New way to make millions of EASY DOLLARS exposed? (news) - GoFuckYourself.com

$5 submissions · 11-02-2009, 06:18 PM

Well, the "carry trade" is not exactly new (people used to do it with the Japanese yen). The "new" thing here is that it leverages the dollar's decline and historically low interest rates: http://www.ft.com/cms/s/0/9a5b3216-c...44feab49a.html

HINT: The carry trade also explains why, despite overall weak fundamentals, the stock market has been going berserk lately.

Steps:

1) Borrow US dollars at historically low rates (read the article for effective interest rate... it will blow your mind) -- if the US dollar drops during the loan period, better WIN for you since you have less to pay if you buy assets that go up in value.

2) Buy foreign assets that can go up in value in one of two ways (normally BOTH): the currency behind the asset appreciates against the dollar AND/OR the asset goes up in value because of other people boosting up the value due to the carry trade

3) Pay back your loan

Rinse and repeat

$5 submissions · 11-02-2009, 06:38 PM

Here's the downside:

"Why will these carry trades unravel? First, the dollar cannot fall to zero and at some point it will stabilise; when that happens the cost of borrowing in dollars will suddenly become zero, rather than highly negative, and the riskiness of a reversal of dollar movements would induce many to cover their shorts. Second, the Fed cannot suppress volatility forever – its $1,800bn purchase plan will be over by next spring. Third, if US growth surprises on the upside in the third and fourth quarters, markets may start to expect a Fed tightening to come sooner, not later. Fourth, there could be a flight from risk prompted by fear of a double dip recession or geopolitical risks, such as a military confrontation between the US/Israel and Iran. As in 2008, when such a rise in risk aversion was associated with a sharp appreciation of the dollar, as investors sought the safety of US Treasuries, this renewed risk aversion would trigger a dollar rally at a time when huge short dollar positions will have to be closed."

tiger · 11-03-2009, 02:17 PM

Thanks that was a good read.

96ukssob · 11-03-2009, 02:35 PM

IMO, the best time was this time last year to buy foreign real estate or assets as the Euro was about USD$1.24:E$1 (im to lazy to find the Euro sign, so Ill use E)

now the euro is about USD$1.47:E$1

even with the low rate, you would need to find a really really good deal to make it worth it IMO

might be better to buy assets and property in the US to take advantage then sit and wait for 5 years when the market is better and sell

$5 submissions · 11-03-2009, 03:01 PM

Quote:

Originally Posted by tiger

Thanks that was a good read.

You're welcome

fatfoo · 11-03-2009, 04:14 PM

It's always about chances with these stock markets and buying dollars, and such things. Nothing is for certain. It's like gambling.

11-02-2009, 06:18 PM	#1
$5 submissions I help you SUCCEED Industry Role: Join Date: Nov 2003 Location: The Pearl of the Orient Seas Posts: 32,195	New way to make millions of EASY DOLLARS exposed? (news) Well, the "carry trade" is not exactly new (people used to do it with the Japanese yen). The "new" thing here is that it leverages the dollar's decline and historically low interest rates: http://www.ft.com/cms/s/0/9a5b3216-c...44feab49a.html HINT: The carry trade also explains why, despite overall weak fundamentals, the stock market has been going berserk lately. Steps: 1) Borrow US dollars at historically low rates (read the article for effective interest rate... it will blow your mind) -- if the US dollar drops during the loan period, better WIN for you since you have less to pay if you buy assets that go up in value. 2) Buy foreign assets that can go up in value in one of two ways (normally BOTH): the currency behind the asset appreciates against the dollar AND/OR the asset goes up in value because of other people boosting up the value due to the carry trade 3) Pay back your loan Rinse and repeat __________________ Need a NON-ADULT income stream? We build your YOUTUBE CHANNEL for only $20 per video! For Hire: $3/hour or $400 per month Marketing Specialist Virtual Assistants

11-02-2009, 06:38 PM	#2
$5 submissions I help you SUCCEED Industry Role: Join Date: Nov 2003 Location: The Pearl of the Orient Seas Posts: 32,195	Here's the downside: "Why will these carry trades unravel? First, the dollar cannot fall to zero and at some point it will stabilise; when that happens the cost of borrowing in dollars will suddenly become zero, rather than highly negative, and the riskiness of a reversal of dollar movements would induce many to cover their shorts. Second, the Fed cannot suppress volatility forever – its $1,800bn purchase plan will be over by next spring. Third, if US growth surprises on the upside in the third and fourth quarters, markets may start to expect a Fed tightening to come sooner, not later. Fourth, there could be a flight from risk prompted by fear of a double dip recession or geopolitical risks, such as a military confrontation between the US/Israel and Iran. As in 2008, when such a rise in risk aversion was associated with a sharp appreciation of the dollar, as investors sought the safety of US Treasuries, this renewed risk aversion would trigger a dollar rally at a time when huge short dollar positions will have to be closed." __________________ Need a NON-ADULT income stream? We build your YOUTUBE CHANNEL for only $20 per video! For Hire: $3/hour or $400 per month Marketing Specialist Virtual Assistants

11-03-2009, 02:17 PM	#3
tiger Confirmed User Industry Role: Join Date: Apr 2002 Location: Los Angeles Posts: 6,986	Thanks that was a good read. __________________

11-03-2009, 02:35 PM	#4
96ukssob So Fucking Banananananas Industry Role: Join Date: Mar 2003 Location: If I was in your ass you'd know it Posts: 12,991	IMO, the best time was this time last year to buy foreign real estate or assets as the Euro was about USD$1.24:E$1 (im to lazy to find the Euro sign, so Ill use E) now the euro is about USD$1.47:E$1 even with the low rate, you would need to find a really really good deal to make it worth it IMO might be better to buy assets and property in the US to take advantage then sit and wait for 5 years when the market is better and sell __________________ Email: Clicky on Me

11-03-2009, 04:14 PM	#6
fatfoo ICQ:649699063 Industry Role: Join Date: Mar 2003 Posts: 27,763	It's always about chances with these stock markets and buying dollars, and such things. Nothing is for certain. It's like gambling. __________________ Send me an email: [email protected]