Compared to British Pound Based Investors, Americans Had It Good
Part 2 of a Series
This is the second part of a series of articles on how to avoid the most common fatal flaw in most long term financial planning. It is based on excerpts from the coming book, The Sensible Guide to Forex: Safer, Smarter Ways to Prosper from the Start (John Wiley & Sons, 2012), the only forex book extant that's dedicated to providing risk averse mainstream traders or investors (even those with no interest in trading) safer, less demanding ways to achieve prudent exposure to currencies and hard assets that are more likely to hold their value over the long run than the US dollar and most other major currencies.
In Part 1, we introduced the importance of diversifying your portfolio by assets that expose you to currencies and commodities in long term up trends.
To illustrate the point, we highlighted some of the travails suffered by most American investors, who tend to be far too exposed to the fate of the US dollar.
Still, there are worse fates.
Hope They're Getting Better Yields In The UK
If you think US investors have had a hard time over the past decades, those in the UK have really had to run hard up the rapidly descending escalator otherwise known as the British Pound.
GBPUSD MONTHLY CHART MID 1977 TO END OF 2007
FELL FROM 2.6500 TO 1.9900, SINCE THEN THE GBPUSD HAS FALLEN TO ~1.6
02 MAY 08 2123
|GBPUSD FROM 1972 TO MID 2012 FELL FROM 2.6500 TO 1.61550|
|GBP Depreciation IN USD|| |
|% GBP Depreciation|| |
There Are Worse Fates Still
Recently I had some good news and bad news.
The good news: my friend and colleague Mitch Feierstein, / CEO of Glacier Environmental Fund Ltd, (and author of the recently published book, Planet Ponzi: How politicians and bankers stole your future)sent me one hundred trillion dollars in cash.
The bad news: it's not in USD issued by the Fed, but rather issued from the less than esteemed RBZ, the Reserve Bank of Zimbabwe - a uniquely humorous and poignant reminder of the consequences of irresponsible fiscal and monetary policy.
How To Avoid Becoming "Zimbabwe-ed"
Unfortunately, a previously solid currency that holds it value can become a drain on your wealth within just a few years if the people in charge opt for the silent, and politically expedient tax, of currency devaluation via money printing. Voters are far less likely to object to that as much as they would tax increases or cuts to government entitlements from which they benefit.
So no matter where you live, you need to know how to identify forex trends and how to benefit from them, either as a trader or investor.
My coming book, The Sensible Guide to Forex: Safer, Smarter Ways to Prosper from the Start (John Wiley & Sons, 2012), is the first forex/commodities book to provide a variety of ways to survive and prosper in the brave new world of fluctuating currency values, both via:
- Conservative trading methods for much lower risks and better returns than via the usual short term spot market forex trading.
- Building portfolios for income or capital gains comprised of assets that provide exposure to multiple currencies that are likely to hold or increase their value.
It's also the only forex book to take an exclusive in-depth objective look at the two latest ways to tap forex and commodities markets for both active traders and passive investors, social trading (an improved type of managed account) and binary options ( a simplified way to trade in which all you really need get right is the overall trend direction over the life of the option. The trend's magnitude, as well as most risk and money management issues, don't really apply). Advanced reviews have been very favorable - see for yourself here.
Its companion website, thesensibleguidetoforex.com, is dedicated to supplementing the book with an ever expanding body of material on how to do this. The website is now up in its embryonic form, and over the coming months prior to the book's release we'll be adding preview content, bonus content on both conservative forex trading and forex diversified income investing, advanced reviews for the book, and more.
Disclosure/disclaimer: No positions. The above is for informational purposes only. All trade decisions are solely the responsibility of the reader.