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!

Let's save Europe!

Since the crises began in 2007, in Europe we believed that if we kept deficits below 3% of GDP, debt below 60% of GDP, and inflation below 2% per annum, the market would ensure growth and stability. However this is not enough. We need an overwhelming fiscal and monetary discipline if we want the European Union to fulfill its dream of “the United States of Europe, a lobby for the integration cause” as Jean Monnet "the father of the EU" the “l’Inspirateur” said.

It is not because of the single market, many people suggest that the Single European Act was made to set the objective of establishing a single market in order to made it easy for money to leave the banks of the weaker countries, forcing these banks to contract lending, weakening the weak further, but of course this is not true. The austerity has not worked yet because it has been implanted in a horrible way, and without any conviction. Citizens in Greece, Spain or Portugal have all voted in large numbers for parties opposed to austerity and more favorable to demagogy. Luckily there are still politicians who give hope to the European dream as is the case of the recently chosen Macron in France.

Many European citizens believed that when they joined the euro, they would give up their economic sovereignty. This is not true at all because the European Central Bank represents all the economies that are part of the eurozone, and each country has its group of banking professionals, they are the supervisors of the banking system of each country together with the European Central Bank. So that the ECB has a social capital, in which each country owns a part of it. The ECB is in charge of maintaining a stable monetary policy and not of making the poor more poor and the rich richer than before, it is obvious.

The ambition of the euro is to bring prosperity to Europe. This would promote economic and political integration. The euro is a project based on integration, in order to create the institutions that would ensure success. We have made many reforms, and many more are coming to make of the European Union a machine of prosperity and not of divergence like many enlightened they are divulging.

To prove what I said before, I would like to explain my experience as a student of economics, in the Erasmus Mobility Program of the European Union. For almost ten months away from home (Galicia, Spain) I have traveled around 13 countries, countries like Romania, Moldova, Ukraine, Germany, Turkey, Croatia or Macedonia among many others. The experience that I have lived as a European student is priceless. As you can perceive, not all of these countries are part of the EU completely, but ALL of them are either in the process of dialogue, waiting or taking the appropriate steps to announce their candidacy being part of the Council of Europe.

In these countries I always wondered “What do people think about the European Union?” or “Do you live better or worse in this country since the arrival of the European Union?” and the conclusions were always the same, people are tired of corruption and clientelistic politics, which have led many countries to the brink of bankruptcy. However in general the European Union has provided more benefits than problems for them.

We should not let bad politicians, demagogues, or extremists claim to be about stability and sustained growth. We should ignore these characters and focus on improving our fiscal policies, because even “the best of the monetary policy” that we have implemented, it will not work if we do not implement a good fiscal policy. It is certain that fiscal policy is one of the most important tools of development, clear example of this are Ireland, Germany or Finland. Because it is not about not exerting fiscal pressure, or exercising it excessively. It is about knowing how to manage the proceeds.

Me as a Spaniard and European, I am proud and very happy for the French people, who elected a new president Emmanuel Macron with common sense and a great European spirit, in order to defeat the extremist Le Pen.

However as the great “father of the European Union” once said

- People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them -

Let’s work together to make Europe more united, and a visionary EU, not a dream broken by politicians with no perception of the future and extremist policies inappropriate for a democracy.

Cantos de sirena

   Como decía el periodista alemán Henry Louis Mencken:

   "Un demagogo es aquél que predica doctrinas que sabe que son falsas, a personas que sabe que son idiotas"

   Es evidente que los británicos han perdido, porque han sacado a relucir una división profunda sobre el futuro de su sociedad y su economía, y sobre el grado de relación que quieren con el exterior, ya que en los tiempos en los que vivimos la globalización de la economía y el cosmopolitismo de la gente son señas de una sociedad avanzada.

   Está claro que tanto la Unión Europea como Reino Unido perderán si los ingleses deciden salirse de la Unión. Pero está aún más claro que la Unión Europea perderá el impulso liberal que siempre ha abanderado Londres en la Unión, y creo que es fundamental para equilibrar al socialismo de la economía y la sociedad que inspiró la UE desde su creación y que hoy en día alimenta sus iniciativas.

   Bien es sabido, que las empresas de todos los rincones del mundo siempre han buscado el mercado británico porque ofrece plena garantía de seguridad jurídica, propia de un país con raíces liberales, siendo un mercado abierto y una sociedad madura con altos niveles de renta. Por lo que no perderá estas condiciones aún saliendo de la UE, pero en caso de producirse un Brexit, Londres y Bruselas deberán buscar una solución que respete lo mejor de nuestras relaciones económicas y que ha beneficiado durante años tanto a Reino Unido como a la Unión Europea.

   No hay duda de que el papel de Reino Unido en la Unión Europea es bastante más importante de lo que se piensa. La salida de los ingleses provocará fuertes turbulencias financieras, incrementándose la volatilidad en los mercados. Debo concluir diciendo que no es una coincidencia que el partido UKIP en Inglaterra, Donald Trump en Estados Unidos o sin ir más lejos Pablo Iglesias en España, hayan reconocido sus raíces peronistas y la conexión que les une al Frente Nacional, en Francia. Que los populismos hayan brotado en ciertos países a la izquierda y a la derecha, responde a unos odios, enemigos comunes y los miedos de cada sociedad, ya sean los inmigrantes, los musulmanes o la denominada casta. El riesgo más grave de la demagogia es que se haga realidad, haciendo un daño terrible a la confianza de los ciudadanos en las instituciones.

La convulsión europea

 Cada vez que leo noticias sobre la Unión Europea recuerdo una frase de, Abel Veiga Copo, profesor de derecho mercantil en ICADE: "La vieja Europa se muere precisamente de vejez. Necesita trabajadores, estudiantes, personas que vivan, trabajen, emprendan, consuman y sostengan un sistema que se convulsionará más pronto que tarde."

Y es que si hoy se suspende Schengen durante 2 años con el objetivo de detener el flujo masivo de refugiados, podemos asegurar con rotunda firmeza la incapacidad de gestión de todos los Estados miembros.

Es una locura suspender uno de los fundamentos y razón de ser de la UE, la libre circulación entre los países miembros. Si esto se aprobase deberíamos empezar a considerarnos "disolver" la Unión Europea.

Me pregunto cómo hoy en día aún puedan existir gobiernos que no asuman su incapacidad para gestionar estos problemas y se nieguen a pedir ayuda incluso a ejércitos extranjeros, parecen no darse cuenta o bien por orgullo o bien por ineptitud, que de esta forma están poniendo en peligro a toda la Unión.

Con todo esto hasta parece normal que países como Hungría, Alemania, Suecia o más recientemente Francia pidan la suspensión temporal de Schengen, pero no es normal. Lo normal sería encontrar un mecanismo para un reparto justo y solidario de los refugiados.

Pero que cabe de esperar de una Unión que no es capaz de ponerse de acuerdo para formalizar un pacto antiyihadista o un Banco Central que no es capaz de estimular el consumo más que inyectando 1,5 billones de euros a la economía, una política monetaria que muchos países no están combinando con una buena política fiscal y que poco a poco nos arrastran a esa "convulsión".