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Entrance for qualified investorsCZ

Why is investing alone not enough?

Anyone entering the market today is not buying an average history. They are buying it at one of the most expensive moments that can be measured, and into a world more indebted than at any time in peace.

Three things have come together at once. Equity valuations are at levels reached only four times in a hundred and forty years. World debt has grown past twice global GDP, and economic growth is not enough to repay it. Interest on deposits is below inflation, so money in an account shrinks in real terms even as its number grows.

None of that says when the turn will come. It says what level the starting point is — and that splitting money between shares and bonds is no longer the same thing as spreading risk.

01State of the market

The level today's starting point is at

Shares are expensive even against their own history

The Shiller CAPE in historical episodesThe ratio of price to the ten-year average of real earnings. Today's band of 30 to 40 against a long-run average of 16 to 17.0204060Ø 16–1719204.8192932.619826.6199944.2200913.32025–2630–40
The Shiller CAPE in historical episodes
YearWhat was happeningCAPE
1920Depression trough4.8
1929Before the crash32.6
1982The Volcker trough6.6
1999Dotcom peak44.2
2009After the financial crisis13.3
2025–26Today's band30–40

Source: Robert Shiller, CAPE data series since 1881

In a hundred and forty years the CAPE has risen above 27 only four times: before the crash of 1929, at the peak of the dotcom bubble, before the crisis of 2007 — and then again after 2020, where it remains today.

The market is twice the size of the economy it stands in

The Buffett indicator — market capitalisation of US equities to GDPA scale from a cheap band of 70 to 80 percent up to today's 209 to 224 percent.70–80 %Cheap100 %Neutral150 %Expensive200 %Overpriced209–224 %Extreme
The Buffett indicator by band
Ratio to GDPMarket valuationWhen it was like that
70–80 %Cheaphistorical troughs
100 %Neutralmarket = size of the economy
150 %Expensivethe peak before the 2007 crisis
200 %Overpriceddotcom 2000, the year 2021
209–224 %Extremely overpriced2025–26

Source: ratio of US equity market capitalisation to GDP; commentary by Warren Buffett

Debt has grown past twice world GDP

Total world debt rose from 180 % of GDP in 1990 to 237 % in 2023. Twice world GDP is not a sum that can be repaid out of growth — it is serviced by interest, and that interest pushes for rates to stay below inflation.

  • Total debt
  • Of that, public
World debt as a share of GDPTotal world debt rose from 180 percent of GDP in 1990 to 237 percent in 2023.50%100%150%200%250%1990200720192023

Source: IMF Global Debt Monitor

Public debt alone reached ninety-eight trillion dollars worldwide in 2023.

A deposit loses in real terms even as interest rises

Where the return on a bank deposit is lostInflation of 5 to 6 percent against interest of 2 to 3 percent gives, after tax, a real return of minus 3 percent.Inflation5–6 %Bank interest2–3 %After tax~1.5 %Real return−3 %
A normal regime against financial repression
RegimeInflationInterest on depositsReal return
Normal2 %4 %+2 %
Repression5–6 %2–3 %−2 to −3 %

Source: the concept of financial repression: IMF, WEF

An average episode of financial repression lasts 10 years. At a real return of −3 % that means 25 % of purchasing power lost — and it is not a fall that can be seen on an account statement.

02What to do about it

Spreading risk today means something else

Diversification within equities is not diversification

The S&P 500 index holds hundreds of companies, but its top 10 make up over 37 % of its weight. Whoever buys the index buys, for the most part, a handful of companies from one sector and one country. In growth years it does not show. In a crisis every component falls at once, because it is the same risk in many wrappers.

The 60 : 40 portfolio has stopped working

Splitting money between shares and bonds rested on one falling while the other held. That protection was built on a negative correlation of around −0.3 — bonds cushioned equity drawdowns. In 2022 the correlation turned to 0.6 and both components fell together. A portfolio that was supposed to be spread out behaved like a single position.

Uncorrelated strategies are expensive to access, not to exist

Strategies that do not behave like the equity market exist and have worked for decades. The problem is not that they are not there — the problem is that an individual investor cannot reach them. They have high minimums, they are closed, or nobody offers them in retail. That is a question of access, not of existence.

03Entry

Are you a qualified investor under § 272 ZISIF?

Behind this confirmation is a fund of funds built from uncorrelated strategies — the figures, the methodology and the terms of entry. Information about the fund is not intended for the public. Your answer stays in your browser and is not sent anywhere.

What a qualified investor means

Under § 272 of Act No. 240/2013 Coll. on Investment Companies and Investment Funds (ZISIF), a qualified investor is, among others, a person who makes a declaration of experience in the field of investment, meets the statutory volume of investment and whose suitability is assessed by the manager of the fund.

The suitability assessment is carried out by a manager licensed by the Czech National Bank. By confirming below you will reach information that is not intended for the public; no obligation arises on your part or on ours.

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