![\"some_text\"](\"http:\/\/4.bp.blogspot.com\/_R3zwHD97QhU\/TJGZPoQ6tNI\/AAAAAAAAAMU\/d3IV9G4wtCw\/s320\/priorities.png\")
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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<\/a>) to the economy. Not to mention countless other absurd and unheard-of reactions and correlations.<\/p>\n In Europe, we stand by impassively as bank accounts are seized outright and with complete impunity in a country right at the heart of the \u00abNeurozone<\/a><\/strong>\u00ab, or how to\u00a0separate the eggs from the omelette<\/strong><\/a>\u00a0by attributing the woes of each peripheral country\u2019s public debt to its respective banking systems, which, through domestic \u00abbail-in\u00bb schemes, ultimately end up plundering the pockets of the general public. We also stand by impassively as\u00a0Germany is issuing guidelines to the Spanish government<\/strong><\/a>\u00a0so that it may also confiscate the assets of property owners, arguing without any shame that, as these are physically rooted in the ground, they cannot be moved and are an easier target than the confiscation of bank accounts. And yet life goes on with a reckless semblance of normality. Because investors are not fleeing in panic, withdrawing their money from the country\u2019s banks or urgently selling off their properties \u2013 no. Just like in the fable, the little frogs will be boiled to death without realising the tragic end that awaits them, as the water\u2019s temperature rises slowly, allowing the frogs to grow accustomed to all this news, to the point where they completely ignore its lethal implications for their wealth. A lethal cocktail of corruption and confiscatory measures hatched in the dead of night by Spanish and European leaders. And so, in the pot, heating up little by little, we have now been here for over five years and the heat is already dangerously stifling.<\/p>\n In this embarrassing scenario \u2013 in every sense of the word \u2013 investors\u2019 attitudes can essentially be divided into two categories: those who prioritise the safety of their wealth; and those who prioritise the short-term return on their assets.<\/strong><\/p>\n For the former, investments must be guided by\u00a0the sacrosanct principle of avoiding permanent losses<\/strong>, because they are aware of the unprecedented dangers of the \u2018New Normal\u2019 in which we find ourselves living. What is a permanent loss? It is any capital loss or loss that is unlikely to be recouped over the coming decades. We must not forget that our investing life does not usually extend beyond the age of 50; in other words, our money will remain under our control and subject to our investment decisions for less than a lifetime (as we must factor out childhood, youth and the period during which we do not yet have, or have not yet built up, a substantial wealth). And a loss that we cannot recoup for another 15, 20 or more years carries an unacceptable opportunity cost that will be too great a burden for the healthy growth of our wealth. For example, holding onto a property in Spain that has already lost 30% or more of its purchase value from five years ago, and which will take decades \u2013 or perhaps never \u2013 to return to the value we paid for it. Or the bondholder or holder of preference shares who has seen 30 or 70% of their value wiped out, and who will never recoup it. Or bank shareholders who bought their shares at prices that will never be seen again. Therefore, for investors who prioritise security, it is vital to avoid losses that cannot be recouped in less than 5 or 7 years. And short-term returns become a secondary consideration if, in exchange for them, we run the risk of such permanent losses.<\/p>\n Conversely, for those who prioritise returns on their assets each year (or even each quarter), the world does not seem to have changed all that much. They believe that the world remains cyclical and that the debt crisis in developed economies is comparable to any other crisis experienced in the past. They fail to realise that the expansion of the balance sheets of the central banks in the most developed economies (the ECB, the Fed and the BoJ) changes everything forever \u2013 or at least for many decades \u2013 until our economies have crossed the desert of deleveraging that we have only just begun to traverse. And these na\u00efve, ill-advised or misinformed investors fail to distinguish between the danger of failing to achieve an adequate return by 31 December and the danger of losing value that cannot be recovered for many decades.<\/p>\n Let\u2019s look at a few more examples of investments that an investor prioritising the long-term security of their wealth should never make. An investor wishing to avoid the risk of default (or write-down or restructuring, whatever you wish to call it) on a fixed-income investment should not, for example, invest in peripheral government debt. Nor should they invest in any other debt linked to the public finances of countries that continue to have unpayable debt and still-bleeding deficits (such as the ICO, FROB, regional governments, financial institutions\u2019 debt, etc.). Nor should they even lend their money to issuers that depend on their central bank printing money or on Mr Market continuing to buy their new issues in order to service maturing debt. And these criteria already rule out almost all non-corporate fixed-income securities from the most developed economies. Obviously, there are exceptions in the developed fixed-income market where debt levels remain manageable and solvency is quite acceptable, as their economies are growing modestly and their budgets are balanced; however, the yields offered by such investments are close to zero or even negative. What, then, remains for those who prioritise the certainty that, at maturity, they will get their money back plus the coupons? Well, carefully selected fixed-income securities from emerging markets \u2013 and, above all, from emerging companies \u2013 as we have already mentioned on other occasions. More volatile, yes. Less risky, too.<\/p>\n What investments would be suitable for those who are only interested in short-term returns? Well, unfortunately, the ones that many will be most familiar with: bank deposits with institutions that are only staying afloat thanks to accounting tricks and bailouts funded by public money. Products guaranteed by banks (whether structured or not) or fixed-income securities from insolvent issuers, be they Spanish banks themselves, public bodies and organisations serving the public, or even debt from over-indebted companies that will be unable to meet their commitments as soon as the flow of money tightens again in the European periphery (a rise in the risk premium). Almost all of these have, to date, met their obligations on time, but they carry an enormous intrinsic risk.<\/p>\n To those investors whose top priority is to have that 3% \u00absecured\u00bb by the end of the year, and who are unaware of the risks of permanent losses they are taking on, I wish them the very best of luck. And in fact, up until now, most have been lucky, with the exception of depositors with accounts in Cyprus and those affected by preference shares, subordinated debt and other junk bonds issued by Spanish banks that have already collapsed. But the water is still getting hotter, and some little frogs, lulled to sleep by the stifling heat of the crisis and endless corruption, have already lost their sense of it. Their sense of the risk of permanent losses. It\u2019s a matter of priorities.<\/p>\n ","protected":false},"excerpt":{"rendered":" Estamos ya en una fase de acomodaci\u00f3n al caos. El mundo se dio la vuelta aquel verano de 2007 (yo incluso dir\u00eda que lo empez\u00f3 a hacer a partir de los atentados del 11-S del WTC en 2001), y hemos pasado un lustro convulso como pocos, como muy pocos. Y ahora parece que ya nos […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[54,58,45,42,39,40,52,37,48,55],"tags":[],"class_list":["post-3531","post","type-post","status-publish","format-standard","hentry","category-asesoramiento-patrimonial-deportistas-artistas","category-crear-mi-propio-family-office","category-asesoramiento-deportistas-artistas","category-estrategia","category-crear-mi-propio-family-offices","category-gestion-financiera","category-asesoramiento-patrimonial-multi-family-office","category-reflexion","category-asesoramiento-patrimonial-multi-family-office-crear-mi-propio-family-offices","category-necesito-un-family-office"],"_links":{"self":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/3531","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=3531"}],"version-history":[{"count":0,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/3531\/revisions"}],"wp:attachment":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/media?parent=3531"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/categories?post=3531"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/tags?post=3531"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}