By Adam Kritzer
Only three years ago, the first currency exchange traded fund (ETF) was introduced, enabling investors to trade the Euro without having to buy and sell the currency directly. Since then, currency ETFs have exploded in number and scope, such that there are now at least 38 such funds, with more being added every month. Rydex and Powershares are the market leaders, with a combined market share of 80% and nearly $5 Billion in invested capital. There are now funds covering all of the major currencies, and several emerging market currencies, as well as funds tailored for specific purposes and strategies. Given the nature of currency trading (there are necessarily always winners and losers), the current bear market has driven a surge in the popularity of currency ETFs. Also given that the average retail investor is relatively uninterested in 100:1 leverage and 24/7 trading, currency ETFs already represent a viable alternative to direct forex investing. In this guide, I will outline comprehensively how these ETFs can be use to achieve a variety of different investing, trading, and hedging strategies.
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February 10, 2009 – 1:54 am
By now, everyone is surely familiar with the measures that the Federal Reserve Bank and US Treasury (under the auspices of the US government) have unveiled to blunt the impact of the credit crisis. The accompanying debate, regrettably, has dwelled on matters of efficacy; in other words, are such measures adequate to stimulate the economy and prevent it from sliding into long-term recession? Only a few analysts have taken to pondering the long-term monetary implications of such policy-making. This is to be expected, since those who call for restraint have always been outnumbered by those favoring bold (and expensive) action. Besides, the Fed has always had critics, namely those who advocate a return to the gold standard. But perhaps this time is different. In recent memory, the stakes have never been so high, and the global economy has never been so imbalanced. Accordingly, the Fed and the Treasury must be careful that in treating the economic crisis, they don’t inadvertently damage the very foundation of the US economy.
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January 12, 2009 – 9:39 am
Economic analysis indicates that countries that host the Olympic Games typically suffer from economic decline and currency depreciation in the months following its conclusion. The "so-called ‘Valley Effect’ is mainly caused by a dramatic increase in investment in the pre-Olympics stage, accompanied by a boom in consumption and revenues, [but] investment and consumption shrink in the post-Olympic stage." On the surface, China fits this mould, as it spent upwards of $40 Billion building venues and upgrading infrastructure in preparation for the Games. At the same time, most economists agreed that the Chinese economy was both more robust and more diverse than previous hosts, and could even receive an economic boost from the Games, as a result of increased media exposure and tourism.
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