Hacía tiempo que no seguíamos al yen

Ha pasado mucho tiempo desde la efervescencia de las hipotecas multidivisas. Algunos se pudieron salir a tiempo, otros han resistido en yenes, otros se cambiaron a la libra..., muchos se han decidido a reclamar legalmente intentando eliminar las pérdidas. En cualquier caso, para los que se fueron y tienen curiosidad acerca de cómo les habría ido, aquí tienen el gráfico:
Parecía que el yen se fortalecía sin parar en el 2012, llegando incluso a hacer peligrar patrimonios. Sin embargo el pullback de la caída vertical del 2008 ocurría en diciembre del 2014. Ese fue el momento de irse para los que aguantaron. Parecía que todo lo malo había pasado, pero el 2015 y 2016 nos dejaban de nuevo la sorpresa de acercarse a la gama baja del EURJPY y pese al mini rebote del final del año pasado, la situación no puede ser más confusa.

Para los que se fueron del yen, ¿se imaginan cómo se sentirían ahora de dudas si se llegan a haber quedado?


Up in the Air

¿Qué tienen en común la película de Clooney con una corriente filosófica llamada uprooting o levantar las raíces? Todo. De hecho, el propio actor en sus discursos recomienda vivir ligero, sin ataduras, con una mochila casi vacía.

La idea del uprooting está intimamente relacionada con el concepto del exilio. Para Costica Bradatan, profesora asociada de la Texas Tech University, vivir es echar raíces mientras que exiliarse es levantarlas.

Nosotros entendemos el mundo a través de una cultura y un lenguaje, construimos nuestras vidas con lugares comunes, costumbres, familia, reglas, en definitiva, limitamos el mundo para hacerlo nuestro, creamos una "familiaridad" con lo que nos rodea. Bradatan asegura que esta familiaridad nos ciega y nos impide expandir nuestras experiencias. Cuando nos exiliamos, ya sea formal o mentalmente, vivimos un auténtico terremoto, donde estamos incómodos, pero a la vez volvemos a ver y a desarrollarnos. Es una forma de salir de nuestra zona de confort.


Real inflation. Consequences

From our personal experience we are inclined to believe that the official inflation rate doesn't reflect the real cost increases. If we kept a record of our expenses, we would see that the official inflation is more or less a joke.

There are many tricks to "doctor" the numbers. They change the basket of goods very often overweighting the ones with less increase and underweighting or even removing the ones with big increase in price (such as healthcare). Also the official rates usually don't take into account the "difference in size for the same prize".

Where the official inflation averages 2.3% a year, some private institutions believe real inflation is more than 7% per year. Can you imagine what would be the consequences of applying the real inflation rate?

1. Social Security. Beneficiaries would ask for higher increases and immediately an already-collapsed system would sink.

2. Bonds. Bond holders would demand higher coupons just to keep up with inflation. The biggest bubble of all times, the bond market, would receive a death penalty.

3. Debt. The only way to maintain the system is to reduce the government and private debt through "invisible" inflation. You keep on borrowing but in real terms you are reducing your debt. When the "invisible" becomes "visible", it doesn't work any more.


Desire through...

René Girard is a brilliant French philosopher who developed the idea of mimetic desire. Basically, we borrow our desires from others. A desire for a certain object is created by the desire of another person for the same object. Therefore, we don't have a direct relationship with the object but a triangle: subject, object and mediator. In a twisted way, it is the model or mediator who is at the end sought (Deceit, Desire and the Novel -1961).

Humans make up many tricks to fool ourselves into thinking that we only desire the object in a simple manner. Mimetic rivalry is contiguous, so it leads to violence. At the end the object is forgotten or used as an excuse to fight our newly created enemies.

In Things Hidden Since the Foundation of the World (1978) he expanded the idea of the scapegoat mechanism. When rivalry threatens the existence of the community itself, a common solution is to project all the communal violence upon a single individual to restore the peace.

His interesting theories are finally starting to be considered in many circles from psychology to economics.

For more information you can click here.


Patrimonio de Prince a su muerte

Cuando el famosísimo bailarín Rudolf Nureyev murió, algunos medios de comunicación publicaron que lo hizo arruinado. Sin embargo, al abrir su vivienda vieron que tenía una de las más espectaculares colecciones de pintura que, sin lugar a dudas, le habrían permitido vivir muy cómodamente.

Ahora, la excelente web Zero Hedge publica el patrimonio final del cantante Prince (enlace). Nos damos cuenta de que, pese a vivir "peligrosamente", sus inversiones no lo eran tanto. Básicamente inmuebles, contado y oro. No tenía ni bonos, ni acciones. Es curioso que siendo dos mundos tan distintos, su distribución de la riqueza se parece a la de muchos habitantes de la India: tierra y oro.


Contentos con la evolución de la cartera

A veces una imagen vale más que mil palabras... La línea negra refleja la evolución de la cartera que utilizamos como benchmark o comparativa para el portfolio expuesto en nuestro libro A Contracorriente. Como ya conocen nuestros lectores, el aspecto fundamental y diferencial de nuestra cartera es evitar las grandes caídas mientras superamos la inflación. En este sentido, este año hemos podido comprobar la eficiencia de nuestro sistema en dos días especiales, el Brexit y la victoria de Trump, en ambos casos con gran éxito.

Hay muchas nubes en el horizonte y se necesita máxima habilidad, lo cual cual básicamente quiere decir que hay que saber gestionar el miedo.

Les deseamos desde SimplyNoRisk un feliz 2017 lleno de salud y suerte. Si desean seguirnos en Twitter, nuestra cuenta es @simplynorisk



Politicians will do whatever it takes to be elected. In India they are even promising a huge lump sum to everyone just to receive a vote (check out our Twitter account @SimplyNoRisk). Clearly it doesn't make any sense, but as individuals we cannot avoid it.

So, how do Indian people manage to keep up with inflation? Basically, buying gold and land. Just for curiosity, check out the next chart. It shows gold paid in rupees.
Even though gold is going down nowadays, imagine a person with 25000 rupees at the beginning of 2007 invested in gold, today he would have 77000. Some will say that gold doesn't pay interests, which it is true. As an average, during this period the interest rate in India has been 7% (link). Compounding, 25000 in 10 years is approximately double, so it would have been a good idea to keep a good percentage of savings in gold also taking into consideration the poor level of politicians over there.


I have the feeling the Aussie dollar is...

... very expensive. While traveling throughout Australia, my perception is everything is very expensive. People here say salaries are high too, but that is not the point. Does it make sense? I guess, yes. When you are trying to store away some cash, you look for healthy countries, and despise their problems, the reality is it is a huge country full of natural resources and almost no population. Besides they didn't get too crazy with the "money printing" schemes.

In any case, amazingly the Big Mac Index doesn't show a very expensive AUD:

Switzerland is again the winner, as we all know. But also the USD is a little bit overpriced in comparison with the EUR.


Currencies this year... in gold

First, let me thank pricedingold.com, very useful web that considers gold as the unit the rest of the things should be priced in.
Here, we can see how "normal currencies" have been declining in price against gold starting one year ago. The exception is bitcoin (BTC) that is going to the roof again as a possible alternative to cash (new trend: cashless society).


Long-term returns depend on initial P/E...

In our article, 3 legs, we exposed one of the main problems related to retirement calculations: returns on stocks depend on initial P/E. Right now, the P/E is high, so to get 7% a year could be a dream. How can we estimate the stock yield?

Crestmont Research has done an amazing job with its stock matrix (link here). How do we use it? We choose a period with similar P/E on the left, and, following the same row, check out the nominal annual returns after 20, 30 years without dividends. For instance, from 68 till 98, the yield is around 8% a year. We can appreciate that when the P/E ratio is high, the following years it is difficult to obtain high returns (red and pink colors). However, after a certain number of years, in most of the cases, we get 5% at least (6% probable). So, in our retirement calculators, we could choose 5% plus dividends (lower line of the chart) if we are going to be retired for a long time. Around 8% could make sense. It took 60 years to get that kind of return after 1929 (3% in 40 years), though.


We are usually right...

..., but you shouldn't trust us. The keyword is "usually", and one thing is being right and another is making money, as most of you know. Let's review:

EURUSD 1.06 now (link)
EURGBP 0.9 end of October (link1link2)
Bitcoin/EUR 800 now (link)
CADUSD rebound OK, still waiting (link)

Some of you may think that our opinions are a little bit vague, and it is true. First, because we don't think it is possible to be more accurate, and, second, to make sure everyone understands that nothing is sure and there is always risk involved. For instance, we like gold, however the lasts days its behavior has been awful.


Gold/oil ratio

Here we see (thanks macrotrends.net) how many barrels of oil we can buy with 1 ounce of gold. Historically, around 35 it bounces back.

This ratio should be followed closely because it is a good indicator of economic climate (see article here).


EURUSD still in the range

With Trump or no Trump the USD is perfectly in the range [1.05, 1.145]. It seems there is not going to be a major range break for a while.
The range started in 2015 and now it seems the USD has decided to go stronger (perhaps towards 1.06). Usually when the range is clear it becomes narrower or flatter with time. We will see. 


Have you thought of retiring in the Philippines?

If you are not very wealthy, but still want to enjoy a high-quality life, one option is coming to the Philippines.

First of all, we need to understand that this group of islands is huge, therefore it is possible to find our favorite spot here. We all know Manila is a dangerous city, but there are many places where safety is not an issue. The most popular expat locations are Cebu, Clark, Subic, Baguio and Iloilo.

Second, the Philippines is a very affordable country, however you want to be close to a nice hospital with decent standards. That is the other side of the coin: cheap but not Western quality. Still there are options. You just need to look for then.

And third, tax wise, if you are an alien resident, you won't be taxed on the money you make abroad, so basically if you don't work or have a business in the Philippines, you don't have to worry about paying taxes here.


Early retirement. Withdrawal. A game

1. We start with C (initial capital) and we want to retire. We want to calculate "w" or how much we can withdraw a month and have a safe future.
2. We are going to hedge the longevity risk by creating a perpetuum mobile, meaning, we are going to keep the principal intact taking inflation into account.
3. Our portfolio will consist of 5% cash, and the rest: 8/13 dividend shares and 5/13 gold.
4. w is going to come exclusively from the dividends. Why? Because we are going to suppose that the inflation will be hedged by the increase in the value of shares and gold.

w=1/12xDIVIDENDx95/100x(8/13xC)x0.7, being DIVIDEND the dividend yield. 0.7 comes from taking 30% taxes into account. The final equation can be rewritten as follows:
w=34103xDIVIDENDxM, being M the number of initial millions.

Practical point of view:
If we happen to have 2.2 million dollars for retirement and we buy shares of solid companies with an average dividend of 3.5%, we can spend 2625 USD a month and feel safe.
From another angle, we think we can live with 4000 USD a month and will receive a pension of 2500 USD a month, how much do we need to retire? w=4000-2500=1500 M=w/(34103x0.035)=1.26 millions.

Some of you might think:
1. Why gold? To hedge the risk of the stock market.
2. Isn't it too much money for such a tiny yield? Inflation is a very powerful enemy, and to overcome it we cannot overspend.