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This phrase reminds us that losses in the financial markets
are not linear: A 50% drop is not offset by a 50% gain, but requires an impressive 100% recovery to return to the starting point. This is the power of asymmetry in investments.

Controlling risk means ensuring that the way back is not an impossible mountain to climb. In other words, it's more important not to get too upset when you make a mistake than to celebrate wildly when you get it right...

Remember, in both the markets and in life, survival is the key to thriving.

The world of investing is often seen as a battlefield, where for some to win, others must lose. But nothing could be further from the truth: Investment is not a zero-sum game, since wealth is not a fixed magnitude either: Its value increases as we discover more efficient and innovative ways of doing things.

Informed optimism reminds us that, even with temporary setbacks, investments drive companies that create jobs, develop technology, and improve our quality of life. In the long term, markets reward investors who opt for progress and innovation.

So, while pessimism may sound plausible and appealing, optimism is the force that moves the world and generates wealth for all. Are you investing today in the ideas that will build tomorrow?

This quote from the well-known founder of Oaktree Capital Management reminds us of a profound truth about markets and risk management: Real uncertainty and danger lies in what is not seen, what is not anticipated, or even worse, what is underestimated.

Marks is renowned for developing what he called "Second-level thinking," which basically consists of going beyond the obvious. It's not just a question of "what is good?", but "what is good and is not already priced in by the market?"

A brilliant example of his vision occurred in 2007, just before the global financial crisis, when Marks sent a note to his clients entitled "The Invisible Risk". In it, he warned about the dangers of assuming that the world was in a state of perfect equilibrium simply because things "looked good". He pointed out that when investors think the risk is under control, that's when it tends to be highest. What happened next is already in the history books.

The lesson is clear: Risk never disappears, it simply changes form. In a world full of uncertainty, critical thinking and disciplined management are our best tools.

Tim Notke was a high school basketball coach in the United States and his quote emphasizes the importance of effort and dedication over innate abilities.

Talent opens doors, but only hard work keeps them open. In a world where information moves around faster than ever, the difference lies not only in what you know, but in how much you strive to continue learning and applying it.

Kahneman and Tversky demonstrated that, when people have to assess the probability of an event, they are influenced by what's known as representativeness bias. Representativeness is a shortcut that humans use to estimate probabilities: Instead of calculating the true mathematical probability, what we do is estimate it based on how well the event fits into a mental prototype that we have already internalized.

The most iconic example of this bias is the Linda problem:

Linda is 31 years old, single, outgoing, and intelligent. She specialized in philosophy. As a student, she was deeply concerned with the issues of discrimination and social justice and also joined anti-nuclear demonstrations.

The participants were asked:

1. Is Linda more likely to be a bank teller?
2. Or what if she's a bank teller and a feminist activist?

The vast majority of people choose the second option because it fits Linda's description better. That, mathematically at least, is incorrect. The probability of A and B occurring (being a teller and an activist) is always less than the probability of only A occurring (being a teller).

This shows that our minds confuse plausibility with probability, leading to systematic errors in decision-making.

In the markets, this same bias manifests itself when investors favor funds or investment strategies based on the narrative rather than the probability of actual success.

For example, if a fund has a charismatic manager, an innovative strategy, and a compelling story, many investors will perceive it as more successful than a fund that simply performs well. But, in truth, an attractive story does not improve expected profitability.

A fund's performance depends on objective factors, such as its cost, diversification, and consistency, not on the underlying story. Choosing a fund based on its narrative is like choosing the wrong option in Linda's problem: intuitively seductive, but statistically inaccurate.

What is so striking about this phrase is that it was uttered in 2007, when he was CEO of Citigroup, referring to the fact that as long as there was liquidity in the system, banks had to continue lending, even though the subprime mortgage bubble was already showing clear signs of overheating.

Shortly afterward, the 2008 crisis hit and the music came to a sudden halt.

This sentence illustrates several key concepts:

• Market pressure: Although the risks are obvious, managers cannot stand idly by while the party goes on.
• Herd behavior: Everyone knows the bubble will burst, but nobody wants to be the first to get out.
• Short-term myopia: The incentives of many financial actors are designed to maximize immediate returns, without much concern for the long-term consequences.

Ultimately, it's hard to leave the party when the music is still playing.

However, when they put on the slow song and turn on the lights, everyone will crowd at the exit door and we'll be at risk of being crushed. However, there are usually signs that should alert us that our time at the nightclub is coming to a close.

When that time comes, keep dancing… but as close as possible to the emergency exit.

This phrase encapsulates one of the most important factors when it comes to building wealth: systematic saving before impulsive spending. A real-life example of this principle is Ronald Read, a humble janitor and mechanic who surprised the world by leaving behind a fortune of more than $8 million.

How did he achieve this without a high salary or a million-dollar business? 

• He saved diligently throughout his life.
• He lived below his means, avoiding unnecessary expenses.
• He invested in solid, high-dividend stocks, reinvesting his profits.
• He let compound interest work its magic for decades.

The great lesson: You don't need to earn millions to build wealth, but rather adopt smart financial habits and play the long game.

In the world of investing, this phrase is not only elegant, it is essential.

I have met investors who are very certain of themselves, prisoners to their prejudices. People who already “know” how the market works, which assets are worth something and which are not. However, they rarely succeed, since the market does not reward mental rigidity, but intellectual humility.

In my experience, it is much more useful to actively seek out what contradicts your ideas than what confirms them.

Solid ideas grow stronger when they are questioned; weak ones only live if no one challenges them.

Investing with maturity means subjecting your convictions to the crossfire of evidence. Not to destroy them, but to see if they can withstand it.

In markets and in life, the real degradation almost never comes from what happens, but from what we fear might happen. We fail by wrongly anticipating an outcome that will never come.

As an investor, you must learn to distinguish between real risk and fear projected by your imagination. If you don't, panic will make your decisions for you.

If you are ever in doubt, remember this maxim: The human brain overestimates extreme negative scenarios. This is adaptive: It is better to prevent a non-existent danger than to underestimate a real one. History shows, however, that worst-case scenarios are exceptional. The vast majority of risks are resolved in a less destructive way than we might imagine.

Sometimes, in my meetings with clients, the following question comes up: Which is the best investment? I have no doubts and my answer never changes, especially when there are young people in the room:

Not in stocks or in properties. Not in houses or in cars. Invest in yourself, in learning! I'm not talking about degrees, but about fostering curiosity, connecting with other creators, and learning more every day. No crisis can take away what you have invested in knowledge.

Those who are better off today are those who invested in knowledge, in developing their human capital. Learning is without a doubt the best investment… And there are no taxes to pay on it either!

We all start out cautiously: We read, ask questions, invest small amounts, and look at the screen as if it were a traffic light. Until that first big success arrives. Then something changes. The mind tells itself a story: “I knew what I was doing.” Attribution bias and overconfidence work silently. We increase the size of our positions, relax our discipline, we try to diversify, and we confuse a winning streak with a method. Euphoria disguises itself as lucidity.

Kostolany does not diminish profits; he warns of the side effects. Winning once is fantastic… and dangerous if it leads you to believe you've got the market figured out. Behavioral economics hits the nail on the head: When the ego takes the wheel, the facts take a backseat. That's why an investor's job is not to "always be right", but to manage asymmetries: lose little when you fail and be prudent when you succeed. Strategy before impulse, process before narrative, rules before opinions.

Consistency doesn't come from the brilliance of a transaction, but from boring habits: periodic plan review, high-quality information, risk control, and an almost obstinate humility. Keep a cool head today. See the results tomorrow.

My wife used to prepare roast leg of lamb following a ritual that intrigued me: She cut off the protruding bone before putting the meat in the oven. It was a complex operation and, in my opinion, unnecessary. One day, I asked her why she did it and she replied that that's how her mother had taught her. Intrigued, I asked my mother-in-law and discovered the real reason: Her oven was too small for the whole thing. It fit perfectly in ours. We had perpetuated a laborious process without questioning its motive.

This domestic anecdote reminded me of the famous experiment with the monkeys, the bananas, and the ladder, a parable that illustrates how rules and behaviors are perpetuated without questioning their reason for being. In the experiment (although it was never actually carried out), five monkeys are placed in a cage with a bunch of bananas hanging over a ladder. Every time a monkey tries to climb up, the others are sprayed with cold water. The monkeys soon learn to avoid the ladder and punish any that try to climb it. Even when the original monkeys are replaced with new ones that have never been exposed to the cold water, the group still prevents anyone from climbing up. In the end, none of the monkeys know why, but they all obey the unspoken rule.

This type of conformity is constantly observed in the financial world. For example, many asset managers resist integrating investment strategies based on artificial intelligence or ESG because they consider them "unnecessary" or it's "not how it's always been done." However, these strategies can provide a competitive advantage. Otro ejemplo: For decades, allocating significant weight to fixed income was synonymous with security. When interest rates reached negative territory, the real risk for conservative profiles was higher than for decisive profiles, and yet few investors questioned their traditional positioning in fixed income.

When we perpetuate traditions without analyzing them, we run the risk of making decisions that don't reflect the reality of the market. As in the story of the monkeys, we avoid climbing the ladder (or cutting the lamb bone) without even remembering why we do it.

In a constantly changing world, questioning established norms is not only advisable, it is essential. Strategies that worked in the past are not necessarily useful today. Innovating, adapting, and above all, thinking critically are key skills for surviving in a competitive environment.

Have you ever found yourself trapped in a decision that seemed logical at first, but ended up leading you astray? Welcome to the dollar auction, an experiment that shows us how our emotions can take control of our financial decisions.

This experiment was designed by economist Martin Shubik to demonstrate how our emotions and biases can lead us to make irrational decisions even in seemingly simple scenarios, like auctioning a one dollar bill. The rules were clear: Whoever made the highest bid would get the bill, but both the winner and the second-highest bidder had to pay the amount of their last offer.

It all started reasonably well, with small offers, but the dynamic soon changed. As the bids approached the face value of the bill, most participants began to drop out of the game. However, the two main bidders often faced each other in an irrational competition, trapped by the fear of being left with the second position and losing their money without receiving anything.

For example, if the first bidder offers $1.10, the second bidder would prefer to offer $1.20, since they would be losing less by obtaining the bill than by abandoning the auction. The result was devastating: It was not uncommon for a one dollar bill to be sold for 5, 10, or even more dollars. On one occasion, the auction ended with a dollar being sold for 20 dollars, leaving bidders trapped in an absurd cycle of mounting losses.

In this experiment, some well-known biases come into play. First, we have loss aversion: Bidders did not want to withdraw because it implied accepting a certain loss. Another bias is perhaps less well known: sunk cost, which is the growing and sometimes unbearable pain of abandoning a project, as the amounts invested in it become increasingly larger. Finally, we have the anchoring effect: The initial perception of value (1 dollar) anchored expectations, and although reality changed, bidders continued to act based on that reference point.

Moral of the story: How often do we cling to a losing stock because we've already invested too much time or money in it? Have you made increasing concessions to salvage an agreement in a negotiation, which led you to accept terms that were unacceptable at the beginning? Recognizing the loss and getting out in time may be the wisest decision. From personal relationships to professional projects, knowing when to step back is a valuable skill.

This post was generated thanks to the original idea from Javier Marsal Moyano. Each year, the most influential strategists on Wall Street publish their estimates for the closing of the S&P 500. They are the highest paid, have access to the best tools and data, and yet, the results are disastrous. Not only do they fail, but the index has closed outside the range of estimates for the past four years.

Four years of mistakes (and counting)

• 2021: Participating strategists: 15
  Average estimate: 4,000
  Range: 3,800 (minimum) – 4,200 (maximum)
  Real closure: 4,766 ❌ Out of range
• 2022: Participating strategists: 20
  Average estimate: 4,865
  Range: 4,400 (minimum) – 5,330 (maximum)
  Real closure: 3,839 ❌ Out of range
• 2023: Participating strategists: 18
  Average estimate: 4,000
  Range: 3,500 (minimum) – 4,300 (maximum)
  Real closure: 4,769 ❌ Out of range
• 2024: Participating strategists: 19
  Average estimate: 4,850
  Range: 4,200 (minimum) – 5,200 (maximum)
  Real closure: 5,881 ❌ Out of range
• 2025: Participating strategists: 19
  Average estimate: 6,600
  Range: 6,000 (minimum) – 7,100 (maximum)

Devastating conclusion: It's not that the analysts were too optimistic or too pessimistic. The problem is that the market has consistently closed outside the estimated range. Not a single strategist has allowed their estimate to result in the final value of the index falling between the maximum and minimum of the range.

How can we use this information?
If the best Wall Street strategists can't predict the S&P 500's closing price, what do we do with these estimates?

🔹 Don't blindly trust predictions. Investing is not about hitting an exact number, but about managing risks and opportunities.

• The market always surprises us. What really moves the markets is impossible to predict a year in advance.
• Diversification and discipline over tactical bets. Don't try to beat the market by guessing where they'll close. Build a robust portfolio for different scenarios.

Every year, analysts place their bets with great confidence. Every year, the market proves to them that their crystal ball is clouded. 

What would be good advice in any area of our lives is critical in the financial world. Today I'm going to talk to you about leveraged ETFs and the risks we take by not knowing how these types of products work.

Leveraged ETFs are an attractive idea: They promise to double or triple the daily movements of an index or stock, allowing you to earn more with less capital. However, these products hide a potentially very dangerous risk: volatility drag.

What is it?

Leveraged ETFs are rebalanced daily, creating a compounding effect that can erode capital over time. The greater the volatility of the underlying asset, the greater the erosion of value. In sideways markets with constant ups and downs, these products can lose money even if the index doesn't move in the long term or even if it has risen in price.

Simple example:
Imagine an index that starts at 100 and has two days of movement:
✅ Day 1: Increase by 10% → New level = 110
❌ Day 2: It drops 9.1% → New level = 100 (it seems like nothing has happened, right?).

Now, a 2x leveraged ETF:
✅ Day 1: Increase by 20% → New level = 120
❌ Day 2: Down 18.2% → New level = 98.2

Although the index has returned to 100, the leveraged ETF has lost 1.8%.

Washington DC, 2007. Joshua Bell, one of the world's best violinists, stood in the subway with his $3.5 million Stradivarius and began playing Bach masterpieces.

Over 1,000 people passed by. Only 7 stopped to listen. In 45 minutes, he raised $32.

Three days earlier, Bell had filled a concert hall with tickets costing more than $100 each. The same musician. The same talent. The only difference: the context.

What does this tell us? True value is not always recognized if the environment is not prepared to appreciate it.

The market is not very different from Bell's experiment. Assets with solid fundamentals go unnoticed simply because the environment is not ready to "listen" to them.

💡 Recent examples:

In 2009, many quality stocks were trading at ridiculously low multiples because fear dominated the market. Companies that later increased in value spectacularly were ignored in their particular "subway".

Price and value do not always coincide. Sometimes, the market ignores what is valuable because it is not the current focus. However, talent is recognized sooner or later, but for visionary investors, the opportunity lies in identifying it before consensus is reached.

Final reflection

The violinist was still a genius, his Stradivarius still sounded the same, but the audience was not ready to hear it. How many assets do we ignore simply because they are in the 'subway' and not in the 'concert hall'?

Isaac Newton discovered gravity, but when he invested in the South Sea Bubble, his portfolio plummeted faster than an apple falling from a tree.

First he made money from the bubble… But he got carried away by the euphoria, re-entered the market at the worst possible time, and lost the equivalent of several million dollars in today's money.

• He bought it when everyone was already talking about it.
• He didn't have a clear strategy.
• He let greed take control.

His famous quote says it all:

“I can calculate the motion of heavenly bodies, but not the madness of people.”

💡 Lesson: No matter how smart you are, if you invest without a strategy, the market can run you over.

On May 22, 2010, a programmer named Laszlo Hanyecz made history by buying two Papa John's pizzas for 10,000 BTC.

• At that time, that Bitcoin was worth about $40.
• Today, with BTC at $96,000, those same 10,000 BTC would be worth $960 million.
• Yes, almost a billion dollars for two pizzas. 🍕💸

To put that into perspective: With 10,000 BTC today you could buy more than 96 million pizzas. Or all the Papa John's franchises in the world. Or a football team, a private island, and you'd still have money left over.
But was it really a mistake?

Laszlo has always said that he has no regrets, because at that time Bitcoin was worthless and nobody imagined that it would reach these figures. His purchase was the first real transaction with BTC and helped to demonstrate that it could be used as a means of payment.

💡 Lesson:

Sometimes, selling too soon is just as bad as never selling at all.

And just in case… Think carefully before exchanging crypto for fast food. 

He earned over $150 million in his career, and yet he ended up on the verge of bankruptcy. How did he achieve this?

Easy:

• Buying castles in Europe (yes, several).
• Acquiring an island in the Bahamas that he almost never visited.
• Spending $276,000 on a dinosaur skull… which he had to return to Mongolia.
• Spending money on luxury cars, two million dollar comics, and an octopus that served "to inspire him in his acting."

When he realized that money wasn't infinite, the tax authorities were already after him and he had to sell everything, including the castles.

💡 Lesson: No matter how much you earn, if you don't manage your money well, you can lose it all. Investing is not spending.

Jesse Livermore was a trading genius, one of the greatest speculators in history. He won and lost fortunes several times in his life, but in the end, his story ended in tragedy.

In 1929, he predicted the stock market crash and earned $100 million (the equivalent of about $1.7 billion today).

But he lost everything soon after, a victim of his own ego and an uncontrolled investment style.

He declared bankruptcy several times, until in 1940, penniless and with no way out, he ended his life.

Why did he go from millionaire to broke?

• He didn't respect his own strategy: Although he was a master of speculation, he was easily swayed by
  euphoria and panic.
• Excess consumed him: When he won, he bet EVERYTHING again, with no margin of safety.
• His emotions got the better of him: He went from the euphoria of big profits to the despair of losses, without finding a balance.

💡Making money is hard enough, but keeping it is even more complicated. In the markets, being a little paranoid can be the difference between success and failure.

Financial markets are a reflection of human psychology: Fear, euphoria, doubt, and confidence intertwine in every economic cycle. In times of volatility, the temptation to react to every drop or wait for the "perfect moment" to enter is enormous. But what if an investor simply ignored the noise and stayed invested regardless of the conditions?

Let's imagine three types of investor:

• Maria, who invests 1 euro a month in the stock market, no matter what.
• James, who invests in the stock market when the economy is not in recession and sells it all at the slightest sign of crisis. In other words, he is out of the market on days when there is an economic recession.
• Peter, who reacts late: He sells six months after the start of a recession and reinvests six months after it has ended.

Between 1900 and 2019, these were the results for each:

• Maria: 435,551 euros
• James: 257,386 euros
• Peter: 234,476 euros

The difference is enormous. Maria wins by a landslide. There were 1,428 months between 1900 and 2019, of which only a little over 300 were recessionary. In other words, remaining calm for just 22% of the total time allows Maria to end up with almost twice as much money as the other two. Getting out during difficult times and returning when it seems "safe" means missing out on a large part of the recovery.

Investing in financial markets is like the old joke about pilots: hours and hours of boredom interrupted by moments of pure terror. Keeping a cool head in those moments of panic is what makes the difference between a successful investor and an unsuccessful one.

This example is taken from Morgan Housel's wonderful book, "The Psychology of Money".

Year 2000. Reed Hastings, founder of Netflix, offers to sell his company to Blockbuster for $50 million.

The response from John Antioco, the company's CEO at the time: 

"Thank you, but we're not interested. We don't believe streaming has a future."

Today:

• Netflix is worth $419.442 billion.
• Blockbuster has only one store in Oregon as a tourist attraction.

The worst strategic mistake in the history of entertainment.

Why did Blockbuster fail?

• They underestimated innovation: They believed their physical rental model was untouchable.
• They failed to see the change in consumer tastes: People wanted convenience, not to pay late fees when returning a VHS tape. And what if you couldn't find the movie you wanted to watch? Total frustration.
• They were too confident: They believed the market would never change… until it was too late.

💡 Lesson:

Avoid dying of success. If you rest on your laurels, the future will leave you out of the game.

If there is one story that perfectly summarizes how to lose a gigantic fortune in record time, it is that of Mike Tyson. The former world heavyweight champion not only terrorized his rivals in the ring, but he was also a complete disaster at managing his money. He earned over $300 million during his career... and lost everything. How did he achieve this? All thanks to a lethal combination of uncontrolled waste and terrible financial decisions.

Financial KO: How Tyson Squandered His Fortune
 

1. Uncontrolled spending

When money flows like a river and you don't put on the brakes, disaster is right around the corner. Tyson spent millions on absurd eccentricities, including:

• Bengal tigers as pets ($70,000 each, plus maintenance).
• A $2.2 million gold bathtub.
• Mansions around the world that he never got to live in completely.
• More than 100 luxury cars, many of which he never even drove.
• An army of "friends" and personal entourage that cost him thousands of dollars a day.

2. Bad investments and fraud

Tyson not only wasted money, but he also trusted incompetent financial advisors or outright swindlers. His lack of knowledge about investments led him to lose millions in disastrous businesses.

3.  Divorces and legal problems

The boxer had to pay millions in divorces and lawsuits, which further accelerated his downfall. His turbulent personal life and legal conflicts left him in an unsustainable financial situation.

The Bankruptcy (2003)

After years of excess, Tyson declared bankruptcy with a debt of $23 million. In less than a decade, he had gone from being one of the richest athletes in the world to not being able to pay his bills.

Hope: He was able to get up before the referee counted to 10.

Unlike other athletes who never manage to get out of the financial hole, Tyson learned from his mistakes and reinvented himself. He managed to recover financially thanks to:

• His podcast "Hotboxin' with Mike Tyson", which was a media success.
• Businesses in the cannabis industry, generating millions with "Tyson Ranch".
• Appearances in films and television shows, such as his iconic role in The Hangover.

Lessons from Tyson for investors (and life)

• Easy money doesn't last if you don't know how to manage it. Earning millions is pointless if you don't invest it wisely.
• Avoid dubious advisors and "opportunistic friends". Surround yourself with people who know how to manage money and who have your best interests at heart. 
• There are always second chances. Even if you fall, the key is knowing how to get back up and correct your course.

Mike Tyson was the worst investor in the world but, like in the ring, he was able to get back up after kissing the canvas. No matter how many times life knocks you down, you should always try to get back up for the next round. 

We live in a hyper-connected financial world, where investment decisions can be made from a cell phone in seconds and where information flows in real time, 24/7. However, the brain we use to make those decisions has not changed at all since our ancestors hunted mammoths.

And therein lies the problem: We are using a mind evolutionarily designed to survive on the savanna to make rational decisions in global markets that move at the speed of light.

Humans are biologically programmed to react quickly to threats. That same instinct that caused us to flee from a predator in the Stone Age is what makes us panic and sell today when we see a 5% drop in our portfolio. But what was once about survival is now a behavioral trap that erodes our profits.

According to the DALBAR (Quantitative Analysis of Investor Behavior) study, during the 20 years prior to 2019, the average investor in equity funds obtained an annualized return of 4.25%, while the S&P 500 index achieved 6.06%.

At first glance it may seem like a small difference, but applied to an investment of $100,000 over two decades, it represents a difference of more than $94,000 in final accumulated capital. A disciplined investor, who simply replicated the index, would have ended up with more than $324,000, compared to the average of $230,000. This gap is not explained by a lack of information, but by emotional decisions: entering too late, getting out too early, and overreacting to every market fluctuation.

The biggest risk when it comes to investing is not economic cycles, trade wars, or financial crises: It's a primitive brain making emotional decisions. Automating, diversifying, thinking long-term, and avoiding overexposure to market news are ways to adapt our "ancestral brain" to the modern world.

In financial markets, there are few forces more powerful than the so-called "pain trade". It is not an indicator, a technical figure, or a specific strategy. It is an unwritten law of market behavior, which tends to move in the direction that generates the greatest possible pain for the greatest number of participants. The market, as if it were an entity with its own will, tends to move in the direction that most disturbs the consensus.

This phenomenon is especially evident during times of strong turbulence, such as those we saw in April. When fear takes hold and many investors get out, the market can rise violently, fueled by panic buying from those absent, who watch in horror as the indices slip away. Similarly, when there is complacency, the market can fall just as sharply, as more and more participants unwind their investments to protect their profits.

But who is behind this phenomenon? La respuesta es clara: Traders, short-term investors, or speculators. In other words, participants who operate with short horizons, high turnover, and an almost surgical obsession with the right moment. They are the ones most exposed to immediate pain and who, with their hedges, stops and repositioning, fuel the movement that punishes them. The "pain trade" is, to a large extent, a consequence of its reactive dynamics.

But on the field of play, there is another type of player: the long-term investor. Their approach is radically different. They think in years, not sessions. They build portfolios to achieve goals, often decades away. They play with the same ball (the market), but it's a completely different sport. It's like one person is playing basketball and the other is playing soccer.

For the long-term investor, the "pain trade" and the associated volatility should not be a real threat. Others suffer the pain, but long-term investors should be protected by a powerful painkiller. The problem arises when, intimidated by the speed of the other team's game, they decide to try to play soccer with their hands. In other words, changing sports without changing the rules. The result is a yellow card.

The "pain trade" is a real, recurring, and often baffling phenomenon. But its impact depends more on our attitude than on the market itself. Understanding how it works (and recognizing what type of player we are) is the first step to avoid falling into its trap. When it comes to the markets, what's important is knowing how to move intelligently within the game we've chosen to play.

Warren Buffett formally began investing aged 11. In 1941, he bought his first shares of Cities Service Preferred, acquiring 3 shares at $38 each. The shares fell to $27, but then recovered and he sold them at $40, making a modest profit.
 
He would later regret selling too soon, as the stock continued to climb to $200. He himself talks about it as one of his first lessons on patience and long-term investment.
 
The rest of his story is well known. Currently, about to turn 95, he has amassed a fortune of 165 billion dollars. A fortune built over 84 years of constant and disciplined investment.
 
Is Buffett an extraordinary investor? Undoubtedly, but Buffett's real secret is not so much his ability to select good opportunities, as his longevity as an investor. He is the personification of the magic of compound interest: Investing wisely is not enough to become one of the richest people on the planet; you have to do it consistently for 84 years without any catastrophic mistakes.
 
I'm going to give you some revealing facts. At age 59, Warren had a fortune of $3.9 billion. This means that, over the last few decades of his life, he has accumulated 97.7% of his total wealth.
 
Some of you will tell me that money is a means to an end, never an end in itself, and that youth is meant to be enjoyed. Some experts even advise young people to live carefree and to start saving from the age of 40. I couldn't disagree more.
 
The other day a friend told me that a nephew of his had saved 10,000 euros in his first years of work and that he was going to spend it on a magnificent trip to the American continent.
 
Let's suppose that this young man, instead of spending the entire 10,000 euros, decides to invest 5,000 euros and enjoy a more affordable trip. If you invest that capital in global equities with an average annual return of 9%—a realistic long-term figure—and let it work for 50 years, untouched, the result would be astonishing: That small initial sacrifice would turn into more than 370,000 euros. In other words, 5,000 euros today can be equivalent to decades of financial security in the future. And all this without giving up on the trip, but rather having balanced it.

Youth, with its power to capitalize on time, is the most valuable stage for sowing seeds. And he who does not plant in spring, cannot harvest in autumn. If you have children, nephews and nieces, or young students nearby, share this idea with them. It's not about scaring them with graphs or asking them to live like ascetics, but about teaching them that money has a memory, and that time is their best ally if they know how to use it well.

This term was popularized by Robert Kiyosaki in his famous book Rich Dad Poor Dad, where he develops a profoundly disruptive idea. His "poor father", with a solid academic background and great human capital, never managed to get out of the "rat race". In contrast, his "rich dad", despite not having completed secondary education, did succeed.

What exactly is the rat race? It is the dynamic that millions of people enter into—regardless of their income level—and which consists of working only to pay off debts and cover expenses. In other words: They work for money, instead of making money work for them.

The underlying problem is a personal imbalance. Their liabilities include accumulated debt, while their assets only include their human capital. Thus, all income derived from work is used to pay off that liability. The result is that they get caught in the rat race: Money will be a constant worry throughout their lives, and they will struggle to find financial peace, even after retirement.

How can you escape this trap? The answer is simple in theory, although it requires discipline in practice: add financial assets to the personal assets column. As human capital erodes over time, it must be replaced by financial capital. The day your financial income exceeds your labor income, you will have definitively escaped the rat race.

Some basic recommendations to achieve this:

• Invest from a young age: Always allocate a fixed percentage of your income to increase your asset column.
• Limit consumer debt: Avoid loans for vacations or goods that you really can't afford.
• Be disciplined with your time horizon: Compound interest needs years to unleash its power.
• Don't rotate your portfolio too much: Constant buying and selling erodes long-term profitability.
• Control your emotions: In turbulent times, fear always urges you to leave the market; Don't pay any attention to it.

If you can follow these guidelines, you will be able to escape the rat race. But be careful: You must start on this path early, not at 50 years old. Neuroscience shows that one of the main causes of unhappiness—if not the main one—is financial worries. Breaking free from them is not just about achieving financial independence: It is about achieving a fuller and happier life.

Some days seem like they were written by a novelist. To take a break from discussing the markets, I'm going to tell you about what was undoubtedly the strangest day of my life: unforeseen incidents, torrential rain, linguistic tensions, and an unexpected outcome. All this happened to me in Naples some years ago when, after a fall in Pompeii, I ended up in a hospital in the south of the city with a fractured hand. Hours later, on my way to the hotel, I came across a cell phone ringing in the middle of a puddle.

Upon answering, a voice on the other end saying “Giorgio amore” led to a confused exchange in broken Italian. I tried to explain that I had found the device in the street and wanted to return it, but communication was impossible. Then I had the idea of asking the hotel receptionist for help. To my surprise, he not only refused to speak to Giorgio, he displayed an almost instinctive level of alarm. He left me alone with the problem, in a foreign country, in a downpour, and with my hand immobilized.

Finally, I managed to arrange to meet with Giorgio and return his cell phone, which by then I had already found out belonged to his girlfriend. Far from the hostility I sensed over the phone, he greeted me with a strong and grateful hug. But it was the receptionist's refusal that stuck with me.

As I grew to understand later, that reaction said a lot about Naples. There, the shadow of the Camorra permeates everyday relationships: It's best not to get involved, best not to get mixed up in matters that could bring unwanted consequences. For me, it was a simple exercise of my civic duty; for him, it was an unnecessary risk.

The anecdote then becomes a metaphor: What in one context is an obvious moral duty (returning what was lost), in another may be seen as imprudence. Ethics is not a universal absolute, but a phenomenon that also depends on the cultural ecosystem around you.

The whole ordeal taught me that, in different contexts, we need more than just principles: We need cultural empathy. It is not about justifying the corruption of values, but about recognizing that social rules, expectations, and even everyday fears vary, and that this conditions behaviors.

Ethics, ultimately, is built at the intersection of what we believe is right and what the society around us allows or penalizes. And sometimes, returning a cell phone in Naples requires more courage than it would in Madrid.

This is the question many Private Banking clients ask themselves: How much could they pass down while they are still alive without putting their own lifestyle at risk?

There are quantitative methods to calculate it, but first we must define a concept: the risk of ruin. The risk of ruin is a classic concept in actuarial and insurance theory, which measures the probability that an individual or organization will exhaust its financial resources before fulfilling its commitments.

In general, a risk of ruin of less than 5% is considered acceptable, but in this case, we are going to tighten the restriction: the risk of ruin cannot exceed 1%.

Assumptions

• Current age: 60 years old.
• Horizon: 35 years (up to 95).
• Initial financial assets: €10,000,000.
• Liquidity needs: €100,000 per year.
• 60/40 Portfolio:
• Expected return: 3.8% per year.
• Volatility: 10%.
• Maximum risk of ruin: 1%.
• Method: Monte Carlo simulation (200,000 runs).

Results

• Maximum initial donation without exceeding 1% risk of ruin: ≈ €4.71M.
• Remaining initial assets after donation: ≈ €5.29M.
• Estimated risk of ruin: 0.23%, well below the 1% tolerated.

Net worth at the end of the period (95 years):

• Average: €12.6M.
• Median: €9.9M.
• 10th percentile: €3.3M (adverse scenario but far from ruin).
• 90th percentile: €24.8M (very favorable scenario).

Interpretation

1. The client can pass down around half of their wealth today (~€4.7M) and still maintain a 99% probability of covering €100k annually until age 95.
2. Even in unfavorable scenarios (10th percentile), the client would retain >€3M at the end of their life.
3. In average or favorable scenarios, their wealth would continue to grow, leaving an additional significant legacy.

Investing wisely is emotionally costly.

For more than 90% of human history we were hunter-gatherers. Our brain and metabolism were forged to maximize the chances of success in an environment of uncertainty, scarcity, and rapid action.

Agriculture, which started only 10,000 years ago, forced us to think very differently, with planning, patience, and routine work. It was a revolution that improved the lives of millions of people, but it reduced the intensity of stimuli that hunting gave us: dopamine, adrenaline and the euphoria of the capture.

The same thing happens in the world of investment. Sustainable wealth requires us to act like farmers: Sow for the long term, diversify, wait and let time do the work. However, our instincts crave the feeling of happiness that hunting offers: Looking for the key moment, seizing the opportunity, and tracking down pieces to collect.

So what's the problem? Our hunting instinct can contaminate the discipline needed to achieve long-term success. The solution is not to deny that part of ourselves, but to channel it. That's where the play portfolio comes in: a small portion of assets, never more than 5% or 10% of the total, intended to experiment, test, satisfy the need for action, and track prey. This play portfolio must be completely separate from the main portfolio.

It satisfies that hunter's instinct, but protects the bulk of the portfolio, which continues to work silently, like a cultivated field.

👉 Ultimately, the true art of investing lies in balancing the hunter within us with the farmer we must learn to be.

Have you ever felt pressured to invest just because someone close to you is "making a fortune"?

Nothing is more corrosive to financial prudence than social pressure. Bubbles are not only inflated by liquidity, cheap credit, or wild expectations, they are also pumped up in family after-dinner conversations, office chats, and WhatsApp groups.

The mechanism is simple: Someone close to you is boasting about spectacular profits in something you haven't touched. It could be your neighbor, a co-worker… Or worse, your brother-in-law. The same one who, between beers, reminds you how well he's doing with that "sure thing" he invested in. And then the awkwardness begins: Your partner asks you why you didn't get on that train, and the pressure slowly but inexorably shifts.

It's the perfect breeding ground for extreme emotions: envy, fear of being left out, need for validation. These are universal, deeply human emotions that are not seen in quantitative models but explain a good part of the euphoria cycle that characterizes each bubble. Because when social pressure is combined with the illusion of easy wealth, rationality is often the first casualty.

Of course, you come in at the worst possible time. Paradoxically, the impulse that drives you to participate is also what sets the stage for the fall. Prices skyrocket, not so much because the asset deserves it, but because nobody wants to be the last to arrive at the party. And when the bubble bursts, the same people who pushed you to get in will be the first to remind you that this was obviously going to happen.

In every bubble there are economists who talk about fundamentals, professional investors who analyze balance sheets, and central banks that worry about stability. But the initial spark, the emotional fuel that ignites it and makes it grow, usually catches fire much closer to home: at the Sunday dinner table, with a smiling brother-in-law reminding you that he saw it coming.

For two decades, real wages in advanced economies (not accounting for the effects of inflation) have barely moved. However, assets—both financial and real estate—have steadily increased in value.

The result: a structural divide between those who have assets and those who only have income from work, even if it is high. Some are on the ascending leg of the “K” and others slide down the descending slope.

The facts are irrefutable: Real wages have grown close to 0% annually since 2000 in much of the OECD. In other words, the purchasing power of each euro of salary has been the same for 25 years.

Meanwhile, equities have had an average real return of approximately 4% and real estate has seen a real appreciation of 1.5%, and up to 3.5% if rental income is added.

Result: Capital has accumulated a differential of more than 3 percentage points per year compared to salaries. Over twenty years, that doubles the wealth gap.

Since this dynamic does not appear likely to change in the coming years, the key to positioning oneself on the positive side of the "K" is to progressively build an assets column.

Invest. Save. Accumulate. Systematically. From a young age. There is no other sustainable way.

1. Don't think you're the smartest. Making money in a bull market is no great feat; maintaining it when everything falls apart is. The first commandment is to be humble.
2. Manage the risk before seeking the return. A good investor doesn't ask how much they can make, but how much they could lose and if they are willing to accept it. Without a risk management policy, there is no valid strategy.
3. The long term is not an excuse for inaction. Investing with a long-term vision doesn't mean going to sleep. Reviewing, adjusting, and evaluating are all part of the commitment to compound profitability. Sometimes you'll have to sell.
4. Liquidity is a strategic decision. Having cash available when others are selling out of necessity is the true privilege of the disciplined investor.
5. Think in terms of probabilities, not certainties. The markets do not reward conviction, but rather the ability to adapt hypotheses in the face of new data. Being dogmatic is the prelude to error.
6. Avoid falling in love with your positions. Every investment thesis is valid… until it stops being so. Objectivity is more valuable than fidelity.
7. Opportunity cost is as real as a loss. Maintaining mediocre positions stops you from taking advantage of great ideas. Time invested in assets with no future also erodes capital.
8. Diversifying is not about accumulating. An efficient portfolio is not a collection of different names, but a balance of correlations, factors, and acceptable volatility.
9. Psychology carries more weight than macroeconomics. Emotional control in the face of greed and fear is the rarest competitive advantage. Markets do not punish ignorance, they punish a lack of discipline.
10. Remember that capital has a memory. Every mistake leaves a scar, but also a lesson. The best investors are not the ones who never fail, but those who never repeat the same mistakes.

SUCCESSES:

DIDN'T YOU WANT TO BUY TECH? NOW IS THE TIME...

Big technology companies have been the driving force of the market in recent years, driven by structural trends such as Artificial Intelligence, digitization and increased technology consumption. But the last few weeks have brought a brutal correction to these key names.

Magnificent Falls:

• $AAPL -13%
• $MSFT -19%
• $META -19%
• $GOOGL -20%
• $AMZN -20%
• $NVDA -28%
• $TSLA -52%

A valuation adjustment, not a trend change

The Nasdaq 100 just recorded its worst session since 2022, and many of these companies have seen their valuations cut to levels that have historically been attractive entry points. Has their business model changed? No. Is structural growth still ongoing? Yes.

Signs of an oversold market and a possible rebound

• Many of these stocks are in a technically oversold area.
• People have left the tech sector in search of new shelter, but this movement won't last forever.
• History has shown that moments of extreme fear often precede the greatest comebacks.

The major trends remain unchanged

AI and automation continue to accelerate.

Global digitization is at a record high.

Record cash flows in these companies.

Has the time come?

For investors with a long-term vision, opportunities do not arise when everything is at its peak, but when there is uncertainty and the market punishes participants without any real deterioration in the fundamentals.

If you've been waiting for a correction in recent months to buy into tech stocks…

Here it is.

Patience has its rewards.

Amid the overreaction of the markets and the dramatic response by some analysts, it is worth taking a step back and coldly analyzing the strategic move of the United States. The tariff package announced by the Trump administration on April 2 should not be understood as a definitive trade policy, but as a position of maximum negotiator. The intention is not to maintain tariffs of 34%, 46% or 54% for key countries for many years. The intention is to force a conversation, an adjustment, a concession.

The strategy is clear. Trump is not seeking technical agreements or product-by-product tariff symmetries. He is looking to generate a situation of maximum pressure from which to step back towards a new equilibrium. The equation with Greek letters that the USTR used to justify the tariffs is not relevant because of its economic rigor (which it does not have), but because it allows for the justification of an arbitrary, flexible, and easy-to-negotiate level of punishment.

From the perspective of Game Theory, the move resembles a "game of chicken": Two cars are heading towards each other at high speed, and the first one to veer away loses. Trump is accelerating towards the center of the board with sky-high tariffs, hoping that his opponents will change course first. Not because he wants to crash, but because he knows that showing a greater willingness to take risks gives him an advantage. The conflict seeks precisely to force the adversary's rationality by design.

What seem like extreme measures today are designed to be phased out. In this sense, the story is predictable: the countries most dependent on the US States will accept adjustments. The US States will declare victory, and the markets will recover some of what they have lost. Meanwhile, Trump will have reaffirmed his domestic position as a champion of domestic industry and an uncompromising negotiator. He doesn't need the tariffs to last. He just needs them to serve as a pressure tool.

In this context, panic is a bad advisor. Benefit reviews are logical, portfolio adjustments are understandable, but projecting the current situation as a new paradigm may be a mistake. The market is discounting a scenario of all-out confrontation when what is actually underway is a complex game of geopolitical and commercial negotiations.

Talks of a structural trade war are premature. The most likely sequence remains: imposition -> loss of value -> negotiation -> price reduction -> new equilibrium. And, as happened in 2018-2019, these types of trajectories open tactical windows that are important to know how to interpret.

There is a lot of noise, but the message is clear: This isn't about tariffs. It's about power, about the tension of negotiations, and about who takes the first step towards the negotiating table. Anyone who sees this situation as definitive is playing the short game. Anyone who understands it as part of a strategic pressure dynamic is thinking like an investor and will be able to take advantage of market irrationality.

On Monday, in a meeting, a client told me that he had "dry gunpowder" ready, but he was hesitant to put it to work.

"What should I buy?" he asked me.

"Close your eyes and buy something, anything," I replied. 

I wish I had had the chart attached today back then. It compiles the 15 biggest S&P 500 declines over three-session periods in the last 75 years. This week's correction ranks as the eleventh most intense in history, with a cumulative drop of 10.7%.

The statistics are devastating:

• In 100% of cases, the index has offered positive returns over 1, 3 and 5 years.
• With average returns of 40% over three years and over 100% over five.

Guarantee of immediate success? Not at all.

A historically attractive entry point for investors with a medium and long-term horizon? Absolutely.

The market never rings a bell when it bottoms out. Troughs are only recognized in retrospect. And it is precisely in moments like this that it is worth remembering that great returns are not realized on days of euphoria, but on days of fear.

Markets have always faced crises, uncertainty, and moments of panic. Wars, recessions, bubbles and financial collapses have shaken investors, but the S&P 500 has averaged a 10% annual return since 1950.

History shows us that, despite the challenges, economic growth and innovation continue to drive markets upward. Crises create noise in the short term, but discipline and a long-term vision are the keys to success in investing.

Don't let fear take you out of the game. Keep things in perspective, keep investing, and let time do its work.

Friday, April 4, 2025. After a brutal Thursday, the S&P 500 suffers its second consecutive plunge.

In his office, Daniel doesn't see numbers. He sees blood pressure. He sees accumulated losses. The media noise is unbearable: “Stock market crash”, “Trump is leading the world into a recession”, “China strikes back”.

He had already struggled for sleep for a few days, but today is unbearable. We are heading towards a global economic collapse, it is inevitable. I have to get out. And out he goes. “I’ll come back when things calm down,” says Daniel.

Monday, April 7.

The market drops a little more. Daniel congratulates himself on having acted so quickly. Furthermore, since he issued the sell order, the S&P 500 fell an additional 2% on Friday. He slept much better over the weekend.

Tuesday, April 8.

Drop of -1.57%. Daniel is becoming more and more convinced of his decision. I nailed it this time, without a doubt.

Wednesday, April 9.

+9.52%. A rebound that looks like a system error. Daniel can't believe it: Is this man crazy? They announce tariffs only to suspend them for 90 days. Why announce them then? Anyway, it's a dead cat bounce. China is not included in the moratorium and tensions are escalating.

Thursday, April 10.

The market drops: -3.46%.
Daniel calms down. It was a foregone conclusion.

Friday, April 11.

+1.81%. Daniel feels a pang in his stomach.
It's no longer fear. It's doubt. He doesn't understand. But the dollar and the bond are plummeting. It is the end of American exceptionalism.

Monday, April 14.

S&P above 5400. And he sold at 5200. Is it possible? In any case, the damage to the economy is already done. It's just a matter of time... It will go down again.

Wednesday, April 16.

Drop of -2.24%. Deep breath. Daniel is mentally preparing to return. It's not the right time yet, he says to himself…

Monday, April 21.

-2.36% Just what we needed. Trump threatens to fire Powell. This man is going to destroy everything. Let's not rush things, there's still a way to go.

Tuesday, April 22.

+2.51% Everything that went down, went back up in a day. It seems that trade agreements are progressing. Daniel begins to fear being left out, but he reads that no strategist trusts the rebound. All of them are saying it will fall again.

Wednesday, April 23.

+1.67%. Trump “makes peace” with Powell and signs up for a deal with China. I was wrong again.

Thursday, April 24.

+2.03% What's going on? It makes no sense. Now the Fed says that if things get worse, they will lower interest rates as early as June. He is becoming less and less certain of his decision. What if things get back on track?

Friday, April 25.

Alphabet publishes results that exceed estimates by 40%. The big tech companies are soaring. Daniel looks at the graph. He zooms out. He zooms in. It doesn't matter. The damage is done. He buys it back for 10% more than when he sold it. It happened again, when will I learn?

For more than seven decades, international trade has relied on a set of shared rules, arbitral institutions, and the foundational idea that all countries pursued the same goals and played on the same playing field. Multilateralism, imperfect but useful, offered stability, predictability, and a legal framework for resolving disputes. That world has ceased to exist.

The globalization we have known since the 1990s, on the other hand, has entered a phase of radical transformation. It hasn't collapsed, but it is no longer governed by universal principles. It is governed by asymmetrical relationships, bilateral pressures and implicit threats. It is being reorganized around power, not consensus.

The United States, for decades the architect and main beneficiary of the multilateral order, has decided to change the rules. Not on a whim, but out of strategic necessity. Its hegemony, although still intact in the financial and military spheres, faces a systemic challenge: the rise of China.

Beijing has ceased to be the "workshop of the world" and has become a hegemonic actor in key points of the global supply chain. It controls critical sectors such as telecommunications, intermediate chemicals, consumer electronics, robotics, and strategic mining. It dominates global maritime traffic and port control. It aims to become a hegemonic power in the training of artificial intelligence models. Furthermore, it expands its political and economic influence in Asia, Africa and Latin America through direct investment, with no political conditionality.

Faced with this rise, the United States is no longer seeking efficiency, but resilience. The brutal example of Germany, which saw its economy collapse when Russia decided to cut off the flow of natural gas, has not gone unnoticed by American leaders. The country has gone from "just in time" to "just in case". What is at stake is not just growth, but economic security. Washington wants to secure access to critical technologies, rebuild industrial capacity, and not depend on a strategic rival for its essential supplies. In that context, multilateralism ceases to be useful. Shared norms become a hindrance. Arbitration institutions are perceived as ineffective. And trade policy becomes part of defense policy.

What is emerging is not a new consensus, but a form of economic vassalage. To achieve security of supply, priority should be given to "reshoring" or, failing that, "friendshoring". Multilateral institutions will play an increasingly anecdotal role. Two great feudal lords are emerging: The United States and China. The feudal lord demands absolute loyalty from his vassals, periodic tributes, and constant availability. In return, it offers protection, access to the lord's resources, and internal political autonomy.

Just as in Game of Thrones, nations must choose which lord to serve. Not doing so is also an option, but not without consequences. The European Union aspires to act as an intermediate power, as a hinge between blocs. But its energy, digital and military dependence reduces its real autonomy. India wants to maintain its neutrality, but will also be forced to align itself on critical issues. Latin America, Africa, and Southeast Asia will be disputed territories, not arbiters of the system.

The most likely consequence is the structural fragmentation of global trade. Two technological blocs, two payment systems, two stores of value, and two parallel regulatory architectures will emerge. Each will prioritize different principles: one, individual freedoms; The other, stability and social control. Both have their advantages. Neither will be perfect.

This new order is not being announced. It's becoming the norm. Decisions are no longer made in Geneva, Brussels, or New York. They are made in bilateral calls, warning letters, blacklists, and conditional agreements. Old treaties are being replaced by temporary pacts, dependent on the will of the lord.

Multilateralism is not officially dead. But it has been gutted from the inside. Instead, an architecture of forced loyalties, selective privileges, and strategic dependence emerges. Power is no longer shared. It is exercised.

Winter is here. But this time the battle is not fought with swords, but with tariffs, electronic chips and supply contracts. This geostrategic logic will also extend beyond Trump's term, because the United States really has no other viable options to curb China's rise. And the rest of the world will have to learn to live under that structural tension.

For decades, we have lived with the idea that equities are an abundant and easily accessible asset. If one company left the market, another came in. If one sector lost the spotlight, another took its place. And if more shares were needed, companies could simply issue capital. It seemed like there was equity for everyone, and forever. However, this is rapidly changing.

Since the mid-1990s, the number of publicly traded companies in the United States has halved. Today, there are far fewer publicly traded companies than there were three decades ago, and thousands have been lost along the way. Furthermore, many high-growth startups prefer to remain privately owned for longer, funded by venture capital, without the need to be listed or publicly accountable. At the same time, established companies spend billions each year buying back their own shares, permanently reducing the amount of equity available on the market. Apple alone has withdrawn more than 40% of its free float from the market in just over a decade.

Meanwhile, what is multiplying is debt. Governments and companies have issued bonds on an unprecedented scale to finance deficits and expansion. In many cases, debt is placed almost automatically because there are central banks or institutions that buy it without paying much attention to profitability. Bonds are issued because they can be issued. Deficits are financed because there is a passive appetite for it.

Simply put: There are increasingly more financial assets that promise something (debt), and fewer assets that directly represent a property right over the economic value that is generated (equity). This leads us to a clear conclusion: Quality equity is no longer in abundance. It is scarce. And like everything that is scarce but holds real value, it deserves strategic attention.

When an asset becomes difficult to obtain, it increases in value. Equity represents direct participation in growth, innovation, and future benefits of the real economy. If there are fewer listed companies, fewer shares in circulation, and more capital competing for exposure to that growth, the result is a structural imbalance between supply and demand. And that implies that equity valuations will continue to rise.

Many investors, especially in the institutional or wealth management sector, still think of equities as just another part of the portfolio, an asset class that "you have to have", but which is managed with the cycle. It is overweighted when the market is rising, and underweighted when there is uncertainty. But if we look beyond the tactical horizon and ask ourselves which assets will retain their real value in 10, 20 or 30 years, the answer is clear: those that represent scarce economic property. And that's where equity has less and less competition.

In this context, maintaining a structural underweighting of equities is not caution. It's a strategic omission. In a world with increasing debt and decreasing equity, the balance of power between assets is changing. And as investors, we can't ignore it.

Jensen Huang, CEO of Nvidia, recently dined at a fried chicken restaurant in Seoul with the presidents of Samsung and Hyundai. He just ate chicken and drank beer. The market did the rest:

• Shares of Kyochon F&B, a competitor of the chain visited, rose 20%.
• The Cherrybro poultry processor reached the daily limit of 30%.
• Even Neuromeka, a manufacturer of chicken-frying robots, saw a 25% increase.

Why? Because everything AI touches turns to gold. The narrative is so powerful that a single photo of the CEO of the world's most important company in front of a bucket of chicken is enough to activate the speculative imagination of thousands of investors.

In behavioral psychology, this bias is called the "halo effect" and, in this case, it applies to artificial intelligence: The market no longer differentiates between silicon chips and potato chips. Irrationality rules.

A few weeks ago I attended a class on artificial intelligence taught by a well-known educator and communicator. It wasn't a technical class, but an invitation to think differently. At one point, the speaker asked the attendees about their hobbies. One said "walking in the countryside", another mentioned "gastronomy". In a matter of minutes, with the help of a generative AI model, the group designed an activity that consisted of mushroom picking and a subsequent gastronomic experience, using the mushrooms they collected. A name was generated for the project. A functional website was created. Attractive texts were written. The logo was designed. And a financial plan was outlined. All in less than half an hour.

The important thing wasn't the idea itself. What that scene revealed was that the cost of putting an idea into operation has plummeted. And with it, also the cost of making mistakes, of failing.

Throughout human history, entrepreneurship and innovation have been within only a small percentage of people's reach: those who could pay the price of failure or those who had a special ability to get up off the canvas. Making a mistake was disastrous. Starting a business required capital, time, special skills, and a tolerance for risk. Millions of brilliant ideas have remained in the minds of people who simply did not have the courage to put them into practice, terrified by the possibility of failure and ruin.

That has changed. AI has eliminated those barriers. Today, a person with no technical training, initial capital, or equipment can launch an idea, test it, and discard it if it doesn't work, all in a matter of hours and at virtually zero cost. You don't need to know how to code or design. You don't need to hire anyone. All you need is an idea and the curiosity to try it.

That has profound consequences, because when we fail early and fail cheaply, people learn faster and are more daring. The number of experiments is multiplied. And more experiments mean a greater chance of success. This phenomenon is not a theoretical one. It's happening right now. Innovation is becoming democratized. Millions of people around the world are trying things they would not have dared to try before.

We are entering a new stage where anyone can test an idea with very little effort and see if it works. It's what we might call "innovation in small doses, but everywhere." One person launches a website to offer gastronomic routes in their town. Another creates an online guitar lesson service with the help of AI. Another designs an app to teach history with videos generated by artificial intelligence. Most of these ideas won't go far. But some will. Some will find their audience, grow, and open markets we can't even imagine today.

We don't know where the next big breakthrough will appear. Will it be a tool for doctors in rural areas? A system that will revolutionize language learning? A platform for personalizing trips? The key is that now there are millions of people trying things they would never have dreamed of or even taken the first step before.

That's why it's so difficult to anticipate what's coming. Because innovation no longer happens in a small selection of laboratories or large companies. Now it's sprouting everywhere.

And yet, macroeconomic models continue to use parameters from the past to anticipate the impact of AI on productivity. They reach lukewarm, linear conclusions. They ignore the fact that an economy where the cost of failure has become irrelevant does not behave in the same way. It doesn't grow in the same way. It doesn't innovate in the same way.

And that's why the models will be wrong once again. They will once again underestimate the impact of AI on global productivity, because they cannot grasp that something disruptive has happened. Something that will break the chains that kept infinite human ingenuity in check.