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Saturday, November 14, 2009

Week in Review: The U.S. Dollar Carry Trade (PODCAST)

"If you know the enemy and know yourself you need not fear the results of a hundred battles." - Sun Tzu, the Art of War

Welcome to the Week in Review!

So after a brief review of the market action for the last week, we'll discuss the "U.S. Dollar Carry Trade" and all of it's implications. My overall point is ... quit panicing !!

In the following podcast, I reference an inflation "pop point" or inflation "flash point" that I discussed at length in another podcast.

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)

Click here to Download this Podcast.

Market Multiples
Now, there's just a little more to market multiples, than "what the market is willing to pay for it." You can research more information on market multiples. But remember, what is important, is the context that we find ourselves in, and what people are willing to pay.

(Can be Enlarged):

Yes, we've clawed back to 10,000. Although many of us may have missed the fact that the "carry trade" with the U.S. Dollar was starting? The fact is that it is on, and it's moving the market higher. So we have to act, with that knowledge. Placing what's occurred within context? We have only begun to crawl out of the level that the "prolonged crash" put us in.

Carry Trade:
I wanted to include a chart of the Japanese Yen of what happened during the unwind ...

(Can be Enlarged):
But the Japanese economy, the Japanese, and the markets are still with us. It didn't result in the "implosion" of Japan.

Keep a Cool Head
To follow my comments regarding the importance of keeping a cool head, and working the problem, rather than whining and moaning? Where is the economy at the moment? Right about ... here ...

Just remember, it was a fictional story, but the U.S.S. Enterprise got out of that particular jam. People in real life, get themselves out of difficult situations by staying calm.

So too with your own personal situation. I hedge myself both ways. But for the love of God? You don't get out of bad situations by getting yourself into a panic, which is preceded by a "State of Fear". You have to have a level head, and you have to think.

That's not accomplished by sitting around and crying: "It's all coming to an end!". Just be aware the problem exists, and think about what you can do to prepare for any eventuality.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have over 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.

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