiones sobre ellos: (more…)

It is not a quarter or a year. It is an entire Investment Life.

Investment gurus such as Warren Buffett have it ingrained in their very DNA: Investing is like playing any sport whilst focusing on the game itself, whereas doing so whilst focusing on the score is pure speculation. The matches, the championships and the well-deserved glory go to those who focus on the pitch – on constantly improving their strategy and competitive skills when selecting companies in which to invest – rather than on the absurd speculation of managing a digit displayed on a neon sign, which, incidentally, is as volatile as our own incompetence.

Buffet – like the rest of the world’s top multimillionaire investment gurus – never tires of repeating this over and over again, in every possible way, as in his latest annual letter, where he also discusses the few property investments he has made throughout his life. Well, few, that is, if we do not take into account that every investor, when buying shares in a company, is at the same time acquiring a proportionate share of the property assets that the company owns, of course. (more…)

Beware of Developed Markets

The party continues. Following the rallies on the American and European stock markets – particularly the Spanish one – it seems that most investors are set to stumble over the same old stumbling block once again. When? It’s impossible to say for certain, but what is certain is that the stumbling block is there and investors, giddy from such a rally, are running about like headless chickens. And what is this stumbling block that so many are set to trip over? Well, logically, it’s the valuations in developed stock markets, which are by no means cheap any longer – not to mention that they’re already starting to look expensive. Especially when we bear in mind that corporate profits are at record highs and interest rates at record lows, which inevitably brings us closer to the end of this cycle and the start of the next.

We must also distinguish between the developed European and American stock markets: the European market is facing persistent deflation, which may well continue if the ECB is forced to take extraordinary measures similar to those taken by the Fed in recent quarters. But with the spectre of solvency crises and recession looming over the periphery, this will not bode well for its stock markets. It is true that the German stock market is trading at more reasonable prices than the Spanish one, but despite its efforts to shield itself, we must not forget that we are still all in the same boat – Central Europeans, Northern Europeans and the southern periphery. And that could be a source of contagion for turmoil on European stock markets, although, logically, those in the south will bear the brunt of it, as they are at the epicentre of the financial problems and are therefore trading at levels equivalent to almost 20 years’ worth of profits. (more…)

A one-off wealth levy.

It has been almost a year since we had already warned that the council of German experts advising Chancellor Merkel recommended that the leaders of southern Europe confiscate a portion of the value of property from owners in the EU’s periphery in order to prevent the collapse of the peripheral financial system. At that time, this body – known as the «five wise men» – argued that whenever a bailout of banks or southern European states was necessary, it should be carried out internally (a «bail-in»), that is, using money from the citizens themselves living in the countries in distress. And that confiscating a proportion of the value of property was the easiest, most practical and simplest way to obtain the money needed to prevent the collapse of peripheral states and the financial system. This was because doing it the Cypriot way – by confiscating a portion of bank accounts – caused greater public alarm, and it was also easier for ‘the targets’ to avoid confiscation by transferring the money out of the country (as the better-advised Cypriots did). Property, on the other hand, is tied up; it cannot be transferred overnight to Luxembourg, Switzerland or Germany, and at the same time it is viewed more favourably ~~to steal~~ to confiscate property from property owners – who are presumed to have greater wealth – rather than from savers or investors who live in rented accommodation. (more…)

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Category: wNecesito un Family Office

Have you won the lottery jackpot? The first 5 decisions you need to make.

Generating income in a scenario of expensive bonds and rising rates.

The 'tailored fund' scam

Fixed Income 2.0

Losing as an investor what you have gained as an entrepreneur.

Peripheral bubble: The perfect storm.

Russia's motives

It is not a quarter or a year. It is an entire Investment Life.

Beware of Developed Markets

A one-off wealth levy.

Shall we help you search?

Cluster Family Office

Do you need help in capital and wealth management?

How can I avoid the negative effects that my fortune may have on my children?

How and when should I talk to my children about family wealth, and what relationship should they have with money throughout their adolescence?

How can I measure the real risks of my investments and protect my assets adequately?

Do I have sufficient liquidity and stable income to cover my needs on a permanent basis?

(+34) 93 626 47 75

(+34) 91 794 19 82

Category: wNecesito un Family Office

Have you won the lottery jackpot? The first 5 decisions you need to make.

Generating income in a scenario of expensive bonds and rising rates.

The 'tailored fund' scam

Fixed Income 2.0

Losing as an investor what you have gained as an entrepreneur.

Peripheral bubble: The perfect storm.

Russia's motives

It is not a quarter or a year. It is an entire Investment Life.

Beware of Developed Markets

A one-off wealth levy.

Shall we help you search?

Cluster Family Office

Do you need help in capital and wealth management?

How can I avoid the negative effects that my fortune may have on my children?

How and when should I talk to my children about family wealth, and what relationship should they have with money throughout their adolescence?

How can I measure the real risks of my investments and protect my assets adequately?

Do I have sufficient liquidity and stable income to cover my needs on a permanent basis?

(+34) 93 626 47 75

(+34) 91 794 19 82

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