Saturday, July 25, 2009

Currency

Here I am, writing about currencies.
The thing that I have learnt about currencies up until now is quite lame..
But well, it is at least a start.
Now, as I know.. (I used I instead of you, because People dont read this blog)
I always form opinions of my own, 'extrapolate' if you may.

So, a guy on a forex blog said.. its easier to long a currency of a good economy than to choose companies. Well, I disagreed.
Simply because - there is only so much that a currency will do, whereas - if u long an index fund - that should work out well.
Becoz then, you are long the currency plus the companies.

Getting on...
One thing he said.. if you are American, you should invest in, let's say, Yuan.
Now, I thought...
OK so Yuan is a better currency to hold than the USD.
But, this is as an American.
Point to be noted my pretties.
You see, and this sounds very juvenile... but it is an important point.

As an Indian, if I were to choose the Yuan - it has to beat my rate of inflation or at the least get me more than the normal G-sec.

And as a Chinese - I am holding the 'best' currency - so I need not do anything right?
Wrong - and again this is a simple.... no, very simple conclusion.
My own currencies need to work to beat inflation.

Concluding,
What I have said is very very evident.
But as a finance guy - and this is my point - you need to look beyond what is written or heard.
For example, if someone gives you a 'tip' - understand that the 'tip' has already been adopted by him. If more people follow him - his prophecy comes true.
Therefore, there is always a reason why someone gives you a tip.
We are all human after all...

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