Free Investing Advice: Short the GBP/RUB

[InvestingIsMyLife]

Frequently I read on these forums about people wanting to invest. Unfortunately, they have little rational behind their investment decisions other than a project looks "nice" or a commodity is at a "low" price. From time to time, I will give readers some free advice. Generally speaking, my advice is for accredited investors or those with some investing experience. Obviously, you should only invest with a percentage of capital you have in the bank and you should not be borrowing to make these investments.

Here is my first piece of advise for 2015: Short the GBP/RUB. Short term resistance is around 101. I would recommend buying at 101 or 102. Exit around 45 (224% gain). This is a long term hold, probably 1-3 years. The rational is quite simple. The price of oil is going to bounce back. As goes the price of oil, so does the Ruble. The GBP is a safe haven currency now, but the UK has yet to deal with it's rising debt and its printing press. This will be a bouncy ride over the next few months, but those in it for the long haul with experience significant gains.

Happy investing!

[lannarebirth]

Here is my first piece of advise for 2015: Short the GBP/RUB. Short term resistance is around 101. I would recommend buying at 101 or 102. Exit around 45 (224% gain).

Did you mean to say sell around 101 or 102, buy around 45 for a 56% gain?

Edited January 14, 2015 by lannarebirth

[SheungWan]

'Long-term', 'bouncy ride', blah-di-blah. Reads like some of the first-class junk served up by Thailand's finest (independent) financial advisors fishing for a little business.

Edited January 15, 2015 by SheungWan

[AyG]

This isn't investing. It's speculation. Would you take a tip from someone who doesn't know the difference?

[Sviss Geez]

Here is my advice, ignore this clown.

[Sviss Geez]

"Frequently I read on these forums about people wanting to invest. Unfortunately, they have little rational behind their investment decisions..."

Your "rational" (presumably you mean "rationale") specific to this Forex gamble would be what then?

[fletchsmile]

On the positive side I'm always open to ideas on investing and or trading.

That said would also add the following:

The suggestion is a trade rather than investment as OP suggests.

How exactly is OP suggesting the trade be executed?

FX trading acc?

Some form of futures with rollover?

ETF?

Cash? as OP suggests shouldnt be borrowing so presumably exludes margin trading and leverage?

Think he means selling GBP/RUB at 101 not buying

When I look now its around 97.8. It hasnt moved that much in the lasr 12 hours since OP posted. Have to wonder why the entry point is behind the times? Make it look good after having already moved? Or just tardy advice?

101 pounds would become 224 ish for a 124% gain not 224% if 101 moves to 45

Thanks for the thought on going short GBP and long RUB. Think there is maybe something in that mid-longer term as GBP looks overvalued and RUB has taken a beating.

But the opening post doesn't really fill me with confidence to support it.

Wouldnt like to be using an FX acc on margin to trade that either. Hence the question on execution.

Cheers

Fletch:)

Edited January 15, 2015 by fletchsmile

[paddyjenkins]

Remember when that guy, MacWalen, or something, generously offered to teach us his "amazing" methods of investment, for a fee, at his new "investment school" that he had decided to start, because he thought he'd done well enough in his personal trading, so he claimed, that he qualified as some kind of trading guru? Another idiot with delusions of grandeur. Come to think of it, same person with different user name?

Edited January 15, 2015 by paddyjenkins

[Naam]

On the positive side I'm always open to ideas on investing and or trading.

That said would also add the following:

The suggestion is a trade rather than investment as OP suggests.

How exactly is OP suggesting the trade be executed?

FX trading acc?

Some form of futures with rollover?

ETF?

Cash? as OP suggests shouldnt be borrowing so presumably exludes margin trading and leverage?

Think he means selling GBP/RUB at 101 not buying

When I look now its around 97.8. It hasnt moved that much in the lasr 12 hours since OP posted. Have to wonder why the entry point is behind the times? Make it look good after having already moved? Or just tardy advice?

101 pounds would become 224 ish for a 124% gain not 224% if 101 moves to 45

Thanks for the thought on going short GBP and long RUB. Think there is maybe something in that mid-longer term as GBP looks overvalued and RUB has taken a beating.

But the opening post doesn't really fill me with confidence to support it.

Wouldnt like to be using an FX acc on margin to trade that either. Hence the question on execution.

Cheers

Fletch:)

Fletch,

an execution via a "straight forward" is rather simple. but i doubt that presently longer periods than 12 months for GBPRUB are available. however, a new forward at maturity would do fine.

on the proposal itself my comment is "may work or may not work". a straight forward has the advantage that one can close it any time if the tide is against the investor.

AyG,

i don't agree with your "speculation not investing" as shorting or going long is quite often used to hedge existing positions of various currencies in an active managed portfolio. in case of positions denominated in restricted currencies which can't be held except domestically (a good example is BRL or INR) shorting or going long is ususally done by NDFs (Non Deliverable Forwards).

i have used both methods for many years and presently still use them. the disadvantage of NDFs is that they are only available in batches value USD 250,000 (or even $500k) and above whereas straight forwards can be executed for much lower values (depending on your bank).

[fletchsmile]

Naam

Yes all sorts of ways it could be done. That's why I was interested in what specifically OP was suggesting.

Cheers

Fletch

[Naam]

Naam

Yes all sorts of ways it could be done. That's why I was interested in what specifically OP was suggesting.

Cheers

Fletch

we should rather discuss shorting the Baht based on the many resident experts' advice "the Baht is doomed". i wonder how many of them have put their money where there mouth is.

[Naam]

off topic. anybody looked at the Swiss Franc today?

[Naam]

Reactions seem to have been somewhat quick and harsh, so would be fair to at least give OP a chance to explain themselves further.

the OP mentioned specifically "accredited or experienced investors". why additional explanations?

[lannarebirth]

Reactions seem to have been somewhat quick and harsh, so would be fair to at least give OP a chance to explain themselves further.

the OP mentioned specifically "accredited or experienced investors". why additional explanations?

Well one reason might be that we seem to have come up with 3 different potential gains from the trade that was recommended. I'm always prepared to be proven wrong, but I don't know how anyone can make more than 100% on a short side trade unless using leverage.

[fletchsmile]

Start with GBP 1

Sell GBP for 101 RUB

X years later rate is 45.

Sell 101 RUB for 2.24 GBP (101 ÷ 45)

So original 1 GBP has become 2.24 GBP

Gain = 124%. Gained Extra 1.24 on GBP 1

Depends on how you look at it when describing the gain.

Cheers

Fletch

[Swiss1960]

off topic. anybody looked at the Swiss Franc today?

yesssssss.... and... HURRAYYYYYY... since I am 6 month from retiring, I can only gratefully thank the Head of the Swiss National Bank für giving me a (at least now) 15% boost for my soon to be transferred retirement money

and I guess all Swiss expat living on their monthly pension will also not be unhappy getting 15% more Baht from the same pension amount

not sure what effect it will have on the CHF when the European Central Bank will start the money press next Thursday, as I assume that the CHF / THB exchange rate will now much more follow the USD / CHF exchange rate...

[metisdead]

Inflammatory posts, vulgar posts and replies have been removed.

Please stay on the topic of the thread. That means addressing the issues presented in the post, not in making comments to or about other posters. Doing so is off-topic and your post will be removed and you could face a suspension.

You have every right to express your opinion about the topic. You may disagree, but it must be done in a civil manner.

[lannarebirth]

Start with GBP 1

Sell GBP for 101 RUB

X years later rate is 45.

Sell 101 RUB for 2.24 GBP (101 ÷ 45)

So original 1 GBP has become 2.24 GBP

Gain = 124%. Gained Extra 1.24 on GBP 1

Depends on how you look at it when describing the gain.

Cheers

Fletch

It sure does depend because the gain you're describing is a long RUB trade.

[fletchsmile]

What I'd like to know is why OP didn't tip us off about the CHF "investment" opportunity yesterday :;

[Naam]

Reactions seem to have been somewhat quick and harsh, so would be fair to at least give OP a chance to explain themselves further.

the OP mentioned specifically "accredited or experienced investors". why additional explanations?

Well one reason might be that we seem to have come up with 3 different potential gains from the trade that was recommended. I'm always prepared to be proven wrong, but I don't know how anyone can make more than 100% on a short side trade unless using leverage.

what the OP suggested does not require any leverage LRB. a forward doesn't even require any cash. some banks may debit the credit line but without levying any fees. my two banks in SG don't even do that if the deal is not completely out of range of the existing portfolio's value.

[Naam]

What I'd like to know is why OP didn't tip us off about the CHF "investment" opportunity yesterday :;

if he knew we should tar and feather him

[lannarebirth]

Reactions seem to have been somewhat quick and harsh, so would be fair to at least give OP a chance to explain themselves further.

the OP mentioned specifically "accredited or experienced investors". why additional explanations?

Well one reason might be that we seem to have come up with 3 different potential gains from the trade that was recommended. I'm always prepared to be proven wrong, but I don't know how anyone can make more than 100% on a short side trade unless using leverage.

what the OP suggested does not require any leverage LRB. a forward doesn't even require any cash. some banks may debit the credit line but without levying any fees. my two banks in SG don't even do that if the deal is not completely out of range of the existing portfolio's value.

I defer to your greater understanding of Forex markets. It's an area that has never interested me other than to buy assets or hold savings in countries with different currencies. Although, that said, I think I'm going to buy some $AUD if it gets in the 60's vs. $USD.

[Naam]

Well one reason might be that we seem to have come up with 3 different potential gains from the trade that was recommended. I'm always prepared to be proven wrong, but I don't know how anyone can make more than 100% on a short side trade unless using leverage.

what the OP suggested does not require any leverage LRB. a forward doesn't even require any cash. some banks may debit the credit line but without levying any fees. my two banks in SG don't even do that if the deal is not completely out of range of the existing portfolio's value.

I defer to your greater understanding of Forex markets. It's an area that has never interested me other than to buy assets or hold savings in countries with different currencies. Although, that said, I think I'm going to buy some $AUD if it gets in the 60's vs. $USD.

actually the transaction is a rather simple one and is in many cases not used to generate profits (as the OP suggested) but a valuable financial tool to prevent losses by hedging a currency exposure. an expat living in Thailand with EUR or GBP income might secure his future expenses by selling € or £ forward vs. THB at a fixed rate. if the Baht is strengthening he's lucky. if the Baht is weakening and he thinks there will be more weakening he can always close the deal any time but of course at the prevailing exchange rate.

in this context it is worthwhile to mention that the OP, besides his percentage calculation, made the mistake not to consider the huge difference of prevailing interest rate between GBP and RUB. a forward deal is priced on this difference which in the case he suggested is around 16.5% p.a. plus (depending on the bank) fees of 0.5-1% and the bid/ask spread of both currencies, id est a one year forward nets zero if the Rub appreciates vs. GBP by only 17% at maturity. using a longer time span (quote: "This is a long term hold, probably 1-3 years") makes the deal even less palatable.

[paddyjenkins]

Well one reason might be that we seem to have come up with 3 different potential gains from the trade that was recommended. I'm always prepared to be proven wrong, but I don't know how anyone can make more than 100% on a short side trade unless using leverage.

what the OP suggested does not require any leverage LRB. a forward doesn't even require any cash. some banks may debit the credit line but without levying any fees. my two banks in SG don't even do that if the deal is not completely out of range of the existing portfolio's value.

I defer to your greater understanding of Forex markets. It's an area that has never interested me other than to buy assets or hold savings in countries with different currencies. Although, that said, I think I'm going to buy some $AUD if it gets in the 60's vs. $USD.

actually the transaction is a rather simple one and is in many cases not used to generate profits (as the OP suggested) but a valuable financial tool to prevent losses by hedging a currency exposure. an expat living in Thailand with EUR or GBP income might secure his future expenses by selling € or £ forward vs. THB at a fixed rate. if the Baht is strengthening he's lucky. if the Baht is weakening and he thinks there will be more weakening he can always close the deal any time but of course at the prevailing exchange rate.

in this context it is worthwhile to mention that the OP, besides his percentage calculation, made the mistake not to consider the huge difference of prevailing interest rate between GBP and RUB. a forward deal is priced on this difference which in the case he suggested is around 16.5% p.a. plus (depending on the bank) fees of 0.5-1% and the bid/ask spread of both currencies, id est a one year forward nets zero if the Rub appreciates vs. GBP by only 17% at maturity. using a longer time span (quote: "This is a long term hold, probably 1-3 years") makes the deal even less palatable.

Lol....gotta love these supposed thaivisa resident experts on all matters financial....especially Naam and fletch...the above comment gets its arse and its elbow mixed up...if you sell GBPRUB in forwards or NDFs, meaning sell GBP and buy RUB, you effectively earn the higher interest because it weakens the forward RUB price, I.e you get to buy it cheaper at the forward date, it then rolls to spot over time, all things being equal, so it's the opposite of want you claim,...it actually adds to profits and is in fact a somewhat attractive carry trade..,,that said, the road to hell is often paved with carry as they say....not that I want to defend the OP, I think he was just a spiv, touting a totally inappropriate and extremely risky punt to an utterly uninformed audience, and I doubt he understands the technicalities either....it's just so funny I had to comment....I presume, like curve flattening, this is also something you've not come across in 55 years of trading....LOL! Edited January 16, 2015 by paddyjenkins

[fletchsmile]

Now you're starting to delve into why I asked the question of execution and in turn answering your own question as an accredited investor why I want further explanation Herr Naam.

This highlights why the execution is important.

A forward transaction is not the way to go in my view. Yes it's simple but the pricing of the forward due to interest differentials is one issue.

Also relevant are the fees, credit line etc. Should you find the trade going in the opposite direction to 200 your bank or broker will be marking to market the trade. That will either impact your credit line, encumber other assets or worst case result in a call for margin to support a now loss making trade.

Hence while youve assumed use of a forward. My assumption is that wasn't what OP intended.

As you say. A forward would be more suited to a hedge.

In this case OP suggested an outright view on currency rates for speculation. If he was doing at spot I would then have asked why he hasn't factored in interest rates to his profit calc which would actually increase the profit further.

Seems like he just hasnt considered them tho. Either for simple cash/ spot calc

or using forward as you highlight.

As he hasnt followed up tho we dont know.

Cheers

Fletch

Edited January 16, 2015 by fletchsmile

[NCC1701A]

I am in Thailand. I am going outside and have some fun.

[fletchsmile]

I am in Thailand. I am going outside and have some fun.

Well said. Best advice on this thread yet.

I'll be taking a leaf out of your book and following your advice tomorrow night

Cheers

Fletch

[Naam]

In this case OP suggested an outright view on currency rates for speculation. If he was doing at spot I would then have asked why he hasn't factored in interest rates to his profit calc which would actually increase the profit further.

Seems like he just hasnt considered them tho.

what i have learned today is that i should not post after a long night with good friends who visit Thailand once a year, no sleep and still under the influence of other friends like Jack Daniels, Johnny Walker and Jim Beam.

reason: the result might be pure e.g. converting plus signs into minus signs. i hang my head in shame but will not commit suicide.

[SheungWan]

off topic. anybody looked at the Swiss Franc today?

yesssssss.... and... HURRAYYYYYY... since I am 6 month from retiring, I can only gratefully thank the Head of the Swiss National Bank für giving me a (at least now) 15% boost for my soon to be transferred retirement money

and I guess all Swiss expat living on their monthly pension will also not be unhappy getting 15% more Baht from the same pension amount

not sure what effect it will have on the CHF when the European Central Bank will start the money press next Thursday, as I assume that the CHF / THB exchange rate will now much more follow the USD / CHF exchange rate...

The Swiss guys at the club will be even more insufferable than ever. And that 1000 Swiss Franc note will look even lovelier.

[Swiss1960]

off topic. anybody looked at the Swiss Franc today?

yesssssss.... and... HURRAYYYYYY... since I am 6 month from retiring, I can only gratefully thank the Head of the Swiss National Bank für giving me a (at least now) 15% boost for my soon to be transferred retirement money

and I guess all Swiss expat living on their monthly pension will also not be unhappy getting 15% more Baht from the same pension amount

not sure what effect it will have on the CHF when the European Central Bank will start the money press next Thursday, as I assume that the CHF / THB exchange rate will now much more follow the USD / CHF exchange rate...

The Swiss guys at the club will be even more insufferable than ever. And that 1000 Swiss Franc note will look even lovelier.

And... most important... we will look even MORE handsum for the girls