This chart shows the British pound going up 8% versus the yen over the last three months. This is kind of a big move for a currency pair.The carry trade has been working of late, this after the unraveling of the carry last spring in what was dubbed the risk aversion trade.
I do not know how much longer the yen will stay weak but at some point it will turn up (whether it would then stays strong is another issue) and a lot of the high yielding currencies will feel it as might their respective stock markets.
This is not something I feel the need to trade as I am not predicting a repeat of last spring but if news coverage of any correction does not include yen strength, perhaps we will have someplace to look. Also, knowing where a bump in the road might come from helps in not being caught off guard.
11 comments:
I suppose that the yen's weakness is still due to their economic weakness and failure of their central bank to raise rates.
It's definitely all about Japan not raising rates and everyone else (or at least the British in this specific case) doing so. For a while there the BOJ looked like it would make a move, but that's all since gone away.
here is a question for one of your "a reader asked ..." posts :)
what do you think about AGD (Alpine Global Dynamic Dividend Fund) and the upcoming AOD (alpinecef.com)? and would they compare to similar offerings from Wisdom Tree -- if any, i do not know much about Wisdom Tree specific offerings.
Somebody brought AOD to my attention recently. Their goal is 10% of dividend, paid monthly. Their current offering, AGD, seems to have fallen a bit short of 10% yield, though it appreciated by more than that since inception in 2006.
A bunch of my high yield bonds are maturing, and while i made a killing on those, i am not going back into the high yield market in this environment. I am considering AGD/AOD instead for the "income" portion of my portfolio... technically speaking, it is the cash-flow portion since i reinvest income.
thanks in advance.
The thing that intrigues me about the Alpine funds is that they do more than own high-yield stocks; they pursue a dividend capture strategy. One can argue the advantages and disadvantages of the strategy (high transaction costs for one), but from the perspective of portfolio management, it may offer the benefit of diversifying the *strategies* in one's portfolio, not just the asset classes. Thoughts, Roger?
Patrick,
thanks for bringing that up. I've always wondered if such a strategy works. Since the stock price drops by the value of the dividend on the ex-day, we cannot just move into and out of the dividend stocks. We have to gain some appreciation back before we move out.
I tried to play with the strategy on a very small scale in my trading account, i had no success. hopefully the Alpine people are smarter than me and manage to succeed where i failed.
Right, Sami. In theory (i.e., the dividend discount model), it's a zero-sum game. The historical returns of ADVDX, however, suggest that smart people can make money with this difficult strategy, which is one of the few situations, IMO, that justify a hefty management fee. Merger arbitrage is another example of a difficult strategy that's worth paying for. I'd love to see an ETF for that.
Does anyone know of any computer software that allows for self adjusting trailing stops. By that i mean a system that would always for examlpe be set to sell a stock that has run up if it goes down below a 50% profit from its original price over time.
I have a yen for Japan, having bought the iShares Japan in December for my speculative portfolio. More upside than down, IMO.
I see that Cramer recommended BNS as one of his two favorite foreign stocks tonight. That makes three of us who like it, correct?
Anonymous regarding trailing stops...have you considered not cementing your floor to be 50% of the security's gain? It seems that your 50% is your threshold. But if the stock were to go up another 25%, you wouldn't want to lose all of that 25% to honor your 50% mark would you? Perhaps considering using a $ trailing stop (if your trailing stop is $2, if the stock falls $2 it will trip) or a % trailing stop (if your % trailing stop is 8%--pick something appropriate for the volatility of the stock in question--it will sell once the stock declines 8% from its current value). If I have any of this wrong, I hope others will jump in.
no imput on trailing stop software.
no interest in Japan.
BNS is a client and personal holding. Cramer liked it?? Interesting.
Trailing stops > I'm certain most trading software can do this, but you could do easily do the same in Excel.
Post a Comment