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Category: wNecesito un Family Office

Resolving the dilemma of whether or not to go against the market.

«If there’s one thing I’ve learnt over the years, it’s that you shouldn’t go against the market«That is the blunt remark made a few days ago by a senior executive at a national bank to one of our clients. In fact, it is a phrase we have heard on many other occasions from various bank employees, and even from some savers, over the nearly three decades that we have been investing our money and that of our clients.

The question we are going to try to settle once and for all is whether it is true that, in the long run, we must stand up to Mr Market, or whether, on the contrary, we should let our investments ride out the ups and downs of the markets. And the answer may come as a surprise to more than a few: It depends on whether we are bankers or investors. Let us explain. (more…)

If you win the Christmas Lottery jackpot…

We are living in times when millions of people dream of the possibility that the Christmas Lottery will make them rich. The common belief is that once this miracle has happened, their problems will disappear forever, and happiness will be the norm for the rest of their lives. But everything will depend on the attitude and decisions of the winners from the moment the Children of San Ildefonso call out their numbers. It is not so much about the amount of money the prize represents, but rather the way in which they decide to manage that sudden wealth.

It is now five years since we published an article entitled «Jurassic Park«, also at this time of year, that «the coexistence of a limited capacity to generate wealth and a sudden fortune will, in almost all cases, be an unnatural union that will seek to restore its balance». In other words, the union of a windfall of money with people who have not been able to generate it through their own efforts tends, unfortunately, to last only a few years.

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The Age of Central Banks

It seems that the pieces of the ‘New Normal’ jigsaw are starting to fall into place. But, as is to be expected given that this is a ‘New Normal’, the way these pieces fit together is currently far less stable and orderly than in the ‘Old Normal’. And what may seem today like a completed part of the jigsaw may, by tomorrow, once again prove to be a state of great uncertainty and chaos.

The key difference between this new era and the previous one is, of course, the size of the balance sheets of all the central banks in developed economies: the Fed, the BoE, the BoJ and, to a lesser extent so far, the ECB. The headlong rush that quantitative easing (QE) represents is driving up the market prices of virtually all assets and directly related markets. And this reality is as striking as it is fleeting, since the mass printing of money has as much influence on asset prices as it is unsustainable, given that the tap on QE will inevitably have to be turned off at some point in the not-too-distant future. (more…)

What is an Outpost Family Office?

The concept is new and meets a logical and increasingly common need in a globalised world. It is common knowledge that Family Offices are companies or groups of professionals that are essentially dedicated to the management and control of the assets of one or several families, as well as to attending to all aspects that may affect these family groups, such as taxation, legal advice or assistance in family logistics and concierge services (concierging), among others. But the new figure that has appeared for the users of a Family Office (whether they are Clients of a Multi-Family Office, or owners of a Single-Family Office), is that of the Outpost FO, or global support network for a Family Office.  (more…)

How does the machinery of the economy work? Video by Ray Dalio

Here’s the 30-minute video by global macro management guru Ray Dalio (Bridgewater) has been created to explain, in a very clear and educational way, not only the economic dynamics that have led us to the current situation, but, more importantly, the roadmap for emerging from the great recession through a “graceful deleveraging”.

The video is in English (I haven’t managed to find it in Spanish or with subtitles yet) and is accompanied by some very pleasant and illustrative animations. Furthermore, its unhurried pace makes it easy to understand all the concepts explained in it. It is probably a suitable response or a different take on the famous video “Money as Debt“, which went viral a while ago. Hope you enjoy it: (more…)

Recovery and stability are here... eppur si muove!

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It appears that August 2013 is marking the start of the Eurozone’s economic recovery. Peripheral risk premiums are shrinking like raisins, whilst the price of German government bonds is falling (yields rising), mirroring US Treasury bonds. The political class and the establishment The Western media are hailing it as such, whilst keeping their fingers crossed that the prophecy will become a self-fulfilling one.

However, mathematics is stubborn. And so is economics. Despite the faith and the malicious or ignorant opinions of politicians and analysts, as Galileo said: e pur si muove. In other words, Spain’s deficit, its economic recession and its unpayable debt reveal the harsh reality: we are far, very far from achieving growth and regaining solvency. That is why reductions in the risk premium are nothing more than mirages in a desert of recession and deleveraging that we have barely begun to navigate. A temporary and unjustified improvement that is the result of political propaganda and the well-known inefficiency of the markets.  (more…)

Old Money and New Money

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A distinction must be made between two clearly differentiated types of estates: Estates that have been created by a single generation, and which are passed on to one or two subsequent generations at the most, since they die out along the way due to their smaller size and the usual dilapidation by the recipients of inheritances. And the large estates that are passed on from generation to generation, impersonally and in large family groups over many, many years. We call the former New Money and the second Old Money. (more…)

A question of priorities

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We are now in a phase of accommodation to chaos. The world turned upside down that summer of 2007 (I would even say that it began to do so after the 9/11 attacks on the WTC in 2001), and we have gone through a convulsive five years like few others, like very few others. And now it seems that we have become accustomed to the nonsense: to see the markets rise when the US unemployment figures worsen, because they are confident that this will mean the continuation of the infinite printing of money. Or to see bond yields fall when the FED insinuates that things are getting better and it will soon be able to take off the life support (QE) to the economy. Not to mention countless other absurd and unheard-of reactions and correlations. (more…)

The Analysts.

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Today I’m reading a news article in *Expansión* which I’d rather laugh off, but which is actually enough to make you burst into tears – or rather, to make you foam at the mouth with sheer indignation. The news report reads as follows: «UBS withdraws its board recommendation just one day later’ to sell »Red Eléctrica’. This story is yet another example (the umpteenth) of the mediocrity of the analyses produced by the research departments of banks as high-profile as UBS itself. But the saddest thing is that this can be extrapolated to virtually the entire banking sector. (more…)

The Cyprus Experiment: The euro is quietly falling apart.

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The dreaded abolition is here de facto the free movement of money between Eurozone countries. And it has happened as always, quietly, behind closed doors, and in the country of Mediterranean soda experiments: Cyprus. The first case to come to the New York Times forum It was Marios Loucaides, a Cypriot businessman who had the audacity to try to buy a flat in neighbouring Athens a few weeks ago.

Don’t think this was some massive purchase or a deal worth millions of euros – no. It was simply a matter of buying a modest flat for €170,000. Mr Loucaides agreed with the Athenian owner that he would transfer the amount upon his return to Cyprus, something that should be perfectly normal and routine between EU countries sharing a currency in the much-vaunted Eurozone. But no. The money could not leave the country after endless obstacles, and the sale fell through. The Athenian owner will have to find a buyer with real money – that is, euros, not Cypriot currency.

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