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Thread: Should I see my USD?

  1. #26
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    Default Re: Should I see my USD?

    Quote Originally Posted by Melonie View Post
    attempting to circle back on topic ...

    The salient point in this thread is that there are quite a few international girls who have business arrangements which result in payment denominated in US dollars, whereas their home currency / cost of living is denominated in a different 'home' currency. As a couple of girls pointed out, being paid the same amount of US dollars represents a huge pay cut in terms of their 'home' currency. And as pointed out by the original poster, girls who have simply banked their US dollar earnings in US dollar denominated accounts have seen the equivalent 'home' currency valuation of that US dollar denominated account balance decline severely. The question is, given the exchange rate losses that have already materialized in the past couple of years, does it make sense to continue to 'ride out' the US dollar versus their 'home' currency, does it make more sense to exchange those US dollars for 'home' currency before the dollar declines and further, or does it make sense to exchange those US dollars for a 'strong' currency other than their 'home' currency.

    Stuart has described the 'fundamentals' which apply to currency exchange rates. Unfortunately, besides 'fundamentals', other factors such as international speculation and central bank interventions can also have large effects on currency exchange rates. IMHO the Swiss Franc is likely to be the strongest currency as the US bank failure / FED rescue scenario continues to play out in slow motion over the next couple of years.



    the above chart covers the change in Swiss Franc value vs the US dollar since I first brought up the subject in late January ...
    Circling back to the topic again,

    If you are from Switzerland and earning US$, What do you do?

    A: Convert to Swiss Franks when you are spending in Switzerland, else spend in $ when you are in US. Where would you park your money? The most optimal Parking Space is Vanguard International Stock Index Fund

    Everything else is waste of time, money & peace-of-mind.

  2. #27
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    Default Re: Should I see my USD?

    Quote Originally Posted by xanfiles1 View Post
    You don't need patterns for

    i) Dollar Cost Index Investing
    ii) Value Investing on Individual Stocks

    Warren Buffett didn't make money by studying patterns/charts or by reading macroeconomic trends

    With Stocks or any Cash Generating Assets, there is some underlying value that can be measured while non-cash generating assets like Tulip Bulbs, Some Internet Stocks, Gold, Currencies, Commodities, price is pure speculation. If you end up on the wrong side you'll be wiped out

    With Indexing, you get diversification aka free lunch
    I think xanfiles1 that your arguments against currency diversification might be a little misguided here - and how you end up back at the Vanguard Fund later in this thread, I have no clue.

    But...

    You are right to say that Warren Buffett didn't make his money by studying technical analysis or macro trends. However, he also didn't make his money by investing in any sort of fund. I think we can all agree on that.

    In fact, his portfolio and holdings could easily be described as incredibly concentrated. He has diversified now but for a number of years about 40% of his very substantial portfolio consisted of Coca-Cola, Gillette and American Express. He isn't - or at least wasn't - the poster boy for diversification that you seem to think he is.

    However, over the last few years he did buy a very large silver position to hedge against the falling dollar. 127 million oz as I recall. He has also put money into other currencies and is currently looking for non-US investments for the same reason.

    This suggests that whilst you may not see the need for non US dollar assets, Warren Buffett does. It also suggests that he perhaps does follow macro and currency issues. Actions speak louder than words.

  3. #28
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    Default Re: Should I see my USD?

    If you are from Switzerland and earning US$, What do you do?

    A: Convert to Swiss Franks when you are spending in Switzerland, else spend in $ when you are in US. Where would you park your money? The most optimal Parking Space is Vanguard International Stock Index Fund
    Whether you are from Switzerland or Australia, the (supposed) return on investment from the Vanguard International Stock Fund Index VGTSX since the first of the year amounts to a 6% loss in terms of it's basic US dollar NAV price. However, in terms of Australian dollars, VGTSX has lost an additional 8% on currency ( see ) . In terms of Swiss francs, VGTSX has lost an additional 7% on currency ( see ). Thus a recommendation to an Australian dancer to invest her Australian dollars in VGTSX would have been more affected by negative exchange rate fluctuations than by the negative performance of VGTSX itself !

    Your US dollar centric view excludes the financial realities of global investors who live in countries whose 'home' currencies are not pegged to the US dollar. Those realities include direct losses of 'purchasing power' on US dollar denominated income, indirect losses on US dollar denominated investment vehicles (even if the US dollar value of those investments has increased marginally), etc. I would also add that this is not a trivial matter either, since 40-50% of all US stock and bond ownership is now in the hands of foreign investors.

    I'm tired of disputing the virtues and risks of 'dollar cost averaging' and 'ultimate diversification' - everyone knows where you stand, everyone knows where I stand, and thanks to Stuart we now know where Warren Buffet stands. However, I will continue to point out the actual 'past performance' of your recommendations - in this case a 14% loss for an Australian investor over the past 6 months - which might not be immediately apparent if you refuse to do the math in Australian dollars.

  4. #29
    Veteran Member StuartL's Avatar
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    Default Re: Should I see my USD?

    ^^^ I can happily admit to not knowing everything... I don't follow many US$ denominated funds. As long-time readers of this board may recall, I got my clients out of as many of the US$ assets that I could between 2 and 3 years ago. Therefore, following individual US$ based funds has little value for me.

    However, I didn't realise what the record of xan's hailed Vanguard fund was like. I was presuming - silly old me - that it was excellent and setting the world alight. I thought that perhaps I was the one missing something. Now I am starting to wonder whether xan is actually a sales rep for the fund instead...

    Blindly recommending something to an international readership that has a record as demonstrated by Mel above - without thinking through the full implications - isn't great.

    If you worked in financial services, that is the sort of advice that would see you unemployable for ever more and probably sued for failing to show a duty of care to clients. Not good. Not good at all.

    Luckily for them, many of the good ladies on this forum seem willing to argue the point about this which suggests that they are not - I hope - following your advice blindly.

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    Default Re: Should I see my USD?

    Quote Originally Posted by Melonie View Post
    Whether you are from Switzerland or Australia, the (supposed) return on investment from the Vanguard International Stock Fund Index VGTSX since the first of the year amounts to a 6% loss in terms of it's basic US dollar NAV price. However, in terms of Australian dollars, VGTSX has lost an additional 8% on currency ( see http://finance.yahoo.com/q/bc?t=6m&s...&z=m&q=l&c=fxa ) . In terms of Swiss francs, VGTSX has lost an additional 7% on currency ( see http://finance.yahoo.com/q/bc?t=6m&s...&z=m&q=l&c=fxf ). Thus a recommendation to an Australian dancer to invest her Australian dollars in VGTSX would have been more affected by negative exchange rate fluctuations than by the negative performance of VGTSX itself !

    Your US dollar centric view excludes the financial realities of global investors who live in countries whose 'home' currencies are not pegged to the US dollar. Those realities include direct losses of 'purchasing power' on US dollar denominated income, indirect losses on US dollar denominated investment vehicles (even if the US dollar value of those investments has increased marginally), etc. I would also add that this is not a trivial matter either, since 40-50% of all US stock and bond ownership is now in the hands of foreign investors.

    I'm tired of disputing the virtues and risks of 'dollar cost averaging' and 'ultimate diversification' - everyone knows where you stand, everyone knows where I stand, and thanks to Stuart we now know where Warren Buffet stands. However, I will continue to point out the actual 'past performance' of your recommendations - in this case a 14% loss for an Australian investor over the past 6 months - which might not be immediately apparent if you refuse to do the math in Australian dollars.
    Please do the math using Google Stock and you'll know the fallacy of your arguments.

    You have taken unnecessary risks in your strategy without long term returns.

    Sure, you got 10% shot in your Currency play, but there are plenty of people who make more than 10% in Las Vegas.

    Bottomline, Currency plays return/risk profile is pathetic

  6. #31
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    Default Re: Should I see my USD?

    Quote Originally Posted by StuartL View Post
    ^^^ I can happily admit to not knowing everything... I don't follow many US$ denominated funds. As long-time readers of this board may recall, I got my clients out of as many of the US$ assets that I could between 2 and 3 years ago. Therefore, following individual US$ based funds has little value for me.

    However, I didn't realise what the record of xan's hailed Vanguard fund was like. I was presuming - silly old me - that it was excellent and setting the world alight. I thought that perhaps I was the one missing something. Now I am starting to wonder whether xan is actually a sales rep for the fund instead...

    Blindly recommending something to an international readership that has a record as demonstrated by Mel above - without thinking through the full implications - isn't great.

    If you worked in financial services, that is the sort of advice that would see you unemployable for ever more and probably sued for failing to show a duty of care to clients. Not good. Not good at all.

    Luckily for them, many of the good ladies on this forum seem willing to argue the point about this which suggests that they are not - I hope - following your advice blindly.
    Stuart, Some points
    i) Just like clueless idiots running shady web-sites who use the conspiracy angle if they don't understand stuff, you have used the Vanguard conspiracy

    ii) If I were a Vanguard salesman, I'm wouldn't waste my time here selling. I know exactly 0 people will buy those funds. They'll follow some other idiot's advice and underperform the market (even paying them fees). I can bet my bottom dollar on that

    iii) Diversification is enlightment. Very few people get it

    iv) International Indexing takes care of most of the risks (currency, inflation, deficit, oil, gold, commodities) and offers the highest returns. If a financial planner doesn't know that basic fact, he should quit his job

    v) Pleny of People Got Rich by Google, Microsoft, Intel, Dell, Apple stock. Doesn't mean they are great stock pickers. Just lucky

  7. #32
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    Default Re: Should I see my USD?

    Quote Originally Posted by xanfiles1 View Post
    i) Just like clueless idiots running shady web-sites who use the conspiracy angle if they don't understand stuff, you have used the Vanguard conspiracy
    Theres a "Vanguard Conspiracy". Jeez. Xanfiles1 - you operate at a whole different level to the rest of us...

    Does this conspiracy involve a grassy knoll, a library and a series of random and unconnected deaths of all the people alleged to have been involved?

    Or does it involve a large ocean-going passenger liner, a sister ship, an iceberg and an insurance claim?

    Or perhaps a secret religious order, clues spread in open sight around Europe and Tom Hanks in the lead role?

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    Default Re: Should I see my USD?

    This thread is awesome
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: Should I see my USD?

    Quote Originally Posted by Meea View Post
    I have a considerable amount of US dollars in a savings account (more than 20K). Should I sell them for the currency of my country or should I buy Euros?

    Fuck, I already lost about 25% due to the decrease of the value of the USD. I don't know if to bite the bulet and sell now while i'M at a loss of 25%, or rist losing even more but not sell the dollars, or invest in something more stable?

    I'm losing sleep over this.
    To actually contribute to the thread, I have similar commodities trading problems (assuming you're speculating on USD and not earning and/or spending USD... some important issues have already been covered by others here).

    The problem is whether you close out your position and take your loss or gamble that it will "come back". Limiting your losses is the disciplined thing to do and lets you sleep at night (you've already determined how much you're comfortable losing on your speculating before you started, right?) but you might have "good reasons" to believe it will bounce back, if you understand the underlying price drivers very well (in equities you worry about irrational investors altering the price in the short term, but in commodities you worry more about macroeconomic issues and big players pushing around market prices for eg.). I have a vague feeling based on news over the last few months that the reasons for the USD decline are pretty long term issues...
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: Should I see my USD?

    Quote Originally Posted by person View Post
    I have a vague feeling based on news over the last few months that the reasons for the USD decline are pretty long term issues...
    For Eg.?

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    Default Re: Should I see my USD?

    i've decided to listen to ScarlettVancouver and hide the cash for a very long term, unless I see an exchange rate similar to that of last year's.

    I mis-spelled the thread title.. it should be "should I SELL my USD"

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    Default Re: Should I see my USD?

    Quote Originally Posted by xanfiles1 View Post
    For Eg.?
    Posted over a period of 2 or 3 months in other threads.
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: Should I see my USD?

    Quote Originally Posted by person View Post
    Posted over a period of 2 or 3 months in other threads.
    OK, I've also posted over a period of three months that it is baloney and nobody can predict exchange rates

  14. #39
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    Default Re: Should I see my USD?

    Quote Originally Posted by xanfiles1 View Post
    OK, I've also posted over a period of three months that it is baloney and nobody can predict exchange rates
    Hmm. Nearly 7 billion people alive and you are sure that NOBODY can predit exchange rate movements... Sounds like either hubris or an egregious abuse of statistics to me.

    http://en.wikipedia.org/wiki/Joe_Lew...businessman%29

    http://en.wikipedia.org/wiki/George_soros

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    Default Re: Should I see my USD?

    Quote Originally Posted by StuartL View Post
    Hmm. Nearly 7 billion people alive and you are sure that NOBODY can predit exchange rate movements... Sounds like either hubris or an egregious abuse of statistics to me.

    http://en.wikipedia.org/wiki/Joe_Lew...businessman%29

    http://en.wikipedia.org/wiki/George_soros
    Again, if you are clueless about statistics, you get fooled by Randomness

    In a Pool of 7 Billion People, (or say 100 Million Active Investors) there exists

    50 Million who have above average returns for a Year
    25 Million who have above average returns for 2 Years
    12.5 Million .... for 3 years
    .
    .
    .
    .
    97,000 People who have above average returns for 10 Years
    .
    .
    .
    3000 People .... 15 Years
    .
    .
    .
    95 People .... 20 Years

    i.e there are plenty of people who have made lots of money whether in Vegas or Trading. If you can't reproduce their success, you are bound to be a sucker and lose money

    Here's the main problem
    i) idiots all around the world can't separate skill from luck
    ii) Even if you separate skill from luck, you can't list out the successful people's methodology (i.e George Soros may be successful 'despite' his methods and not 'because' of his methods)
    iii) Even if you list the methods, it is impossible to have the combination of skills in the right mix for an individual

    i.e When I say, nobody can predict Exchange rates, I mean nobody can predict rates in a reproducible way.

    Sure if you think you have the exact combination of skills of George Soros and opportunities in the market, go ahead make money for yourself and your clients

  16. #41
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    Default Re: Should I see my USD?

    Quote Originally Posted by xanfiles1 View Post
    i.e When I say, nobody can predict Exchange rates, I mean nobody can predict rates in a reproducible way.
    Yes, but on a case-by-case basis (since I'm trying to answer the OP's question about selling USD at this point in time) there's the possibility that you have good enough information to not make a stupid decision or at least know when it's riskier. I'm not disputing that this might be very hard and that it will be very rare that you have more information than the market, and it's hard to tell when you just got lucky anyway

    Quote Originally Posted by xanfiles1 View Post
    Sure if you think you have the exact combination of skills of George Soros and opportunities in the market, go ahead make money for yourself and your clients
    How do you know I'm not George Soros?
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: Should I see my USD?

    The New Dollar Carry Trade?
    There's been much chatter recently from bloggers covering China's economy.
    ...
    But after the Fed’s significant rate cuts the past few months, the dollar itself may be the new currency to finance speculative bets. The best evidence seems to be China’s exploding foreign exchange reserves.
    http://optionarmageddon.ml-implode.c...rade/#more-154

    They're now going to try to sell the dollar because it's weak -- but they don't want to lose any money, so they are going to wait until it rallies. Somehow I doubt it will ever rally enough for Japan to drop $1 trillion of reserves without taking a huge loss.
    http://implode-explode.com/viewnews/...nWatanabe.html

    http://finance.yahoo.com/currency/co...CNY&amt=1&t=2y
    http://finance.yahoo.com/currency/co...JPY&amt=1&t=2y

    Interesting times. On the surface, buy China & Japan, sell US? Surely it's not that simple...
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

  18. #43
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    Default Re: Should I see my USD?

    ^^^Sometimes it is.

    The real skill though, in a currency sandwich, is being able to use a.n.other instrument to hedge the potential losses if it goes against you. In other words, making it a no-lose proposition one way and an acceptable win proposition in the other direction.

  19. #44
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    Default Re: Should I see my USD?

    this certainly isn't 'random' ...



    (snip)"The fight against inflation in the 15-country eurozone will remain the European Central Bank’s top priority even if that clashes with US attempts to prevent a further slide in the dollar, a senior official at the bank made clear on Monday.

    The ECB’s actions and words “aim at ensuring the preservation of price stability”, said Lucas Papademos, the bank’s vice-president.

    US concern over the effect on the dollar of the ECB’s warning last week that it would probably increase its main interest rate next month.

    The ECB communicates regularly with the Fed and does not intend to create transatlantic tensions. It has also seen other central banks signalling heightened concern about global inflation – and could argue that its plan to raise the main policy rate by a quarter percentage point to 4.25 per cent should not have been a surprise.

    Eurozone inflation, at 3.6 per cent, is far above the ECB’s target of an annual rate “below but close” to 2 per cent. Inflation is expected to remain above that level significantly longer than previously expected.

    The ECB’s latest “financial stability review”, issued last night, shows risks to the eurozone have increased in the past six months."(snip)

    IMHO as long as you have passed reading comprehension 101 this announcement by the ECB constitutes a pretty clear statement that they will hold or raise Euro interest rates in order to mitigate European price inflation - REGARDLESS of the fact that this will cause the Euro exchange rate to rise against the US dollar !!!

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