Multi Currency Portfolios – Small & Large – Us Investors as Well

by | Dec 8, 2007 | Archives

Multi Currency Portfolios can make sense for even small investors…though they work for large investors as well. So we are creating additional portfolios that anyone can hold with even a few thousand dollars including US investors.

We’ll take a look in a moment. First, let’s see an excerpt from the latest Multi Currency Portfolio Update that I recently sent to my Multi Currency subscribers. That update looked at the one month performance from Nov 1 to Dec 1, 2007 of the six 2008 portfolios we currently track and said:

“Portfolios 2008 Dec. 01

Infrastructure -18.58%

Emerging Market -19.62%

Danish Health -38.06%

Green -11.43%

$ Short Non – 6.24%

Blue Chip – 2.00%

“When we announced the 2008 portfolios we mentioned our concerns over volatility in the short term ahead and wrote of the Blue Chip Portfolio:

“Blue Chip Portfolio. One prominent feature we saw in the portfolios we tracked these last two years has been the panics. The world is not convinced yet that emerging markets are the places to go. Plus emerging markets are highly leveraged, especially with Japanese yen loans. One lesson we learned from the panics of the last two years is that equities recovered the best after each panic. There are many scenarios we can imagine that will cause a 2008 panic including further fallout from the sub prime loan disaster, a slowing US economy and over $100 a barrel oil. Last go round investors fled to US dollar bonds. As noted above the flow to US dollars last July could have been the last time in our lives, that we will see a rush for safety into the US dollar. If there is a 2008 panic we are thinking that investors will flee into Blue Chip, mainly non US dollar, equities…and this portfolio will do well.

Look above at the first month’s performance again. See how accurate these comments were.

This update looks at the Blue Chip Portfolio in more detail:

Currency InvestmentInvested AmountToday’s Value
SEK Hennes & Mauritz B 50,000.0048,352.46
CHFRoche Holding AG-Genuss 50,000.0056,444.27
JPY Toyota Motor Co. (7203)50,000.0049,126.72
USD Samsung Electronics-GDR CO50,000.0050,500.00
EUR Adidas AG50,000.0051,399.10
LOAN Interest RateBorrowed Cost to Repay & Interest Now
JPY 2.750%100,000.00104,285.15 254.92
CHF 4.375%100,000.00103,823.73 403.76
   208,108.88 254.92

Here is what is interesting about this portfolio at this time. The investments are up even though the portfolio is down! $300,000 was invested and the shares after one month are worth $306,372…an appreciation of about 2%…which is darn good growth in a month.

The loss comes from forex changes in the loans. The total loan repayment is $208,363.80…thus creating a loss position at this time. $100,000 was invested, $200,000 borrowed. After the loan pay off the portfolio’s value would be $98,008.30.

Almost this loss is due to appreciation of the borrowed Japanese yen and Swiss franc since the interest cost for the loan this month has only been $254.92.

This is the first time in over two years that we have been able to see a good example of the risk side of borrowing yen and francs.”

You can read this entire update by subscribing to our Multi Currency Portfolio Course. See details at Multi Currency Portfolios Course

Good News

We are adding several small investment multi currency portfolios to track.

One of these portfolios is being created by Larry Grossman, a friend of many years who is a US financial consultant.

Larry writes:

“ Gary , Currently the following ETF’s exist. The good news is you can buy as little as one share of each.

Australian Dollar

British Pounds

Canadian Dollar


Japanese Yen

Mexican Peso

Swedish Krona

Swiss Franc

G10 Currency Basket (They are long some of the G10 and short others as

indicated by the current weighting below)

AUD 9/17/2007 34.47% 33.33%

CHF 9/17/2007 -35.50% -33.33%

GBP 9/17/2007 35.19% 33.33%

JPY 9/17/2007 -35.59% -33.33%

NZD 9/17/2007 34.11% 33.33%

SEK 9/17/2007 -35.71% -33.33%

“US Dollar Bearish (100% short the dollar) – US Dollar Bullish (100% long the dollar). These are available through the USDX futures contracts in an ETF.

“We can blend these in any manner you need and most of them allows us to go short if need be.

“I had my staff start to put this into Excel yesterday and I am almost done. Larry”.

I’ll announce the final Small US Investor Portfolio as soon as we have it posted.


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