I first expressed concern that yen strength could be a problem for global markets on January 23. I also noted selling my position in the DB Carry Trade ETF (DBV) on February 2.
After I sold DBV it kept going up; I left at least 2% on the table and the last price I saw on it today was the same price I sold it for so the specifics of the sale were not so great. The reason why I sold it though was because I wanted to reduce my exposure to the carry trade. I have exposure to Iceland and Australia which are also vulnerable so those two plus DBV was too much. Interestingly the Icelandic kroner is up against the greenback.
To repeat from other posts, I sold at a time when there was no stress, the yen had not popped yet I was simply worried it might. Now that the yen has popped DBV is just one less thing I need to think about.
The context here is for you to look forward (a recurring theme here of late) to see what you are vulnerable to, assess the probability of whether the things you are vulnerable to will turn against you and then take action.
One possible stopping point for yen strength is that there is carry trade demand coming from within Japan. Japanese investors have to worry about retirement too and 0.50% won't cut it for them just as it would not for us.
Wikinvest Wire
6 comments:
Just a thought, couldn't you have hedged your DBV with a buy of FXY?
Could be a stupid comment as I am still getting my head around these vast numbers of products like this out there.
cheers
dnf
sort of; FXY came out a week or so after i sold DBV
more useful here is that i thought about FXY as a counter strategy but did not pull the trigger.
When Fox News begins their investor channel, I hope they don't turn the minute-by-minute fluctuations of markets into a sporting event.
Roger, Any opinion on whether the yen carry unwind will bolster domestic Japanese stocks? Marc Faber has suggested that it might (if I'm understanding him correctly). Would it be worthwhile to look at some of the newer Japan ETFs like JSC, DNL, or DFJ? I have no Japan (or Asia) exposure at this time.
how did you gain exposure to Iceland? i am looking for a cheap way to invest in Iceland but didn´t find anything, yet
Momo I have no interest in Japan. Years and years of wildly stimulative policy without great results; something is not right.
jf, i opened an account at Kaupthing Banki and wired some money up there. it took months to set up. I am 50% in an ICEX-15 ETF and 50% cash.
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