They said

For all of those who follow me on EStaloteSAssets, Twitter or LinkedIn, what is happening in the financial markets has not surprised them at all. I was very skeptical to many managers, institutions and of course catastrophic policies that today still go on. Many criticized me for the skepticism, but in the end, as usual, history and time have justified my comments with solid facts.

A recession is almost inevitable, this means hard times and unfortunately as I said in previous articles, populism will stay for a while. Many people will still support these damaging “policies” due to desperation, but we should not fall into their game, we must keep it cool. It is very difficult to anticipate a recession because statistical data always tends to be late.

Now is not the  time to panic. It is the best time to invest your savings as well as to do business. Remember that the great fortunes are built on these scenarios, so keep fighting. Some corporate bankruptcies will be due to financial excesses and bad management (there are also fraudulent cases very difficult to detect). As I warned you before, and I will do it one more time, I did bet AGAINST the market but I DO NOT advise you to do it at these levels because world leaders are going to meet in order to "solve this crisis". With the help of central banks, they will try to pull their shit together and put their differences aside (hopefully).

Every crisis is the same, and this time the trigger was a pandemic, so let me be clear if you did not bet against the market 4 months ago, please do not do it now that the world powers are working together, that would be stupid, so move on. This market will recover at these prices because right now there are so many great shares at great value. I think many of you are very pesimistic right now, but now it is time to be optimistic. I am happy that I got it right with my predictions about the market but I am not happy with what is going to happen in the coming months, because the market will recover slowly, but many people are going to suffer from the incompetence of certain people.

Be careful with “fake investors”, people dedicated mainly to scam other people providing investment courses. There are also funds that use Value Investing as a marketing tool to attract clients. I will not give names, you can play detective yourself and investigate them. One of the first things that you have to do now is to silence on your phone those wonderful analysts who have recommended you to buy that stock and bond… yes, you know who I am talking about, don’t fool yourself (we all make mistakes, but some make the same mistake systematically). Avoid the analysts who told you that the market was and is living a simple correction (even when Standard and Poor's 500 was at 3,300 points and a price earnings ratio above 26), avoid them because they said “just a correction” they continued “buy the dip” without any good explanation. You must block them, NOT because of that, but because they will mostly distract you when you need to be focused and the right time comes. Many of them now say "time to get out of the market". Do not do it now! Why are they going to be right this time? Now is the time to BUY, so stay focused!

It is worth to remember that bear markets do not last too long and that bull markets are not forever. Forget the excuses like "there is nowhere to invest in a bear market". It is very easy to invest when things look good, but now that things are not looking so good many “investors”, who earned money on the stock market without having studied a single stock (bonds, commodities, CFDs etc) previously, now realize that investing is not like playing Russian roulette. God bless the economic cycles, which do not stop teaching us important lessons that will later be forgotten again by millions of people. Allow me to repeat myself, patience is necessary and the market rewards it.

Timing is one of the most important things when investing, as well as patience, determination and analytical skills. As investors we must remember, stocks that are cheap today may end up being overvalued in the future, just like the stocks that are expensive now can become undervalued later. For example, four industries that have not performed particularly well in recent years and have depreciated; automotive sector (which I warned in early 2018), mining sector, airlines and energy are now much more attractive and a good opportunity to invest long-term (as long as you know how to choose companies with good fundamentals). But as always, this is NOT buying advice, it is just my opinion and what I do with my savings, which by the way, I have done very well until now, as people who have followed me for years can see.

Many of you also tell me that you do not have the time to analyze companies or investigate funds, I would suggest an ETF or a fund index focused for example in the  S&P500 (Differences between ETF & Fund Index https://investor.vanguard.com/etf/etf-vs-mutual-fund ), Fidelity, Vanguard and Amundi are pretty good (really nice prices). For more information you can visit their official pages, but there is a wide range to choose from. The stock market is one of the best choices to optimize long-term savings, as long as you do NOT need that money in the near future. I believe that the stock market is a better choice than the bond market (unless you are a very good bond trader specialized in companies in complicated situations and in risk of default), but it is just an example and there are many more.

For a real value investor there is nothing more beautiful than these discounts all over the stock market and finding more and more pearls that will provide us with very interesting returns. I have no words to describe this feeling.

I will not talk about debt and central banks balance sheets because I am just tired of it and you all know my point of view. I will not be sharing any more articles publically for a while (I will do only private work), but if you want to contact me you know how to do it. Good luck!

The importance of the emerging markets

The moment for emerging markets has arrived, as I quoted in my article ''A little bit of everything''. We should not be surprised when we read the press in the morning and on the cover of the newspaper it appears that the currency of an emerging country plunges to historical low levels. Do not take it as a breaking new please, because it is a situation that is going to continue for a long period of time and it is something that I can assure with certainty since the European Central Bank has not yet begun to normalize its monetary policy (those who read me often already know that I disagree with extending the QE to where the ECB has done it).

Countries like Argentina and Turkey will continue to suffer, and I am afraid that the measures proposed by Turkish Treasury and Finance Minister Berat Albayrak in İstanbul, August 10, 2018 will NOT be enough to recover the Turkish economy and the confidence of the financial markets. Because the problem of the Turkish economy is not external, as some say, the problem of the Turkish economy, as in Argentina or Brazil, is INTERNAL. Many of these emerging countries are not doing their homework and the solution to their problems lies WITHIN these countries.

We can not wait for someone from outside to tell us how we have to organize our house, but in the last case that may be our only solution if we want to get out of this chaos. Let’s see how it works between Argentina and the International Monetary Fund. However, the real solution lies in generating internal economic stimulus, but why economic stimulus?

Emerging markets have always served as refuge for investors in times when interest rates are very low or even negative in developed markets (like in the last financial crisis). This is due to the fact that in emerging markets investors are able to extract juicy profits that in more developed markets would not be able to have due to low rates. So what happens is that when interest rates rise again in developed markets, investors again have incentives to repatriate capital to developed markets.

What is happening now in emerging markets is a flight of capital that is not being ordered due to political and financial instability. That is why I said earlier that what emerging markets such as Turkey or Argentina need is to create incentives to stop the flight of capital. They need stability in order to recover market confidence.

However, nowadays they do not have the necessary conditions to compete against the more developed ones such as the American economy where interest rates are finally beginning to be normalized by the Fed. The first symptoms of crisis in the Turkish economy: deficit by current account and, of course, and excess of indebtedness with foreign currencies (in this case Dollars and Euros). We must be aware that so far this year the Turkish lira has already depreciated more than 70% against the Euro and I do not think the currency will stop depreciating there unless the previously mentioned problems are solved. By the way, better not to dedicate this article to talk about the countries that are more exposed to this debt (Spain, Italy or France).

Do not laugh when I tell you that Turkey's credit bubble may pop sooner than expected, so I encourage you to look if you do not believe me, take the data and have a quick look. Later I invite you to take a tour around Turkey and open your eyes, visit buildings, see the immense amount of houses that are being built, ask for prices, think about how many of those average people are going to be able to pay for their house within the established deadlines in these economic conditions and finally, ~you~ value the situation yourselves. It is about the simple law of supply and demand my friends.

Everything is going to depend on the geopolitical direction of emerging markets. In this case Turkey is a strategic country for Europe, but in recent years relations have been deteriorated because of what we all know. It has never happened that a NATO country goes bankrupt (and no Greece did not bankrupt in the end because the EU was there...), and I sincerely think that this will not happen to Turkey. What I'm trying to say is that Turkey must decide which direction wants to take, west or east. Turkey is not Argentina, the Turkish economy has enough potential to face the crisis, but what the country does not have right now is political will.

As a wise man said:

‘’Our aim is not to die. It is to carry out the revolution, to make a reality of our ideas. We must live, to get them accepted by the people’’ – Mustafa Kemal Atatürk

Many thought that in the meeting of the Fed in Jackson Hole, the president Jerome Powell was going to stop normalizing monetary policy to bailout bad investments in emerging markets. But of course NO, the American economy needs to continue raising rates so as not to jeopardize its own stability in the case of a new crisis, since macro data supports rate increase.

So imagine what could happen in emerging markets when the Fed and the ECB begin to normalize their policies together. I assure you that things are going to get a lot worse before they get better, but there are still many investment opportunities in emerging markets, especially in Turkey. You just need to be careful, know how to analyze the data and ask the right questions.

A little bit of everything

I’ve been trying to write this article since November of 2017; at that time stocks were rising to all-time highs. Don’t misunderstand me I have no problem with all-time high stocks, I like them the most but I can not see the value in so many stocks, which are rising for NO fundamental reasons. That’s very dangerous for many economies.

I really believe that we are heading into a recession before 2020, or at least we can NOT deny that the chances of sinking into a new recession before 2020 have significantly increased since political demagogies play an essential role in decision making (almost as much as in the 30s). Whenever this type of behavior takes on greater importance than macroeconomic fundamentals, RUN!

Even though many economies are booming right now I wouldn’t be so optimistic. It is true that technology together with innovation, globalization and the market economy bring progress and prosperity: History proves it. We have also globalized the risks, which is obvious and normal. Nowadays there are so many fears about the increasing globalization of the world economy. The most important ones are the geopolitical risks such as trade wars, which will increase the stress in the financial system, infecting emerging markets that at the same time will cause very high volatility in currencies (removing the effects on the interest rates that should imminently begin to rise, so it will be much worse for emerging markets because they will be financed by borrowing with foreign currency).

I do not want to pay special attention to trade wars because I think there are enough studies that explain their negative effects on economies; these trade wars damage the final consumer along with many other consequences. Now we do not know exactly whether in the 21st century advanced countries are going to really use these tools or they will merely be used to renegotiate contracts. Because if it were the second one I wouldn’t be worried at all but if it is the first one, well, we have all failed. I really hope no one takes it too far and other countries strike back because it will send the global trade community down a spiraling path out of control of retaliation (like “The Smoot-Hawley Tariff Act” in the 30s in USA). 

Nowadays we can appreciate the rise of nationalist, countries blaming each other for their struggles, and as usual at the end of the day average people are going to be the ones who will have to pay for all of this ignorance. The last time it happened the trade war became into a real war, and I think we all know the impacts besides deaths and destruction: When economies tank people always blame poor people and immigrants. It's nothing new, right?

We are living very unstable moments for the world economy, we live not only in a populist era as we said, but also an era of fraud. That’s why making investment decisions by looking at the fundamentals of isolated companies is NOT a viable investment philosophy right now for some individuals who don’t know how to apply it in these kind of conditions (many investors who call themselves as value investors just because they expect everything to rise in the long term|| Don’t call yourself a value investor, that’s not value investing ||), we must analyze beyond the fundamentals. It is necessary to aim and study the companies in depth, the environment in which they find themselves and, above all, we must be flexible. We have to know how to use the information that is given to us and find out if it is true or not. Tasks that are harder in the phase of the cycle known as "peak", phase in which I think we are, as long as we are not entering into a recession. What is clear is that we will continue to see important corrections in the market due to the lack of security and SOLVENCY. Confirmation depends on the macroeconomic data, which for now show signs of deceleration but still remain stable.

Perhaps the extreme nationalisms, protectionism or the loss of international competitiveness are not the reasons for the next recession, but they could be the triggers that make it blow up. We don’t know exactly when it will happen and it is very difficult to know when everything will break down again but I believe it shouldn’t take more than 2 years, as long as the central banks do not continue injecting capital into the markets, which could prolong the rise somehow but with much worse consequences in the end.

I may be early but I believe I am right, the problems are still the same as in July 2016, when I wrote my article called “¿En qué entrada estamos?” in English “Where are we?” Debt is still increasing in numerous economies; its management has been disastrous. Those in charge of fiscal policies have NOT been able to clean up the debt in times of boom and economic growth. Now it is time to normalize monetary policies and many governments have not done their homework. Do not misunderstand me; I do not believe that the debt is bad as long as it can be paid in the agreed periods. Once we lose confidence in certain economies, it is very difficult for them to earn it back that’s why the global economy has recovered with much uncertainty.

As I said, many economic agents haven’t done their homework, from governments to companies and the time has come for the central banks. The quantitative easing of the European Central Bank will stop very soon, and interest rates must be normalized if we do not want the next crisis to catch us off guard and become the next Japan. Actually Europe couldn’t be the next Japan, the truth is that Japan and Europe are culturally incomparable, Europe would perform below the standards, which would lead us to a higher internal devaluation, and the European periphery would need a tougher restructuring. It is obvious that European citizens can’t compete through internal devaluation and they would not tolerate it, even China can’t continue anymore competing at that rate of internal devaluation. What I mean is that if the responsible of the monetary policy together with the responsible of the fiscal policy don’t act fast to eradicate the debt problem, Europe may be in a similar situation as Japan, with problems to reactivate the economy.

I hope it doesn’t end as usual, bailing out inefficient companies that are not managed properly. I do not want this to be an article in which I criticize companies, because the article would never end and it is not its purpose. I just want to dedicate a few words to Deutsche Bank (Germany's biggest bank), a bank run by managers without strategy and without vision of the future for the banking business. Managers who have not been able to reduce their toxic assets to ensure the survival of the bank, without the need for rising capital or even a bail out from the government (taxpayers). I could speak also about the situation in BNP or BPCE, as we can see these days German and French banks still hold the most-hard-to-value assets, toxic assets that they aren’t ready to handle and that in situations of extreme instability could cause the collapse of these entities. Now the “extreme instability” may arrive soon and someone hasn’t done its homework after all this years of growth. So what will it be next time: Bail out, capital increase or merger? Extend the inevitable fall or launch the necessary restructuring to guarantee the autonomous survival of the company? We will see what happens, but maybe new managers are hired to do their job in a clean and concise way.

People know that inflation erodes the real value of government debt and, therefore, it is in the government's interest to create a minimum of inflation, in some cases even force it badly. Debt is going to continue to suffer; I doubt that those responsible of the fiscal policies do their job together with those in charge with the monetary policies. Government debt yields are going to reach dangerous levels and I am afraid that they will damage numerous stocks along with other financial products like corporate bonds. For all of these reasons I’m bearish on many financial products, specially overvalued companies, which hold strong debt, those most exposed to world trade, and punctually to pro-cyclical sectors that can turn around very quickly. Not everyone can invest in these conditions, whether it is a long position or a short position.

However, the situation shouldn’t be an obstacle to invest and still be profitable. To my clients and my friends I advise them to invest in the same way that I operate to find value, I have also advised many to change managers (because there is a lot of trash in the market) or NOT invest. There are many people who deposit their money in products/assets that they do not know anything about and they do it simply because their bank/fund advises them, that isn’t right. You have to know where your manager is investing or at least have references to avoid surprises and big losses. You have to have the peace of mind that your manager is doing his job as "manager of your money" as if it were his.

Análisis sobre la gestión de activos **************** realizada sobre **************** SICAV

Desde EStaloteSAssets queremos compartir con el público un informe externo que hemos realizado a uno de nuestros clientes, un informe “exprés” sobre el estado de su cartera y la gestión de su actual gestora. Los datos de la cartera que hemos analizado corresponden a la fecha 08/02/18, el trabajo se nos encargó el 02/03/18 y nosotros entregamos el trabajo el 04/03/18. Ha sido un trabajo rápido, claro y directo ya que la situación que sufrían (y todavía seguirán sufriendo) los mercados lo requería. A petición de nuestro cliente hemos tenido que borrar datos personales pero las bases del informe se mantienen intactas.

  

El informe empieza así…

Nos vemos obligados a comenzar diciendo que la gestión realizada por *********** Gestión de Activos de los últimos años ha sido pésima. La diversificación de su capital social a fecha 08/02/18 es radicalmente conservadora, la renta fija asciende a un 65,23% sobre el capital, la renta variable un 21,86% y la SICAV posee una liquidez del 12,89%.

Lo peor de todo no es que la SICAV este constituida mayoritariamente por renta fija, sino que la exposición a los bonos es demasiado elevada. Es intolerante tal exposición ya que el mercado bajista de bonos se ha confirmado. Es más, si fuéramos el gestor tomaríamos posiciones cortas en no solamente deuda americana pero también en deuda europea. Las relaciones entre China y EEUU se han dañado debido al neo-proteccionismo y Pekín está planeando relajar e incluso cesar la compra de deuda publica americana, algo que sin duda acabará afectando negativamente al mercado de bonos. Queremos recordar que China es el mayor tenedor de bonos del Tesoro estadounidense con 1,20 billones de dólares americanos.

Las elevadas tensiones comerciales entre estos dos países, junto con la tendencia negativa de los bonos, los ratios de solvencia y el aumento exponencial pre-crisis 2007 de los créditos e hipotecas en China, animan a deshacer  al menos un 20% de las posiciones en bonos y tomar posiciones cortas en bonos corporativos americanos y no simplemente bonos soberanos. Hay que recordar que el mercado de bonos americano ya esta sufriendo las consecuencias, a lo que no tardará en sumarse el mercado de bonos europeo. Aunque para algunos sea prematuro declarar un mercado de bonos bajista, para nosotros sinceramente no lo es.

En cierta medida podemos entender que la SICAV sea gestionada de forma conservadora, pero deben vigilarse muy de cerca las posiciones abiertas en renta fija, aunque el 67,91% de esa renta fija tenga un plazo de vencimiento inferior al año (e indiferentemente del Rating obtenido), ya que no garantiza ni la calidad del producto ni el deposito realizado. Porque cuando el mercado de bonos se vea alterado, como describimos anteriormente, dañará significativamente la cartera de la sociedad. Y en el hipotético caso de que el mercado de bonos se lograse mantener hasta el año 2020, la SICAV ha realizado una inversión de 1.100.000 de euros nominal sobre unos cupones que en el año 2020 le podrían reportar un beneficio de 68.608 euros, un tanto insuficiente para cubrir las perdidas de la cartera.

Con respecto a la renta variable, la SICAV posee una participación en tres fondos de inversión. El 6,28% de la cartera en el fondo MFS MERIDIAN EUROPEAN VALUE FUND I1, se trata de un fondo defensivo y centrado en el consumo. El 1,73% en el fondo Robeco BP US Premium Equities, un fondo con un perfil mucho más agresivo que invierte en sectores altamente cíclicos. El tercer fondo, con una participación en la cartera del 1,67% es iShares Morningstar, un fondo que invierte en acciones mayoritariamente estadounidenses como JP Morgan, Exxon, Intel o Berkshire Hathaway, no tiene nada de especial y simplemente apuesta por gigantes de la economía estadounidense considerados “too big too fail”. 

Recalcamos que no somos partidarios de que las sociedades de inversión como esta SICAV inviertan en fondos de inversión como es el caso, pero si tuviera que escoger uno de estos tres fondos escogería el fondo Robeco BP US Premium Equities y retomaría posiciones cuando la corrección que estamos viviendo  (y que desde EStaloteSAssets ya llevábamos anunciando desde hace meses), cambie de tendencia, pero aún así no parece que vaya a cesar pronto.

En cuanto a las acciones que posee la sociedad, distinguimos entre acciones que la SICAV debería plantear vender o comprar como son:

-     Anheuser Busch, una acción que venderíamos y para suplirla compraríamos Baron de Ley, una empresa potente en su sector y que desde nuestro punto de vista aún tiene recorrido a pesar de sus últimos resultados.

-               Novartis AG sin ninguna duda se debería cerrar la posición en esta empresa, las farmacéuticas dependen mucho de las patentes y los permisos de fabricación. Es crucial entender si una empresa tiene un futuro sólido basado en sus operaciones actuales y su estado financiero, pero en el caso de Novartis AG dependemos de que los medicamentos que producen y de que los ensayos de los nuevos fármacos sean aceptados, algo que no siempre suele ser así y por lo que son duramente castigadas en el mercado. Solo debemos invertir en estas empresas cuando sabemos que están trabajando con un fármaco que estudiamos muy de cerca y “sabemos” que va a tener un grado de aceptación alto.

-               Pharma Mar, lo mismo que Novartis AG.

-               Sanofi Aventis, lo mismo que Novartis AG.

Del sector industrial nos gustan muy pocas empresas, pero por fundamentales me quedaría con Ferrovial y Airbus. Añadiendo a la cartera Fomento de Construcciones y Contratas esperando a una posible corrección que la lleve a los 8,80 euros por acción y con un stop-loss en los 7,50 euros por acción. 

En caso de que la corrección no llegue y el mercado entre en tendencia alcista compraríamos al precio actual ya que se trata de una inversión “value” que esta aguantando muy bien las ultimas correcciones.

            Sobre el sector media-internet y en especial ITV PLC, una compañía inglesa, debemos de tener mucho cuidado, ya que si entráramos en recesión antes del año 2020 (y creemos que así será) es uno de los sectores que más se va a depreciar, porque las empresas en épocas de recesión suelen recortar primero gastos en publicidad por ejemplo, lo que provocará una bajada sustancial de los ingresos en el sector media-internet. Por ello, recomendamos vender esta acción. Tampoco recomendamos estar en posiciones largas en valores como Daimler o Acerinox debido a la ya nombrada anteriormente “guerra comercial”.

            Las empresas de telecomunicaciones no nos gusta ninguna, no recomendamos comprar ninguna, sino todo lo contrario, llevamos recomendando vender acciones como Telefónica desde hace 2 años. Son empresas que deben de ser reestructuradas y reinventar su oferta para no quedarse rezagadas ante otras empresas del sector de la tecnología como Google o Facebook. Son necesarios mayores cambios para hacerlas rentables y que puedan sobrevivir. Como acabamos de nombrar valores americanos, también nos gustaría recomendar Tesla y otra empresa un poco más arriesgada en estos momentos pero que creemos que puede tener un alto potencial: General Electric, que va a seguir corrigiendo pero debemos de tener paciencia.

            En el sector de las utilities incluyendo las energías renovables, nos sigue gustando Siemens Gamesa y la recomendamos mantener, es un sector que en los próximos años va seguir creciendo (aunque la regulación en España no la favorezca, en Alemania si lo hará). Es un sector muy dependiente de las regulaciones europeas y por lo tanto elevadamente arriesgado, pero pensamos que puede ser una buena inversión. Como no podía ser de otra forma, también nos gusta mucho Saeta Yield, similar a Gamesa. Recomendamos vender Iberdrola, nosotros nos encontramos en corto sobre esta compañía. Se trata de una empresa que no se está sabiendo adaptar a los cambios que se están produciendo en el sector de las utilities, un ejemplo de ello son las inversiones en carbón que hoy en día aún siguen financiando.

            En cuanto a las petroleras debemos de estar muy atentos a los precios del barril del petróleo Brent, que en el año 2018 se debería estabilizar en los 70 euros por barril (lo que comenzaría a hacer rentable a las renovables), al igual que las propias petroleras. De entrar en una petrolera, entraríamos en la IPO de Aramco, pero debemos de seguir muy de cerca las relaciones geopolíticas, ya que podrían retrasar esta salida a bolsa hasta en año 2019. Mantendríamos las que ya tienen en cartera Total y Shell, siempre y cuando el precio del barril de Brent se acabe estabilizando en los 70 dólares*. Digamos que 2018-2019 puede ser el año de las petroleras.

            En cuanto a sectores mucho más cíclicos, como la banca y las aseguradoras, a día de hoy (04/03/18) no recomendamos estar en posiciones largas debido a la corrección que hemos estado y estamos viviendo durante numerosas sesiones. Es muy probable que a día de hoy la cartera se haya depreciado bastante más que cuando han realizado el informe de gestión a fecha 8 de Febrero de 2018. Como gestor de la SICAV desharía muchas de las posiciones largas anteriormente nombradas y abriría algunas  posiciones a la baja en sectores pro-cíclicos, siempre y cuando el gestor no tenga problemas de conciencia moral y sepa como utilizar estos instrumentos. 

En definitiva, desde EStaloteSAssets vemos que los bonos proporcionan seguridad a los mercados financieros mundiales, pero el problema va a llegar cuando esa autocomplacencia sea insostenible. He ahí la necesidad de seguir esa renta fija muy de cerca y estudiar desde dentro cada uno de esos bonos para evitar problemas mayores. Eso sí, por lo menos se debería cerrar ese 20% de la cartera en renta fija que comentábamos en la primera página, comenzando por la norteamericana. Por otro lado, la renta variable resulta mucho más atractiva, es por ello que el gestor debe de afinar sus apuestas y comenzar a invertir tanto a la larga en empresas, como las que hemos comentado, pero también invertir a la corta. El nivel de liquidez actual es bueno e incluso podríamos aumentarlo con la venta de los “activos” que nombramos anteriormente, preparándonos para abrir nuevas posiciones en renta variable cuando las condiciones en el mercado lo permitan.

            No cabe duda de que la tendencia actual se mantiene, y tan pronto como sea posible pondremos a disposición del público un artículo (será en inglés) sobre la próxima crisis, que es muy probable que se produzca antes de 2020, si bien aún no hemos entrado en ella.

A good investment

I wanted to post this “article” for a long time ago. People ask economists for answers that they don’t really have, this is the truth. People need trust, people want us to tell them what to do, and we don’t know it always. Properly combining limited knowledge and the need for public policy together with common sense is the key.

I think we should talk about the main cause of poverty. In a democratic environment you must believe and feel that you have opportunities and access to a fair portion of the pie. I do not think anyone believes that everyone should be successful but at least they should feel they have the opportunity to do so, for example if someone has good ideas or work for it, then they may be successful and feel it. It is essential to start from the base that opportunities are there for everyone and not just for a few. If we lose that feeling, as it is the case of Spain among with many other countries, the political consequences are disastrous. But how did we start it? We have disregarded education, the pillar of our society. We have left education in the hands of the politicians who change the model very periodically with worse and worse results. Spain has done very little to make teaching attractive, the main problem is the lack of relevance that students see in teaching. 

For example, in Spain we have 25 textbooks for a single subject, the culpable of this as well as in many other fields the Spanish autonomies, as usual. We have a very decentralized system that causes a deterioration of the Spanish educational system and polarizes it by regions. The ANELE denounced that the disparate requirements of the Spaniard autonomous governments, lead a publisher to publish each year an average of up to 25 different textbooks for the same subject of the same mandatory course. It provokes an increase of the prices in these manuals, which deteriorates the coherence of the educative system; it is more than proved that nowadays there is too much diversity in these manuals. It is hard to believe that a student from Galicia, a region from Spain, studies the history of Spain with different content than a student from Andalucia another region of Spain, and this is just an example.

This is very sad because those who do not have a good educational base stay in the margins of society. Students are not offered more options to learn differently. In Japan, the language teacher works with the mathematics teacher. Finland has also begun to deliver these multidisciplinary courses, hoping that students will act as historians, philosophers or scientists. We must teach fewer things but in more depth, Spaniard students are good at memorizing, but they have trouble solving complex problems. Teachers have to leave the classroom and look at what other teachers do, do not divide the contents so much by subject and we must bet on the integration of the subjects and the diversity of itineraries. –Tell me and I’ll forget, show me and I may remember. Involve me and I learn- Benjamin Franklin.

In order not to blame just the state and independently of the country, parents must rethink what they are teaching wrong to their children because this is not just a school problem; manners and bases are taught in home. It is enough fail parenting strategies please! Stop telling your children they are special all the time, stop telling them that they have everything they want in life just because they want it, stop giving medals for being last because devalues the reward of the ones who really work hard. In an instant they will realize they are not as special as their parents make them believe, in the real world they will find out that their mom can not help them to achieve the promotion in that job they want just because they want it.

So in the end we have an entire generation that it is growing up with lower self-esteem than previous generations. Most of them are growing up in a Facebook, Instagram world where they are good at putting filters on things and showing everyone that life is awesome even if they are depressed. They believe they are so tough but the reality is that there is not toughness on it and most of people have not figured it out yet. Many “kids” don’t know how to form deep meaningful relationships, most of their friendships are superficial, they would not rely on their friends they just have fun with them and for sure they know that their friends will cancel out them if something better comes along. So they do not have the skills to deal with the stress of the harsh reality, they are turning to a social media device, which offers temporary relief. Science proves that people who spend more time in social media suffers high rates of depression. There is nothing wrong with social media and cellphones it is the imbalance. For example, if you are siting at lunch with the ones you want or a meeting and you are texting at the same time to someone who is not there and you are supposed to be listening and speaking, that is a problem, bad education, an addiction. Like every addiction in time it will destroy relationships, it will cost time, it will cost money and at the end it will make your life worse. Another problem of this generation is impatience, because they are growing up in a world of instant gratification. One day if it is not too late they will realize they can not have job satisfaction and strength of relationships with an app. They have to learn confidence, learn patience, learn the social skills, find a better balance between life and technology because it is the RIGHT thing to do.

In conclusion, the more advanced countries have not politicized education the way Spain has done for almost 41 years, the advanced countries have reached a consensus because they know that education is an investment with long-term guarantees. It is a shame for a developed country like Spain that 35% of the young Spaniards between 25 and 34 years old does not have the high school, double that in the OECD. If people do not participate in the reforms and do not help, nothing is going to be achieved. We must depoliticize education through consensus. This causes ignorance in the population and instability for future generations. We live in a world full of radicalism in which it is easy to fall if we do not take action and we must eradicate it on time before it is too late. As well as the independence movements in Galicia, Basque Country and Catalonia, the islamophobia or hate to any ethnic group we are human beings with the gift of reason, let’s use it because the best weapon against radicalism is education as Nelson Mandela said -Education is the most powerful weapon which you can use to change the world-, and our job is to change this world we live in a better place.