myWealth.com

Recessions Are Perfect for Currency Investing

Now that the Fed has lowered the U.S. rate to even lower than Japan's rate....expect the greenback to lose its luster and to become a "carry trade" funding currency for the euro, aussie, etc. in EUR/USD, AUD/USD, etc.

Recessions Are Perfect for Currency Investing

Keep in mind that the currencies that went up when stocks went down...are likely to be the ones that go down once stocks head back upward. So people that think this is all hindsight aren't seeing that both sides are true. If investors think the yen will continue to rise with a rising stock market...they are kidding themselves. The yen heads lower when "times are good and stocks flourish"...and so has the dollar much of the time. Hope this helps.


On Dec 08 11:41 AM LonelyTrader wrote:

> Now is not the time to long the USD, or the yen, unless you are trading
> intraday. Too many uncertainties at this point. Look to crosses related
> to commodities (like CAD, NZD and AUD) and hold through the cycles
> -- but don't look too closely at the price each day or you'll end
> up with ulcers. It isn't for the faint of heart.
>
> Equities are gonna be choppy -- market is currently running out of
> sellers, as it was last week, so shorts who aren't nimble will almost
> certainly get crushed. Likewise, buyers who get greedy will get crushed.
> This is a depreciatory situation for both the USD and yen. I suspect
> other currencies will grind higher as money moves out of these two.

>
>
> There is nothing easy about trading currencies. Hyman hits some good
> general points. But it's the specifics that kill ya. Too many to
> mention here. Agree that this article should have been written earlier...by
> more than a year, perhaps, when EVERYONE and their Auntie was publishing
> stuff just like this.
>
> I suspect that 90% of those who follow this guy's advice in the last
> paragraph will have wiped out their currency accounts by this time
> next year. Unless they have very deep pockets or trade in sizes so
> miniscule as to be not worth the effort. In short, his timing is
> waaaaay off. Risk in these two bets is too high at the moment.

Recessions Are Perfect for Currency Investing

The recession will likely end soon since the average recession lasts 8-12 months and we're already at the 12 month mark (here in the U.S.). Since the sell offs were so much faster in this recession, it's likely that in the coming weeks to months...the worst will finally be behind us. IF that's the case, then stocks will begin to flourish again and the dollar and yen (which flourished in the stock downturn) will likely fall against most all other major currencies.


On Dec 06 07:01 AM Debt Junkie Scum wrote:

> I don't see GBP as a higher yielding currency, we in the UK are headng
> to ZIRP. The Euro will likely follow. USD strength looks likely
> to continue as the depression intensifies.
>

Recessions Are Perfect for Currency Investing

Stocks appear to be rallying lately on "bad news days" which is bullish and the "first signs of life" that we've seen in a while.

Therefore, the party for the yen may be almost over. If so, when stocks for sure reverse to the upside (and that may be in the beginning stages now), then that could be a great time to look to reverse those positions ...as investors come out of the "risk adverse" (defensive plays) and back into stocks and higher yielding currencies.


On Dec 03 09:13 PM Paulo wrote:

> There is good research out there showing that in recessions (over
> the past few decades) you long the American dollar and short the
> Canadian (and Australian) dollar.
> True again this time.
> But maybe knowing when to reverse that position will be different
> this time.

Recessions Are Perfect for Currency Investing

Remember, though...the inverse is true too. As stocks start to recover, the yen will likely tank very hard. As it does, if were short the yen, it could speed up the recovery of your stock portfolio. So it works both ways.


On Dec 03 11:00 AM Calgary wrote:

> This would have been much more useful if you'd published it last
> October.
>
> Here's another idea for an article: If stocks are about to crash,
> just sell them in advance. Then, while everyone else is “crying the
> blues”, you'll be holding up just fine.
>