Wednesday, August 6, 2008

Bear Market. Or Not.

This discussion is annoying. And the main problem is that it doesn't mean anything. Who cares if we are in bear market or not? It usually clear afterwards, and you can't make money looking back. You can only make money on what WILL happen. The only thing about market I know for sure is that we are in a long term sideways market, which started in March of 2000. Before that we were in 18 years of bull market. Jim Cramer declared bottom. Doug Kass doesn't agree. In the last 6 months Doug predicted market better. So my Modus Operandi is "buy dips, sell rips and don't miss sure trades". I honestly don't know what part of my portfolio will win. Experience of 2000-2004 shows that half of it will, making profit in total. I just don't know what half. But I still keep oversized (for me) cash position.

What I think about currencies? That's complex. I sensed Euro rise in 2003, made money on European Fund (traded then under ticker EF, now extinct). I still have significant part of my investment in companies registered outside of US and in funds invested abroad. But My current gut feeling is that US dollar bottomed and now will go up against Euro. Reason: Euro was thought as a better currency than dollar, but it offers less investment opportunities. And European economy officially tanked and now is going down faster than US one. I also think that currencies of countries with significant commodity exports will see their currencies go down with commodities. That includes Australian dollar, Canadian dollar, South African Rand, Mexican peso, Russian rouble. Brazilian real might be in the same company, but there are several factors in Brazil which might work for real. Brazil Central Bank is very afraid of inflation and raises rates at the smallest threat. And Brazil economy is much less dependent on commodities exports than other above mentioned countries. Or at least it's a perception, which quite often trumps reality. I don't have enough information to talk about other currencies. Swiss frank for me is a some kind of shelter currency, and I don't know whether I'm right or wrong. I have no idea of what moves Singapore dollar (and most other Asian currencies). Japanese Yen is an exception. I think Bank of Japan lost all control of it and it's totally dependent on yen carry trade. That means that yen should go down compared to US dollar short term, but long term is not clear. We might yet see dollar carry trade in six months...

Of course, I might be completely wrong on all counts.

Disclaimer: This article is not intended as an investment advice. Every person should make her/his own investment decisions based on all available information and advice from her/his own financial advisor.

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