Multi Currency Portfolio Update #28

by | Oct 11, 2007 | Archives

We are nearing the end of the year and the performance of the five portfolios we created for 2007 has been quite good.


Mar 27

June 28

July 20

Aug 17

Sept 28

Oct 5

Swiss Samba16.15%44.80%45.84%15.19%44.40%47.94%
Emerging Mkt12.81%54.31%67.67%30.50%103.22%105.22%
Dollar Short20.12%33.81%40.31%9.14%42.71%42.06%
Dollar Neutral16.58%37,64%38.07%13.56%34.74%37.19%

We will have one or two more updates for 2007 and then begin the 2008 portfolios.

We need to applaud Thomas Fischer and his team at Jyske Bank. They have created really great performance for 24 months and have now completed their work on the 2008 portfolios. They suggest the following and I have agreed:

We will continue to track the Green Portfolio as it stands. However to make equal comparisons with the other new portfolios we’ll reset the Green Portfolio to zero and track its growth for 2008.

The second portfolio will be an Infrastructure Portfolio.  The bridge collapse in Minnesota highlighted an economic fact I have been thinking about for some time….that it is more politically attractive to promise new things rather than to spend government funds just keeping things the way they are.  Politicians who put in new roads, new facilities and create new opportunities for their communities attract attention…and votes.

Then the bridges begin to fall…the potholes become too large and too many…and tunnels leak even before they are built.  With the public’s attention on the rot of America ’s infrastructure there is likely to be a rebuilding.  This is where the Infrastructure Portfolio is directed.

The Infrastructure Portfolio will consist of six shares and be leveraged two times. $100,000 will be invested. $100,000 will be borrowed in yen and $100,000 borrowed in Swiss francs so the portfolio will begin with $300,000 shares.

The Blue Chip Portfolio is founded on three economic facts. 

Fact #1:  Emerging markets have outperformed major markets for the past six years.

Fact #2: We have seen a global bull market for a number of years and history suggests that the time for a downturn in near.

Fact #3: Times of rapid appreciation in equity markets are normally followed by times of slow appreciation.

One lesson we have learned in our studies of our portfolios these last two years is that emerging markets can drop quickly and dramatically.  In 2006 our emerging portfolio dropped over 50% in just months!   In 2007 the portfolio again dropped over 50% from July 20 to August 17.  When markets panic, they tend to shift to the perception of quality…ie Blue Chips.  

The Blue Chip will also consist of six shares and be leveraged two times. $100,000 will be invested. $100,000 will be borrowed in yen and $100,000 borrowed in Swiss francs so the portfolio will begin with $300,000 shares.


The Danish Health Portfolio will aim to cash in on the growing demand for health products.  This portfolio will consist of six Danish shares and will be leveraged one time in Swiss francs.  $100,0000 will be invested and $100,000 borrowed in Swiss francs.

The Emerging Market Portfolio will run for a third year and look very much like that of the last two. This portfolio will consist of four Jyske Invest funds and will be leveraged one time, half in Swiss franc and half in Singapore dollars. $100,000 will be invested and $50,000 will be borrowed in Swiss francs and 50,000 in Singapore

Dollars so a total of $200,000 will be invested.

Finally I have asked the Jyske team to create one Un-leveraged portfolio. They selected a Dollar Short Portfolio. The US dollar has dropped a lot in the past few years and enormously in the past forty years. History however shows that the buck’s long term free fall is punctuated with recoveries of some extended periods…nasty for the short term speculator. The US Dollar Portfolio bets on a continued dollar drop but in a careful way without the added potential that leverage brings for profit….or loss.  If the greenback shows strength this year the Dollar Short Portfolio will be a good one worth holding until the American federales once again destroy the US currency. See attached Excel file.

We are living, as the Chinese curse suggests, in interesting times and Jyske’s team led by Thomas Fischer have put together some interesting portfolios. I look forward to sharing them in the year ahead with you.