WHO REALLY CONTROLS YOUR INVESTMENTS?

Control, control, control… we often live obsessed with controlling everything. We want to maximize control over every aspect of our lives. But do we really control everything we think we do? Or do we unknowingly leave many things and situations to chance? Certainly, when I started asking myself these questions, I realized that we rarely find ourselves in a situation where we have control over what we believe. Let’s look at the clear example of the topic that concerns us in this paper, which is investments and what we believe is important for our future and that of our family:

I started working in “The Banking” (that’s what we call the financial industry in America) in 1989. At that time, my country was experiencing its second hyperinflation in history (Argentina), which ended with a government plan to take all foreign currency deposits (fix-term deposits) from the people and exchange them for state bonds with a 10-year maturity. What was a calamity and a disaster for many at that time was a great opportunity and an excellent business for others

When a part of the savers, who had trusted in the system, felt completely swindled because their savings and hopes of buying a house, paying for their children’s education, and fulfilling their dreams were disappearing, becoming just a piece of colored paper they had to wait for 10 years, there was another part of society that saw an opportunity. Without intending to judge the actions of anyone, a new business was born at that moment: debt acquisition.

Yes, you might tell me that this has existed since the dawn of trading desks! True, but many savers who urgently needed the money were selling their bonds (for example, at 75 or 80 cents on the dollar) to those who had no urgency for their money. Clearly, after 10 years and with the 13% interest rates on foreign currency and the obligation to maintain the original currency of the time, enormous profits were generated for those who bought that debt. Let’s not forget that after the issuance of the Bonex ’89 bonds, Argentina ended up adding the fourth “zero” to its currency, and there was inevitably a terrible monetary reform.

We often see money as a mere medium of exchange, as a way to accumulate wealth, power… and we fail to realize that money is ultimately just potential energy that we can accumulate, but if we don’t use it, if we don’t give it the value and care it deserves, it transforms, and we end up losing it.

Its effect is just as the first law of thermodynamics and the general principle of conservation of energy state: energy is neither created nor destroyed, only transformed. This effect is identical when we talk about money.

When an investor or saver loses money, there’s another party that gains it. In the same way (in a very simplified form), if a government prints money, it leads to the devaluation of its own currency, and it loses value to the point where the monetary base still maintains its balance regarding its global value. But this is not the topic of our conversation today.

Continuing with the fact that money is nothing more than potential energy in our hands, and we recognize that it’s just a simple “paper” until the time comes to give it a purpose, the main problem that motivates this article emerges. We want to control it, make it grow, and increase our wealth.

In the times of the Phoenicians, they understood very well what they had created. To put a suitable weight in metal that could be used as an object of exchange among different cultures, from the Mediterranean to the Indies. This concept, over the coming centuries, turned into an industry in itself where, like in any industry, the pursuit of profit is central. Money ceased to be just a “medium of exchange” and became a product.

The industry developed, grew, becoming an increasingly efficient apparatus for obtaining a cheap product to sell at a higher price.