Could The Dollar Be In A New Bull Market?

[Abrak]

That these investment banks have huge naked short doesnt seem to make a lot of sense to me

I assume there must be some other explanation. Obviously gold producers sell short gold that they will produce in the future but I do not see why they would do that through an investment bank.

One thing I do notice is that Central Banks often lease out their gold but show it as an asset on their balance sheet (the BoE for example.) Remember the CBs had limited amounts they agreed to actually sell. So they could use GS as a tool to provide finance for a lease. Ultimately GS has no naked short and the CB has no naked long.

I am sure this sort of thing would appeal to Greece. The good news for the goldies is that when people say to Greece why dont you sell your gold, they will have to admit they already have on a rolling sale and lease back.

[makavelithedon]

I read a few pages of this (not all) apologies if it has already been noted. But I saw Soros branded gold the 'ultimate bubble' a while back and hasnow apparently DOUBLED his holding in the recent dip!

Edited February 24, 2010 by makavelithedon

[churchill]

US dollar favourite currency of hedge fund managers in near term

The US dollar is the currency on which hedge fund managers are most bullish in the near term, research by TrimTabs Investment Research and BarclayHedge shows.

Six in ten fund managers cite the greenback as their preferred currency investment over the next three months.

“The debt crisis in Greece, the creditworthiness of other countries in Europe, and the US dollar rally have market participants focused on currencies,” says Vincent Deluard, global equity strategist at TrimTabs. “We think currencies will dominate other investment themes throughout 2010.”

Nearly 26 per cent of hedge fund managers expect a quick resolution to the Greek crisis, while 59 per cent believe it will spread without endangering the unity of the Eurozone. Only 15 per cent of managers believe it will lead to the destruction of the euro.

“The euro is one of the few successes of the European Union in the past ten years,” says Deluard. “France and Germany will take action to protect it if this Greek tragedy infects other Eurozone members.”

Nearly all managers expect the yield on the ten-year Treasury note to remain level or rise significantly by year-end. Only seven per cent expect long-term interest rates to drop.

“Managers worried about inflation expect long-term rates to pop,” Deluard adds. “And governments on both sides of the pond are auctioning huge amounts of debt this year. Beware a bloodbath in bonds.”

http://www.hedgeweek.com/2010/03/10/38311/...agers-near-term

[churchill]

Dollar higher; yen pressured by Fitch Japan statement

TOKYO (MarketWatch) - The yen slipped in late Asian trading Thursday after Fitch Ratings said that Japan's sovereign creditworthiness was at risk from the country's burgeoning public debt.

The Japanese government "is one of the most indebted in the world," Fitch said in a statement. "In the absence of sustained economic recovery and fiscal consolidation, government debt will continue to rise, placing downwards pressure on sovereign credit and ratings over the medium term."

Against the yen, the dollar /quotes/comstock/21o!x:susdjpy (CUR_USDYEN 92.9700, -0.1700, -0.1825%) was buying 93.15 yen, after rising as high as 93.34 yen after the Fitch news.

It was at 93.20 yen in late North American trading Wednesday.

The euro was also under pressure, after the Eurostat statistics agency on Thursday chided the quality of Greece's budget data, saying that its budget deficit may be revised up by up to a half percentage point from an already high 13.6% on uncertainties over issues including off-market swaps.

http://www.marketwatch.com/story/dollar-ri...nk=MW_news_stmp

[Gambles]

US dollar favourite currency of hedge fund managers in near term

The US dollar is the currency on which hedge fund managers are most bullish in the near term, research by TrimTabs Investment Research and BarclayHedge shows.

Six in ten fund managers cite the greenback as their preferred currency investment over the next three months.

"The debt crisis in Greece, the creditworthiness of other countries in Europe, and the US dollar rally have market participants focused on currencies," says Vincent Deluard, global equity strategist at TrimTabs. "We think currencies will dominate other investment themes throughout 2010."

Nearly 26 per cent of hedge fund managers expect a quick resolution to the Greek crisis, while 59 per cent believe it will spread without endangering the unity of the Eurozone. Only 15 per cent of managers believe it will lead to the destruction of the euro.

"The euro is one of the few successes of the European Union in the past ten years," says Deluard. "France and Germany will take action to protect it if this Greek tragedy infects other Eurozone members."

Nearly all managers expect the yield on the ten-year Treasury note to remain level or rise significantly by year-end. Only seven per cent expect long-term interest rates to drop.

"Managers worried about inflation expect long-term rates to pop," Deluard adds. "And governments on both sides of the pond are auctioning huge amounts of debt this year. Beware a bloodbath in bonds."

http://www.hedgeweek.com/2010/03/10/38311/...agers-near-term

As usual the majority = mediocrity

There are huge risks to the Euro - it's not just that the GIPSIs policy needs are so different to the DM bloc

Just probe a little way beneath the surface and Belgium, Holland, France and Germany have potentially critical debt problems and by the end of the year the ECB has to resolve the problem of devaluing the quality of the currency by extending the temporary suspension of quality criteria or else all hel_l will break loose and half the EU members will either have to default on debt to the ECB pushing the ECB over the brink or will have to start to leave the Euro. The time bomb is ticking but there are a lot of things that can happen between now and then that convince me that the Euro is an extremely dangerous place to be. AT the end of the day the ECB can issue UNLIMITED debt so it has got policy room for manoeuvre but now the IMF are involved any acts of wanton currency debasement by ECB are going to be harder to sweep under the table.

Germany is my biggest worry

[flying]

.........

Edited April 24, 2010 by flying

[Naam]

Germany is my biggest worry

guess what Gambles? i'd wholeheartedly agree with you if... i possessed the same amount of "no bloody idea" about Germany as you do.

[Gambles]

Germany is my biggest worry

guess what Gambles? i'd wholeheartedly agree with you if... i possessed the same amount of "no bloody idea" about Germany as you do.

we'll find out in time.....

[Gambles]

meanwhile, for Herr Naam's further delectation, my piece about currencies from the Nation last week -

Rampant volatility in currency markets recently surged to a three-month high. There is little sign of this turbulent trend abating. Such uncertainty can have a dramatic impact on key economic drivers, as well as having a crippling effect on the individual finances of expatriates based in Thailand who are remunerated in weakening western currencies or who haven’t hedged their investments and savings.

While the Greenback and the Euro have slid down the league table of global currencies over the past 18 months, the Baht has held its ground (although it has fallen against other trading partner currencies such as Canadian and Australian Dollars) leading senior figures from both the foreign and Thai business communities to repeatedly call on the central bank to cause the Baht to weaken in line with other regional currencies. This would help boost exports by making them cheaper and could provide some solace for the tourism industry by making Thailand a better value destination.

Currency management is one of two control levers which central banks use to influence events related to their country’s financial flows, with the other lever being interest rates. Essentially when one lever is pulled, the other is free to find its own level in response. Fixing or “pegging” the currency rate would cause interest rates to fluctuate in response to market activity. Conversely, if a central bank fixes interest rates, currencies fluctuate instead.

It is possible for both levers can be pulled at the same time However if the combined levels are set at or become too different from the market expectations, pressures build up. Typically these end up being released explosively. A good example of this is the Baht’s valuation in the mid-90s which failed to fully reflect the requirement for overseas capital, foreign goods and expensive imports. Capital tended to be imported in hard currency due to exchange restrictions on the Baht. Foreign investors typically leant in Dollars and demanded Dollars back because they didn’t want to hold an overvalued, hard to trade, artificially priced currency. The problem eventually became self-fulfilling. Pushing interest rates up into the high teens did nothing to address the structural problems, merely papering over the cracks and tending to attract hot money which tried to head for the hills at the first signs of trouble in 1997.

Global Markets Asia’s John Sheehan recently mooted the idea of implementing a fixed Baht exchange rate now, on the grounds that we’re currently in the opposite situation to 1997. Today, we have a global currency system where competitive devaluations are the likely order of the day and fixing the rate at a defined level lower than the current market rate can stimulate growth. Ultimately the explosive pressure could lead to revaluation upwards at some point and meanwhile inflationary pressures may be unleashed but that wouldn’t necessarily be a bad thing right now and could stimulate badly-needed inflows too. A competitive rate fix could also be very good for Thai exports. The proposal is not as crazy as it sounds but may be too risky for most mainstream politicians to consider at this stage.

A key point is that right now both China and the US are accusing each other of manipulating their currencies for their own ends and the truth is that, in different ways, they're probably both right. Ultimately the Yuan will probably win the battle with the Greenback, though essentially it’s a game of chicken to see who'll blink first. Meanwhile all other currencies that “play fair” are paying an exorbitant privilege by subsidising US and Chinese gross domestic product. Thailand does have alternatives however unlikely.

The impact of recent volatility goes beyond economic management and central bank policy; it also creates huge difficulties for expats living in Thailand whose finances are built on foreign currencies.

Scott Campbell, three times S&P award-winning CEO of international portfolio management company MitonOptimal, can claim to have made more prescient currency calls than anyone on his recent trips to Bangkok. In 2007 he predicted weakening of the US Dollar. In June 2008 he called a Dollar bounce when consensus was that the Greenback had become a banana currency, and in February last year he once again correctly called a weakening of the Dollar. During April 26-29 he’ll be briefing investors in Bangkok on surviving and exploiting the prevailing currency calamities.

His recent take has been that US Dollar was due short term strength but Asian currencies could prevail in the mid-to-long-term once the various local and global crises are over. Even though currency volatility could surge going forwards Asian currencies that are not linked to the US Dollar, such as Singapore Dollar and Baht, are poised to benefit. Amazingly these two currencies have become a relatively safe haven now, a far cry from events in 1997. One potential solution to successfully navigate the shifting sands of the currency market and the profit at the same time is to hedge into Asian currencies. Scott Campbell has pioneered the only global investment portfolios available fully hedged into Baht and Singapore Dollars as well as the major currencies. As with most things in life hedging your bets is a sensible strategy to adopt, and for the time being the safest bets may be in Asia.

[fletchsmile]

....

Global Markets Asia’s John Sheehan recently mooted the idea of implementing a fixed Baht exchange rate now, on the grounds that we’re currently in the opposite situation to 1997. Today, we have a global currency system where competitive devaluations are the likely order of the day and fixing the rate at a defined level lower than the current market rate can stimulate growth. Ultimately the explosive pressure could lead to revaluation upwards at some point and meanwhile inflationary pressures may be unleashed but that wouldn’t necessarily be a bad thing right now and could stimulate badly-needed inflows too. A competitive rate fix could also be very good for Thai exports. The proposal is not as crazy as it sounds but may be too risky for most mainstream politicians to consider at this stage.

A key point is that right now both China and the US are accusing each other of manipulating their currencies for their own ends and the truth is that, in different ways, they're probably both right. Ultimately the Yuan will probably win the battle with the Greenback, though essentially it’s a game of chicken to see who'll blink first. Meanwhile all other currencies that “play fair” are paying an exorbitant privilege by subsidising US and Chinese gross domestic product. Thailand does have alternatives however unlikely.

Think some of these calls are misplaced.

Fixed baht exchange rate won't happen. Completely against BOT's FX policy as transparently stated on their website

We're passed the stage of competitive devaluations happening.

Agree that "THB will revalue upwards" at some point. It won't be explosive though, as stated above. SGD and THB will simply appreciate vs USD and benefit from CNY's permitted appreciation vs USD later in the year.

Thailand's growth won't need any further stimulating - even with the political mess. With growth of 3-5% in GDP expected this year, I'd expect the THB appreciation to be combined with interest rate increases later when the economy is confirmed strong enough and measures then taken to ensure growth is not too high.

The impact of recent volatility goes beyond economic management and central bank policy; it also creates huge difficulties for expats living in Thailand whose finances are built on foreign currencies.

Agree. Not a risk I would like to take.

If you're living in Thailand, you need some THB assets and THB exposure. All too often people are frightened by the advice of know-it-alls and their Thai mantras "don't bring in more than you can afford to lose blah blah blah..." These are of course the same people who said put GBP 150k on deposit earning 6% and live off the proceeds a few years back...

Exception to the need for THB assets: Super-rich and/or Klingons. Even Klingons have THB property though sometimes!

Scott Campbell, three times S&P award-winning CEO of international portfolio management company MitonOptimal, can claim to have made more prescient currency calls than anyone on his recent trips to Bangkok. In 2007 he predicted weakening of the US Dollar. In June 2008 he called a Dollar bounce when consensus was that the Greenback had become a banana currency, and in February last year he once again correctly called a weakening of the Dollar. During April 26-29 he’ll be briefing investors in Bangkok on surviving and exploiting the prevailing currency calamities.

His recent take has been that US Dollar was due short term strength but Asian currencies could prevail in the mid-to-long-term once the various local and global crises are over. Even though currency volatility could surge going forwards Asian currencies that are not linked to the US Dollar, such as Singapore Dollar and Baht, are poised to benefit. Amazingly these two currencies have become a relatively safe haven now, a far cry from events in 1997. One potential solution to successfully navigate the shifting sands of the currency market and the profit at the same time is to hedge into Asian currencies. Scott Campbell has pioneered the only global investment portfolios available fully hedged into Baht and Singapore Dollars as well as the major currencies. As with most things in life hedging your bets is a sensible strategy to adopt, and for the time being the safest bets may be in Asia.

Seems to conflict with Sheehan's view.

Agree much more with this view. SGD and THB will appreciate as stated above. This direction will follow the expected and much desired (by US in particular) appreciation of CNY.

For those that can't easily take CNY positions (like myself), SGD is a good alternative.

Living in Thailand, you're going to suffer if you're relying on western currencies, as USD and EUR in particular weaken against the appreciating THB.

Personal currency exposures (approx) for me living in Thailand:

THB 40%

GBP 20-30%

SGD 20-25%;

USD < 5%

Others as balance: AUD (nice year so far and now attractive yield even though not much further to appreciate); NZD a little

EUR as low as I can possibly get - here's the bargepole you touch it

Edited April 27, 2010 by fletchsmile

[Naam]

Exception to the need for THB assets: Super-rich and/or Klingons. Even Klingons have THB property though sometimes!

Klingons can't live on the expenses they shell out for the THB property in which they live even if they lead a very frugal life and inspite of the fact that the exchange rate of THB vs. those other currencies from which they derive their income is rather irrelevant, some of them are holding 11 years of THB expenses (not inflation adjusted) in Thailand as well as offshore at yields which nearly drive tears in the eyes of battle experienced warriors.

some Klingons might invest in Thailand and THB assets other than cash but have no bloody idea "where and how" as they abhor stock markets and rental properties. so what is left? participation in a profitable thai company, id est putting in substantial amounts of money and have no rights? no thank you!

[Gambles]

Thanks Fletch

I'm starting to suspect that maybe I wasn't as clear as I should have been....

....

Global Markets Asia's John Sheehan recently mooted the idea of implementing a fixed Baht exchange rate now, on the grounds that we're currently in the opposite situation to 1997. Today, we have a global currency system where competitive devaluations are the likely order of the day and fixing the rate at a defined level lower than the current market rate can stimulate growth. Ultimately the explosive pressure could lead to revaluation upwards at some point and meanwhile inflationary pressures may be unleashed but that wouldn't necessarily be a bad thing right now and could stimulate badly-needed inflows too. A competitive rate fix could also be very good for Thai exports. The proposal is not as crazy as it sounds but may be too risky for most mainstream politicians to consider at this stage.

A key point is that right now both China and the US are accusing each other of manipulating their currencies for their own ends and the truth is that, in different ways, they're probably both right. Ultimately the Yuan will probably win the battle with the Greenback, though essentially it's a game of chicken to see who'll blink first. Meanwhile all other currencies that "play fair" are paying an exorbitant privilege by subsidising US and Chinese gross domestic product. Thailand does have alternatives however unlikely.

Think some of these calls are misplaced.

Fixed baht exchange rate won't happen. Completely against BOT's FX policy as transparently stated on their website

________________________________________________________________________________

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This is why I said "The proposal is not as crazy as it sounds but may be too risky for most mainstream politicians to consider at this stage."

It is being and should be debated but as a policy possibility it's not even on the radar yet.

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We're passed the stage of competitive devaluations happening.

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I don't think so - economic vulnerabilities remain until the end of 2011 - and in that scenario competitive devaluations are a likley policy response to significantly adverse data

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Agree that "THB will revalue upwards" at some point. It won't be explosive though, as stated above. SGD and THB will simply appreciate vs USD and benefit from CNY's permitted appreciation vs USD later in the year.

________________________________________________________________________________

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but it would be potentially explosive if Baht is pegged which was the scenario that I thought that I was writing about here

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Thailand's growth won't need any further stimulating - even with the political mess. With growth of 3-5% in GDP expected this year, I'd expect the THB appreciation to be combined with interest rate increases later when the economy is confirmed strong enough and measures then taken to ensure growth is not too high.

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I really hope you're right, Goldilocks, but that's pretty muchthe dream outcome and dreams rarely come true. I'd describel that as a possible although improbable outcome

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The impact of recent volatility goes beyond economic management and central bank policy; it also creates huge difficulties for expats living in Thailand whose finances are built on foreign currencies.

Agree. Not a risk I would like to take.

________________________________________________________________________________

____________________________________________________________________

quite right

________________________________________________________________________________

____________________________________________________________________

If you're living in Thailand, you need some THB assets and THB exposure. All too often people are frightened by the advice of know-it-alls and their Thai mantras "don't bring in more than you can afford to lose blah blah blah..." These are of course the same people who said put GBP 150k on deposit earning 6% and live off the proceeds a few years back...

________________________________________________________________________________

___________________________________________________________________

Or, preferably, a significant expsoure to global assets of all classes hedged into Baht

________________________________________________________________________________

___________________________________________________________________

Exception to the need for THB assets: Super-rich and/or Klingons. Even Klingons have THB property though sometimes!

Scott Campbell, three times S&P award-winning CEO of international portfolio management company MitonOptimal, can claim to have made more prescient currency calls than anyone on his recent trips to Bangkok. In 2007 he predicted weakening of the US Dollar. In June 2008 he called a Dollar bounce when consensus was that the Greenback had become a banana currency, and in February last year he once again correctly called a weakening of the Dollar. During April 26-29 he'll be briefing investors in Bangkok on surviving and exploiting the prevailing currency calamities.

His recent take has been that US Dollar was due short term strength but Asian currencies could prevail in the mid-to-long-term once the various local and global crises are over. Even though currency volatility could surge going forwards Asian currencies that are not linked to the US Dollar, such as Singapore Dollar and Baht, are poised to benefit. Amazingly these two currencies have become a relatively safe haven now, a far cry from events in 1997. One potential solution to successfully navigate the shifting sands of the currency market and the profit at the same time is to hedge into Asian currencies. Scott Campbell has pioneered the only global investment portfolios available fully hedged into Baht and Singapore Dollars as well as the major currencies. As with most things in life hedging your bets is a sensible strategy to adopt, and for the time being the safest bets may be in Asia.

Seems to conflict with Sheehan's view.

________________________________________________________________________________

___________________________________________________________________

I'd say that there's some commonality of outlook but rather different interpretation - Scott's certainly no 'pegger' at this stage

________________________________________________________________________________

___________________________________________________________________

Agree much more with this view. SGD and THB will appreciate as stated above. This direction will follow the expected and much desired (by US in particular) appreciation of CNY.

For those that can't easily take CNY positions (like myself), SGD is a good alternative.

Living in Thailand, you're going to suffer if you're relying on western currencies, as USD and EUR in particular weaken against the appreciating THB.

Personal currency exposures (approx) for me living in Thailand:

THB 40%

GBP 20-30%

SGD 20-25%;

USD < 5%

Others as balance: AUD (nice year so far and now attractive yield even though not much further to appreciate); NZD a little

EUR as low as I can possibly get - here's the bargepole you touch it

That sounds pretty reasonable but the bargepole will ultimately be needed for the carry currencies - maybe not tomorrow but at some point it will become apparent that AUD & NZD are walking along the clifftops and that's when accidents happen.....

[Gambles]

I'll just post an extract as the full article is on other threads but the currency comments are relevant ref USD:THB

One of the world’s leading global portfolio managers told The Bangkok Post that Thailand might fail to capitalise on its strengths to become one of the best investment markets in Asia if political risk continues to affect the country's economy.

Scott Campbell, an S&P award-winning fund manager, told Post writer Pornnalat Prachyakorn that foreign investors remain bullish on the growth of emerging markets including Asia -

''Asia along with other emerging markets will continue to be the best place for investment for the next 30 to 40 years. Over the past 10 years, the stock market in the west has done nothing while Asian stock markets have grown three-to-fourfold.'','' said Mr. Campbell, Managing Director of award-winning MitonOptimal Guernsey.

Khun Pornnalat reported that although Thailand's economic fundamentals are attractive, political risk is seen as the major obstacle on the path to a better economic position, which is highlighted by the relative performance of the Baht during the period since April last year, which has seen a significant rebound in Asian currencies.

''Currency is a barometer of political risk and the Thai Baht has been pretty much flat since last year [on a trade-weighted basis]'' he said. ''If the political risk gets sorted out, then you may see the Thai baht appreciate just to catch up with what other regional currencies which it has lagged during this time.'' adding that the fundamentals for the whole Asian region are still very positive but Thailand could lag because of political instability.

One very positive sign for Asia, Mr. Campbell said, has been the growth in domestic consumption and markets and in intra-regional trade:

''The region is exporting within itself. This has shown that Asia is much less dependent on the west which is very positive,''

Asian demographics also are positive with the population distribution being similar to that of the United States Baby Boom era:

''An economy that has a bigger chunk of people at the bottom [age group] is in a much better shape than the economy that has bigger chunk of people at the top. India, for example, will progress through the baby boom stage and isn’t projected to reach the top heavy state that is starting to impact on the growth of the US today until 2050. In long term trends this is a theme very supportive of emerging markets growth for another 40 years or so.''

Scott also noted that other economic aspects are shifting from the West to the East –

“In the past, a high-risk portfolio was emerging market bonds, Japanese equities and developing market property. At the same time a low-risk one contained US government bonds, German blue-chip companies and UK property but now, the situation is completely reversed.''

[Naam]

[Fletch] "EUR as low as I can possibly get - here's the bargepole you touch it "

That sounds pretty reasonable but the bargepole will ultimately be needed for the carry currencies - maybe not tomorrow but at some point it will become apparent that AUD & NZD are walking along the clifftops and that's when accidents happen.....

question: "how many seconds does it take for a seasoned investor to get out of a "cliff top" currency and still sit on fat yields?"

[Gambles]

[Fletch] "EUR as low as I can possibly get - here's the bargepole you touch it "

That sounds pretty reasonable but the bargepole will ultimately be needed for the carry currencies - maybe not tomorrow but at some point it will become apparent that AUD & NZD are walking along the clifftops and that's when accidents happen.....

question: "how many seconds does it take for a seasoned investor to get out of a "cliff top" currency and still sit on fat yields?"

history would suggest that in too many cases the answer is 'too many' but in a few cases 'enough' and kudos to those smart and/or lucky few who will get it right

How many nickels can be scooped in front of bulldozers and is there a relationship between this number and the answer to Naam's question

As you know I consider the likeliest timescale to be H2 10/ H1 11 but likeliest doesn't mean much in this context; trying to guess timing isn't really a strategy for capital preservation but I would agree with you that I don't think that we're on the verge just yet

[Sunbelt Asia]

Bizarrely, I looked at the Dollar - Baht rate today and it is EXACTLY what it was on March 16 (the last time I updated the particular spreadsheet I was in.)

0 movement in 6 weeks. Pretty amazing.

[Naam]

[Fletch] "EUR as low as I can possibly get - here's the bargepole you touch it "

That sounds pretty reasonable but the bargepole will ultimately be needed for the carry currencies - maybe not tomorrow but at some point it will become apparent that AUD & NZD are walking along the clifftops and that's when accidents happen.....

question: "how many seconds does it take for a seasoned investor to get out of a "cliff top" currency and still sit on fat yields?"

history would suggest that in too many cases the answer is 'too many' but in a few cases 'enough' and kudos to those smart and/or lucky few who will get it right

How many nickels can be scooped in front of bulldozers and is there a relationship between this number and the answer to Naam's question

As you know I consider the likeliest timescale to be H2 10/ H1 11 but likeliest doesn't mean much in this context; trying to guess timing isn't really a strategy for capital preservation but I would agree with you that I don't think that we're on the verge just yet

instead of answering my question you are dodging Gambles. i therefore rephrase my question: "does one minute max [manually] or a three second [automatic] stop loss equal "too many" seconds and is this response time too short for your likeliest timescale?"

[Gambles]

[Fletch] "EUR as low as I can possibly get - here's the bargepole you touch it "

That sounds pretty reasonable but the bargepole will ultimately be needed for the carry currencies - maybe not tomorrow but at some point it will become apparent that AUD & NZD are walking along the clifftops and that's when accidents happen.....

question: "how many seconds does it take for a seasoned investor to get out of a "cliff top" currency and still sit on fat yields?"

history would suggest that in too many cases the answer is 'too many' but in a few cases 'enough' and kudos to those smart and/or lucky few who will get it right

How many nickels can be scooped in front of bulldozers and is there a relationship between this number and the answer to Naam's question

As you know I consider the likeliest timescale to be H2 10/ H1 11 but likeliest doesn't mean much in this context; trying to guess timing isn't really a strategy for capital preservation but I would agree with you that I don't think that we're on the verge just yet

instead of answering my question you are dodging Gambles. i therefore rephrase my question: "does one minute max [manually] or a three second [automatic] stop loss equal "too many" seconds and is this response time too short for your likeliest timescale?"

It's impossible to answer on the loss implementation without understanding the bigger picture - it's possible that you've constructed something extremely effective. My point is that most people haven't and I was happy to bail at .9:1 several months ago and forego the carry because I can't construct a basis that I'm 100% confident in as the day of reckoning gets closer.

- What level do you set your stop loss, Herr Naam? At what level were you last stopped out? What's your trigger for buying back?

Edited May 3, 2010 by Gambles

[badge]

Anyone with any experience will know that to actually transact a 'stop order' takes no time at all, to question that is just facetious.

The risk that I assume Gambles refers to comes from the decision making process to press/place the stop order. Why? Where? When? These processes are usually not enacted 'one minute max [manually] or a three second [automatic]'.

For example if one had purchased NZD against USD in the 0.5000's last year, one would likely have limited risk by using a 'stop order'. Now its trading in the 0.7000's, Where does one move their stop order too? When does one get out completely? Under what circumstances would the views that led to the buying of the cross in the 0.5000's, have changed? etc etc

It is in this decision making process that time - and potentially yield - is lost, not in the almost instantaneous transaction speed of placing an order.

[Naam]

What level do you set your stop loss, Herr Naam? At what level were you last stopped out? What's your trigger for buying back?

personally i hate stop losses, never used them and was therefore never stopped out. the same goes for any "buy back" or rather mental "buy" trigger which i used (to the best of my knowledge) only once and that was NZD below .50 and AUD below .60 vs. USD in 2009. but i am talking of currencies only. for most other assets in my portfolio i have mental sell as well as mental buy triggers which are adjusted not only on a daily basis but sometimes several times a day depending on prevailing circumstances. what i am trying to say is that i might discuss with my wife at 10.00 GMT a "brilliant" idea of mine and discard that idea at 11.00 GMT. when my wife asks me a 12.30 GMT "Did you...?" i might say "no" and if/when she enquires further "but you said you would...?" my answer is perhaps "i told you rubbish 2½ hours ago".

based on my experience lack of flexibility is the worst enemy of an investor if his name is not Buffet, Soros, Iacocca or his portfolio does not match those of the afore-mentioned persons. and in my [not so] humble opinion the most silly thing (which i still hear sometimes even from close and experienced friends) is "how can i sell now? I'd realise a loss of xx percent!" next "best" enemy of an investor is if he thinks he is capable to forecast anything that is beyond a time frame of a couple of weeks or even a few days no matter what asset is concerned.

[Parvis]

based on my experience lack of flexibility is the worst enemy of an investor if his name is not Buffet, Soros, Iacocca or his portfolio does not match those of the afore-mentioned persons. and in my [not so] humble opinion the most silly thing (which i still hear sometimes even from close and experienced friends) is "how can i sell now? I'd realise a loss of xx percent!" next "best" enemy of an investor is if he thinks he is capable to forecast anything that is beyond a time frame of a couple of weeks or even a few days no matter what asset is concerned.

"Herr Naam" - from my observation verrry accurate - 1 day - 2 days - 3 days - 4 days - well maybe even 7 - thats my Time horizon.

I have to take off a few days to vist a place called Tutzing - keep everthing orderly while I am gone.

Edited May 5, 2010 by Parvis

[Naam]

I have to take off a few days to vist a place called Tutzing - keep everthing orderly while I am gone.

give my greetings to the Ammersee!

[badge]

Flexibility is certainly part of my success; limiting ones self to only being long, or in 1 market or security seems awfully disadvantageous.

The notion that anyone is incapable of forecasting a market/security beyond a time frame of a couple of weeks or even a few days, seems a bizarre suggestion for people who(presumably) make judgements on investments over days/weeks/months?

Although -"Parvis"- only claims to make forecasts upto 7 days.

I consider that everytime I place an order Im making a forecast, some of which last months. I guess I must be lucky they go my way more often than not.

The real point should be that if a person makes a forecast, over whatever period, and it turns out to be incorrect, generally they should accept this and act appropriately, as opposed to sticking with a forecast that is incorrect.

"What is the biggest public fallacy regarding market behaviour?"

"That the market is always right. The market is nearly always wrong. I can assure you of that"

- Jim B. Rogers Jr. Arguably the analytical/thinking side of the Quantum Fund partnership.

[Naam]

Flexibility is certainly part of my success; limiting ones self to only being long, or in 1 market or security seems awfully disadvantageous.

The notion that anyone is incapable of forecasting a market/security beyond a time frame of a couple of weeks or even a few days, seems a bizarre suggestion for people who(presumably) make judgements on investments over days/weeks/months?

Although -"Parvis"- only claims to make forecasts upto 7 days.

I consider that everytime I place an order Im making a forecast, some of which last months. I guess I must be lucky they go my way more often than not.

there are forecasts and there are assumptions Badge. i prefer not to call my assumptions on which i base my moves "forecasts". and that no matter how often i am right.

[Parvis]

I have to take off a few days to vist a place called Tutzing - keep everthing orderly while I am gone.

give my greetings to the Ammersee!

I may get over there - but it's the Starnberger See (also known as Wuerm See) I am talking about. Your previous pictures of the beautiful scenery "inspired" me.

[Parvis]

The notion that anyone is incapable of forecasting a market/security beyond a time frame of a couple of weeks or even a few days, seems a bizarre suggestion for people who(presumably) make judgements on investments over days/weeks/months?

Although -"Parvis"- only claims to make forecasts upto 7 days.

Badge

You need to realize - I do not get paid for trading. There is ofcourse a difference between "trading" and "investing" in my mind. Not doing longterm projections does not imply being incapable of doing them - just not needing/wanting to do them (and relying on them). I have kept some stocks for years and some derivatives for hours. Also forecasting for maybe 7 days does not imply holding the position as long as 7 days - or as short as 7 days - for that matter.

As it goes with "predicting" - looks like we are potentially making a bottom again on Wall Street on Wednesday - but I'll be up in the air by then.

Edited May 5, 2010 by Parvis

[Gambles]

Badge and Naam - I agree of course

But my point is that a high velocity trade like the collapse of a carry trade can happen so quickly that I for one don't have the courage of convictions to do this when the upside is so small and the risk so great

You can be the most brilliant technician in the world but the markets will catch you out (unless you have Parvis' system ) whereas a bit of common sense, a healthy regard for the power of the market and an understanding of fundamentals would steer you away from going near a trade with a small upside and a 50% downside and a high probability of going wrong 'sometime soon'

[Gambles]

based on my experience lack of flexibility is the worst enemy of an investor if his name is not Buffet, Soros, Iacocca or his portfolio does not match those of the afore-mentioned persons. and in my [not so] humble opinion the most silly thing (which i still hear sometimes even from close and experienced friends) is "how can i sell now? I'd realise a loss of xx percent!" next "best" enemy of an investor is if he thinks he is capable to forecast anything that is beyond a time frame of a couple of weeks or even a few days no matter what asset is concerned.

I'd agree..........but a lack of discipline comes a close second....

[Gambles]

The notion that anyone is incapable of forecasting a market/security beyond a time frame of a couple of weeks or even a few days, seems a bizarre suggestion for people who(presumably) make judgements on investments over days/weeks/months?

Although

Actually the most detailed recent research shows us that there's a higher probability of making accurate forecasts over longer rather than shorter terms

This is what separates traders from investors - investors exploit fundamental themes which pay off over the longer term in a non-linear fashion; the best traders (IMHO) tend to react fastest to what the market's telling them and to extra-market events but because it's all on the hoof, risk management and strategy tend to be very ad-hoc

[j_cheung]

based on my experience lack of flexibility is the worst enemy of an investor if his name is not Buffet, Soros, Iacocca or his portfolio does not match those of the afore-mentioned persons. and in my [not so] humble opinion the most silly thing (which i still hear sometimes even from close and experienced friends) is "how can i sell now? I'd realise a loss of xx percent!" next "best" enemy of an investor is if he thinks he is capable to forecast anything that is beyond a time frame of a couple of weeks or even a few days no matter what asset is concerned.

My quote of the year so far ...

Batten down the hatches, we're in for some 'turbulence' this time ... as compared to what Thailand has been through the past 5 years.