{"id":410,"date":"2009-01-25T00:01:00","date_gmt":"2009-01-25T00:01:00","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=410"},"modified":"2009-01-25T00:01:00","modified_gmt":"2009-01-25T00:01:00","slug":"boquerones-fritos-iv","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/boquerones-fritos-iv\/","title":{"rendered":"Fried anchovies (IV)"},"content":{"rendered":"
Here\u2019s another anonymous article that has been sent to us as a comment, and in it we see a real-life example of a falling knife<\/a>. What, in our view, warrants consideration is the position taken by the fund manager\/adviser throughout the entire process of the fall in value:<\/div>\n
\n

\u00abI\u2019ve been meaning to write a post about Cintra all day after seeing how badly it\u2019s been hit over the last few days. It closed today down 9%, and I\u2019ve finally decided to share my thoughts on the stock with you. In fact, I\u2019ve been talking to my friends about Cintra for over a year now. I started following it back in December 2007, at an investors\u00ab meeting organised by Credit Suisse, where the bank recommended investing in the stock market and specifically highlighted Cintra as a \u00bbsafe\u00ab stock. I still have the piece of paper with the recommendation for the share when it was trading at around 12 euros. I kept it because I was convinced that a bear market was on the horizon and I wanted to test the bank\u2019s predictions. Since then, I\u2019ve kept asking the CS fund managers about the share on a regular basis. When the share price hit 6.5 euros in the summer, I asked, with a touch of sarcasm, whether the bank still recommended it. The manager pulled out all the stops, like a good salesman, to convince me that it was an extremely safe investment, and that the bank had recommended it all along. His exact words were: \u00bbWe recommended it when it was at 8.5, and now that it\u2019s at 6.5, we recommend it even more.\u00ab From there, the fund manager launched into a whole spiel about how good Cintra\u2019s business is, how stable its revenues are (I don\u2019t agree with this, but never mind) and the conclusion was that the stock market was behaving irrationally and that Cintra would return to its target price of 13.5 shortly. My response is that I\u2019ve never asked the stock market to behave rationally because it never has; and that I\u2019d rather wait another year to see what happened. Today, Cintra closed at 3.76?. If, back in December 2007, I\u2019d have listened to the bank, I\u2019d have lost 70% on a stock that was supposedly \u00bbsafe\u2019. Thank goodness I used my own judgement rather than the bank\u2019s. I\u2019ve never been so glad not to have bought a share. I\u2019ve just received an email from Renta4 forecasting theoretical falls as low as 2.3. Given that, the clear floor is 0, but I\u2019m sure it will bottom out before then.<\/p>\n

I think Cintra\u2019s bottom is near, although I can\u2019t say exactly where, and I don\u2019t think anyone can predict it. Even so, I still don\u2019t dare to buy. The spectre of a takeover by Ferrovial is the main reason. I also think you shouldn\u2019t buy a stock in free fall on the assumption that it will bottom out just because you know it will. The fact is, Cintra\u2019s share placement reminds me far too much of Terra\u2019s IPO. I have no doubt that Cintra, unlike Terra, has real assets. But as things stand, what Cintra has most of all is DEBT! I reckon Ferrovial is going to wait for Cintra to fall as far as possible before reabsorbing it, and I doubt you can make any money from that operation unless you have inside information on when and at what prices. Let someone tell me they made money from Terra\u2019s plunge into the abyss or from its takeover by Telef\u00f3nica.<\/p>\n

What do you think? I\u2019m sure many of you would want to buy \u00abtangible assets\u00bb at a good price given those figures. That\u2019s why this is a clear example of the stock market not behaving rationally, isn\u2019t it? \u00ab<\/p><\/blockquote>\n

\"\"<\/a>Regardless of any comments that may arise regarding the specific figure, I found this text to be a clear example of what the world of financial advice is like today. Renta4\u2019s projections may well be just as unreliable as those made in their day by the managers at Credit Suisse, although their accuracy may differ incidentally<\/span>. \"\"<\/a>Or do we perhaps think that Renta4\u2019s advisers are more competent than those at CS? It\u2019s simply that this time, in this specific case, it happened to be their turn to get it right, and we\u2019d have to see what they recommended regarding Cintra when it was at \u20ac12. And vice versa, because we could say the same about CS\u2019s advisers. But we mustn\u2019t view these recommendations solely as a means of raking in commissions (though that does happen), but rather recognise that the advisers, brokers and fund managers at financial institutions \u2013 who spend their days in front of a few screens, who go to bed and wake up with share prices on their minds \u2013 genuinely believe in the soundness of certain securities. In other words, it\u2019s not all about prostitution<\/span> as well as the recommendation (committees), there are also other components such as the incompetence<\/span>, the poor risk management<\/span>, the inexperience<\/span> (youth), the gambling addiction<\/span>, etc\u2026<\/p>\n

Of course, we can find the same shortcomings in managing our own equity investments, assuming we can shield ourselves from the influence of external advisers (friends and acquaintances, the press, radio and television, financial blogs, etc.). \"\"<\/a>But with one exception: the selling out of investment decisions in exchange for commissions. The Juan Palomo administration<\/a>, however, in many cases it inevitably compensates for the absence of such corruption with an increase in incompetence. Self-management is not immune to the other dangers mentioned either, but in some cases, such as that of our anonymous subject, it has managed to safeguard the investment against wind and tide<\/a>.<\/p>\n

I simply can\u2019t resist recommending that you read it again the article we published in September 2007<\/a> and note the distinguished names mentioned: Alberto Espelos\u00edn (<\/span>Head of Analysis <\/span>from Ibercaja Gesti\u00f3n) and Gustavo Trillo (<\/span>Head of Management<\/span> (from JPMorgan Asset Management Spain and Portugal)<\/span> among others. A great many investment vehicles and instruments \u2013 which a huge number of savers accepted at face value \u2013 depend (or did they?) on all of them.<\/p>\n

Having said that, let\u2019s talk about CINTRA\u2026<\/div>","protected":false},"excerpt":{"rendered":"

Ah\u00ed va otro art\u00edculo an\u00f3nimo que nos ha llegado como comentario y en \u00e9l vemos un caso real de un cuchillo cayendo. Lo que a nuestro juicio merece una reflexi\u00f3n es la posici\u00f3n del gestor\/asesor a lo largo de todo el proceso de ca\u00edda del valor: \u00abLlevo todo el d\u00eda queriendo escribir un post sobre […]<\/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-410","post","type-post","status-publish","format-standard","hentry","category-sin-categorizar"],"_links":{"self":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/410","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=410"}],"version-history":[{"count":0,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/410\/revisions"}],"wp:attachment":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/media?parent=410"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/categories?post=410"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/tags?post=410"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}