The Math Behind the Price Target

Four studies, one pattern: the more optimistic the call, the less you should trust it.

When Goldman Sachs, JPMorgan, or any other major bank publishes a 12-month price target, it reads like a forecast. The research says we should treat it as something closer to a position statement — informative about what the bank is willing to put its name behind, far less informative about where the stock will actually trade.

The research desk: where the target gets written, and where the incentives live.

The Track Record

Bradshaw and Brown (Harvard Business School / Georgia State, 2006) examined roughly 100,000 twelve-month price targets issued between 1997 and 2002. By the end of the twelve months, the stock had reached or exceeded the target in only about a quarter of cases. Even allowing for the target being touched at any point during the year — a much looser bar — it happened less than half the time. A separate study, Asquith, Mikhail and Au (2005), found a similar pattern: targets were achieved at some point within the year in 54.28% of cases.

The Direction Problem

Hitting the exact number is one thing. Getting the direction right is a lower bar, and even there the record is weak. Lee, Miao and co-authors (2024, International Review of Economics & Finance) found that only 54% of targets correctly predicted whether the stock would rise or fall — barely better than a coin flip. The same study documented a systematic upward bias of 9.4% and an average absolute pricing error of 24.8%.

This sample was an emerging market, not US large-caps — worth flagging, since it likely overstates the problem for the most liquid, heavily covered names, and understates it for smaller or less-followed ones.

Why the Bias Runs One Direction

Kerl and Walter, studying German stocks, found something specific: the further a target sits from the current price, the less accurate it tends to be, ex post. The most aggressive, most optimistic calls are precisely the ones the literature says to trust least.

A separate strand of research — Dugar and Nathan; Lin and McNichols; Michaely and Womack — ties the upward bias itself to a structural incentive: analysts at banks with underwriting or advisory relationships to the company they cover have something to lose by publishing an unfavorable number. Losing management access, or future deal flow, is a real cost; being wrong about a price target a year later rarely is.

A Rare Call

Sell ratings remain rare today. As of December 2025, FactSet counted 12,696 analyst ratings across S&P 500 stocks: 57.5% Buy, 37.7% Hold, and just 4.8% Sell. That figure has sat in roughly the 5–6% range for years — a small fraction of all coverage, regardless of where the market itself was heading.

We won't claim that scarcity makes a sell call more accurate — we don't have a study that tests that directly, and we'd rather say so than invent one. What we can say is that when a bank does go negative, it's choosing to issue the rating its own incentive structure pushes against. That alone makes it worth a second look, even without a verified accuracy edge attached to it.

Our Own Rule

None of this means ignore Wall Street. It means reading a target for what it is: one institution's public position, shaped by incentives that don't always point toward accuracy. We treat a price target the same way we'd treat a single data point in any model — useful in context, useless as a conclusion on its own. The temptation, especially when a target is far above the current price, is to let the number do the thinking. That's exactly the case the research says to be most careful with.

A Sentiment Reading, Not a Forecast

A price target tells us what a bank is willing to publish about a company it often has a commercial relationship with. It is a data point about sentiment — not a forecast we should weight as a probability.

One Currency

Unequal by Design

The Balassa-Samuelson effect explains why sharing a currency does not mean sharing a standard of living — and why it probably never will.

A German factory worker and a Greek café owner both spend euros. But their euros come from very different productive foundations. In 2023, the average gross monthly wage in Germany was approximately €4,250; in Greece, around €1,450 — both countries inside the same currency union, bound by the same monetary policy, yet separated by a threefold wage gap (approximate figures, European Commission). This is not a flaw in the euro. It is a structural feature of economies at different levels of productivity, first described independently in 1964 by economists Béla Balassa and Paul Samuelson.

Two Tracks

Every economy runs on two tracks. The first is the tradable sector — goods and services that compete internationally: cars, semiconductors, pharmaceuticals, financial services. Prices here are set by global competition and tend to converge across borders. The second is the non-tradable sector — haircuts, restaurant meals, plumbers, taxi rides. These cannot be exported. A Greek barber does not compete with a German barber.

Here is the key mechanism. In a highly productive economy like Germany's, wages in the tradable sector are high — driven by world-class output per worker in manufacturing and industry. Because workers can move freely between jobs within the country, wages in the non-tradable sector get pulled upward too. A Berlin barber charges more than an Athens barber not because he cuts hair faster, but because his alternatives — working in a factory, an office, a lab — pay far more than they do in Greece.

This is the Balassa-Samuelson effect in its purest form: productivity differences in tradables spill over into wages and prices across the entire economy, including sectors where productivity between the two countries is essentially identical.

The Currency Trap

Before the euro, the exchange rate performed a quiet but essential function. If Greece's economy was less productive than Germany's, the drachma would trade at a weaker level than the deutschmark. Greek wages in drachmas might look adequate domestically, but internationally they translated into lower purchasing power — which kept Greek exports competitive and the economy in rough balance.

The euro removed this valve. With a single currency, there is no exchange rate to adjust. A German wage of €4,250 and a Greek wage of €1,450 share the same denomination, with no automatic mechanism to rebalance them. The only adjustment paths that remain are internal devaluation (cutting wages and prices — politically brutal, as the 2010s demonstrated), labor migration (Greek workers relocating to Germany, which happened at significant scale after 2010), or fiscal transfers from richer to poorer members (which the Eurozone's architecture deliberately resists).

This is not a critique of the euro as a project. It is a structural observation: a common currency functions most smoothly when member economies have similar productivity profiles. When they do not, the Balassa-Samuelson effect transforms a monetary union into a permanent source of imbalance.

Hard Data

The productivity differential is not marginal. According to Eurostat, GDP per hour worked in Germany is more than double that of Greece. Wages roughly track that ratio, and the gap is not primarily a story about effort. Greeks consistently work more hours per year than Germans — the OECD data has shown this for decades. The difference is structural: capital stock, industrial complexity, export sophistication, institutional depth.

The Balassa-Samuelson framework predicts precisely this outcome. Where tradable-sector productivity is more than twice as high, economy-wide wages will tend to be higher — not because non-tradable workers are twice as productive, but because the entire productive base supporting their wages is twice as strong.

Structural, Not Circumstantial

Wages in a currency union reflect not just what workers produce, but the productive power of the entire economy around them — and no common currency can equalize that.

Buying Options: Four Rules

Four conditions before every trade. If any one fails, wait.

Options are more accessible than they used to be. More brokers now allow retail clients to buy calls and puts from the start — even when selling is restricted until you build a track record. That opening is welcome. It has also brought a steady stream of the same questions: which strike do I pick? How far out should the expiry be? Should I buy now or wait for a better entry? No framework answers these perfectly, and what follows does not pretend to. These are rules of thumb — a working estimate designed to avoid the most common mechanical traps. They are not a substitute for professional advice, and anyone trading real money should consult a qualified financial adviser before acting.

The four rules below each address a specific way options buyers lose money before a directional thesis even has a chance to play out. Together they form a filter, not a strategy. All four conditions must be satisfied before entering a position. One failure is enough reason to step back.

RULE 01

Time — Minimum 60 Days

Buy options with at least 60 days to expiry. The mechanism here is theta — the daily cost of holding an option as time passes. Theta decay is not linear. It accelerates sharply below 30 days, eroding premium with every session regardless of what the underlying does. Above 60 days, you remain on the flat part of that curve: decay is slow, the option holds its value while the trade develops, and there is time to be right without being pressured into an early exit.

Many experienced buyers prefer 90 days or more, particularly when the thesis requires time for a catalyst to materialise. Short-dated options are not inherently wrong, but they are a different instrument with a different risk profile — one that punishes hesitation and rewards only speed. For a buyer applying these rules, the practical minimum is 60 days.

RULE 02

Strike — At or In the Money

Buy at the money or slightly in the money. A delta in the range of 0.40 to 0.50 gives enough sensitivity to the underlying move without loading the premium with pure time value and directional hope. Delta measures how much the option price moves for each one-point move in the stock — at 0.40, a ten-point move in the underlying translates to roughly four points of option gain. Real leverage, with a real connection to what the stock does.

Deep out of the money options carry deltas of 0.10 or lower. They are cheap for a reason: the probability of profit is low, and most of their price is composed of hope rather than intrinsic value. Experienced traders use them for specific asymmetric bets with high conviction. As a general rule for buyers, they behave like lottery tickets — and lotteries are designed so the house wins.

RULE 03

Volatility — Check IV Rank First

Implied volatility is the premium the market charges above and beyond what current price movement would justify. When IV is elevated, options are expensive — you pay more for the same exposure, and the odds work against you even when the directional view turns out to be correct. When IV is low relative to its historical range, you are buying at a discount, and any move in your direction works in full.

IV Rank measures where today's implied volatility sits within its one-year range, from 0 (historically cheap) to 100 (historically expensive). Before entering any options position, check IV Rank for the specific ticker. The practical tool we use for this is the IV Rank chart from Pineify.

Volatility check: Visit pineify.app/options-iv-rank-chart, enter the ticker, and read the signal displayed on the right side of the chart. Proceed only if it reads Buy Options. If IV Rank is elevated, the premium is already working against you from the moment the position opens.

RULE 04

Earnings — Wait for the Crush

Earnings announcements are one of the most reliable ways to lose money as an options buyer without being wrong on direction. As the reporting date approaches, implied volatility inflates in anticipation of the move — pushing premiums higher regardless of your view. The moment results hit, IV collapses. This is called a volatility crush, and it is mechanical: it happens after every announcement, bull or bear, beat or miss. A buyer can call the stock's move correctly and still lose money if the actual move is smaller than what the inflated premium had priced in.

If earnings are fewer than 30 days away, do not enter. The ideal timing is the day after results have been reported. IV has just crushed — options are at their cheapest. The stock has made its post-announcement move, the uncertainty is resolved, and entering with 90 days to expiry gives approximately two months of clean runway before the next report becomes a factor.

These four conditions function as a gate, not a guarantee. Markets can move against a position even when every box is checked. What the framework removes is the most common set of mechanical disadvantages: overpaying on premium, running out of time, entering into elevated volatility, and absorbing a post-earnings crush. Remove those disadvantages first. Everything else is the trade.

You can follow every rule and still lose.

If the stock does not move in your direction, none of this saves you. The four conditions remove the mechanical traps. They do not replace the hardest part: being right.

The Shiller P/E Ratio

A Simple Guide for Everyone

If you’ve ever wondered how to tell if the stock market is overpriced or a bargain, the Shiller P/E ratio is a tool you’ll want to know about. It’s a popular way to measure the value of stocks, and it’s easier to understand than it sounds. In this article, we’ll break it down step-by-step: how it’s calculated, where you can find it, if it’s used beyond the S&P 500, and how to use it to guess what returns might look like. Let’s dive in!

1 How Is the Shiller P/E Ratio Calculated?

The Shiller P/E ratio, also called the Cyclically Adjusted Price-to-Earnings (CAPE) ratio, was created by economist Robert Shiller. Unlike the regular P/E ratio, which just looks at a stock’s current price divided by its earnings from the past year, the Shiller version takes a longer view to smooth out the ups and downs.

Here’s how it works in simple steps:

- Step 1: Take the price of the S&P 500 (or another index or stock) right now.

- Step 2: Gather the earnings per share (EPS) for the past 10 years.

- Step 3: Adjust those earnings for inflation so they’re all in today’s dollars (this keeps things fair over time).

- Step 4: Average those 10 years of adjusted earnings.

- Step 5: Divide the current price by that 10-year average.

For example, if the S&P 500 is at 5,000 and its 10-year average inflation-adjusted earnings is 150, the Shiller P/E would be 5,000 divided by 150 = 33.3. That’s it! The idea is to avoid getting thrown off by short-term booms or busts in earnings.

2 Where Can You Find It?

You don’t have to crunch the numbers yourself—plenty of free resources track the Shiller P/E ratio for you. Here are some great places to look:

- Multpl : A simple site with the current Shiller P/E and a chart going back over 100 years.

- GuruFocus: Offers the latest Shiller P/E for the S&P 500, plus other market insights.

3 Does It Exist for Other Markets?

Yes! While it’s most famous for the S&P 500, the Shiller P/E has been calculated for other markets too. Researchers and financial sites have applied it to indexes like the Dow Jones, NASDAQ, and even international markets such as the UK’s FTSE 100, Japan’s Nikkei 225, and emerging markets. However, the data might not be as widely available or go back as far as it does for the S&P 500. Sites like GuruFocus or research papers from economists often include CAPE ratios for these other markets if you dig a little.

4 How to Use It: Ranges and Expected Returns

So, what does the Shiller P/E tell us? It’s like a thermometer for the stock market—higher numbers suggest stocks are expensive (overvalued), and lower numbers hint they’re cheap (undervalued). Over time, it’s been linked to future returns: when it’s high, expect lower returns over the next decade; when it’s low, expect higher ones. Here’s a simple guide:

Historical Average: Since the late 1800s, the Shiller P/E for the S&P 500 has averaged around 16-17. Think of this as “normal.”

Ranges:

  - Below 15: Stocks are cheap! This has happened during big crashes, like 2008-2009 when it dipped to 13.

  - 15-25: Fair value territory—neither a steal nor overpriced. This is where it sits most of the time.

  - 25-35: Getting expensive. Investors are paying a premium, like in the mid-2010s or today (it’s around 33-35 in 2025).

  - Above 35: Very high! It hit 44 in 1999 before the dot-com crash and has only topped 35 a few times (1929, 2000, and recently).

Expected Returns Per Year:

  - Below 15: Historically, returns over the next 10-20 years averaged 8-10% per year or more.

  - 15-25: Returns drop to about 5-7% annually—still decent but not amazing.

  - 25-35: Expect 2-4% per year. That’s where we are now—modest growth ahead.

  - Above 35: Returns could be 0-2% or even negative, like after the 2000 peak.

For example, with a Shiller P/E of 33, history suggests S&P 500 returns might average 3-4% per year for the next decade—not terrible, but not the 10% many hope for. It’s a clue, not a crystal ball, so use it alongside other info.

P&F Charts: Good, Bad, and Ugly

Let’s talk about Point and Figure (PF or P&F) charts—a classic tool that’s been around forever but doesn’t always get the love it deserves. Unlike those flashy candlestick charts or time-bound bar charts, PF charts are all about price action. No time, no volume, just pure, unfiltered price movements. Sounds simple, right? Well, like any trading tool, it’s got its ups and downs. Let’s break it down: the good, the bad, and the ugly of using PF charts in the stock market.

The Good: Why Traders Love PF Charts 

1. Bye-Bye, Noise!

PF charts are like noise-canceling headphones for traders. They ignore all the tiny, meaningless price wiggles and focus only on the big moves. This makes it way easier to spot real trends without getting distracted by market drama.

2. Trends Made Simple

Upward trend? You’ll see a column of Xs. Downward trend? A column of Os. It’s that straightforward. No overthinking, no complicated patterns—just clear, visual signals.

3. Support and Resistance on Steroids

PF charts are great at showing where prices might bounce or break through. Because they’re not cluttered with time or volume, key levels pop out like neon signs.

4. No Time, No Problem

If you’re a long-term investor who doesn’t care about what happened at 10:32 a.m. last Tuesday, PF charts are your best friend. They don’t care about time—just price. Perfect for keeping your cool during short-term market chaos.

5. Customizable AF

You can tweak the box size (how much the price needs to move to plot an X or O) and reversal criteria (how much it needs to reverse to switch columns). This makes PF charts super flexible for different trading styles.

6. Price Targets You Can Actually Use

PF charts often give you clear price targets based on patterns like double tops or bottoms. No guessing games—just actionable info.

The Bad: Where P&F Charts Fall Short

 1. Where’s the Time?

The lack of time context can be a double-edged sword. Sure, it’s great for filtering noise, but it also means you can’t see when a price move happened. Momentum traders, this one’s not for you.

2. Not for Day Traders

If you’re into scalping or short-term trading, PF charts might feel like trying to use a sledgehammer to crack a nut. They’re better for the big picture, not micro-movements.

3. Settings Can Be Tricky

Choosing the right box size and reversal criteria is key—but it’s also subjective. Pick the wrong settings, and your chart could give you garbage signals. It takes practice to get it right.

4. Missing Pieces

PF charts ignore volume and time, which can be a dealbreaker for traders who rely on those factors. If you’re a volume junkie, you’ll feel like something’s missing.

The Ugly: The Learning Curve

Let’s be real—PF charts aren’t the easiest to master. If you’re used to candlesticks or bars, the whole Xs and Os thing can feel like learning a new language. Plus, they’re not as popular as other chart types, so finding resources or communities to help you out can be tough.

So, Should You Use PF Charts?

Here’s the deal: PF charts are awesome if you’re a trend-focused trader or a long-term investor who wants to cut through the noise. They’re simple, objective, and great for spotting key levels and targets. But if you’re a short-term trader or rely heavily on volume and timing, they might not be your cup of tea. If you want you can play around with the settings, see if they vibe with your trading style, and decide for yourself. After all, the best tool is the one that works for you.

Hedging Portfolios with Reverse ETFs

When your outlook on the stock market turns bearish, selling your entire portfolio (or part of it) isn't the only option to reduce risk. A practical alternative is investing in a reverse or inverse ETF, which profits when the market declines. These ETFs are traded like regular ETFs through any broker and offer a straightforward way to hedge against market downturns.

Using Reverse ETFs Conservatively 

The primary use of a reverse ETF is to hedge your portfolio, not to speculate on market declines. Here's an example:

- Portfolio: $100,000 in stocks and $50,000 in cash.

- Hedge: Allocate $20,000 to a 3x leveraged reverse ETF.

This hedge provides approximate coverage for market drops, as the ETF is designed to move inversely to the market on a daily basis. While the calculation isn't perfect—because reverse ETFs are optimized for daily performance—the hedge can offset some losses if the market falls.

Which Reverse ETF Should You Buy? 

Choose the ETF that matches the market or sector you expect to decline the most. For example, if you anticipate the Nasdaq dropping more than the general market, you might consider a reverse ETF tied to that index. Leveraged options (e.g., 2x or 3x) amplify gains and losses, making them more volatile but potentially more effective for hedging small cash allocations.

Key Considerations

- Reverse ETFs are meant for short-term strategies, as their performance may deviate from expectations over longer periods.

- Not for Speculation: These are tools for protection, not gambling on a bear market.

- Alternative Protection: Selling part of your portfolio remains a valid option for managing risk.

For those interested, here’s a link to tickers of commonly used inverse ETFs.

Are They Really Fighting?

Take a look at this chart. It's a visualization of the S&P 500 divided by the price of gold—basically, what happens when you price the stock market in gold instead of dollars. The result? A story of financial cycles that many miss if they only focus on stocks or only on gold. This chart doesn’t just show market moves; it shows when one asset reigns supreme over the other.

In times when the line trends upwards, it's better to own stocks. Confidence is high, economies are expanding, and the return on equities outpaces the stability gold offers. But when the chart takes a sharp dive? That’s gold's time to shine. These moments represent financial turbulence, recession fears, or market corrections, where investors seek safety in gold’s enduring value.

Now, here's the kicker. Many analysts believe we’re on the verge of another significant downward leg in this chart. If that proves true, it would mean a shift in favor of gold over stocks—a warning shot for those clinging too tightly to equities. But let’s be clear, nothing is certain. What this chart does tell us is that these shifts happen, and when they do, it’s dramatic. Watching for these changes can make all the difference.

That said, it’s not about being all in on gold or stocks. The real strategy is balance. Holding both assets in a portfolio, but adjusting the weight depending on which part of the cycle we're in, is the key. Early in a downward segment? You might tilt toward gold. In the upswing? It’s time for equities to shine. Finding the exact mix is very complicated. What matters is to have the foresight to adjust the desired percentage with the cycles.

This isn’t advice—it’s a reminder to watch the clues, understand the patterns, and adjust your strategy before the next shift catches you off guard.

Zimbabwe’s New Gamble

Zimbabwe has a long and troubled history with its currency. After a period of hyperinflation in the early 2000s, the country abandoned its currency in 2009 and switched to a multi-currency system dominated by the US dollar. However, economic woes persisted, leading to the reintroduction of a local currency, the Zimbabwean dollar (ZWL), in 2019. Unfortunately, this attempt backfired, causing renewed inflation.

In April 2024, Zimbabwe took another stab at currency reform with the launch of the ZiG (Zimbabwe Gold). This time, they're hoping a gold-backed currency will be the answer.

The ZiG: A New Approach

Unlike previous currencies, the ZiG is backed by a "basket" of assets, including:

- Foreign currency reserves: US$285 million at launch, raising concerns about its adequacy.

- Gold: 2.5 tonnes of gold currently held by the Reserve Bank of Zimbabwe (RBZ), with plans to increase gold production and channel it into the reserves.

- Other precious metals and minerals: Platinum, lithium, and diamonds mined in Zimbabwe could also contribute to the reserves.

The ZiG's value is tied to the price of gold and a comparison of inflation rates between the ZiG and the US dollar. This, in theory, should provide stability and prevent hyperinflation. Link here.

Can the ZiG Succeed Where Others Failed?

Skeptics abound. Critics point to the following weaknesses:

- Insufficient reserves: The current reserve value is considered too low to provide real import cover or meet regional liquidity recommendations.

- Government mismanagement: Zimbabwe's history of economic troubles raises doubts about the government's ability to manage the ZiG effectively.

- Lack of trust: Years of currency instability have eroded public trust in Zimbabwean currency.

A Glimmer of Hope?

Despite the criticism, there are some potential positives:

- Gold-backing: Gold is a historically stable store of value, and linking the ZiG to it could provide some stability.

- Increased gold production: Zimbabwe's plans to boost gold production could strengthen the ZiG's reserves in the long run.

The Verdict: Too Early to Tell

The success of the ZiG remains to be seen. Only time will tell if it can overcome public skepticism and become a stable and trusted currency.

Business Opportunities in Kazakhstan

Kazakhstan, the largest landlocked country in the world, has been steadily attracting attention from international investors due to its abundant natural resources, strategic location, and efforts to bolster its economic infrastructure. As the nation continues to enhance its global presence, with increased international flights and growing traction on the global stage, let's delve into the strengths, weaknesses, and emerging trends that shape investment opportunities in Kazakhstan.

Strengths

- Rich Natural Resources: Kazakhstan boasts significant reserves of oil, natural gas, minerals, and metals, positioning itself as a key player in the global energy and mining sectors. Investors eyeing opportunities in these industries find Kazakhstan particularly appealing due to its vast resource potential.

- Geopolitical Importance: Situated at the crossroads of Europe and Asia, Kazakhstan serves as a crucial link in the Belt and Road Initiative (BRI), China's ambitious infrastructure and economic development project. This strategic location offers immense opportunities for trade, investment, and regional cooperation.

- Economic Diversification Efforts: Recognizing the need to reduce reliance on extractive industries, Kazakhstan has been actively diversifying its economy. Initiatives such as the "Nurly Zhol" infrastructure program and the "Digital Kazakhstan" strategy aim to foster innovation, entrepreneurship, and modernization across various sectors.

- Political Stability: Kazakhstan has maintained political stability since gaining independence in 1991, providing a favorable environment for business and investment. The government's commitment to economic reforms and attracting foreign investment further bolsters investor confidence.

- Growing International Connectivity: The expansion of international flights to and from Kazakhstan's major cities, including Nur-Sultan and Almaty, reflects the country's increasing integration into the global economy. Improved air connectivity facilitates business travel, tourism, and trade, enhancing Kazakhstan's appeal to international investors.

Weaknesses

- Bureaucratic Hurdles: Despite efforts to streamline regulations and improve the ease of doing business, bureaucratic red tape remains a challenge for investors in Kazakhstan. Complex administrative procedures and inconsistent enforcement of laws can impede business operations and investment decisions.

- Infrastructure Development: While Kazakhstan has made significant investments in infrastructure, particularly in urban centers, there is still room for improvement, especially in rural areas. Issues such as inadequate transportation networks and outdated facilities may hinder long-term economic growth and development.

- Dependence on Commodity Prices: The Kazakh economy remains vulnerable to fluctuations in global commodity prices, given its heavy reliance on extractive industries. Diversification efforts are underway, but reducing this dependency remains a pressing challenge for sustainable economic development.

 

- Corruption Concerns: Corruption, although declining, continues to pose risks to businesses operating in Kazakhstan. Transparency International's Corruption Perceptions Index highlights ongoing challenges related to corruption, which could deter some investors despite governmental efforts to address this issue.

- Human Capital Development: Investing in education and skill development is crucial for nurturing a competitive workforce and fostering innovation. While Kazakhstan has made strides in this area, there is still a need for further investment in education, training, and research to meet the demands of a modern economy.

Emerging Trends

- Renewable Energy: Kazakhstan is increasingly focusing on renewable energy sources such as wind and solar power to diversify its energy mix and reduce greenhouse gas emissions. Investors keen on sustainability and green technologies are exploring opportunities in this burgeoning sector.

- Technology and Innovation: As mentioned above, the government's "Digital Kazakhstan" initiative aims to promote technological innovation and digitalization across various industries. This presents opportunities for investors in sectors such as information technology, telecommunications, and e-commerce.

- Tourism Development: Kazakhstan's rich cultural heritage, stunning landscapes, and emerging tourism infrastructure are attracting attention from international travelers and investors alike. Investments in hospitality, leisure, and ecotourism are expected to grow as the country promotes itself as a tourist destination.

- Logistics and Transportation: With its strategic location and growing trade volumes, Kazakhstan is investing in transportation infrastructure, including roads, railways, and logistics hubs. This presents opportunities for investors in transportation, warehousing, and supply chain management services.

- Regional Integration: Kazakhstan's participation in regional economic blocs such as the Eurasian Economic Union (EAEU) and the Shanghai Cooperation Organization (SCO) enhances its economic integration with neighboring countries. Investors can leverage Kazakhstan's position as a gateway to markets in Central Asia and beyond.

Kazakhstan offers a compelling investment landscape characterized by abundant natural resources, strategic positioning, and ongoing efforts to diversify its economy. While challenges such as bureaucratic hurdles and dependence on commodity prices persist, emerging trends in renewable energy, technology, tourism, and regional integration present exciting opportunities for forward-thinking investors seeking to capitalize on Kazakhstan's potential for growth and development. As the country continues to garner international traction and enhance its connectivity, it remains poised to attract investment across various sectors in the years to come.

Shrinkflation

When Less Is Hidden in More

Prices hold steady. Packages look the same. But something quietly disappears — and most consumers never notice until it's too late.

Shrinkflation is a manufacturer's quiet solution to a loud problem. When raw material costs, transportation, and labor eat into margins, the instinct is to act — but not visibly. Raising the price invites immediate consumer pushback. Reducing the product's contents, while keeping the package and the price unchanged, invites nothing. That silence is the point.

The chocolate bar that once felt substantial now disappears in three bites. The bag of chips that used to feel generous now rattles with empty air. The product looks identical on the shelf. The receipt shows the same number. Only the experience — and the weight — quietly tell a different story.

01The Psychology Behind It

What makes shrinkflation effective is not clever packaging — it is how the human brain processes quantity. Research in consumer psychology identifies what is commonly called the size-contrast illusion: we judge how much a product contains primarily by the size of its container, not by reading the fine print on the label. When the package stays the same, our perception stays the same. The reduction happens below the threshold of conscious notice.

This is not accidental. Manufacturers understand that a price increase triggers an immediate, rational comparison — consumers can see it and react to it. A content reduction triggers nothing, at least not immediately. By the time a loyal buyer registers that something feels off, the habit of purchase is already maintained and the margin is already recovered.

02The Hidden Cost Beyond the Wallet

The financial impact is straightforward: you pay the same price per unit and receive less value. But shrinkflation carries a secondary consequence that receives far less attention — it increases consumption and waste. When a package appears identical to what consumers have always bought, they buy and use the same amounts as before. The container signals "same as always." The contents do not keep up.

The result is that households consume more units to meet the same needs, generating more packaging waste in the process. The environmental cost of shrinkflation is real, even if it never appears on the receipt.

The price of denial is paid twice — once at the register, once at the bin.

03How to See Through It

The most reliable defense is unit pricing. Most retailers are required to display the price per kilogram, per liter, or per unit alongside the shelf price. This single metric cuts through packaging entirely — it shows you what you are actually paying for, not what the box implies. Comparing unit prices across time and across brands is the clearest signal available to any consumer.

Sudden changes in packaging design or brand repositioning are also worth noting. Manufacturers often introduce shrinkflation alongside a redesign, using the visual novelty to absorb attention. A fresh logo and a lighter box are not always unrelated events.

The rule is simple: ignore the package, read the label.

Shrinkflation works precisely because most people don't. The moment you make unit price a habit, the illusion stops working — and so does the strategy behind it.

Navigating the changing World order

Allow us to provide a brief overview of the projected changes in country rankings by 2050, based on various sources including PwC's "The World in 2050" report. According to these projections, China is expected to ascend to the position of the world's largest economy by 2050, surpassing the United States. This shift is driven by China's ongoing economic growth, population size, and increasing productivity. India is also anticipated to rise significantly and potentially become the third-largest economy globally, following China and the United States.

Furthermore, other emerging economies such as Indonesia, Brazil, and Mexico are expected to experience substantial growth and climb the rankings. Meanwhile, developed economies like Japan and those in Western Europe may see a relative decline in their positions. It is important to note that these projections are subject to various factors and uncertainties, and future outcomes may differ from these estimates.

Nevertheless, recognizing the potential changes in country rankings provides retail investors with valuable insights for identifying investment opportunities and adjusting their strategies accordingly. In this article, we will explore practical ideas for retail investors seeking to profit in the stock market amidst the changing world order.

1. Embrace Emerging Markets:

With the projected rise of emerging economies like China, India, and Indonesia, retail investors can consider diversifying their portfolios by investing in Exchange-Traded Funds (ETFs) that focus on these growing markets. These countries boast substantial consumer bases and expanding middle classes, offering investment opportunities in various sectors.

2. Technology and Innovation:

Technological advancements continue to disrupt industries worldwide. Investors can focus on companies at the forefront of innovation, particularly in sectors like artificial intelligence, renewable energy, biotechnology, and fintech. Investing in technology-focused ETFs or individual stocks within these sectors can offer opportunities for substantial growth and profitability.

3. Infrastructure Development:

As countries invest in infrastructure projects to drive economic growth, retail investors can explore opportunities in construction, engineering, and related sectors. Investing in ETFs that track infrastructure indices or individual companies involved in large-scale infrastructure projects can potentially yield favorable returns as governments allocate resources to develop vital transportation, energy, and communication networks.

4. Diversification through Global ETFs:

In an increasingly interconnected world, diversification remains crucial for mitigating risks. Retail investors can consider investing in globally diversified ETFs that provide exposure to a broad range of international markets. These ETFs can help balance portfolios and capture opportunities across different regions and sectors.

5. Long-Term Focus:

Given the projected changes in the world order, it is essential for retail investors to maintain a long-term perspective. Rather than succumbing to short-term market fluctuations, adopting a disciplined investment approach and staying informed about global trends can help navigate the evolving landscape successfully.

Top to bottom

 

Check New Zealand, Canada, Australia…, but also India, Indonesia, Saudi, China.

If we had to invest in their stock market, which countries should we choose?

Follow the hedge funds

We, mortals, have some tools to track what hedge fund managers do. Have you ever wondered how Bill Ackman is investing? Would you love to track a mix of trendy stocks in the hedge fund community?

Let us give you a couple o tips in case you are interested in tracking these famous managers:

1. Web hedgefollow.com It is still beta, but it works beautifully. Here you can track managers, stocks… with a very easy intertace.

2. ETF: GURU directly invests in highest conviction ideas from a select group of hedge funds.

Inflation III. Personal Inflation and Retirement

When there is confusion in a system because of the excess of variables or its possible distortion, it’s advisable to try to look closer at the origins of the problem trying to find more clarity. From this comes the concept of personal inflation (PI).

Although all the parts of the economy are interrelated, they don’t have a prefect correlation. Thus, if you can estimate the inflation data that directly affects the retired person, precision will be enormously improved. Most likely, the price increase in university education isn’t a relevant factor for someone that isn’t going to start their studies, in the same way that the increase in housing prices isn’t to those who already own their own house and who intend to leave it to their inheritors.

A borderline case happens with health costs. For some, not being included in any type of public protection system is nearly their greatest worry, while for others it’s contemptible to find themselves under the state’s umbrella. Therefore, as a first step, it would be necessary to calculate those areas that can affect retirement and obtain specific historical data. As an example, you can imagine a couple that decides to retire to the Philippines. They rent, don’t have a car and have global health insurance. This couple will need to know the details of their last few years of rent in the Philippines and the evolution of health insurance in a global way. The rest of their expenses such as: food, telephone, Internet, electric, and water; affects them to a lesser extent and the average could be used to calculate them.

If they estimate a monthly payment of $500 on rent, $400 on insurance, and $800 on the rest of their expenses, and on average in the last few years rent has risen 8% annually, health insurance 7% and the country’s inflation is 2%, the following calculation can be made to obtain the personal inflation data:

PI=(500x8%+400x7%+800x2%)/(500+400+800)=4.9%

Calculating future monthly expenses isn’t complicated; in fact, it is where less uncertainty appears, despite the fact that uncertainty is always found in the future. What is not as trivial is estimating an average inflation for the retirement period. Perhaps rent in Manila has risen a lot in the last few years, but you encounter an unsustainable situation and it’s nothing more than the reflection of a real estate bubble that is on the brink of bursting. Or maybe the historical data on housing rentals in the last 30 years didn’t take the current situation into account. The solution to this problem doesn’t exist. Once again, you can make a reasonable approximation. If we call the average increase in rent in Manila in the last 30 years IA30, 3%, and IA5 the average increase in the last 5 years, 10%, as an example the following could be used:

i . If the couple is young, you can give more weight to the historical data, IA=(2xIA30+IA5)/3=5.3%.

ii . If the couple is old, then the recent data is overvalued, assuming that they have fewer years to live and there won’t be time for inflation to return to the average, IA=(IA30+1.5xIA5)/2.5=7.2%.

iii . The age of the couple is omitted and you simply use 1.5 times the official inflation of the rent history, IA=1.5xIA30=4.5% (you don’t use double, as in the general case seen previously, as in specific areas the distortion between the actual inflation and the official is less).

Logically, this is only an example. The weight of each type of inflation varies according to the particular scenario of the person making the calculations. In any case, prudence requires leaning towards a high inflation figure as a more restrictive situation. Therefore, it’s possible to calculate personal inflation without knowing more than the areas of expenditure that each one has and finding average inflations specific to each. Estimating these average inflations is an art, which can be used for future inflation. This applies as much to the historical data exclusively multiplied by a coefficient of security (for example 1.5), as to a combination of these historical figures with the more recent ones.

DYNAMIC MODEL

It’s healthy to make an estimation about future inflation through the methodology that is considered appropriate. However, to remain only with the initial calculation and never make a periodic follow-up during the retirement years would be a shame. This will be a constant in all the variables that affect retirement.

Recalculating the estimated future inflation each year or every other year upon retirement diminishes carrying forward previous errors and permits correcting the rhythm of expenses (or possible extraordinary income) to the new situation of corrected inflation. It is, therefore, a dynamic model, a process that doesn’t end during the whole of retirement.

Inflation II

After “printing money”, the rise in prices isn’t as direct as many economists predict. It depends on the mechanism utilized and the utility attributed to it.

Since the fall of Lehman Brothers, and now because of the Covid, a spectacular increase of the popularly phrased “money printing” has been used. In reality, there aren’t more bills circulating, but it is rather the Federal Reserve (FED) and other central banks expanding their balance with the objective of deleveraging financial entities. The idea is that since that money doesn’t affect the balance of commercial banks, it hinders a rise in prices. This mechanism was reproduced year after year in the golden age of leverage. The recommendations of the Basel Accords seem to want to level the risk of the sector. These agreements were motivated by the Financial Stability Board (FSB) and the G20 upon observing how the 2008 crisis could have, among other causes, its origin in the excessive growth of the banks’ balance sheets and the leverage of the by-products.

Returning to the topic of measuring inflation, faced with the fragility of the official data and the necessity of having accurate figures, there are private entities that try to independently calculate the data of price increases. Some are very wellknown and respected such as Shadow Government Statistics (www.shadowstats.com). This company, created in 2004 by the prestigious economist John Williams, follows a non-manipulated American CPI. As we could have guessed, this one is different from the one presented by the authorities. Another good initiative, in what would be considered the Wild West of Argentina, comes from a group of economists that in 2007 wanted to start to provide alternative price indexes, www.inflacionverdadera.com. From that point on, their work evolved together with the Massachusetts Institute of Technology (MIT), creating The Billion Prices Project and, later on, PriceStats, www.pricestats.com.

The doubt that can arise regards whether you need to estimate the value of inflation to prepare for retirement. The terrible answer is: yes, but it’s very difficult to calculate. If you aren’t aware of the evolution of inflation, you could estimate the necessary money for future expenses and “bring them to the present” in a precise and reasonable way. The explanation of the expressions “bring to the future” or “bring to the present” are related to the equivalent financial concept.

Example:

With 500 euros today, Peter can buy a certain basket of goods at his supermarket. Supposing a homogeneous inflation of 3%, while omitting the possibility of depositing money in an interestbearing account, Peter would need 515 euros to be able to buy that same basket in a year. In this context, you can say that 500 euros today is financially equivalent to 515 euros in one year.

A similar reasoning can be made by adding the possibility of investing the original amount of money in risk-free assets. Another way to demonstrate the great interest that the inflation estimate has in the field of retirement is to know the deterioration of the initial assets over time (again, independent from the profitability obtainable from them).

It’s necessary to emphasize that inflation utilizes compound interest, and the increase in a year is “mounted” on the following year and so on. This process provokes a strong multiplier effect on the initial values. We should remember the famous quote by Albert Einstein: “Compound interest is the eighth wonder of the world. He who understands it, earns it, he who doesn’t, pays it.” Thus, this implies that a minimum deviation in the estimate of inflation can signify an abysmal difference in results over the years.

It will continue…

Inflation I

The great enemy of “living off investments” is called inflation.

In the first place, it must be made clear for the purists that it has been stepped over the deeper digressions that differ between the Consumer Price Index (CPI) and inflation. The CPI is based on calculating the price of a basket of primary goods and watching its evolution in the future. This should serve as a comparison to know how much the cost of living has gone up. However, as it normally happens when there are political interests in the mix, the official CPI data isn’t consistent. To make the number seem less, in an almost generalized way, from time to time governments change the way they calculate it and the composition of the basket of goods. Taxes, leisure expenses and self-production aren’t usually included.

It’s curious, given that the CPI is a value that doesn’t have any intrinsic meaning and is only useful for the possibility of comparing it. Constantly changing the methodology doesn’t seem the most appropriate thing to do.

The logical chain that is camouflaged by inflation is the following:

1. In the quest to remain in power, leaders spend more than what they earn, thus generating debt.

2. Raising taxes to pay this debt is unpopular, so they resort to an “invisible” tax that consists of devaluing the money so that the debt is lower, although a simultaneous loss of citizens’ purchasing power comes with it.

It isn’t easy to realize this loss of purchasing power, because the basket used in the CPI isn’t always homogeneous and closed, such that governments can manipulate the data so that their citizens aren’t aware of the theft. Somehow many people think that inflation is like a drought or the ever-rising sun, a fact of nature. And perhaps that is true, because the lust for power is natural in human beings. Nevertheless, not by any means is it inevitable, given that it is a product of tangible and provoked economic actions. In general, inflation is understood as the continuous and sustained growth of price levels in an economy. The CPI would act as an added indicator.

The formal definition of inflation, however, can be more complex and depends on different schools of economic thought. The Austrian School considers inflation directly in its origin: the issue of paper money. That is, inflation is the increase of the money supply (once again, various definitions exist on what money supply is). From this point of view, it’s not possible to have a generalized growth in prices without issuing money. Obviously, there is a consumption of goods and a creation of new goods (with possible changes in productivity), but this variation is negligible against the issuance of money.

To sum up the concept in a simpler way: inflation is the increase of the money supply and the consequence is the hike in the prices of goods. This begs the highly topical question of whether it will always be true that, as long as the money supply increases, prices will necessarily go up.

It will continue…

How to calculate your freelance rate

We are going to go directly to the point, as we usually do here.

A) Should we charge by project, a monthly rate, a daily rate or per hour?

There is no good or bad answer. The main focus has to be, not how you want to get paid, but how your clients feel more comfortable.

If you clearly control the amount of work you are going to need for a project, billing for a full project makes sense. In general clients love to be able to anticipate their expenses and prepare a reasonably exact budget.

If you happen to work in several projects for the same company, and you feel you can adjust the number of hours as the projects are not time critical, negotiating a monthly rate could be a great idea. The client companies are expecting some kind of discount from the per-hour rate (around 30%).

We are not sure why someone will want to bill by days. We think it is more logical to bill by hours. There are some useful apps to track the working time, such as Clockify.

B) How much should we charge per hour?

Our rate is a reflection of our value to our clients compared to the value of the competitors. Again, our preferences don’t matter. There are some webs that recommend starting the calculation with our desired salary and then divide it by… Obviously, this is all wrong.

If we want to increase our hourly rate, we need to be more professional, faster and more experienced than our competitors.

Each day we see a shift from worked hours to value added to the project. The benefit of basing our rate on value is that it’s easier to start thinking about value-based pricing methods and transitioning away from trading time for money. Value-based pricing requires a huge change in mind-set. Even if we are thinking about our hourly rate as a reflection of value, it’s still tied to time. Some authors suggest to charge by week instead of hours to force the client into thinking about added value instead of worked hours.

In any case, the hourly rate will remain as the default method of pricing our work, so we just need to check the prices around: in the countries where we work, for our expertise, for our experience…, and try to find a fair value.

How to Build a Currency Basket III? Benchmarks

To continue with our approach about building a currency basket, we will try to look for different benchmarks. Perhaps, you don´t know but this question is one of the most complicated nowadays. For instance, the Central Bank of China keeps the percentage of their reserves portfolio in secret (that would be a really good benchmark!).

So let´s start with our first option: the SDR (Special Drawing Rights) designed by the IMF. They held the following: USD 42%, EUR 31%, RMB 11%, JPY 8%, and GBP 8%. There is an interesting link about the concept of a new reserve currency here.

How to Build a Currency Basket? II

In the first article, we predefined a fix number of currencies (AUD, CAD, CHF, USD, and GBP), and we calculated a reasonable portfolio to hedge against EUR. In this second article we want to determine why these currencies and why we started using 20% of each one when some of them behave approximately the same. For instance, AUD and CAD have a high correlation and if we use them separately we are overweighting their importance in our basket.

How to Build a currency Basket? I

Imagine our main currency is euros. We are paid in euros and we live in a euro country. But we don´t trust our currency that much, or we are not sure where we will live in a few years, or simply to diversify our portfolio, we want to create a currency basket. Problem: which currencies and in which percentage?

First of all, we don´t want to talk about the different tools to invest in a specific currency (funds, Forex account, foreign stocks...). Here we will only show an algorithm to build a reasonable currency exposure.