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…)
We all shudder (or should shudder) when we contemplate the possibility that our money is invested in assets whose prices are at what is known as a «bubble», i.e. at levels far higher than their real intrinsic value, the result of unfounded speculation. Investing in bubbles is the mistake we all want to avoid at all costs, because if they burst, the losses will be irrecoverable or, at best, it will take decades to recover the value lost. Because, if the capacity of those assets to generate Value does not increase considerably, those prices at which we buy wildly will not occur again without the help of a new bubble on that same asset, which may never happen or take more years than our own 
