why are you not massively shorting the dollar? - Page 3

spider · #21 09-22-2007, 02:24 PM

Also, if you find that you are successfully able to predict currency changes, you might want to ask Alan Greenspan for a job as he has maintained that exchange rates are unpredictable. So I'm sure he will be very impressed when you prove him wrong!

soko · #22 09-22-2007, 05:21 PM

Can you please point me to sources that say the euro is overvalued? Everybody who knows nothing about currency is jumping on the euro bandwagon it seems.

spider · #23 09-22-2007, 07:32 PM

Economist Big Mac index (might need subscription) implies Euro overvalued by 22%.
Big Mac Index

Not the most rigorous PPP index but not w/o merit either. I'm pretty sure the Economist has suggested in other articles that the euro might be overvalued but I can't find any other links.

But just to be clear, I'm not trying to predict anything. Just saying that lots of people thought the dollar would lose value and it has -- about 15% in the last year and 30% in the last 5 years. Will it drop more? I don't know, but it won't keep dropping forever, just keep that in the back of your head if you decide to play the currency game.

spider · #24 09-22-2007, 07:49 PM

Actually, here is what I was looking for:

The Economist

Here is the relevant text if the link requires a subscription:

"Morgan Stanley uses no fewer than 13 models to value currencies. Its latest update offers a wide range for the euro's fair value against the dollar from $1.02 to $1.29, with a median value of $1.15. By all measures the euro's current rate of $1.34 looks overvalued. Sterling and the New Zealand, Australian and Canadian dollars also all look too expensive (see chart). Most striking is the New Zealand dollar that is 29% overvalued."

Edit to add: note that Euro has risen to $1.41 since the article was published (June).

Ray Zee · #25 09-23-2007, 01:30 AM

because when the masses are touting something as a good bet, it is time to think about going the other way. works everytime.

petp_the_greek · #26 09-23-2007, 05:43 PM

ive been (indirectly) short the dollar for the past 5 years....needless to say, im VERY satisfied with my returns and have no plans whatsoever to reverse the position until next summer/fall.

dazraf69 · #27 09-23-2007, 06:54 PM

Seems a little late to profit from the decline o the dollar as the market seems well aware of it. At this point it may be the case that the dollar is over sold ( or at least I hope). It does seem though that the government/FED feel a weaker dollar may help the account deficit and the trade deficit.

KingGordy · #28 09-23-2007, 07:31 PM

This might be a stupid question, but aren't expectations already factored into the price the currency trades at? If it's 'obvious' to everyone that the dollar will continue to decline, isn't that already reflected in its current price?

Fishhead24 · #29 09-24-2007, 09:28 AM

No, as most people do not understand how bad the situation is right now with the US DOLLAR..........it is on the verge of being worth ZILCH, NADA, NOTHING.

spider · #30 09-24-2007, 09:59 AM

I was trying to buy a DVD player at a Best Buy in Virginia yesterday but they wouldn't let me b/c all I had was dollars but they were only accepting Euros. Clearly, Best Buy knows what is up and doesn't want to get stuck being the last holding on to worthless dollars. Idiots at Circuit City happily took my money though. I even gave one of the kids working there $5 to carry it out to my car. What a moron, he didn't even realize he was doing it for free!