Us Dollar Came To The Gunfight With A Knife

[Harmonica]

Here's my post from December 23rd:

Fellas,

As softly as ever, with just a shhhh, may I humbly, oh, ever so gently, coax you, guide you and urge you to

start ACCUMULATING Dollars (USD).

Do it "saaalowwleee" every week, a "leeetle beet" at a time.

Do this while every mothers' son is negative the Dollar.

Sentiment plays a huge role in overall market success and I believe we are at a dramatic, historical turning point. A bottom is being formed currently. No. no, not that kind of bottom!

There is not ONE dude who's +ve the Dollar--that's why I'm hiding and am only just whispering to you. I've taken too many bullets in the past and I'm a wee bit gunshy. The shooters later came back to cuddle & fondle me, but I'm not into that sort of thing.

Four years in Thailand and I'm getting very lonely making decent money in the markets. No office required, no overhead, just Tech. analysis, a computer, 4 Brokerage accounts, and guts to go against the HERD. The CNBC (and other)experts will ruin you! I've already told them to "piss off", the lying, BS mothers.

It hurts & torments me to see that so many wildebeast are just going to jump into the river full of hungry crocs with narry a thought that it is a classic bear-trap.

It is dangerous to be different and go against the multitude, the crowd, for in the end it is only a teeeeeny-weeeeny %age of cats that profit. These profits come from the herd's losses.

Give it some thought my friends. Just think about it, thats all I ask.

God bless you all for you've opened a door to a vista (this topic) I just plain love and by all measures, it loves me.

Adios

Harmonica

[Harmonica]

Here's my second post on the same subject on Dec 23rd.

LivinLOS,

You've put forth some very interesting analysis. I applaud your effort at figuring out the markets.

You asked me for "one single fundamental reason why the Dollar could go up" -- well, there is none, not a single fundamental reason.

However, therein lies the trap, for I believe you're using the wrong tool.

And for others here who have been quoting CNBC, WSJ, Nation, Bangkok Post and a host of other mainstream Media financial experts, all I can say is, you will never win following their advice because their job is simply to keep the game going forever and, if you get smart, it kind of defeats their modus operandi. They are not your friends. They should be avoided at all costs. Their only valuable service is raw DATA. This is what you use and then, go do your own analysis.

Here's a nugget for starters:

"At major turning points the Media and therefore the general public, aka the HERD, is ALWAYS on the wrong side of the market and leads the public enthusiastically over the cliff! It rarely acknowledges the error until the reverse move is well underway and a new uptrend has been establlished; then it latches onto this and the cycle repeats"

###### em, I say. Start then and you have a shot.

[Harmonica]

The US Dollar Index has in the last few days wiped out 25% of the loss sustained in ALL of 2004. Read this sentence thrice!

Are there any guarantees that I am correct in calling this December bottom THE actual medium-term or long-term bottom? NO!

We little guys do our analysis, our study, make a decision and GO with it. We are hobbyists; they are professionals, aka experts.

Am I destined to a life of loneliness or are some of you going to join me in "independent thought"?

Best regards

Harmonica

[Harmonica]

As the USD (horseless) faced the Euro, Yen and Pound (who had come to battle on horseback) in battle, he asked them, "did you bring a horse for me?" ..... "looks like we're shy one horse" replied the Euro. With a piercing gaze, the USD sofly said, "No, you've brought two, too many!"

[Richard Hall]

As the USD (horseless) faced the Euro, Yen and Pound (who had come to battle on horseback) in battle, he asked them, "did you bring a horse for me?"  ..... "looks like we're shy one horse" replied the Euro.  With a piercing gaze, the USD sofly said, "No, you've brought two,  too many!"

Don't forget that Charles Bronson was carrying a hidden gun and was absolutely aware of this shooting abilities and so he eventually left with the three horses. Therefore, his statement was based on some ground rather than just boasting abilities.

If the USD can claim the same well, the chances to eventually succeed are there otherwise most likely it' ll stay horseless or even gets blown away.

Agree, not stampeding with the herd can indeed be beneficial and smart but denying all logic and just rely on the guts' feel is... well, figure it out youself.

Bluffing may be good and possibly takes the pot but only as long the other players in the game accept to be bluffed.

Heaps of luck that your hopes become actually true and you are not eventually ending up wiping your backside with the greenbucks.

[LivinLOS]

The USD has one long term direction..

ALL my comments were based not on 'playing' the markets (both up and down as you seem to do) but on trends and long term investing / protection of assets. How precisely can the us pay back its debt (or even service it shortly) ?? it cant at current dollar price levels..

Luckily for me my asset hedge is not another fiat currency but commodity based..

2006 dollar >1.60 / Euro and possible >1.80.. 2006 gold >$800

[britmaveric]

2006 dollar >1.60 / Euro and possible >1.80

2005-06 dollar >.90 - 1.10. (around that range - Euro is hugely inflated)

[Harmonica]

>>>>> What do you think the USD will bottom out at by July 2005? <<<<<

Rav,

I've placed my bet that we already have a bottom in the USD Index. If however the 80.60 closing low on Dec 29 gets taken out, I'd be looking at your scenario. There is plenty of resistance just slightly above where it closed yesterday. For me now its a wait and see.

[Harmonica]

>>>>> Don't forget that Charles Bronson was carrying a hidden gun <<<<<

not hardly! The gun was right at the top of his duffelbag with the butt within easy grasp by just letting go of the bag altogether. He had time to prepare as he got off on the other side of the train. What fooled the 3 gunfighters was that they never expected him to fire with his right hand since he was holding the duffelbag with the same hand.

[Harmonica]

>>>>> Heaps of luck that your hopes become actually true and you are not eventually ending up wiping your backside with the greenbucks.<<<<<<<

Such wisdom! I'm in the green currently, and with a STOP in place my backside is protected. Yours is very likely to pucker up and twinge as and if the USD just keeps going up.

[Richard Hall]

>>>>> Heaps of luck that your hopes become actually true and you are not eventually ending up wiping your backside with the greenbucks.<<<<<<<

Such wisdom!  I'm in the green currently, and with a STOP in place my backside is protected.  Yours is very likely to pucker up and twinge as and if the USD just keeps going up. 

Harmonica,

you appear to be a firm believer and kind of a gambler but on the other hand good to know that there is still a STOP in place (the gun on the duffle back?).

No, I have no own currency something like a Richard buck or so... I am just a business man and I worship all currencies. The USD is just one among others and the same goes for Euro, Yen, Yuan or whatever. Gimme USD, THB, EURO, YEN - I'm not prejudice at all in this respect. Frankly said the weak USD gives me presently a headache because in my business I usaully have to convert from THB to USD so behind my wishing you luck is also kind of selfish thinking.

Many years in business taught me a clear lesson. Don't rely on anyone or anything but just on yourself. My Gods are my right and left hands and so if one day I go down the drain I do not need to scold anyone but myself. Be assured I have equally less faith in the abilities and wisdom of the leadernship of the US, EU countries or Asian countries. Try keeping control yourself all the time is my religion and therefore just betting on a single horse does not fit.

As previously said, heaps of luck (no sarcasm at all) to you and may your dreams become true.

Richard

[Richard Hall]

As things stand at this moment, it looks to me as if the USA is still the favorite... and the question is, to bet on the favorite or one of the outsiders... ?

Ravisher,

suggest not "betting" on anything that is beyond your personal control. The favorite horse can suddenly stumble and fall and if all your hope is just on it you are f.......

The best odds one can ever achieve in gambling is 50:50 means there is always a 50% chance of losing. Great chances of winning come with great chances of losing. Minimizing your risks and always keeping the steering wheel in your own hands gives you less headaches and regrets.

All the best,

Richad

[~G~]

Short term rise... Great for forex traders drawing lines on their graphs, meaningless for long-term investors.

[Richard Hall]

As things stand at this moment, it looks to me as if the USA is still the favorite... and the question is, to bet on the favorite or one of the outsiders... ?

Ravisher,

suggest not "betting" on anything that is beyond your personal control. The favorite horse can suddenly stumble and fall and if all your hope is just on it you are f.......

The best odds one can ever achieve in gambling is 50:50 means there is always a 50% chance of losing. Great chances of winning come with great chances of losing. Minimizing your risks and always keeping the steering wheel in your own hands gives you less headaches and regrets.

All the best,

Richad

Richard... you are talking to a casino manager.

If I had your philosophy of 50/50 the casino would go broke!

You must always have an 'edge' whether in the casino business, or in Life.

Ravisher,

darn... you got me know! I overlooked that gun on your duffle back.

Now, I have to find a pathetic way to make up for this. How 'bout declaring the "casino chip" the most reliable and hardest currency.

Yep, best chance to fight the casino is to make the 50 : 50 bets. If you lose double your bet, if you win keep you standard bet. No better odds neither in gambling nor in life. Beware when the casino door opens and I approach your table. The duffle bag in my hand means nothing - it is just were I keep my bucks in.

Richard (still searching for the edge)

Edited January 8, 2005 by Richard Hall

[Harmonica]

>>>>> you appear to be a firm believer and kind of a gambler but on the other hand good to know that there is still a STOP in place (the gun on the duffle back?).

Frankly said the weak USD gives me presently a headache because in my business I usaully have to convert from THB to USD so behind my wishing you luck is also kind of selfish thinking.

Many years in business taught me a clear lesson. Don't rely on anyone or anything but just on yourself. My Gods are my right and left hands and so if one day I go down the drain I do not need to scold anyone but myself. Be assured I have equally less faith in the abilities and wisdom of the leadernship of the US, EU countries or Asian countries. Try keeping control yourself all the time is my religion and therefore just betting on a single horse does not fit. <<<<<<

Couldn't agree with you more, Richard. I do pay attention to the Yen, Euro and Baht -- however I just feel strongly about the Dollar for the forseeable future. And by the way, based on one of your prior posts, it is NOT a "gut feeling" -- its hard, cold technical analysis, or as some smart alecs tend to say, Anal-ysis. Hey, whatever; it works for me. Best regards to you.

[Harmonica]

>>>>>> Short term rise... Great for forex traders drawing lines on their graphs, meaningless for long-term investors <<<<<<<<

G,

Your quote IS #4 in the Traders Almanac for standard excuses and rationalizations. Hard cheese is a better term, IMHO!

Many, many examples of the market making NO net gain in a well established uptrend (which is along the lines of your long-term view) for months, sometimes even for years is, to say the least, very frustrating; technical players play this "trading range" both LONG and SHORT and despite the fact that the market during this time made no net gain, these fellows usually do very well.

Best of luck

[xbusman]

Thanks harmonica and ravisher, I have been following the market closely as I am tied into exchange rates as well. I think you have both slid some good common sense into the equation. I know some big boys who play in the market and to a man they told me that while the trend is your friend, at this point in world history do you really want to bet against the US in business. Having done business on all the continents and being of the Friedman school I think you guys are seeing the situation pretty clearly. Plenty of problems there but far less than anywhere else. The inside money right now is watching India very closely. While the 90s might have been the decade of China, the 2000s might go to India.

[Harmonica]

>>>>> try to get real! the gun in the dollars left hand is owing 8 trillion to the world. the gun in the dollars right hand is paying it back by selling big macs.

its the old stophunter! the ole headfake! the old lull before the dollar collapse storm! <<<<<

theonlyway,

Tell that to the Dollar --- its possible it might start coming down when it listens to your arguments; its also possible it might just tell you to "hide and watch" --

[britmaveric]

Hmmm federal reserve announces it wants a strong dollar and reduce the national deficit. The dollar gains is up .08 on th Euro. If that isnt a sign that euro is inflated I don't know what is.

[Harmonica]

theonlyway,

the blank that was fired on Dec 29th was some blank!! It tore off the previous short-term high; that's a very bad sign; for you anyway! Did somebody forget to check the chambers?

[The_Moog]

"one single fundamental reason why the Dollar could go up"

Because US interest rates are going up at a faster than anticipated pace. Another 5-10 upward moves likely this year. Higher interest rates mean hot money flows into a currency in search of yield.

[~G~]

>>>>>> Short term rise... Great for forex traders drawing lines on their graphs, meaningless for long-term investors <<<<<<<<

G,

Your quote IS  #4 in the Traders Almanac for standard excuses and rationalizations.  Hard cheese is a better term, IMHO!

Many, many examples of  the market making  NO net gain in a well established uptrend (which is along the lines of your long-term view) for months, sometimes even for years is, to say the least, very frustrating;  technical players play this "trading range" both LONG  and SHORT and despite the fact that the market during this time made no net gain,  these fellows usually do very well.

Best of luck 

<{POST_SNAPBACK}>

First of all, Harmonica, since you sound a bit defensive, I want to make it clear that I have no critisism against technical players whatsoever! If they are good at it, they'll make a lot of money. Good for them! Good for you! No sarcasm here! Buying and selling, both long and short, really a great game. Used to do it myself for some time and made some nice profits.

I just discovered one fault in it - that's a fault for me, maybe not for others - it makes me spend a lot of time checking, following, analyzing the forex market - more than I want to spend. And actually, I prefer to focus on my main business! Again, just my personal preference. Something which is right for me at this point of time.

My comment was directed to having USD as a long term investment. Not weeks or months but rather years. Many years. No need to be frustrated about making little gain in this case; it's just one element that balances your portfolio (say 5% of it).

Good luck!

Edited January 8, 2005 by ~G~

[~G~]

the dollar is a con game,a scam,a pile of paper

adding color to the bills and new coin designs wont save it.

plus the world is really looking forward to seeing paris hilton and michael jackson in the save the children commercials.

and wont help either.

<{POST_SNAPBACK}>

I am sure this is all very philosophical... but too deep for me.

<{POST_SNAPBACK}>

Actually I think it's better to paint the USD bills black than green. A good way for America to remind the world that oil prices are still in USD.

Edited January 8, 2005 by ~G~

[Harmonica]

>>>>>> Short term rise... Great for forex traders drawing lines on their graphs, meaningless for long-term investors <<<<<<<<

G,

Your quote IS  #4 in the Traders Almanac for standard excuses and rationalizations.  Hard cheese is a better term, IMHO!

Many, many examples of  the market making  NO net gain in a well established uptrend (which is along the lines of your long-term view) for months, sometimes even for years is, to say the least, very frustrating;  technical players play this "trading range" both LONG  and SHORT and despite the fact that the market during this time made no net gain,  these fellows usually do very well.

Best of luck 

First of all, Harmonica, since you sound a bit defensive, I want to make it clear that I have no critisism against technical players whatsoever! If they are good at it, they'll make a lot of money. Good for them! Good for you! No sarcasm here! Buying and selling, both long and short, really a great game. Used to do it myself for some time and made some nice profits.

I just discovered one fault in it - that's a fault for me, maybe not for others - it makes me spend a lot of time checking, following, analyzing the forex market - more than I want to spend. And actually, I prefer to focus on my main business! Again, just my personal preference. Something which is right for me at this point of time.

My comment was directed to having USD as a long term investment. Not weeks or months but rather years. Many years. No need to be frustrated about making little gain in this case; it's just one element that balances your portfolio (say 5% of it).

Good luck!

G,

Yes, I was a bit defensive -- I apologize. Yes, the time required for analysis can be substantial. Many research outfits mislead individuals into thinking that 5-30 minutes per day is adequate. If one is looking at currencies, crude oil, US stock market, Thai stock market, Gold, Silver and perhaps a commodity or two, 2 hours/day is not uncommon.

[Harmonica]

>>>>>> My comment was directed to having USD as a long term investment. Not weeks or months but rather years. Many years. No need to be frustrated about making little gain in this case; it's just one element that balances your portfolio (say 5% of it). <<<<<<

G,

No criticism here-- long-term investing has been and is being promoted by "heavy dude" gurus since 1940; but from 1980 onwards it got even bigger. However, since early 2000 when the markets topped, is it really a healthy way to go?

Here's what I mean -- fellows who were jumping into the market all the way upto the top in 2000, were playing for the long-term, but then after the collapse, these guys have still been holding and holding and holding -- but the Nasdaq and S&P are not even close to their original peaks. The Dow is basically just 1000 points shy of it's historical top.

Isn't this phenomenon just plain frustrating to the holder? It would seem to me that one would have to have brass balls to withstand the heat as the market plunges and then wanders downward for 3-5 years. Patience is a virtue in the markets, but this scenario puts enormous mental pressure (and what about pressure from your family to sell, sell, sell, before you lose it all) on the LT investor.

I personally, just prefer to step aside for the inevitable retracements and then re-enter when the market is showing signs of resuming the uptrend. This captures a great deal of the overall gain, but completely dispenses with the liability of holding thru' the tsunamis and scaring the daylights out of the wife (or husband) and others.

Technical analysis, if studied well does provide the means to do respectale entry/exits.

So I ask you again, how do you live with the inevitable stress when the market is declining and there is no end in sight?

[~G~]

>>>>>> My comment was directed to having USD as a long term investment. Not weeks or months but rather years. Many years. No need to be frustrated about making little gain in this case; it's just one element that balances your portfolio (say 5% of it). <<<<<<

G,

No criticism here-- long-term investing has been and is being promoted by "heavy dude" gurus since 1940; but from 1980 onwards it got even bigger.  However, since early 2000 when the markets topped, is it really a healthy way to go?

Here's what I mean -- fellows who were jumping into the market all the way upto the top in 2000, were playing for the long-term, but then after the collapse, these guys have still been holding and holding and holding -- but the Nasdaq and S&P are not even close to their original peaks.  The Dow is basically just 1000 points shy of it's historical top.

Isn't this phenomenon just plain frustrating to the holder?  It would seem to me that one would have to have brass balls to withstand the heat as the market plunges and then wanders downward for 3-5 years.  Patience is a virtue in the markets, but this scenario puts enormous mental pressure (and what about pressure from your family to sell, sell, sell, before you lose it all) on the LT investor.

I personally, just prefer to step aside for the inevitable retracements and then re-enter when the market is showing signs of resuming the uptrend.  This captures a great deal of the overall gain, but completely dispenses with the liability of holding thru' the tsunamis and scaring the daylights out of the wife (or husband) and others.

Technical analysis, if studied well does provide the means to do respectale entry/exits.

So I ask you again, how do you live with the inevitable stress when the market is declining and there is no end in sight?

   

<{POST_SNAPBACK}>

Harmonica,

No stress if the money invested long-term is not going to be collected in the next 20-25 years.

When, except during the crisis in the 20s, didn't the stock market give excellent yield if you check it over a 20-25 years period? With no effort made by the investor whatsoever! Not even a minute a day.

Money I want to use in 1,2 or 5 years should either be in lower risk investments or will need to be managed more closely.

[Harmonica]

>>>>> No stress if the money invested long-term is not going to be collected in the next 20-25 years.

When, except during the crisis in the 20s, didn't the stock market give excellent yield if you check it over a 20-25 years period? With no effort made by the investor whatsoever! Not even a minute a day.

Money I want to use in 1,2 or 5 years should either be in lower risk investments or will need to be managed more closely <<<<<<<

G,

Greetings!

Let's take the first paragraph: "No stress if the money invested long-term is not going to be collected in the next 20-25 years"

You've got to be kidding me; no stress? People were jumping out windows to their deaths during the Depression era crash and also during the 70's bear market. The country was caving in and long-term investors were getting drilled with ferocity!!!

Your 2nd paragraph: "When, except during the crisis in the 20s, didn't the stock market give excellent yield if you check it over a 20-25 years period? With no effort made by the investor whatsoever! Not even a minute a day.

The crisis in the 20's took the market 26 years to just break even -- many of the long-term holders just plain died, or lost their minds. The other time was from 1965-1984, almost 20 years of frustration for long-term holders just to break even. Many just gave up and split.

Your last sentense of the 2nd para is a peach -- "With no effort made by the investor whatsoever! Not even a minute a day"

No effort by investors? 90% of long-term investors get thoroughly ruined. This is a proven fact in the markets.

And may I remind you that long-term investors from the 1990's are still holding Nasdaq stocks -- that is for some 14+ years and have given up most or all of their gains and are still holding. Now, since October 2002 they've gotten a reprieve with the big rally -- but they will hold right thru' the next decline. Thats just the way it has been for aeons.

Regards

[~G~]

Harmonica,

I must say I thorougly enjoy this discussion not sure if I am 100% right or not, but lets continue and see what happens, ha?

Let's take the first paragraph: "No stress if the money invested long-term is not going to be collected in the next 20-25 years"

You've got to be kidding me; no stress?  People were jumping out windows to their deaths during the Depression era crash and also during the 70's bear market.  The country was caving in and long-term investors were getting drilled with ferocity!!!

People do all kinds of crazy things... The ones that jump out the window in times of crisis do not understand the concept of long term holdings... it means that you change your holdings to safer investments gradually, the closer you get to retirement. If they experienced the crisis when they just started to save for retirement, then why all the fuss, not much money invested anyway? If later, than at that stage most of their money should have been in safer investments.

Without being an expert on that subject, I suspect those that jumped out the window were the ones that really needed the money in a year or two and were stupid enough to put 100% of it in the market.

In addition, I was specifically excluding the depression era, as it is believed that financial management improved since then.

Your 2nd paragraph: "When, except during the crisis in the 20s, didn't the stock market give excellent yield if you check it over a 20-25 years period? With no effort made by the investor whatsoever! Not even a minute a day.

The crisis in the 20's took the market 26 years to just break even -- many of the long-term holders just plain died, or lost their minds.  The other time was from 1965-1984, almost 20 years of frustration for long-term holders just to break even.  Many just gave up and split. 

same comment as before. Long term means long term, don't have strong nerves and patience for that, don't do that.

Your last sentense of the 2nd para is a peach -- "With no effort made by the investor whatsoever! Not even a minute a day"

No effort by investors?  90% of long-term investors get thoroughly ruined. This is a proven fact in the markets. 

Do you like peaches? They're kinda tasty. "No effort" means no work invested in maintaining the portfolio. Not more, not less. Regarding "thoroughly ruined...A proven fact" - A proven fact is that 100% of all people get thoroughly ruined at the end of their lives (they ususally die). Don't be so dramatic!

And may I remind you that long-term investors from the 1990's are still holding Nasdaq stocks -- that is for some 14+ years and have given up most or all of their gains  and are still holding.  Now, since October 2002 they've gotten a reprieve with the big rally -- but they will hold right thru' the next decline. Thats just the way it has been for aeons.

Hey, play fair! I wasn't talking about holding something narrow like the Nasdaq but a portfolio that represents the national (or even better, international) economy.

Regards

Best Regards!

[xbusman]

Most of the jumpers in the great crash were highly leveraged. No laws back then against banks loaning money to private investors for stock market gambling. Many people were in the market for millions with less than 6% equity, there was no chance of sitting tight for the rebound.

Sound familiar? The fundamentals were very similar to the highly leveraged and speculative investing that brought about the 97 crash here. Differance is that after the crash the US put some pretty strong regulations in place to limit that sort of speculation, I dont see the same sort of restraint in place here after the 97 crash.

[~G~]

Most of the jumpers in the great crash were highly leveraged. No laws back then against banks loaning money to private investors for stock market gambling. Many people were in the market for millions with less than 6% equity, there was no chance of sitting tight for the rebound.

Sound familiar? The fundamentals were very similar to the highly leveraged and speculative investing that brought about the 97 crash here. Differance is that after the crash the US put some pretty strong regulations in place to limit that sort of speculation, I dont see the same sort of restraint in place here after the 97 crash.

<{POST_SNAPBACK}>

Well, gambling on money you don't have... That can be very painful.