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Is Apple just a plaything of the currency boys? Frustrated by governments and central banks that...
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Tuesday, April 24, 2012, 1:39 PM ETIs Apple just a plaything of the currency boys? Frustrated by governments and central banks that have taken the action out of fx trading, pros are headed to the sidelines, with at least one former punter moving to Apple: "It is what trading the Deutsche Mark was like years ago. Fx, I won't touch it. Too much risk and too little reward."
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Much easier to manipulate a stock and get away with it longer, than an entire currency (except for a very few central banks - and they can't keep that quiet for long).
Fundamentals of nations are far harder to turn around than those of a stock. Think: how will it take to reverse US job growth and wage stagnation? At best, many months. How long would it take to send Apple shares plummeting? One earnings report, iphone or ipad release that misses expectations.
Because fundamentals of national or EU economy change slowly, currency markets produce many stable, persistent long term trends. Historically, central bank interventions of frequency and magnitude of recent years are an anomaly (and are still easily avoided if one avoids currencies of the very largest central banks - even the Banks of Japan and Switzerland have yet to show that they can sustain interventions beyond a few months.
The fact is, most investors need currency diversification now more than ever, as the central banks behind the most widely held currencies are trying to cut debts by cutting value of the currency in which they repay them via low rates and easy money policies that will bring inflation as global economies recover. They have no realistic alternative other than default. So they will choose inflation as the lesser of evils, and the most politically expedient solution to debt that they cannot or will not repay for lack of assets or political will.
That inflation will reduce their debt loads, and also the value of anything denominated in those currencies, including your assets.
Therefore any prudent investor must diversify by currency just as they would by asset class or sector.
So what’s a brother to do?
Here’s the best most cost effective source for a variety of solutions to suit different needs: THE SENSIBLE GUIDE TO FOREX: Safer, Smarter Ways to Profit from the Start (Wiley & Sons, 2012). A solution for the prudent, not the punters.
See http://bit.ly/HiAI8F for full description.