Currency ETFs or funds...anyone?

bee

From article:

"The US Federal Reserve has begun to pivot. Monetary tightening is coming sooner than the world expected, with sober implications for overheated bourses, and for those in Asia, eastern Europe and Latin America that drank deepest from the draught of dollar liquidity.

We can expect a blistering dollar rally, perhaps akin to the early 1980s or the mid-1990s. It is fortuitous that the BRICS quintet of Brazil, Russia, India, China and South Africa have just launched their $100bn monetary fund to defend each other's currencies. Some of them may need it."

My Take:

The British Sterling pound has had a great price appreciation over the past year. With low borrowing rates and a strong currency the real estate market in England also shot higher. If interest rates rise as the US Dollar rises I see less upside to US Real Estate valuation, but if the Fed can keep home mortgage rates low watch for US Real Estate to benefit from a stronger dollar.

Article Link below image:

Fed-kicks-off-global-dollar-squeeze-as-Janet-Yellen-turns-hawkish

Ted

@bee: Currency ETFs or funds...anyone? Neither !!
Regards,
Ted

scott

This is not meant to be mean or sound rude or anything like that, but nooooooooooooooooooooooooooooooooo.

Playing currencies is a futile game of musical chairs. Even talented managers like Axel Merk haven't done well - look at Merk's Absolute Return fund (MABFX).

Be global in your exposure to stocks and bonds. Don't try to sit and play currencies.

bee

Maybe a more important question is how will a stronger US dollar as well as rising US interest rates impacted various investments.

Ted

@ Scott: A+++, go to the head of the class.
Regards,
Ted

scott

bee said:

Maybe a more important question is how will a stronger US dollar as well as rising US interest rates impacted various investments.

A stronger dollar this week. How about next week? Again, it's this ping-ponging between "who's the least bad this week" in terms of currencies (and then a country is unhappy with how strong their currency is and talks it down) and .... not for me.

As for rising interest rates, the market is, I believe, ahead of itself in anticipating them sooner vs later.

This whole thing really gets back to the core concept of asking yourself what you own and what's changed? What do you want to sell and do you have a substantial reason as to why? Do you have a better idea?

All these attempts to try and predict interest rate policies and currencies is just very short-term, exhausting and not something I'd recommend. The "goalposts" that determine monetary policy could very well be moved tomorrow. Who knows.

Lastly, from the original article:

"US Real Estate to benefit from a stronger dollar."

Stronger dollar would lessen the appeal from all of the foreign cash buyers, would it not?

bee

ScotTed

I agree that individual currencies often fall into the political arena making them ripe for manipultion. These individual currencies and their fragmented values seem to add friction to global trade, yet I'm just not sure if ignoring it as an investor is a wise move either.

Thanks for your strong opinions on currencies as an investment...maybe it fall into "the price for doing business" category.

scott

bee said:

ScotTed

I agree that individual currencies often fall into the political arena making them ripe for manipultion. These individual currencies and their fragmented values seem to add friction to global trade, yet I'm just not sure if ignoring it as an investor is a wise move either.

Thanks for your strong opinions on currencies as an investment...maybe it fall into "the price for doing business" category.

It's not a matter of ignoring it, really, I think it's a matter of diversification. I own investments denominated in GBP in London and on the US market. This exposure has seen the added benefit of the rise in the pound. I owned a couple of Brazil stocks last year that benefited from an admittedly brief move in the Real. I own a lot of Canadian investments that have suffered somewhat from the recent softness in the CAD. I also have an investment in Australia, as well as a number in Asia.

The average person trying to stay ahead of currency movements is going to drive themselves nuts. I forgot the statistic, but the amount of successful forex traders is low. When CNBC has their stock market game, try doing the Forex trading part that they have. It's just delightful.