{"id":22930,"date":"2009-03-11T14:01:00","date_gmt":"2009-03-11T14:01:00","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=389"},"modified":"2009-03-11T14:01:00","modified_gmt":"2009-03-11T14:01:00","slug":"boquerones-fritos-vi","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/boquerones-fritos-vi\/","title":{"rendered":"Fried Anchovies (VI)"},"content":{"rendered":"
Below is a letter recently taken from lacartadelabolsa.com<\/a>. It strikes me as an account of a situation that may be more common than we care to believe. At the end of the letter, I\u2019ll share some interesting thoughts, and I look forward to hearing your views and comments. Here is the letter from I\u00f1aki in Pamplona:<\/p>\n<\/div>\n
\n
\u201cYesterday I got a call from my financial advisor, the one who handles all my investments, administration, bookkeeping and other administrative matters for my three companies. As soon as I walked into his office, I sensed that something was very wrong. Panicked, his eyes bulging, beside himself\u2014had he taken some kind of hallucinogenic substance?<\/p>\n

\"Sit down,\" he said to me. \"I've sold off your entire portfolio. I reckon the stock market's in for a proper crash\u2026\"<\/p>\n

He\u2019s sold me out now, right at this moment, when I\u2019ve already lost more than half my money. I signed the management papers four years ago, because nowadays everyone follows the rules and the fund managers treat any client complaint or request from the National Securities Market Commission with kid gloves. But it\u2019s not the signature that worries me, because, I insist, you have to sign. What worries me is my own folly, my stupidity in trusting those who shouldn\u2019t be trusted: IT\u2019S THEM, the usual suspects\u2026\u201d <\/span><\/div>\n

\u201c\u2026I had a right row with the manager. \u201dWhy didn\u2019t you consult me before selling my portfolio at a loss of 60%?\u2019 I said. \u2018Because,\u2019 I insisted, \u2018I believe the stock market is going to fall another 40%.\u2019 \u2018What\u2019s more,\u2019 he added, \u2018I\u2019ve sold absolutely everything to the rest of my clients\u2026\u2019 <\/span><\/p>\n

<\/div>\n

\"\"<\/a>\u201c\u2026He told me that unemployment is going to skyrocket, and that street riots and social and political unrest are going to proliferate in the coming months. He\u2019s told me about rising crime rates and public insecurity. He\u2019s said that corporate profits are going to go down the drain and that the Spanish economy might enter a process of \u201dArgentinisation\u2019 \u2013 in other words, a suspension of payments, just like in Argentina. He fears a sort of swarm of immigrants. Come on! I would have fainted if it weren\u2019t for the fact that I\u2019ve seen Crisis, Crisis and Crisis in my 70 years, and also Ways Out, Ways Out and Ways Out of those Crises\u2026\u201d <\/span><\/p>\n

<\/div>\n

\u201c\u2026Dear Editor, IT IS THEM, I insist. The same old lot: the pseudo-analysts, the bogus fund managers. In the 50 years I\u2019ve spent in the world of the stock market, I\u2019ve observed that when you entrust management to someone (I devote myself to managing my own companies), that person earns less than the stock market index and loses more than the index. We don\u2019t need these saddlebags for this journey\u2026\u201d <\/span><\/p>\n

<\/div>\n

\u201c\u2026I\u2019ve noticed that some people just copy what others do. Nobody wants to put a foot wrong, step out of line, in case they draw the dissident\u2019s attention, in case the others turn on them. Everyone buys at the same time and everyone sells in unison. They sell at the lows and buy at the highs. Blimey! Anyone can do that\u2026\u201d <\/span><\/p>\n

<\/div>\n

\u201c\u2026These lines, dear editor, lead me to the following reflections: What should I do with my cash, which is now less than half of what I started with when I began my investment journey with this fund manager, given that interest rates are at zero\u2014indeed, banks are now charging us to hold our money with them; given, as I see it, that property prices must fall, because they are the assets that have not yet caught up in terms of valuation, as the stock market or oil have? This fund manager has told me to buy gold, which is what the experts are now recommending. Gold? And what do I want gold for? To eat it? No, he told me it\u2019s for speculation. And why don\u2019t I speculate on the stock market, which is more liquid and, above all, more transparent? \u201dNot the stock market,\u2019 he told me again\u2026\u201d <\/span><\/p>\n

<\/div>\n

\u201c\u2026Dear Editor, don\u2019t you think that the \u201dGreat Crash\u2019 which a few people were predicting two years ago\u2014yourself included, Editor\u2014has already happened to a very large extent? I agree with the manager that unemployment will rise. I myself have implemented a redundancy plan in one of my companies. I also agree that social unrest will increase and that company profits will fall. But isn\u2019t that already sufficiently priced in?\u2026\u201d <\/span><\/p>\n

<\/div>\n

\u201c\u2026In my 70 years of life, I have seen that after major crises, the economy takes time to regain its momentum and emerge from the tunnel. The same thing is going to happen now. But I have also seen that the stock markets tend to lead the way. When? I don\u2019t know. I am convinced, in any case, that my fund manager has played a dirty trick on me, because one shouldn\u2019t sell now, right now, with a loss of 60% on the managed portfolio. What\u2019s more, they were all top-tier stocks\u2026\u201d <\/span><\/p>\n

<\/div>\n

\u201c\u2026Finally, if the world is going to hell, as most analysts are now predicting, why on earth would I want gold\u2014which is what this fund manager is recommending? What\u2019s more, why would I want money in my current account if we\u2019re all going to perish in the final conflagration?\u2026\u201d <\/span><\/p>\n

<\/div>\n

Yours faithfully,. <\/span><\/p>\n

<\/div>\n
I\u00f1aki. Pamplona.<\/span><\/strong><\/span><\/div>\n<\/blockquote>\n
<\/strong>\"\"<\/a>This is not about debating whether Mr I\u00f1aki is right or wrong, or whether he will lose more or less as a result of his fund manager\u2019s decision. What strikes us as telling is the radical shift in tone being adopted by some equity fund managers. These are changes typical of an impending stock market collapse, but we must approach them with the caution of someone treading on unknown and unexplored territory: the Great Depression of this century and a radical overhaul of the global financial and economic system. It is also curious to see how the manager\u2019s rhetoric changes radically whilst the investor remains, at the very least, anchored in scepticism, a victim of the accumulation of so many optimistic statements from this manager and others who live off the commissions generated by trading I\u00f1aki\u2019s assets. For months on end, they have sought to justify the losses with optimistic and positive visions of the future. Then they continued with the wait and see\u2026 but wait inside<\/a>. To many of us, these arguments seemed unbelievable and damaging, because so many investors believed them\u2014and continue to believe them. To the point where they have acted in line with what they have been told over and over again, only to end up angry and confused when their fund manager gives in\u2014not to the market, but to honesty. The anger is the least of it, because at the end of the day, I\u00f1aki could buy back his entire portfolio today at even better prices. But what really outrages him, and rightly so, is feeling disoriented and duped when one suddenly realises that he was the only one who truly believed the arguments of his \u00abtrusted manager\u00bb.<\/p>\n

<\/span><\/strong>\"\"<\/a>We don\u2019t know what the stock market will do in the future, of course, nor whether that fund manager will get it right or not, having sold the equity portfolio to Mr I\u00f1aki. To err is human<\/span>. But at this point, it\u2019s clear that their relationship hasn\u2019t been transparent or honest enough. That\u2019s why, all of a sudden, their paths have diverged completely, and the ground is shifting beneath the feet of an angry I\u00f1aki. What do you think?
<\/span><\/strong><\/div><\/p>","protected":false},"excerpt":{"rendered":"

A continuaci\u00f3n os copio una carta recientemente extra\u00edda de lacartadelabolsa.com. Me parece el testimonio de un caso que puede se m\u00e1s habitual de lo que queremos creer. Al fin de la carta haremos alguna interesante reflexi\u00f3n y espero tambi\u00e9n vuestra opini\u00f3n y comentarios. Os dejo con la carta de I\u00f1aki de Pamplona: \u201cAyer me llam\u00f3 […]<\/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-22930","post","type-post","status-publish","format-standard","hentry","category-sin-categorizar"],"_links":{"self":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/22930","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=22930"}],"version-history":[{"count":0,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/22930\/revisions"}],"wp:attachment":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/media?parent=22930"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/categories?post=22930"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/tags?post=22930"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}