Gold Magazine December 2013 - January 2014, Issue 33 | Page 40

wealth management

Where to invest in 2014

Nicolas Theocharides gives a few tips on where to put
(and not to put) your money.

People who have a
lot of money should
understand that they
need someone they can
trust to look after it
that the banks in Cyprus are halfway out
of the woods and on their course towards
the complete restoration of their strength
and they have the complete of support of
the eurosystem,” he elaborates, adding that
“We haven’t seen this kind of statement.
In fact, after every encouraging review, the
Troika continues to underline the fact that
things are still fragile. When that changes
we will see a more rapid improvement of
sentiment towards the banks.”
When the Cypriots are again in a position to start building up their wealth,
Theocharides believes that it is essential for
them to understand two things: that the
ideal asset allocation is no longer the old,
popular idea of real estate, cash and shares
in one or two banks, and that they need a
wealth manager to work for them and their
money. “After thoroughly interviewing
people and understanding their risk profile,
their future needs and return expectations,
it is our job to structure portfolios across
many asset classes and to manage those
portfolios,” he says. “When stocks are going
up, we need to make sure we are in stocks.
We need to start reducing exposure when
a specific asset class approaches a bubble or
is in a ‘frothy state’ as we say. It’s the same
with bonds because they peak at different
stages of the cycle, and it’s the same with
precious metals.”
On this issue, he explains that gold was
at its peak a year ago because it is essentially
regarded as a hedge against inflation and
when the US Federal Reserve was adding more and more bond purchases (in
the form of what the layman calls ‘money
printing’), the fear of inflation was much
higher than it is now. So gold peaked.
“People’s main priority is not to understand these things but to be successful in
their own sector,” he explains. “They often
don’t understand these concepts at all and I
don’t expect them to. But people who have
a lot of money should understand that they
need someone they can trust to look after
it. Our foreign clients tell us that this is

exactly why they want us – to take the right
decisions on their behalf at the right time.
They have seen the value of having people
understand who what they are doing when
it comes to managing their money and in
many cases they have entrusted us with
quite a bit more of it. The Cypriots need
to see that times have changed and the old
ways cannot be trusted.”
Theocharides acknowledges that it’s
difficult to convince people – Cypriots
and foreigners alike – to have their wealth
managed from Cyprus at this stage. While
the country’s many double tax treaties are
still in place and the benefits of structuring
through Cyprus are still there, continuing
banking restrictions mean that it is not easy
to take people’s money and invest it abroad
and they no longer have trust in the local
banking system. “If the restrictive measures
were lifted now, many people would just
want to take their money out of the banks
so everybody knows that it is not advisable
to lift the restrictions right now. The banks
first need to be in better shape than they
are now.”
One of the most frequently asked questions of the past nine months is “How
did this happen?” Nicolas Theocharides
believes that a small number of people were
in a position to see what was happening but
either they didn’t speak out or they were
not listened to by those who should have
been paying attention to them. In fairness,
however, he also suggests that “Unless you
have had a similar experience before and
actually witnessed banks going bust, it’s
very difficult to imagine that such a thing
can happen.”
He speaks from experience, having seen
what happened during the Russian banking
crisis 15 years ago. “I was living in Moscow
in 1998, having been sent there to open an
office for the bank I was working for at the
time, and I saw armed guards outside the
banks, preventing people from going in to
withdraw their money. This was an unprecedented experience for me and it