 Good day, fellow investors. I really hope you're doing great today. Recently, I was watching a Wall Street Journal video about how global leaders that were present at the Davis Conference were very, very positive about Europe. And I was amazed about the strength of the positivity about what will happen in Europe. It all looks so perfect in Europe. Now, am I the only insane guy here that doesn't see it that way? Let me elaborate on what they have been saying, and then I'll show you my point of view. At the end, we'll come to a conclusion that's very, very interesting and very important on how to position yourself when investing in and out of Europe. Okay, David Rubenstein, co-executive chairman of the Carlisle Group said that prices in Europe are still pretty low and Europe is actually a pretty good place to invest now because Mario Draghi, to quote, has been a magician in making sure the economy did pretty well. Ken Moialis discusses how there is more stability in Europe. The feeling is that Europe will push through the negative effect of Brexit. David Serra, CEO of Algebra's Investments, believes that in the next three to four years, we will see in Europe what we have seen in the States in the past three to four years. Jonas Preising, CEO of the Manpower Group, raises the Marcon government for what it did in the French labor market, as he says it was more than what had been done in the previous 40 years. Isabelle Koher, CEO of NG, discusses how the atmosphere is very positive and France is back. Wopke Huxtra, the Dutch finance minister, praises themselves that they have done great things on the field of supervisory and resolution in the banking system in favor of a European banking union. Pierre-Carlo Padoan, the Italian finance minister, expects to bring many Europeans back to the labor market by applying new technologies. He mentions the women that are at home not working will be working in the future thanks to new technologies. Now, I don't know what they give them to drink there at Davos or it is because of the rarefied air at altitude, but that's the biggest pile of peep that I have heard in a long, long time. And it reminds me of similar situations in the past that didn't end up that well. In 1929 Irving Fischer, the famous economist, said that stock prices have reached what looks like a permanently high plateau in September of 1929. In early 2007, Ben Bernanke, the Fed chairman, was mostly concerned about the economy growing too fast in the future. So he was concerned that the economy will grow too fast in the upcoming years. So imagine the disparity between what was the perception at that moment and what happened in the future. Something very similar to what is going on in Europe. Extremely positive perception, everybody is happy, everybody is high. Yes, they're high on free money and usually it doesn't end well. However, there is one thing I agree with. Mario Draghi is definitely a magician. He has printed so much money out of thin air that he puts David Copperfield in a shadow because something like what Draghi did is pure, pure magic. I don't know whether this illusion will last and whether our money will be there after the illusion ends. Let's see. Now, being confident is great in relation to anything, but it's not that good when it comes from free money. People are so accustomed to free money that nobody sees it as a problem. But don't forget that the ECB is still injecting €30 billion in the economy every month. How confident would you feel if there is somebody buying all the bonds you can issue and most of those bonds at negative interest rates? This is the chart that shows how much the ECB has been buying. It was €60 billion up till last month. Now it is €40 billion. And I wonder what will happen when they stop or they start selling bonds. It's impossible that they do so. So it's a very, very delicate situation. The situation has led to distorted financial markets, especially for those assets that are in demand. Just look at prices in Amsterdam compared to the rest of the Netherlands. In the rest of the Netherlands, prices have been flat. Look at the right column. While in Amsterdam, prices went up 60% in the last three, four years. 60%. All thanks to the previously shown chart with money pumping that went to the rich that buy real estate. The ECB still holds interest rates at zero and it even charges bank 0.4% on the money those banks hold at the ECB. It seems to me that Europeans are high and have become addicts on free money. To me personally, any kind of country or in this case continent that has been enjoying economic growth but only thanks to free money and 0% interest rates over the last few years, it's sick beyond repair because you cannot increase interest rates because everybody is high on interest rates. You cannot stop buying bonds because everybody likes that you buy those bonds. You practically eliminate anyone's risk and that's a very, very distorted financial market. However, the ECB went even further. If we take a look at ECB buying bonds before the French election, you can see how they have been increasingly buying French bonds in order to keep the situation in France stable and let Marcon win the election. It is crazy how far those central bank interventions go. Of course, no country goes bankrupt. Greece doesn't go bankrupt because there is so much money coming in the form of very low interest rates and in the form of ECB printing. Italian banks, they don't go bankrupt. If 20% of the loans are bad, let's make something, let's invent something, let's put it to the taxpayer to whomever, let's make the ECB buy those bonds, repackaged and who cares? Of course, you won't go bankrupt. Companies, they compete around the world with negative interest rates so they have an extreme competitive advantage. Again, very, very distorted financial environment, very distorted business environment. Now I can go on and on about how the youth unemployment is very high, how future Europeans are not developing their skills, how the government debts are increasing and ballooning up and how that will be a burden in the future. But that's really something that everybody knows or knows but doesn't think about it because it's much better to be confident. So I want to talk about something else. I want to talk about what can happen and that's something important because there are two options that are in my mind and both are very, very different and I bet you they will surprise you. The first scenario is, okay, interest rates start to increase and then somebody yells to keep it in European spirit, Hans Christian Andersen, the king is naked. So the money is worthless and then everybody starts selling the euro, everybody starts selling the European assets because nobody wants to touch something that has been so artificially distorted. That's one way. The second idea is that the ECB keeps interest rates low forever because everybody is addicted on them, keeps buying bonds, keeps putting helicopter money and yes there is higher inflation but everybody is happy, everything goes on like it has been now going on. So on one case there is a scenario of crash, doom and gloom but on the other hand there is a scenario that for the next four or five years everything continues with a little bit higher inflation and everybody is happy as long as the ECB keeps buying because if they don't stop because if they stop buying then the country, the continent is in trouble. So what to do from an investing perspective? First, don't get tempted by the lower, relatively lower valuations in Europe. The risks are huge. So if you are a long-term investor from the US don't get tempted by the euro. I think the euro is much more risky and much more unstable, much more fragile than the United States. So if you want international diversification, look at Asia, China, South America. There you might find better diversification plays for your money and of course also cheaper with much less risk because it's a different story there. Demographics in Europe are going down, there is no people who is going to work. Very, very complicated situation. If you are from Europe, the strong euro now as everybody is confident is a good idea to think about diversifying across the world. If the euro devalues, if the euro collapses, you are protected and also from inflation. We don't know if the euro and stock markets will crash or stock markets will go up because the euro will weaken. So it's a very delicate situation. It can happen both ways. The only way we, the only thing what we can do is being prepared. Thank you for watching. I'll see you in the next video. Looking forward to your comments because there is a lot to comment, discuss and learn from what's going on in Europe.