Multi Currency Portfolios affected by Surging US dollar

by | Jan 13, 2007 | Multi Currency Investing

All the multi currency portfolios we track are affect the US dollar’s movement.

Attached are the five updated 2007 multi currency portfolios. All the portfolios remain in profit but over the last two weeks, a majority of the portfolios were affected by the surging US dollar.

Here is their performance since November 1, 2006, from our last review and now two weeks later.

PortfolioDecember 22, 2007December 29, 2007 January 11, 2007
Swiss Samba3.18%8.10%5.92%
Dollar Neutral5.09%7.94%7.87%
Emerging Market5.91%15.11%4.46%
Dollar Short11.74%12.91%6.91%

We wondered aloud in the last update why the portfolios had popped up so quickly and expressed that it was less a rise in the portfolios than a fall in the US dollar.

We can see a stronger argument now for this understanding as the dollar strengthened in the last two weeks. This suggestion is fortified by the fact that the two portfolios most affected by movements of the greenback, the Dollar Short Portfolio and Emerging Market Portfolio dropped most dramatically.

The US dollar recently shot to a two month high versus the yen and Jyske bank wrote about its strength in its forex analysis. The bank said:

The dollar rallied for a second straight day on Thursday, gaining support from a recent run of upbeat economic data that have lowered expectations the Federal Reserve may cut interest rates in coming months. The latest crop of U.S. economic data including pending homes sales and the Institute for

Supply Management’s report on the services sector did nothing to change a view that although the economy is slowing, there are no signs of a sharp deceleration in growth on the horizon. The dollar has also gained support this week from a slip in oil prices. The oil plunged another

4 % on Thursday, as U.S. fuel stocks showed a big build amid unusually mild weather in the world’s top energy consumer.

The Green Portfolio continued to rise however and the lesson here is clear. If you make an investment in a trend that is tapped into a true economic transformation it will do well regardless of currency moves.

This sudden up and down is also another lesson. What leverage gives, leverage can take away. This is an important lesson to remember right now after 16 months of stunning profits in the portfolios. This is a time to take care. I personally am doing something I rarely do, monitoring all my emerging market mutual fund prices almost every day. I remember the lesson last year when many investors who were borrowing Japanese yen and Swiss francs suddenly panicked and markets collapsed quickly. I am setting personal running stop losses at 15%. If the markets start to slide quickly last years lesson suggests it would be a good time to step back and wait for fear in the markets to clear.

Until next message, good global investing.


See attached file.