No. of Recommendations: 4
Wow, so you're saying that from 2008 until today, the purchasing power of the dollar is up relative to the other currencies of the world by about 40% (72 to ~100)? That's a pretty strong move, isn't it?
Absolutely. Big moves like that aren't that rare in forex, and they often happen faster--that's a very long term move. I think in this particular stretch, it has been driven to a large extent by portfolio flows from the rest of the world into US equities.
If you can trade currencies successfully, you can definitely make all sorts of advantageous moves.
Definitely. But the "if" in that sentence is doing a lot of work! FX is almost the closest thing to a true random number in the finance world. A trade with, say, 55-60% chance of success probably needs to start from strong and too-longstanding overvaluation on one side, momentum starting to move in the direction of sanity, and a short term catalyst like interest rate differentials moving in your direction. I gave up doing any FX beyond what I need for the actual things I do in a few countries.
Stock prices (some stocks) are much easier to predict, by comparison. Berkshire was somewhat more richly valued than usual 1-2 years ago, so it seemed reasonable to anticipate a good chance of 1-2 years of below average returns, followed by a few articles along the lines of "Buffett has lost his touch".
Jim
