It’s never too late to look back and learn from the past

by May 27, 2021Thinking outside the bottle0 comments

Paulo Pinto Alti Wine Exchange founding member

Dear reader,

In life, just like in the financial world I’m often mulling over, one has to reflect on what brings value to them.

For this article, I have been wondering about how nothing is certain and how there are only probabilities.

But seeing so many people talking about how extended markets are, no wonder the most popular search phrase for 2021 is… will the stock market crash in 2021?

I personally think that markets are not yet extended enough to be cut in half.

I could be wrong, but with so many warnings, surely a lot of investors are sitting on cash – waiting for that market crash.

But allow me to divert to a personal reflection that will lead us today. A thought on looking back, learning from the past and improving.

I have decided to retire from the financial business, after 35 long years. It will happen at the end of this year. I contemplate my life and ask myself: what happened?

Now that I am approaching the end of this road, turning 66, I tend to do my share of checks and balances.

What have I learned?

There are many important lessons I have learned during these decades.

First and foremost, that relations with others are the most important “assets” we have in life.

Our lives and our actions are determined largely by our surroundings, our environment, and we learn from living and observing this transformative experience. It’s no wonder that, by being charismatic, many doors will open.

Also, mistakes will happen. They are unavoidable. As managers we can mess up a lot. I lost my temper way too many times, pushed people too hard or maybe not hard enough, but I never silenced the spirit of my fellow associates. As fathers we can also mess up a lot, mainly because we learn on a job that never ends. That’s part of the journey.

 

Among accomplishments, frustrations, and reflections on what has happened, I wonder:

WHAT WOULD I CHANGE IN THIS TRAJECTORY?

I would have been more careful with everything I said, for a start. With remarks, jokes, and everything else that pops out of my mouth sometimes without much thought. I never, until recently, truly realized the implications of the words we throw about casually. All of them, no exception, have consequences. In life, at home, at the office.

Fortunately, I learned about letting go my mistakes and starting all over – or these mistakes would be compounding. I learned that I cannot erase that moment when I said something I regret saying, or that other moment when I lost my cool.

There is now a massive cultural shift sweeping the world with a desire to establish complete control over everything and everyone. That is making me uncomfortable and afraid too.

On financial terms, I now have to protect my retirement from inflation, when interest on savings are nonexistent and a retirement payout is far lower than anticipated.

Luckily, I still have too many creative ideas and think I would like to take up another challenge, but also see many threats.

I imagine most of the people in my situation go through the same process of doubts. The thought of selling everything and relocate crossed my mind, I’m not going to lie.

Here I have to talk about Social Security. When it was created, the number of working individuals far exceeded the number of retired individuals. Today, it is the other way around in many places in Europe, making it impossible for governments to cover unfunded liabilities when people retire.

So, what will happen? Will they cut benefits or have a solution?

The only solution within the monetary system we live in is inflation. It will allow governments to keep benefits – but with far less purchasing power.

Maybe it is time for us to think of a whole new pensions and welfare structure – or, as I have argued before, something such as a proposed model of a Central Bank of Social Security.

  Let’s go back to the probabilities of a stock market crash in 2021, which brought us to this long personal reflection.

There are problems with this perspective of sitting on cash waiting for a crash.

One is about time. Time does not care about you or anything, I know that now for a fact. But time is also an issue if you sit on cash – now that there is inflation, with commodities at an 8-year-high.

The issue of cash is very obvious in Venezuela, for example, where inflation is rampant and nobody wants cash, but maybe less obvious in other parts of the world. In Europe or the USA, it is much less obvious – when an entire generation has been living with zero percent interest rates for the past 10 years. But then again, I could be mistaken. How can we explain this growing interest for cryptocurrencies?

What is certain is that inflation is about to be the most discussed topic in the next two months. And, as our regular readers know, higher inflation has been a topic here well before the 4.2% consumer price inflation reported this week in the US.

We need to revisit this retirement issue, and how we can better safeguard our retirement from inflation.

Thankfully, there are ways to protect your savings and your portfolio. Think outside the bubble by looking for a small part of tangible assets, for a change. For instance, the kind of fine and rare wines on offer at Alti Wine Exchange are scarce. They are desirable. They will grow in value as time goes by. They are truly something… wonderful. They definitely are of undeniable value.

No matter what happens, there’s always time to learn from the past.

Until next time.

Paulo

 

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