{"id":22877,"date":"2008-09-26T12:24:00","date_gmt":"2008-09-26T12:24:00","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=460"},"modified":"2008-09-26T12:24:00","modified_gmt":"2008-09-26T12:24:00","slug":"carta-abierta-a-un-gestor","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/carta-abierta-a-un-gestor\/","title":{"rendered":"An open letter to a manager."},"content":{"rendered":"
In the previous article, The Key Factors in an Investment: Circumstances vs. Risk-Return Profile<\/a>, we have received the following revealing comment from Mangallous<\/a> which I think deserves a reply in the form of a post:<\/div>\n
\n

\"\"<\/a>\u00abI 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.\u2019.
Those of us who\u2019ve been involved in the markets for a few years now are so scared and terrified this year that we don\u2019t know what to think anymore.
All that talk about the time horizon, each person\u2019s risk profile, and where my savings or investments are headed \u2013 whilst not entirely untrue \u2013 already sounds almost as hollow to me as any sales pitch from a high-street branch sales rep.
Mind you\u2026 I\u2019ve used it too, because I\u2019ve also been selling motorbikes in private banking.
What\u2019s interesting for your readers \u2013 and I\u2019m one of them \u2013 is how you\u2019ve weathered the tsunami, or whether you\u2019re just as badly hit as the rest of us; what you\u2019ve invested in; how you\u2019ve put your foot in it or managed to dodge the blow; what your medium-term outlook is; which stocks are undervalued\u2026 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\u2019s completely useless in the real world\u2026\u00bb<\/p><\/blockquote>\n

As will be clear, Mangallous, I think the only thing we agree on is our admiration for Xavier Sala-i-Martin.<\/p>\n

Mangallous, our worlds are different. \u00abAll this fuss\u00bb, as you put it, is nothing more and nothing less than the vast difference between looking at the markets, the competitors\u2019 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\u2014such as yourself, for example\u2014comes into play.<\/p>\n

\"\"<\/a>You\u2019re, as you put it, \u00abscared stiff, terrified or drenched\u00bb because you see your stock market portfolio as a whole universe. That\u2019s why I\u2019m telling you it\u2019s a question of perspective.<\/p>\n

\"\"<\/a>It is no surprise, then, that we always protect the bulk of our clients\u2019 assets through fixed-income investments, and always in accordance with the rigorous standards set by the Balance sheet<\/a> Vital<\/a> 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<\/a>, are selected according to criteria based on two fundamental concepts: The historical rigour netos<\/span><\/span> (if any), and the absolute independence of interests<\/span>, as well as, of course, all the investment selection criteria that are suited to the circumstances<\/span> for each Customer, as we have already explained in the previous article<\/a>. Only in this way \u2013 through high-risk investments and the proportion of one\u2019s assets allocated to them \u2013 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<\/a> the detail involved in simply selecting the stock market assets that make up your portfolio.<\/p>\n

\"\"<\/a>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\u2019t know how to do your job better than you do (although, judging by your tone, I\u2019d venture to say we may well have more years\u2019 experience of following the markets). But bear in mind that you won\u2019t get the answer you\u2019re 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\u2019ll only come across illusions that are extremely dangerous for you and, worse still, for your clients.<\/span><\/p>\n

Managing a family\u2019s wealth over the years goes far beyond simply year to date<\/span> (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.<\/span> \"\"<\/a>I deeply regret that, as you yourself acknowledge, you have been \u00ab\u00bbselling motorbikes in private banking with empty sales pitches from high-street branch sales staff\"<\/span>. And I don\u2019t just feel sorry for you \u2013 who\u2019s peddling motorbikes in a way that ought to be keeping you awake at night far more than it actually does \u2013 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\u2019ve 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\u2019t kid yourself \u2013 they were merely collateral damage in your main objective, which was to sell indiscriminately<\/span> the company\u2019s 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.<\/p>\n

But please don\u2019t see this post as a personal attack on you.<\/span> We don\u2019t even know each other. What you\u2019ve been doing in your job is common practice amongst bankers and other asset managers. But just because it\u2019s common practice doesn\u2019t make it any less shocking or reprehensible.<\/p>\n

I know lots of people like you who, one fine day, insightful and memorable<\/span> 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\u2019s \u2018motorway to heaven\u2019.<\/span><\/p>\n

\"\"<\/a>To conclude, I\u2019ll answer your questions: If you\u2019re 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<\/a> 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<\/span>, there may be some financial opportunities. For those BV<\/a> 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\u2019s survival<\/a> does not mean that this is not Let it be the Perfect Storm<\/a> which could wipe out much of the economic growth and prosperity achieved over recent decades. As for the undervalued stocks you\u2019ve asked about, I\u2019d 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\u2019 decline. Therefore, you should never invest more than the amount set out in the BV<\/a> for value shares, no matter how much they\u2019ve fallen. Even if they\u2019re made of gold, they\u2019re still knives falling from the sky. As you can see, you won\u2019t find a miracle share that will definitely get you \u2013 and your clients \u2013 out of this situation. And I wouldn\u2019t recommend taking a gamble, for the sake of the assets that depend on you. Readers \u2013 and of course you too \u2013 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. <\/span><\/p>\n

\"\"<\/a>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<\/div>","protected":false},"excerpt":{"rendered":"

En el art\u00edculo anterior, Las Claves de una inversi\u00f3n: Circunstancias vs rentabilidad-riesgo, hemos recibido el siguiente revelador comentario de Mangallous que creo que merece una respuesta en forma de post: \u00abOs leo desde hace algun tiempo y aunque no dudo de vuestra honradez profesional, tengo una importante recriminacion que haceros.Los que llevamos ya algunos a\u00f1os […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"class_list":["post-22877","post","type-post","status-publish","format-standard","hentry","category-sin-categorizar"],"_links":{"self":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/22877","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/comments?post=22877"}],"version-history":[{"count":0,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/22877\/revisions"}],"wp:attachment":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/media?parent=22877"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/categories?post=22877"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/tags?post=22877"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}