This page has been archived and commenting is disabled.
Australian Dollar Owners Make a Killing.
Those who took my advice to buy the Australian dollar at the $.80 handle (click here for the call at http://www.madhedgefundtrader.com/may_25__2010.html ) are no doubt now shopping for the next vintage Ferrari to add to their collection, a contender for next year’s triple crown, or a new mansion at the Hamptons. Sure, they know the house will drop in value by half, but who cares?
Those who loaded up on the Ausie made 11%, and 55% in a month if they used 5:1 leverage that some currency traders favor. Not only have the outrights done well, so have the crosses, such as Ausie/yen and Ausie/Euro.
The Australian dollar tanked in May because of a global flight from risk and a proposed 40% windfall profits tax on mining companies that triggered the most ferocious negative advertising campaign in TV history. Since then, hedge funds poured into the currency down under, making it one of the world’s best performing assets this month.
The bottom line is that interest rates there are high and rising, while ours are low and stagnant, to the benefit of Ausie holders, and at the expense of Buck owners. Australia is running a trade surplus and a labor shortage, not American style trade deficits and labor gluts.
Then the stunning news emerged yesterday, that the man who proposed mining tax, Chinese speaking prime minister Kevin Rudd, was tossed out on his ear by his own left-of-center Labour Party, to be replaced by Julia Gillard, a Welsh borne former trial lawyer.
I’ll date myself hear, but when I first lived in Sydney 40 years ago, women were not allowed to go into pubs. They were restricted to the more civilized and vomit free “lounge.” To see a woman now running the country is irrefutable evidence of how far the country has come.
The Russian Central bank said it is moving a portion of its reserves into Australian (FXA) and Canadian dollars (EWA). They join a procession of central banks that have been pulling the ripcord on the troubled euro and landing into currencies with vastly better fundamentals.
I still love the Lucky Country’s currency and the stock market (EWC) long term, seeing it eventually reaching parity against the US dollar. But you might want to take the easy money that has been made off the table during otherwise diabolical market conditions. If you’re wondering who’s that singing “Waltzing Matilda” in the shower, it’s me.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two and a half years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
- advertisements -
I Love you madhegefuntrader, I do
Take your misspelled (I’ll date myself "hear") commercial press release somewhere else.
So your returns were "11%, and 55% in a month if they used 5:1 leverage that some currency traders favor"? Why not claim that someone using your recommendation made 555% in a month, if they used the 50:1 leverage that some other currency traders favor?
Plus, all fiat currency is suspect in this environment,
madhatter
Ausie 1
BP -1
Those of us who have been short since the Aussie was in the mid 90's think you are a moron.
Hopefully you are using the insane leverage you are talking about as you will be a guaranteed loser of 100% of your equity at some point.
Why does finance attract so many fools?
+1
The leverage he's talking about really is insane... Currencies are volatile! Yesterday the aussie was down by 2.7% - that's a nice loss for the day if you multiply by five... Who the hell takes a countertrend move with five times the leverage!? I seriously hope you're not actually trading for a hedge fund...
His Ausie bet is sane when compared to his BP bet to "average down" (from $44-46)
Yes it was a great bounce pick! Risk on/Risk off is still the rule though. If one is of the opinion that the market as a whole will tank, so will the Aussie, with or without mining tax.
Great call on the AUS, but "a woman running the country"?
No one person EVER 'runs' a country.
Who are her power brokers behind the curtain, mate? THEY run the country just as they do here, Canada, and every other country, state, and fjord in the world.
Gotta laugh at those who call theBamster the Most Powerful Man in the World. What a crock.
True, but...what would happen if one fine morning, a POTUS with serious backbone were to roll out of bed, get on the phone to DHS and declare all of Ponzi schemers financial terrorists. Since apparently the Supreme Court advises that a terrorist is anyone the govenment accuses. That would win them a one way ticket to Gitmo- no lawyer, no hearing, no appeals, just....gone. The banks may control the money, but POTUS is CinC.
been a blast.. Still wonder when the house bubble will burst in Oz.
It's coming mate... the YOY percentage price increases are unsustainable since they are far exceeding the increase in domestic growth. Once the bubble bursts, the hot money will exit. Mean reversion will be .....wait for it.... BITCHEZ!!
Good call!