Investment in which currency?

[dinesh]

Hi Friends,

After seeing the slide of US dollar,I need to know which currency will be better to deposit the money in fixed deposits.All stock markets are very high.So which option will be good for investments.Investments of about Three millions,very hard earned money.

[flyingchair]

When you are talking about that sort of money two thoughts come to mind:

1. If all you want to do is CDs then I might suggest a mixed bag of currencies to spread risk. Playing the currency game can be very dangerous.

2. Markets are falling at the moment but to be honest that is good news. If you are looking at a reasonable investment period before you touch the money again, say two or three years, I would watch this cycle and by into some medium risk growth funds - emerging geo markets or emerging vertical markets, and take advantage of cheapening unit prices because in the upturn, more more units of a fund you own the more accelerated your return will be.

To answer your question directly, the lower the US dollar is, the more attractive it becomes. If you buy into a CD now from another currency (not the HK$ obviously as it is pegged) you get a lot of US$ and in two or three years you might stand a very good chance of turning it into a good return if the US$ rebounds which it ultimately will do as these things are all cycle based anyway.

Fixed deposits carry litte risk but frankly they carry little reward. I'd rather put 500K of that in CDs for as long as I can, accessible in emergencies, and the rest in a mix of funds in different markets, spreading the risk, and then eave them to ride the cycle.

[sghkcn]

Hi Friends,

After seeing the slide of US dollar,I need to know which currency will be better to deposit the money in fixed deposits.All stock markets are very high.So which option will be good for investments.Investments of about Three millions,very hard earned money.

The best currency is gold, which performs inversely to the US dollar.

[cb1118]

I personally think Stock market is still the best investments.
for USA market now, the only good stocks is "technology" because it owns all the creativity and patents on all the latest technology.

example, Apple Inc. and RIMM (Blackberry mobile service), Google

in searching what stocks to invest, you must understand the PEG
that's profit growth divided by its PE value.
if the value is below 1, it is good price.

of course, the market is very very risky and overheated now.
we all are waiting for the best adjustment (talking about 4000 index points different everytime) and then hope to catch on a short rebounce.
(not an easy task for rookie players)

Anyway, markets that you can consider is
Brazil, Russia, Thailand, Eastern Europe (such as Czech Republic, and other newly joined EU countries)
**as long as you stay away from US market, you should be able to control level of risks.

Taiwan is also a good market to keep a close eye as it has not grown at all during the past 8years.
so after the election, there may be a change in economy.

and for currency, the only one worths to invest is RMB.
if you save your money in banks in China, you will get very good saving interest rate, and the rate is increasing in the coming year.
so you get both growth in interest rate, and strong exchange rate vs US Dollar.
but it is not a free trade currency.

[cb1118]

anyway, the information is just for discussion.
I am not responsible and do not suggest for any buying / selling decision based on this.
Everyone should study further more informations and do his/her own analysis.
In the end of the day, one is responsible for his/her own action in investment decision.

[cb1118]

further discussion about investments;
(sharing of my experience)

to be honest, you make the right decision to just save up the money now.
it's not the time to put more "new money" into the stock market.
I believe, regardless the age of a person, long term investments are the best financial return.
But economy is run in "cycles", so there are time that one must to be more conservative, and other time to be more agressive.
Now is time to be conservative.

as a long term investor, I don't think it's wise to spend time to catch all the short term rebound. Instead, it's better to put money in a safer place and focus in one's career.

From time to time, one may read news about some young people quit working and focus on day trading as main channel of income.
This is very scary thought and action. I would have doubt about how many actually succeed in doing this.
I only believe to use investment as a way to grow my monthly saving from my salary, so as long as it beats the growth of living index, I am successful. I don't expect to get 25% in 2 weeks.

always bear in minds: "priority is to trust only in yourself", so read books of investments to gain more knowledges, and make your own decision.
of course, there are people who simply cannot do this and must rely on a professional finance planner.

In my experience with the HK stock market, I think
HK market does not have much regulations, and most individuals are very short term. so the local chinese books about investments are usually only suitable for the way of HK market.
there are many books about "technical analysis, chart analysis".
I guest everyone trys to find a way to read the market's trend.
such as the mentioned PEG. I mention it only because it is the hot topic among readers now. It gives a way to explain about the high PE situation in the 2007 market (the book that talks about this is first released in July 2007).

**the cover of the book is http://www.cosmosbooks.com.hk/img/bo...882116580L.jpg

The book also mentions about PEVG, EBITDA MARGIN, ARPU.
It is kind of becoming a "bible of investment" among chinese readers now, as most never experience very high PE but prices continue to grow. So, it is like a way of finding an explanation about things that are happening (people just want a way of reasoning)
I mention it only because PEG is what people have been talking about for months now.
Of course, there is no magic formula to give a "risk free" environment. It's always a 2 heads snake, it does not guarantee a stock with PEG of 0.5 will become 1.0 (growth) or drop to 0 PEG (crash) in the future.
the only fact we know is the lowest price of any stock share is 0.

Also, there is a group of investors who supports the "technical analysis/chart anaylsis". (you won't believe how many chinese books talk about reading charts). By reading many books, I only know these kind of anaylsis only may work in a specific region, and the same way usually do not work in other countries.
So, from my experience, I think it gives not much help to do this.

besides the way of technical analysis, direction of economy growth, and the most important, political situations, direction of currency.
**out of all, political situations is the most uncontrollable matter and has the biggest impacts on the market.
political situation can change things upside down immediately.

the mood of the market is the next thing, if a very negative mood is built up (in reaction to future economy expectation), it is a very strong force to impact the market direction even for the stocks with strong finance support.

Out reading all books, I like a point of view from this author
?The Seven Pillars of Wisdom in Stock Investing ?
Author: CHAN Yan Chong
**he writes a finance column in Apple Daily every Mon-Fri

He mentions about
"having stocks in the heart, but not on the hands"
what he means is to reach a level that you owns shares of stocks but your mind is not worrying about its price changes (of course, you still need to keep tracks about changes in the stocks' business market situation)

after some experiences, I think I start to understand what he means;
I try to give the easiest way to explain it here;
for example, one have money to buy 3 LOTS of share A at $1
usually, it will be very good if the share gives a growth of about15% annually.
but let's say the market gets very exciting and grows 30% within one year.
so the return is almost double of the expecting return, it's good time to sell some of it but it is still "a stock with good business future" (however, I do not plan to buy more of it when it is now 30% increase in price)
according to this "point of view",
let's sell 2 LOTS of share, for the remaining LOT is actually costing nothing (it is purely from the 30% profit)
so now one can decrease the risk, gain some cash flow so he/she can strike again in the next market crash or big adjusment, but he/she still owns shares of this stock "free"!!

I have experienced his theory since I bought a stock in late 2006 in relatively much lower prices than what is today.
It works alright because it puts me in a situation where I can gain return if the market price continue to surge, and I still make profit if the market crash (I still make about 15% profit even its price crashes 50%)
and the best part, I get cash flow to "choose" to strike again when the stock price reflects its "reasonable" true value. or, of course, I can use the money to invest other things.

But even doing this way, I think it is not wise to put any "new money" into stock market today.
China is doing everything to cool off the market.
America is the biggest importing country, so any political changes and economy downturn, currency exchange rate will affect the world, I doubt if anyone can be left alone.
Inflation is the most worry factor now.


for choosing the reading materials, I still find these 3 books to be the best resources;

The Five Rules for Successful Stock Investing - Pat Dorsey
The Intelligent Investor - Benjamin Graham
One Up on Wall Street - Peter Lynch

[sideduck]

One thing you have to understand is if you think you will need the money or not. If you put things away for longer periods, then of course you can put things in more risky portfolios. What I think is a good investment is real estate. If you are living in HK at the moment, maybe buying a rental property is good. The average price of a home increased roughly 7-10 percent. Where can you get such a stable investment with a return like that. The prediction is that housing prices will still continue to rise and by the end of next year the market may have gone to 12-15%. Now I would consider this a good investment with good return.

[whong]

Dinesh,

Short term wise:
since this is hard earned money, put at least 50% to CDs, MM funds, and bonds -- "not bonds funds". The rest of them, maybe you can consider-- CDOs, SIV commercial papers -- they are @ very attractive prices since these investments are sponsored by US Feds, UK Euro central banks, and other Asia central banks. you can buy them @ bargain.

Long term wise: stay at least 25% stocks and 25% real estate trust funds. or previous posters said-- a real estate. a real estate that generate at least 6 to 10 % yield on rental income would be perfect.

Back in November, I have posted a comment where Central bank would step in and bail out wall street and left behind the main streets. A lot of people disagreed. As it turn out in December, major world central banks have stepped in.

Pretty soon, US government would do another tax cut to boost consumer spending to maintain the retail sales so that 2008 US recession would be avoid. that's the topic for another day!!

as cb1118 pointed out in his disclaimer,

anyway, the information is just for discussion.
I am not responsible and do not suggest for any buying / selling decision based on this.
Everyone should study further more informations and do his/her own analysis.
In the end of the day, one is responsible for his/her own action in investment decision.

100000% AGREED.

[dinesh]

Thanks friends,
For your valuable advices.
I will consider every word of advice given here.