keith

Choosing A Currency ETF: Why We Went With DBV

Sorry for the delay. Would love to comment! In the short term currency trading is very speculative (i.e. betting on one currency to move up or down). However, over the long term the strategy employeed by (DBV) seems to be working. The tendancy for currencies attached to high rates to move up and those with low rates to move down. Given the divesification of currencies in (DBV), I believe this aids in lowering your exposure to a quick unwind in a "carry trade" for a particular currency. Is it possible that all three currencies could unwind at once, sure. Is it possible for the stock market to experience a 20% to 30% correction, yes. However, these events are rare. Accordingly, I believe this to be more of a long term strategy. If you look at the annual returns attached to a specific year in (DBV), you will see there where some real underperformance for long durations. I don't see this particular vehicle as a trading vehicle, but more of a strategy to grind out superior return over the long term. On a broader portflio perspective it fits the bill for diversification via both correlation and volitility to S&P 500. The ladder further lending weight to mute concerns of a quick carry trade unwind. Keeping in mind that past performance is no sure ticket for future performance. Also, I added the above piece of the quote, since I think it is important to be aware of the risk. I think for the average guy or a manager, who manages asset classes for particular portflio startegies, this is a good fit. Does this add a bit more clarity to my thinking process?

Choosing A Currency ETF: Why We Went With DBV

According to the New York Times, the firm reversed a second quarter loss and gained $412 million between July and September, after increasing its share of foreign currency contracts from $12 billion at the close of 2003 to $20 billion now.

MDCigan....Thanks for keeping my nose clean on this. I will work to keep the facts right!!!!!!! Keith