The market is up and that is not a bad thing but it feels like it is lacking conviction. This is a gut feeling more than anything else and hopefully I am wrong about the sentiment.
I have written about a structured product that I bought personally but not for clients that is pegged to a basket of Asian currencies (ticker CAQ). Lately it has been bouncing up a little. It is spending some time above $9.50, but not necessarily staying there, which is new territory in the time I have been watching it.
I still have no plans to buy it for clients due to its complexity and I am not suggesting anyone else buy it either but I am starting to wonder if watching it might be a useful proxy to gauge sentiment for the dollar. This is a theory I am working on and have no conclusions yet. I think it is worthwhile to explore new theories. There are inter-market relationships that exist that can help you better understand your own portfolio.
In a few minutes I am going to a shindig hosted by State Street about gold across the street from our office. Hopefully there will be some decision makers there and I can make some headway with what I think is missing. And maybe the gift bag will include a hat!
Wikinvest Wire
2 comments:
The USD's resistance to gravity has certainly been a surprise, at least to some of us. I've heard all the explanations and while some, such as export intensive countries buying treasuries to support their dollar peg, certainly seem plausible I frankly don't know why we didn't see more weakness in 2005; i.e., rising international equity prices leveraged by appreciating currencies (against the USD) was a great investment theme but only half of it worked out as planned.
Not complaining mind you -- made some money -- but it remains a puzzlement.
Still, Morningstar has recently issued a report on "Value Destroyers" (http://biz.yahoo.com/ms/060123/154001.html?.v=2) that features unhedged international bond funds among the Top 10 worst so I figure the time to buy some is probably right about now ;->
As to gold I picked up a junior miner but sold a major too so, for most intents and purposes, I've been standing pat. At current gold prices the more efficient miners are generating very high levels of free cash so they still seem a reasonable play on value criteria alone even if the metal price stays flat or drops a bit. Besides, the main bet on this sector was placed years ago, it will play out as it will.
RW
taking the other side of M-star is no doubt a good idea.
The dollar is the world benchmark currency for good or for bad. AS such I think it does and will continue to be unique at times. This is not to say the the dollar will be the benchmark currency forever but it is for now to be sure.
Post a Comment