18.10.23
How global distress drives up gold prices
28.8.23
Shrinkflation: when less is hidden in more
Shrinkflation doesn't only affect our wallets; it also contributes to an increase in waste and packaging materials. As containers remain the same size while the contents shrink, a concerning gap between perception and reality emerges. This mismatch often leads consumers to purchase more than they need, believing they are getting the same quantity as before. Consequently, more goods are consumed and more waste is generated, resulting in a negative impact on the environment.
The link between shrinkflation and waste is rooted in psychology. Known as the "size-contrast illusion," our brains tend to judge the quantity of a product based on the package's size rather than the actual contents. When these packages appear unchanged, we unconsciously assume they contain the same amount as before. However, this optical illusion doesn't just affect our purchasing decisions; it also fuels overconsumption and unnecessary waste generation.
In light of these practices, consumers are encouraged to adopt a vigilant approach. While it may be challenging to spot shrinkflation immediately, there are steps one can take to make more informed choices. One strategy is to verify the price per unit, weight, or volume. Focusing on these metrics allows consumers to compare products more accurately and gauge whether the product's value has genuinely changed. Additionally, it's essential to remain skeptical of drastic changes in packaging design or brand positioning. These may signal an attempt to divert attention from the actual reduction in content. Staying informed about the products you regularly purchase and their typical sizes can also help you quickly recognize any subtle alterations.
8.7.23
Navigating the changing World order
21.6.23
Property, an alternative to university education
In today's rapidly changing world, it is essential to explore alternative paths to traditional higher education. One such alternative that holds tremendous potential is redirecting the substantial funds typically allocated towards university tuition fees towards purchasing a small, well-located flat as an investment. This article aims to shed light on the advantages of this approach, highlighting the benefits it offers to both students and their families.
1. Long-Term Financial Investment:
By opting to invest in a small, well-located flat, parents can make a sound long-term financial decision on behalf of their children. Instead of spending a significant sum on tuition fees that may not guarantee future financial security, investing in property can provide a tangible asset that has the potential to appreciate over time. Property investment offers the opportunity for steady rental income and capital growth, making it a financially prudent choice.
2. Rental Income and Return on Investment:
A well-chosen flat, strategically located in a high-demand area, can generate a steady rental income. This income can be utilized to cover expenses such as rent, living costs, and potentially even mortgage payments. Over time, as the property market appreciates, the investment can yield a favorable return on investment, providing a solid financial foundation for the student's future.
3. Flexibility and Diversification:
Investing in property offers flexibility and diversification compared to the more linear trajectory of university education. While a university education offers a specific set of skills and qualifications, owning an investment property opens up opportunities for multiple income streams and potential business ventures. It provides the student with a wider range of options and the ability to adapt to the changing needs of the job market.
4. Real-World Experience and Practical Skills:
Instead of spending years solely focused on academic pursuits, investing in property allows students to gain practical experience in the real estate industry. Managing a property involves learning essential skills such as financial management, property maintenance, tenant relations, and negotiation. These experiences contribute to a well-rounded education and can enhance the student's professional development and employability.
5. Potential for Future Education Funding:
Should the student decide to pursue further education in the future, the property investment can serve as a potential source of funding. It can be used as collateral to secure loans or as a means to generate additional income for education-related expenses. The property investment offers flexibility and the ability to adapt to changing circumstances and aspirations.
22.4.23
Top to bottom
14.3.23
USDJPY
15.1.23
Gold 2023
30.12.22
EURUSD forecast
Remember this post? November 2021. Under parity happened this year, but as we always say, big movements have drawbacks. Our perception for the coming year is the rebound might not be finished, perhaps reaching around 1.1, but eventually the dollar is going to keep on strengthening and target 0.8.
30.10.22
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.
26.9.22
Super dollar, till when?
DXY is the common reference for USD against the rest of the currencies.
29.6.22
Inflación en España
En las noticias de hoy vemos que el IPC en España se dispara al 10.2%. Nosotros internamente utilizamos el doble de la inflación oficial pues los gobiernos en general tienden a buscar medios para bajarla, generalmente cambiando cíclicamente la cesta de la compra que usan como referencia.
Esta vez no vamos a ser tan conservadores y vamos a suponer una inflación anual del 15%.
La causa de la subida de precios es la increíble creación de dinero que hemos vivido los últimos años y que se ha acrecentado con el Covid. No creemos que vaya a remitir el próximo año como sugieren la mayoría de los analistas.
Solo como ejercicio vamos a ver qué sucede con nuestros ahorros si tenemos inflaciones del 12% durante los próximos 5 años.
Capital inicial: 100.000 EUR
Equivalente en dinero de hoy dentro de 5 años: 56.742 EUR
Esto es, casi la mitad de los ahorros desaparecerían en 5 años.
1.6.22
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.
3.5.22
Inflation II
15.4.22
Inflation I
29.3.22
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.