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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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  • Thank You, U.S. Taxpayers, For Insuring My Forex Account 13 comments
    Jan 5, 2013 9:03 PM | about stocks: YINN

    As previously discussed, a majority of our short ideas over the past few years have been in China. Additionally, we have shorted equities and derivatives related to Direxion Daily China Bull 3X Shares (YINN). That being said, I also like owning a bit of their currency. Although inconvenient and not particularly scalable, it is possible. I opened up a savings account and bought CDs from Bank of China's New York City branch at 410 Madison Avenue. They are an FDIC member, so I have US federal insurance on my savings. Given the nearly total lack of opportunity cost in terms of yield on my cash accounts, I decided to at least expose myself to the potential appreciation of a currency that is currently fixed at an artificially low cost. So far so good. Meanwhile, we are in the process of switching our mortgage over to Yen. To be continued.

    Meanwhile, if you would like to read more on China, I would highly recommend Mr. China.

    Themes: China, Yuan, Yen, FDIC, renminbi, RMB Stocks: YINN
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This post has 13 comments:

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  •  
    Mortgage to yen, that was funny, but with all those bonds in Chinese hands it makes sense.
    6 Jan, 08:20 PM Reply Like
  •  
    I think so, but we'll see. I also like puts on Yen. My favorite Yen investment is long gold calls in Yen quanto. My hope and expectation is that will increase in value over the next few years. This is my favorite investment with a generational time frame.

    Chris DeMuth, Jr.

    Rangeley Capital
    6 Jan, 08:37 PM Reply Like
  •  
    Smart! I can't help but agree with your reasoning.
    14 Mar, 02:24 PM Reply Like
  •  
    Chris does that mean that if your CD loses value in dollar terms the FDIC pays the difference??
    18 Mar, 11:50 PM Reply Like
  •  
    Alas no. Just FDIC insured against the bank itself.
    19 Mar, 12:04 AM Reply Like
  •  
    Gotcha! Thanks, and you happen to be bullish on the Yuan vs. the Dollar and/or are diversifying..
    19 Mar, 12:22 AM Reply Like
  •  
    Bullish on Yuan and diversifying. Hyper bearish on Yen, which I have borrowed.
    19 Mar, 12:24 AM Reply Like
  •  
    Yes I watched the link you posted to the Florida hedge fund conference RE: Yen. Do you do that in your hedge fund (short the yen) or personally? Also, if you don't mind the question, do you use leverage?
    19 Mar, 12:31 AM Reply Like
  •  
    Yes.

    Yes, a spectacular amount of leverage. One can short billions of Yen at a tiny cost each year.
    19 Mar, 12:41 AM Reply Like
  •  
    Chris,
    I, too, am bullish on the Yuan and have used it to diversify my USD cash. I opened my BOC account a couple of years ago when you still had to go in person to the NYC branch to do so (that in itself was an educational experience.) Today the account can be opened by mail. The only minus for me has been their anemic online capabilities.

    Short term I expect more of the political manipulations of the Yuan we have seen in the past, but long term I am in the camp that sees China letting the Yuan float more freely in 5 years or so: http://bloom.bg/16Gqrhu
    Thanks for your post.
    mj
    19 Mar, 07:02 AM Reply Like
  •  
    I sort of enjoyed going; when you're inside that bank it somehow feels as if you are actually in China.
    19 Mar, 07:37 AM Reply Like
  •  
    Note that if your Yen mortgage is a net gain you owe tax on the currency gain. If you lose money on the currency of the mortgage you do *not* get a deduction. Heads Sam wins, Tails you lose. Probably still worth while, but just something to keep in mind.
    19 Mar, 05:55 AM Reply Like
  •  
    That is a rotten aspect, isn't it? Oh well. I have a few tax projects in the works:

    http://seekingalpha.co...

    http://seekingalpha.co...
    19 Mar, 07:39 AM Reply Like
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