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Patrick Bourbon

Patrick Bourbon, CFA

(+1) 312-909-6539


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Table of Contents


The BFM Team

Ivan Leveille Nizerolle, CFA, FRM

Ivan has close to thirty years of experience. He began his career with Banque du Bâtiment et des Travaux Publics in the treasury Department. In 1989, he moved to the Crédit Agricole Group as a derivatives products and interest rate trader on the French and German markets. He moved to Chicago in 1999 and was an analyst focusing on the arbitrage and multi-strategy managers based in North America, before becoming a Senior Portfolio Manager, Managing Director of Credit Agricole Asset Management Alternative Investments (CAAM AI), which had $15 billion under management.
He is an expert in asset allocation and mutual funds due diligence.

Ivan has the French equivalent of a Masters from the University Paris-Dauphine in Financial Markets and Business Management. He also has a Master's degree in Economics from the University of Paris-Sorbonne and a Masters in Engineering from the Ecole Nationale des Travaux Publics (ESTP).



Gilles de Barbeyrac
Gilles has spent his whole career in credit risk and market risk functions. Gilles worked in the Risk Management department of Calyon Financial (a derivatives brokerage firm that merged with Fimat in 2008 to form Newedge) from 1999 to 2008. He became its Counterparty Risk Manager in 2006.
Gilles is now the Credit Risk Manager of RBC Investor Services BankFrance, a depositary bank which is part of the Royal Bank of Canada group.

Gilles also successfully passed the CFA exam in 2004 (Level 3). He holds a bachelor’s degree in finance from University Paris Dauphine and an MBA in finance from Loyola University Chicago.

Laurent Barocas
Laurent brings more than fifteen years of experience in financial markets serving both Buy-side and Sell-side global institutions. Most recently Laurent joined Bloomberg’s Portfolio Risk & Analytics product team to focus on the development and commercialization of Bloomberg’s portfolio capabilities. Laurent started his career in Chicago as an Interest Rates Specialist for ABN AMRO fixed income investment portfolio. Then he moved to London in senior portfolio specialist roles within investment banking research departments at Citi and Lehman Brothers. Laurent transitioned in 2008 as a Director to Barclays Capital Index, Portfolio & Risk solutions team.

Laurent holds an Masters in Computer Sciences from Paris-Dauphine University and an MBA in Finance from the University of Chicago, Booth School of Business.

Juan Carlos Espina
Juan joined the Federal Home Loan Bank of Chicago in 2004, and has played many different roles with increased responsibilities within risk management. Currently he works as a Vice President of Credit Analysis for unsecured credit covering Federal Fund, Reverse Repo and Derivatives counterparties.
Before, he worked in risk management at Bank One (JP Morgan), and has corporate banking experience in Latin America (Banco del Caribe – Scotiabank). Juan also has commodity trading exposure (Chicago Board of Trade).

He graduated with a Bachelor of Science in Engineering and Agronomics (Universidad Central de Venezuela, 1996), and a Master of Science in Finance (Illinois Institute of Technology, 2000).


Fabienne Legger
Fabienne brings over 15 years of senior international expertise in the area of strategy, operations, business infrastructure/transformation, compliance and international business expansion. She started her career within Euronext Group (formerly SBF – Bourse de Paris) where she led a number of leadership and consultancy roles in Europe, U.S. and APAC, including 2 years in Chicago, where she was part of the team which worked on the technology swap between Euronext and the CME (trading/clearing). Then she moved to Switzerland and expanded her know-how to the brokerage, banking and insurance sectors. She worked for key global players such as Interactive Brokers, Credit Suisse, E*TRADE and SwissRe, and held senior management positions as Head of Regional Business and/or Operations.

Fabienne holds a Master's degree in Business Administration and Management. She is passionate about “making business work” in profitable, sustainable, and socially responsible ways. She considers Operations as a key strategic competitive business asset.

Pierre Monperrus
Pierre is a Director with over 13 years of Management Consulting experience at PwC. Pierre specializes in financial effectiveness and process improvement initiatives. He has significant experience transforming finance functions to assist corporate and private equity clients quickly integrate acquired companies.
Finally, Pierre also has expertise in audit approach & risk management.

He holds a Masters in Corporate Law and a Masters in Business Management. He is currently a part time student (executive program) at the Kellogg School of Management at Northwestern University.

Sagar Sheth
Sagar is currently Managing Director and Head of Chicago for MKM Partners. Sagar previously served as a Director in the Global Markets Group at Deutsche Bank where he was a top ranked Institutional Equity Salesperson. Prior to Deutsche Bank, Sagar spent nearly four years at UBS Investment Bank in the Equities Group. He also held positions as an Associate Quantitative Analyst at UBS Global Asset Management and as a Business Analyst at Morgan Stanley’s Discover Financial Services Group. He has a broad background in business development and has built a vast network of executives that stretches across the globe.

In his personal time, Sagar is an Adjunct Professor at the IIT Stuart School of Business in Chicago teaching a course on Investment Banking, Global Markets and Hedge Funds. Sagar also gives back to the community as a member of the Board of Directors of the Israel Idonije Foundation, and is an active supporter of the Cystic Fibrosis Foundation, the Foundation for Educating Children with Autism, as well as a variety of other nonprofits.

Sagar received an MBA from the University of Chicago Booth School of Business, and he graduated from University of Michigan with a Bachelors in Economics. He is also a licensed Illinois Real Estate Managing Broker and holds multiple securities licenses.
Find practical tips you can use to help you make better and more informed decisions.

Did you know that your vision can literally "trick" you? Did you know that human attention is limited and that we can't analyze all the information we receive?

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BFM Videos

Over the past few years, we’ve carefully assembled practical tips and videos you can use to help you make better and more informed life decisions. 


See examples of cognitive illusions, and learn why humans make predictably irrational decisions.


For example, did you know that your vision can literally “trick” you whenever it can? That human attention is limited and that we can’t analyze all the information we receive? Let's watch this video:

The butchers' and dietitians' story: discover the difference between brokers and fiduciaries.


BFM is a fiduciary (like a dietitian).


Behavioral Finance: overconfidence and the role of psychology.











Both doctors and pharmacists play an important role in health care, but when you’re feeling ill you know whom you visit first.

Pharmacists are experts in their field, but they aren’t diagnosticians. That’s why you visit a physician first — to get a diagnosis and, when warranted, a prescription. And to protect you from the risk that a physician might try to sell you pharmaceuticals you don’t need in order to make a profit, you buy the drugs from the pharmacist. This eliminates the potential for a huge, and medically dangerous, conflict of interest.

This same logic applies to financial planning.

Some practitioners in the financial field make a living by earning commissions when you buy products they recommend. This creates a financially dangerous conflict of interest, because the advisor doesn’t profit unless you make a purchase.

The solution is simple: Don’t buy products from advisors whose compensation is largely dependent on the commissions they’ll earn when selling them. Instead, hire a fee-based advisor whose compensation is aligned with your best interests. (Source: Ric Edelman)

In the case of BFM, we do not accept any commissions. We are FEE-ONLY. Thus, instead of a conflict between us, our interests are aligned.



Don’t hesitate to
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Is inflation stealing your future?


At BFM, we help you make better financial decisions so that you can have peace of mind.

Our core beliefs are:
• Asset Allocation is the most important determinant of performance            
• A globally diversified portfolio reduces risk         
• A disciplined investment process is critical         
BFM enables you to increase your wealth through independent financial advice with no conflict of interest. We neither sell products nor receive commissions. 

Executive Summary

• As you get closer to retirement, you face an increasing risk of negative real returns, also called inflation-adjusted returns. This erodes your purchasing power and has a negative impact on your wealth.

• Inflation (or price increase) is higher for college tuition, medical care, food, and energy.

• True inflation may be higher than officially reported inflation.

• While we have few inflation concerns in the short term (Southern Europe already sees some deflation), we believe that reported inflation will come back in the mid to long term. Reported inflation is currently below target in most OECD countries. 

Certain types of investments could protect you against inflation. However, their effectiveness, reliability, and cost vary.

There is a small cost to protect against inflation, but it should provide valuable protection: it will reduce the large loss in purchasing power that a traditional stock/bond portfolio is likely to suffer.
• One way to prepare yourself against inflation (to hedge) is to diversify your portfolio beyond traditional stocks and bonds, by including real assets (commodities, real estate, global REITS…), and inflation-linked bonds (TIPS).

Don’t be fooled by people who claim that there’s no inflation.



What is inflation? Is inflation bad for your portfolios? Should you be selling your mutual funds if there is higher inflation? What type and how much inflation protection is appropriate?

Most portfolios are not designed to protect against inflation.

Following aggressive fiscal and accommodative monetary policies since 2008 (also called quantitative easing), some of you have concerns about inflation globally and its negative impact, declining purchasing power.  Inflation means that your money won’t buy as much today as it could yesterday. In simple words, rising inflation means that the same amount of goods that you can buy with your money today will cost more tomorrow. Inflation is the reason your grocery bills are relatively higher every month. It is defined as the rate (%) at which the general price level of goods and services is rising. 

Inflation may not have been headline news for many years, but prices for many everyday items have increased dramatically, making an adverse impact on investors' wallets. For example, the price of one dozen eggs went from $0.97 in 2000 to more than $2 in 2014. With the rising price of everything from energy to food, we are forced to spend a larger percentage of our earnings on necessities. 

Labor costs may soon increase as U.S. has a need for high-skilled, highly-educated workers, and a lot of corporations are saying they cannot find the skilled workers they need.

You don’t buy home insurance because you think you will have a fire tomorrow. We can see inflation in the same way. You may not have concerns about a spike in inflation tomorrow, but who knows when inflation will come? Remember to buy the protection ahead of the fire… W
e believe in investing in protection against inflation today for a better and safe tomorrow.

At BFM, we are keenly aware than most people "feel" and "see" inflation that seems well higher than the government-stated numbers. 


"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some... Those to whom the system brings windfalls,... become "profiteers," who are the object of the hatred... the process of wealth-getting degenerates into a gamble and a lottery... Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." Source: J.M. Keynes


To get a better idea of how inflation can eat up your wealth, you can see that $1 in 1920 is equivalent to 5 cents in 2014.

The main drivers of future inflation are wages (salary) and inflation expectations. The U.S. government is also talking about raising minimum wage. Inflation can be a stealthy thief to investors.

To give you some perspective, this chart shows the historical inflation since 1872. The last period of high inflation was in the 1970’s.

A good complementary reading is an article by Gary Halbert: Is the Government lying to us about inflation? Yes!

We note that inflation is good for debtors because it allows them to repay their debts in devalued dollars. The weight of your debt decreases when the purchasing power of the dollar decreases with inflation. A home mortgage is a hedge against inflation.

Inflation also encourages spending rather than keeping your money in cash.

1. Impact of Inflation

How does inflation impact you?

A common goal of most investors is to maintain the long-term purchasing power of their investments but in 25 years, $100,000 will be worth the equivalent of today’s $47,761 assuming 3% annual inflation.

If investors do not take steps to hedge against the impact of inflation, their retirement portfolios may be negatively impacted.

$100,000 in 2013 had the same purchasing power as $7,692 in 1925. If inflation stays at 2.82% (like the past 30 years) in the next 25 years, you will need $200,196 to buy the equivalent of $100,000 of the same goods/services today.

In the following chart we see how inflation has impacted the tuition rates and the medical care the most. 

The following graphic also gives us an interesting perspective of how inflation reduces the total return on our investments. For example, a nominal return of 11.09% which might sound really good at first comes down to 5.97% after adjusting for different expenses and inflation numbers. 

The performance/returns of stocks and bonds can look very different when adjusted for inflation.
In the 1940's, 50's, 60's, and 70's, U.S. Government bonds had negative returns after adjusted for inflation.

We note that retirement could last for a long time. Advances in health care are helping people to live longer than ever before. A married couple reaching age 65, has a 70% chance that at least one of them reach age 85, and a 47% chance that at least one of them reach age 90 (source: Society of Actuaries 2000 Annuity Table).

You should prepare retirement portfolios for income needs.

2. What is the Consumer Price Index (CPI)

The CPI affects the economy because cost of living adjustments to social security, federal retirement, and supplemental security income are tied to it. It’s also used to index income tax parameters, and TIPS (Treasury Inflation-Protected Securities that are bonds used to protect against inflation).



We believe that CPI is a controversial measure. Many argue that it is not a very accurate indicator.

We agree with Gary Halbert: over the years, the methodology used to calculate the CPI has also undergone numerous revisions. According to the BLS, the changes removed “biases” that caused the CPI to overstate the inflation rate. The new methodology takes into account changes in the quality of goods and “substitution.” Substitution is the change in purchases by consumers in response to price changes, and this alters the relative weighting of the goods in the basket. The overall result tends to be a lower CPI.

"Quite simply because it’s a government report that’s been frequently manipulated over the last 35 years. Whether by design (my bet) or coincidence, these revisions have served to reduce the official inflation rate. Also, keep in mind that our government has a record $16.7 trillion in debt it is paying interest on. If interest rates rise, it costs Uncle Sam more money. If inflation rises, interest rates follow. Obviously, the government has incentives to manipulate the official inflation rate lower than it really is." Gary Halbert.

Economists using different methodologies (including the original methodologies) estimate that the real U.S. inflation rate is anywhere between 5% and 8%. That’s a huge difference with the official reported figures! 


The true inflation may be higher than the official reported inflation.

Some people argue that Governments have 2 choices:
1) mislead its citizens by understating inflation
2) release accurate inflation data but it will increase social benefit obligations

3. How to Protect Against Inflation: Asset Allocation

In this section, we would like to present some more graphics which can give you some perspective of how you can hedge yourself against inflation and what assets could be used. 




Inflation beta means the sensitivity to inflation. Inflation can have a positive impact on an asset’s value when prices are rising. The chart above shows that commodities are the most sensitive to inflation. Unfortunately, the reliability/consistency of commodities as an inflation hedge is not great but when they have worked, they have worked exceptionally well.
It seems that the greater the inflation sensitivity, the lower the reliability. 

We can see below that TIPS have been much more reliable in protecting against inflation.

In summary, many different assets can provide a hedge against inflation, but their effectiveness, reliability, and cost-effectiveness vary (foregone return potential).

One way to prepare yourself against rising inflation (to hedge) is to diversify your portfolio beyond traditional stocks and bonds and include real assets (commodities, real estate, global REITS…), inflation-linked bonds (TIPS), and stocks including natural resources. Finally, investing in foreign currency may help to increase the reliability of your inflation protection.

4. Appendix - Past Newsletters




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This newsletter is not investment advice or trade recommendations. Many factors beyond those discussed in this newsletter exist in determining a proper investment allocation and whether global investing is appropriate for each individual investor. We welcome all questions and comments regarding investing and retirement concerns.