Seeking Alpha

Nestor Castillero's  Instablog

Nestor Castillero
Send Message
Mr. Castillero is responsible for execution of trades and meeting all governance, regulatory, and reporting requirements for Physical Gold Fund SP, as well as overall daily operations. He is also in charge of marketing the fund and client meetings on behalf of the company. Prior to Physical Gold... More
My company:
Physical Hard Assets Fund SPC
  • What Is Safe? 0 comments
    Aug 6, 2013 12:59 PM

    I remember being in Boston during 2008 for a graduate program on banking and finance. My textbooks were already purchased, and I was eager to start classes. On the first day of my financial markets class, our professor told us to stop bringing the books, since they were now obsolete, and to start watching the news. My book specifically said Fannie Mae and Freddie Mac were extremely safe, AIG was the biggest out there and was recommended to invest into, and banks like Citibank and Bank of America, among others, were too big to have any issues. Reading all of these notes while watching how they collapsed one after the other was a privilege for me; I got my mind awoken and realized that things were changing drastically. Safe wasn't safe anymore, and people were scared.

    According to the Merriam-Webster dictionary, safe means "free from harm or risk." I would presume that travelling on a train was safe until the recent Santiago de Compostela train crash. I would also have thought that having gold in a bank was safe until ABN Amro decided to stop delivery of physical gold and simply make the conversion into cash. Even having cash in a bank was considered safe until Cyprus decided to make bail in out of the bank's clients and use that money to rescue the institution. If you thought that becoming a billionaire would give you safety, just read about former Brazilian billionaire Eike Batista.

    My point is that nothing is 100% safe - there is always a risk. There are events simply out of our control that can affect us enormously. The suggested way to be safe is to mitigate that risk so in the event something bad occurs, there's a Plan B, C, D, and so on. Every risk brings an opportunity; just don't concentrate everything you have in that one and only opportunity.

    Traditional portfolios are comprised of stocks and bonds. Both assets are extremely dependable on the financial markets, but even if you have ten different bonds, they're still bonds. Having many of the same assets doesn't mean you're diversified, it just means you have the same thing with different names.

    I'm not against having stocks, bonds, hedge funds or other fixed income products. I believe it's a great decision to try to get a return higher than what your salary can provide so you can improve your standard of living. I truly believe it would be advisable to incorporate other non-correlated assets that may help to reduce risk and expand your portfolio into alternative investments. A well-balanced portfolio should not only be oriented to return, it should also be oriented to protection of wealth and reduction of risk.

    Don't wait until it's too late to take action; be prepared for any eventuality. Consider allocating a portion of your portfolio into alternatives assets such as gold so you can spread your investments and achieve true diversification.

Back To Nestor Castillero's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.