Are Spaniards rational animals? As the proverb says “man is the only animal that stumbles twice on the same stone”. Do we, Spaniards, stumble twice on the same stone or do we stumble 222 times? I have chosen the number 222 because 22 seemed to me a scarce number as an “apparently rational” investor.
The previous questions come because in Fellow Funders we remembered that this week is the 10th anniversary of the official beginning of the Subprime Mortgage Crisis, the great financial crisis that we are still overcoming, and that for many has been even more aggressive than the crisis of 29 that our parents or our grandparents suffered (depending on your age, dear reader).
We are not going to carry out in this newsletter a thorough work on the origins of the 2007/2008 Crisis, but reviewing the many published studies, several ideas underlie all of them.
In addition to a financial crisis it was an enormous credit distrust, an abnormal overvaluation of financial assets, a lack of knowledge of investment products and above all an extreme greed (a characteristic associated with the human race) that put the “Money God” above all else, regardless of the consequences for others and for the system as a whole.
Do these ideas sound familiar to you, dear reader? Do you think people have changed since then? Have we learned something? Will it take at least a few years to experience another similar crisis? Could there be “a certain” overvaluation of Assets? And ignorance of the financial products we buy? And ….?
What did this crisis bring?
This crisis, against which according to many politicians and some economists we were vaccinated, finally arrived in Spain and brought with it a devastation of the productive fabric (the little that was left after the successive industrial reconversions), unsustainable unemployment rates, the rupture of the savings/real estate investment binomial (real estate was never going to go down in price and represented a piggy bank for our future retirement, ¿¿? ?) and, above all, a feeling of pessimism that has been and continue being difficult to overcome (some recalcitrant pessimists still see the “half-empty bottle”).
Many of us had never suffered anything like this and when our parents talked about the “terrible 30’s and 40’s” it sounded like a “tall tale” or “grandfather’s stories”. We had always taken for granted that future generations had the right to live better than past generations… Do you believe, kind reader, that these truths continue to be an irrefutable and immutable dogma? Do you really believe that your children will live better than you and will have the same opportunities?
Just when it seemed that we were promising to be happy and Spain was beginning to overcome the crisis, suddenly, some publications and Research Services are saying that “The economic recovery in Spain is largely replicating the pre-crisis pattern”, i.e., so that we all understand each other, another construction boom, another disproportionate increase in real estate prices, another increase in tourism, in many cases giving priority to quantity over quality… In short, what we have already seen in the past.
Can we consider these bases as sustainable for the development of Spain as a prosperous nation and leader in the 21st century? Is this model an economic model that generates wealth and added value? Is this the world in which we want to educate the new generations? At Fellow Funders we say NO to all three questions. And you, kind reader, what is your answer to these questions?
Actions to be performed
- Spain’s future must be focused on a new economic model based on the development of industry, new technologies and, above all, research and development.
- In Spain, it is essential to accelerate the implementation of a strong and logical entrepreneurial ecosystem based on solid foundations.
- It is necessary to redesign a fiscal policy that helps entrepreneurs.
- It is unavoidable to support the entry of private investors in a significant way to support entrepreneurs. When will tax incentives similar to those of other countries in our environment be introduced?
- We must implement professional tools in startups (which are actually SMEs with a high technological component).
- And above all, we must create, among all, a climate of trust and long-term relationships in the world of entrepreneurship.
At Fellow Funders we say
At Fellow Funders we believe that if we maintain our short-term vision in the world of entrepreneurship, we will not be helping to change the productive model of Spain, but rather developing another culture of the “pelotazo” and creating a bubble that, like all the previous ones, will end up bursting and damaging mainly the weakest links in the chain, the retail investors.
Furthermore, we believe that the individual investor, for better or for worse, must be aware that he/she must build his/her investment portfolio with a medium/long-term time horizon in order to ensure the maintenance of his/her standard of living when retirement arrives (which I promise you, dear reader, will come).
In this Investment Portfolio we recommend that the investment in Equity Crowdfunding has an adequate proportion (no more than 5/10% of the total portfolio), but always approached from a professional point of view (not guided exclusively by “moods” generated by marketing).
We believe that Equity Crowdfunding is an interesting product, but always bearing in mind the need to diversify the portfolio and the risks assumed.