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Yen collapse leads to deflation?


Zorrofan
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According to Albert Edwards the end is near, and (according to Zorro) Prem's big deflation bet might just payoff......

 

http://www.businessweek.com/news/2014-10-02/albert-edwards-says-watch-japanese-yen-and-be-very-very-afraid

 

The one thing you can count on with macro economics is things not unfolding the way you expect.  Is Albert a perma-bear or is he right? 

Thoughts, comments??

 

cheers

Zorro

 

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I like his advice on investing in Japan and hedging out the currency risk..I think that's really smart. As for Prem's bet working out...I don't think that will happen. The United States in my view will recover. A devaluation from China won't necessarily have any effect on the US. After all the US has been dealing with a devalued Chinese currency more than 20 years. Low-priced Chinese labour and goods are not really that big of a deal.

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According to Albert Edwards the end is near, and (according to Zorro) Prem's big deflation bet might just payoff......

 

http://www.businessweek.com/news/2014-10-02/albert-edwards-says-watch-japanese-yen-and-be-very-very-afraid

 

The one thing you can count on with macro economics is things not unfolding the way you expect.  Is Albert a perma-bear or is he right? 

Thoughts, comments??

 

cheers

Zorro

 

Yes, he is a Perma bear.

Like most finance professionals, Edwards hasn’t always had impeccable timing. He’s been telling investors to reduce their holdings in equities for almost 20 years.

 

He is wrong.

 

Still helpful to think about scenarios.

 

The future is always uncertain so it is unlikely that an exact outcome can be predicted other than by chance.

 

;)

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“What happened in March 2009, when the S&P 500 touched 666, that was just a brief stop,” he said. “We will go lower than that. The structural bear market ends when equities are dirt cheap.”

 

 

Compare this mindset to Buffetts of constantly buying good lasting businesses.

 

;)

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  • 1 month later...

Being a permabear is difficult, the markets are biased upwards.  It's like swimming against the current.

 

Foreign investing is tough because there are two moving parts, the company and the currency.  I've left all of my foreign investments unhedged.  Right now my gains in USD are lower than my local currency gains on foreign holdings.  But just looking at right now when the dollar is strong ignores a few positions I sold where I made outsized gains due to a lower dollar a few years back. 

 

There's a Tweedy Browne article on foreign investing that shows that over a longer time period the foreign currency gains/losses wash out.  I believe someone posted a blog post on this for USD/CAD maybe two years ago as well.  Like anything, if you jump in and out you have the potential to win big or lose big, but steady investing wins over both in the long haul.

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