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Or you can now use TapaTalk again!350Z's 2007 I Fund Thread
- Thread starter 350zCommTech
- Start date
- Status
WIND_HUNTER
Member
Rod
Well-known member
350zCommTech
Well-known member
350zCommTech
Well-known member
Re: 350Z's I Fund Thread-Feb07
It appears to me that the bulls are very much in control of this market. 1 or 2 down days might be all the pullback the bears can muster, then it's up we go again. With the Fed on hold and the BOJ handcuffed, money is still too cheap. If get some more hedge funds to blow-up, we might see a correction.
350zCommTech
Well-known member
Re: 350Z's I Fund Thread-Feb07
Yen carry trade explained:
"The Mechanics of the Carry Trade
With short-term Japanese interest rate remaining close to zero percent, the financial press is filled with stories of how the so-called "yen carry trade" is helping to fuel run-ups in the prices of many financial assets. The yen carry trade works this way: an investor borrows Japanese yen at very low interest rates. He then sells the yen and buys another currency - say, U.S. dollars. The dollars are used to buy a high-yielding U.S. asset - say, a non-investment-grade corporate bond. After the bond matures, the investor collects his principal and interest and sells the dollars for yen, which he subsequently uses to repay his original yen loan. In sum, the investor has borrowed yen at a low interest rate and has used them to buy a high-yield U.S. corporate bond. The same strategy can be employed to buy other high-yielding assets, such as Brazilian bonds, Hong Kong stocks, etc.
The upside to these trades is that investors can realize significant returns by borrowing low and lending high. The downside is that they can become unprofitable if short-term Japanese interest rates rise, which increases borrowing costs, and/or the yen appreciates. In the event of yen appreciation, the investor would need to sell more foreign currency than he originally anticipated to purchase the same amount of yen. Although yield differentials could continue to exist, the profitability of the trade could get wiped out if the yen appreciates too much.
Indeed, an unwinding of yen carry trades contributed to volatility in financial markets in October 1998. As shown in Exhibit 1, the Japanese yen, which had been depreciating versus the dollar for three years, began to appreciate in August 1998. In early October, jittery investors unwound their yen carry trades en masse by selling their high-yielding assets and the underlying currencies for yen to retire their yen obligations. Not only did the Japanese currency appreciate very sharply in early October as investors scrambled to buy yen, but prices of high-yielding assets tanked. The Federal Reserve cut the Fed funds rate twice (for a total of 50 bps) in the subsequent month to bring liquidity back to financial markets. Thus, the existence of a significant amount of carry trades is more than just an academic curiosity. They can potentially lead to significant amounts of financial market volatility if they are unwound at the same time."
http://www.actionforex.com/forex_an..._carry_trade:_fact_or_fiction?_2007012616440/
SkyPilot
Well-known member
Re: 350Z's I Fund Thread-Feb07
One thing to consider... not so much the number of days up, but rather the amount up. Often this amounts to the same thing, but not always... I think (mho) that the amount is the greater factor than the number of days in a row.
Just a thought...
Rod
Well-known member
Re: 350Z's I Fund Thread-Feb07
One thing to consider... not so much the number of days up, but rather the amount up. Often this amounts to the same thing, but not always... I think (mho) that the amount is the greater factor than the number of days in a row.
Just a thought...
Right about that, especially when it's at an high like it is now.
Time for some selling...FUTURESTRADER
Active member
Re: 350Z's I Fund Thread-Feb07
One thing to consider... not so much the number of days up, but rather the amount up. Often this amounts to the same thing, but not always... I think (mho) that the amount is the greater factor than the number of days in a row.
Just a thought...
agreed...additionally, the amount or fraction of percentage away from a relative moving average, followed by the tendency to revert back to it. This becomes the 'volatility' and can be measured, (vega). Factor in a time period, 'time decay' (theta), like "S&P won't hit 1465 by Feb 16th", and your selling options.
350zCommTech
Well-known member
Re: 350Z's I Fund Thread-Feb07
Early estimate: down .430% or 10 cents.
350zCommTech
Well-known member
Re: 350Z's I Fund Thread-Feb07
Down .432% or 10 cents.- Status
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