Raddr's Early Retirement and Financial Strategy Board

[subrosa]

Seen at fundalarm:

http://www.indexuniverse.com/printer.php?id=1420

interest/thoughts?
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Please note: this and all posts by me are for entertainment value only, regardless of how unentertaining they are, & not to be interpreted as medical/legal/tax/financial or other investment advice. Consult your professional in all matters.

[ben]

Well - it is basically interest rate arbitrage (where one borrows in the cheap interest currency and buys in the high interest currency) and does some hedgefund- style things. It could be an interesting diversification tool but I would need to see it "in action" before I give my verdict. Betting on currencies is even harder than on equities due to pride/politics Etc. involved. Expenses and dramatic currency swings can kill that return rather quickly. Cheers!
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90% of my money I intend to spend on wild women, booze, and good times and the other 10% I will spend foolishly.

[bpp]

Isn't this a bet against interest rate parity?

Bpp

[ben]

bpp;yes that is how i see it. my previous post was a bit unclear sorry. Cheers!
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90% of my money I intend to spend on wild women, booze, and good times and the other 10% I will spend foolishly.

[bpp]

Hi ben,

If it is a bet against interest rate parity, and if interest rate parity holds (as I belive studies indicate), then this fund should systematically lose money over the long term...

Bpp

[subrosa]

[bpp]

[lazyday]

Maybe some of you can understand this better than I:

http://www.investorsinsight.com/otb_print.aspx

[bpp]

I don't know if I can claim to really understand it, but yikes. I have been kind of wondering when all this money printing by the BOJ was going to come home to roost. The separation of the exchange rate from the futures prediction from 1995 is quite...impressive.

As far as the new ETF goes, it looks like it is exploiting this anomaly created by the BOJ: the ETF is based on back-testing from 1993, and the BOJ started their quantitative easing policy in 1995. Now that the BOJ is ending their quantitative easing policy, it seems like it would be the exact wrong time to get into this ETF. Unless some other central bank decides to play the same trick starting now.

Bpp

[subrosa]

[Greg]

This is a related article from John Mauldin about Japanese liquidity flows. It might be helpful in your thinking. I still believe we print way too much money too:

http://www.investorsinsight.com/otb.aspx

[redmoon]

Hi Greg. Just curious, why do follow this Mauldin character so closely? Does he really have any credibility other than being a contrarian of sorts?
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Cube farms kill

[Greg]

redmoon: I think he's one of the smartest characters in the business of financial/monetary analysis and market trends. He brings up topics that if I haven't thought about I should. He clarifies them and puts them in context. He is also, to my mind, very cautious and keeps ideas presented separate from what he sells (hedge funds)--somewhat. Bullseye Investing was where I found out about the actual demographic problems that will be faced by this country and western democracies in general. Things are a lot worse now than when I read his book. He talks about why index fund buying may be a problem in the future, etc. Every week I read him, step back for a couple days, and read him again. It's been worth it to me--so far. I do think his "muddle thru" declaration is tied to his livelihood though. Him, Hussman, and the Pimco bunch all the time. Everyone else is optional. Oh, the Magambo Guru to scare the bejezus out of me on Wednesdays.

These guys are the canaries in the coal mine to me. They seem to be focused on the correct things, the ones that determine whether stocks or bonds go up or down and the macro-monetary events that cause this.

Indexing and rebalancing is a form of timing no matter what anyone says. I'm trying to refine my skills enough to get out generally near the tops and in near bottoms. A modest goal to my mind. I do not see a steady growth of 2-3% in western economies for the next 30 years, my probable lifetime. I see increasing volatility and a neccesity of draining the whole pool of financial products down to rational size and rational behavior before that steady-state or slightly improving state happens again. Or just one big dump. Right now I'm looking forward to a 10-15% drop in the market within the next month or two.

[redmoon]

What kind of track record does he have out of curiousity? Right half the time, most, or what? If he hits the big calls he is worth his weight in gold, no pun intended.

I suppose I would prefer a guy like Hussman who maintains market exposure until his technicals tell him otherwise - thus hedging. Not bad, a little balanced approach to both worlds.

Sigh....I am going back to my boring stock/index funds but I am with you in theory my man.

You want to really get scared, get on some of those peak oil forums. You will begin to believe your future life will be living out of a box and eating mayo sandwiches
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Cube farms kill

[Greg]

redmoon: Mauldin makes zero specific predictions that I know of. He just highlights possible trends. He does recommend lots of hedge funds though. If I was to invest in one, I would tend to trust him more than a hedge fund solicitor off the street.

I've been reviewing my own portfolio in the context of putting money into foreign equities and discovered that, separate from Hussman, I've arrived at a portfolio that mildly mimics his. I certainly don't have all my equities covered by puts but a significant portion are protected by RYDEX double downs. He mentioned last week that a 20% gold position is a "moderate" allocation for him. I'm getting close. And the duration on his bonds is now pushed out from 2 to about 2.5. I bought some AOF a few months back which extended my duration slightly, just about matching him. This whole thing sort of confirms to me that I am starting to think a little like him, see some of the things he may be seeing, although what he does is primarily technical in nature. Unless we're both wrong. Then I'm in real trouble .

Maybe you and I and Capt. America and our wives can start a hippie commune powered by methane if we're on the shady side of the oil bell curve