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Or you can now use TapaTalk again!Playing the I fund
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James48843 said:Japan Up big.
Most of Asia up big.
London Up a bit.
Most of Europe Up a bit, or up big.
Dollar plunges again in the last half-hour- adding the "compounding exchange rate" factor.
Could this be another "more than 1% gain" day for the "I" fund? ? ?
Looking that way already
James,
This is addressed to you, but I would ask anybody that can clarify my concerns to pitch in. I don't mind if we can only speculate on the impact this week, because I need some help in understanding the potential effect of the compounding exchange rate factor on the I fund. Assuming that the U.S. markets correct to the downside and EAFE follows a bit, but the Dollar keeps falling and on June 8 the ECB raises rates, is it reasonable to expect that the drop in the I fund would be contained or absorbed to some degree by the compounding exchange factor and prevent the price of the I fund shares to drop excessively?
My appreciation and thanks to you, and to anyone else who is willing to help me understand this point!
Wimpy
Member
The currency component aspects of the I-Fund are certainly compelling. The dollar is in a long-term bear trend and has much farther to fall to balance the triple deficits as there is currently no other mechanism to achieve this balancing of the 'books'.
We no longer produce anything of consequence that doesn't carry far more liabilities (wages, health care and pensions) than assets, so, we won't be able to pull ourselves up and out of the quagmire by our bootstraps.
The destiny of the dollar is driving gold and the international funds. Foreign inflows of capital are showing signs of weakening and this will accelerate the dollar's decline. The I-Fund will become a major benefactor of the dollar's decline. There are efforts by some to shake gold and the international funds out of weak hands. This latest effort is complete and the dollar will resume its downward trend.
Many hold the viewpoint the I-Fund is hinged to the U.S. markets to the extent it will get caught in the undertow of a capsizing U.S. market. I disagree. I think there is ample evidence the Asian markets are decoupling from U.S. markets and are expanding their internal markets. Those markets are certainly expandable with the high savings rates for which their citizens are famous.
I think the I-Fund will continue to do well during the dollar's continued decline and will also show increasing evidence of decoupling from the drag of the U.S. markets. The I-Fund is certainly the place to be with our TSP funds, in my opinion, and it will soon become apparent to many in the G-Fund that its purported safety is largely an illusion. It has lost 5% of its purchasing power since the first of the year. How much more purchasing power will it lose before the 'books' are balanced? The dollar has lost more than 50% of its purchasing power since 1980 and the books are a long way from being balanced.
I'm seeing the I-Fund increasingly as a 'buy and hold'.
Birchtree
Well-known member
It's good to keep in mind that 60% of FTSE revenues are in dollars, if the dollar sinks so does the FTSE. That I fund component is 27.5%.
I don't have a problem with the dollar because I'm not traveling outside the country this year. But there is currently another U.S. invasion going on and it's not from Mexico. The Canadians are here in mass - spending their appreciated Loonies. The WORLD is on the way to buy everything on the cheap.
Wimpy
Member
Birchtree said:
The dollar's purchasing power is not limited to travel. Every time a person purchases a product made outside the U.S. they are taking a virtual trip outside the U.S. that has a noticeable impact on their budgets and Wal-Mart's anticipated earnings. The decline of the dollar increases the cost of items in Wal-Mart as well as foreign travel. The decline of the dollar also impacts the price of fuel used in this country. The direction of the dollar is very important to the domestic consumer's bottom line. Foreign travel is a very small part of the equation. Nice try.The European Market makes up roughly 66.5% of the I-Fund. The value of the euro -vs- the dollar is only a part of a larger equation controlling the value of the I-Fund. If European markets tank out... the I fund will be affected; bet on it. If interest rates are raised, it will affect the sentiment of Europeans stock buyers. Ask yourself... what happens in the US when interest rates are raised beyond the comfort level of investors?
Yes, a drop in the I fund would be contained or absorbed to some minor degree by the compounding exchange rate factor of the dollar -vs- the euro. It will not however prevent the price of the I fund shares to drop excessively. JMHO.
Check out this for more information: http://news.bbc.co.uk/1/hi/business/4488550.stmsponsor said:James,
This is addressed to you, but I would ask anybody that can clarify my concerns to pitch in. I don't mind if we can only speculate on the impact this week, because I need some help in understanding the potential effect of the compounding exchange rate factor on the I fund. Assuming that the U.S. markets correct to the downside and EAFE follows a bit, but the Dollar keeps falling and on June 8 the ECB raises rates, is it reasonable to expect that the drop in the I fund would be contained or absorbed to some degree by the compounding exchange factor and prevent the price of the I fund shares to drop excessively?
My appreciation and thanks to you, and to anyone else who is willing to help me understand this point!
Last edited:
FundSurfer
Well-known member
Ouch! The market sucks today....
OK...Berny is hawkish on inflation...hints at rate hike at next opportunity - maybe more - sounds like a familiar song.... "hikes are probably done - maybe just one more". This will cause dollar to bounce.... bad for I-fund.
ECB ... Discussing raising rates on June 8?? This may well have already been priced into the market by now... but this will strengthen Euro, thus lowering dollar, thus helping I-fund.
I think this means short lived bounce in the dollar which is destined to fall again in a few days.
I'd bet that today we see an FV. Tommorrow could be more bad news for I-fund as foriegn markets lag ours. If you are not in the I-fund, tommorrow might be a good day to buy because we could be setting up for a bounce on Wednesday. Especially if US markets show signs of bouncing tommorrow.
If you are already in the I-fund, you may just want to hunker down and ride for awhile. You won't be able to get out till COB tommorrow and if you do, you could end up missing a bounce opportunity.Now check this link, Sponsor...
ECB may raise interest rates to 3%
http://business.timesonline.co.uk/article/0,,16849-2210975,00.html
They're talking about going a half % this time; June 8th.Fivetears said:Wimpy said:
As long as the price of oil continues to increase along with interest rates, coupled with hedge funds imploding, equities here, Japan and Europe will continue to sell off. Until this condition changes, I'll take a slower rate of loss in purchasing power versus a faster hit in equities. If the I Fund had a larger component to it that reflected the Yuan/Dollar or Chinese (further East) equities, then I would ride the I for a much longer time.
Rod
Well-known member
Birchtree said:
Amen
As long as your shares are intact you've got nothing to lose unless the price falls below the point in which you bought in.
Heck, my target price could be met COB tomorrow since I'm sure Japan will be thrown into a panic. But then I have to evaluate if I need to bail because a bounce will be right around the corner.
That's why sometimes it simply pays to go long, both monetarily and emotionally.Right, dollar is heading straight up at this time (8:52 EDT) and foreign market all down by a bunch. Question is: Does a second down day make an entry point? If this is all psychology driven, markets obvious but also currency cuz traders are still digesting Bernake, it could turn on a dime. What happens (later this week??) when the European bank raises rates?
Oh, for a crystal ball !!!Man... I don't know Rod. The world markets page looks like an aircraft bird strike. Yeah, It'll come back. But I'm still looking for a solid "limbo" entry. How low will it go, is what I wanna know? :nuts: http://quote.yahoo.com/m2?u
Rod said:
The_Technician
Active member
Fivetears said:Man... I don't know Rod. The world markets page looks like an aircraft bird strike. Yeah, It'll come back. But I'm still looking for a solid "limbo" entry. How low will it go, is what I wanna know? :nuts: http://quote.yahoo.com/m2?u
I'm looking for the high to mid 50's soon Fivetears.......watch it.... don't get caught holding the bag.....The only bag in my personal possession is the G Mobility Bag. Been holding it at 8.49% since April 19th. 4 year cycle lows are dangerous play grounds for the average TSP invester. Couple that with all the other less than favorable news, and you have yourself a real TSP train wreck waiting to happen. I do love watching those who choose to dance on the tracks though. Some are really good at it. Hell, I may even tempt fate at some point before October, as well. :nuts: But right now... not even.:notrust:
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