Categories
Currencies

A Rip Van Winkle trade

In an earlier post, we had discussed Rip Van Winkle trades wherein you put on a trade and forget about it for the next 20 years.

While stocks,realty  etc may be some of the investment classes for such trades, even currencies can be a fertile area for Rip Van Winkle trades.

Take for instance, the historical data of USD and the Pakistani Rupee (PKR) for the last twenty years

One would have made 4x just holding onto this trade .Considering the huge leverage one could employ in the forex markets, the returns could have been much much higher

Does this trade still hold?Considering the country’s dire economic straits, radicalization of its people,the immense incompetence of its political leadership  the imminent withdrawal of US from Afghanistan and drying up of western aid, it is fairly clear that the Pakistani Rupee will head lower with time.

So the right thing to do is to sell PKR and buy USD and keep rolling the positions for the next twenty years.

 

Categories
Currencies

Fortunes of War

In an earlier post, had discussed the consequences of Israel attacking Iran.

In most wars, the biggest beneficiary is the one who has not taken part in the war

For example, the biggest winner in the Korean War and the Vietnam War was Japan as the US military used it as a base for their operations

In the US-Afghanistan war, the biggest monetary winner was Pakistan as the NATO supply lines went thru its territory.

In the Iraq war, the biggest winner was Dubai.No wonder it saw a huge boom during that period.

So if the Iran-Israel war breaks out, the country not taking part in the war will be the biggest beneficiary.In my opinion, that country will be…Saudi Arabia.It will benefit by a weakened Iran and/or a weakened Israel and the best part will be that oil prices will remain elevated.

So its probably time to stock up on some Saudi Arabian Riyals !