As someone with a strong grasp of the political economics behind international currency pairs I was confident that my first million would be traded relatively quickly. However having done a lot of reading, I realized that it is not quite as simple as I thought.
However, theory and practice are far removed from one another as a quick Google search revealed. Approximately 99% of independant forex traders go insolvent. In the words of famous economist John Maynard Keynes, 'The markets can remain irrational longer than you can remain solvent.'
From what I can see, this is largely due to over leveraging of their positions however I have decided to put a hold (excuse the economic pun) on this exercise and rather pursue safer investment options...
A quick study of the investment climate in South Africa reveals a few key features for young(ish), bull(ish) investors:
-The JSE is at an all time high. Investing in equity would be foolish at this time.
- Gold is tracking down from a thirty year high. The opportunity might present itself in the coming future however the downward trend looks to continue for the near future.
Currency still appeals to me. And while I have ruled out the heavily volatile forex market, investing in hard currency might? be the way to go. The Chinese Renminbi interests me no end. The currency is pegged (fixed and currently floating) against the USD and in many economists perspectives is undervalued.
What would happen if the peg was removed? Despite the HUGE implications for world trade, would the yuan appreciate enough to beat the deflationary effect over time?
I think it might.
No comments:
Post a Comment