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Constable

Over (Under) Valuation Of Currencies Vs. Usd

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On another note: here is a chart from the Morgan Stanley Strategy Forum on the main tradable currencies:

poundunervalued.jpg

It speaks for itself. Sterling is the most undervalued. The Aussie and Kiwi are the most stretched. No wonder Goldman Sachs is advising clients to go long sterling/short kiwi as one of their top trades.

There again, mean reversion always looks deliciously simple but never quite works the way you think.

Personally I think sterling is overvalued vs. toilet roll.

btw this is what they said back in January: Sterling to enjoy rally against dollar, Goldman predicts. I expect they were trying to engineer a bounce in Sterling before shorting it...

Edited by Constable

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poundunervalued.jpg

Personally I think sterling is overvalued vs. toilet roll.

btw this is what they said back in January: Sterling to enjoy rally against dollar, Goldman predicts. I expect they were trying to engineer a bounce in Sterling before shorting it...

Wowwowigeebee...these guys have a lot more confidence than I do.

I wouldn't even begin to try to value any fiat against another considering the ponzi dynamics that are at play...

They (or their clients) are going to get creamed if they really think that things are that simple...

IMO noise levels alone can cause a +/- 5% difference...

Gold/fiat crosses are exhibiting walk characteristics that are definitely heavy-tailed. That should be enough to scare anyone in the FX markets...

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Gold/fiat crosses are exhibiting walk characteristics that are definitely heavy-tailed. That should be enough to scare anyone in the FX markets...

Could you translate to English for the uninitiated?

Thanks

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Personally I think sterling is overvalued vs. toilet roll.

btw this is what they said back in January: Sterling to enjoy rally against dollar, Goldman predicts. I expect they were trying to engineer a bounce in Sterling before shorting it...

this is what i said back in December

december

Had to update it recently over a longer time frame to get the full picture

july

All going rather spiffingly so far and if the next decline happens as such the goldbugs are going to get decimated, as are the equity bugs as are the bond bugs, as will the housing bugs, in fact if it happens we're globally fcked :D

Edited by Tamara De Lempicka

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this is what i said back in December

Can you explain your thinking words? The graphs look pretty but I've only got a basic understanding of technical analysis.

Edited by Constable

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Can you explain your thinking words? The graphs look pretty but I've only got a basic understanding of technical analysis.

Essentially we're all doomed to enter a hyperinflationary holocaust due to mass printing of money. Grannies who talk to checkoutstaff will be hated as their conversations will increase the price of your groceries by several trillion pounds once they have finished waffling.

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Can you explain your thinking words. The graphs look pretty but I've only got a basic understanding of technical analysis.

rather complex, suffice to say a fall to sub 1.50, before a rally back to 1.70+(this is likely where gbp is on its way to over the coming months) then a big deflationary bust for a couple of years causing a flight to the dollar(probably produced by a number of sov defaults and sharp interest rate rises above 10% for most debtor countries)

or not

Edited by Tamara De Lempicka

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Could you translate to English for the uninitiated?

Thanks

I tried to find some forex noise charts to post so that it could be visualized easily. But I've not had any luck finding them on the 'net. :(

'Walk characteristics' as in random walk (and random flight).

Here's a Gaussian Walk. See how regularly distanced the steps are?

gaussc.th.jpg

Here's a Levy Walk (heavy tailed). See how often big jumps occur?

levyt.th.jpg

OK. These are general charts, but they could be prices, for example.

Another way to visualize this is to plot the price values per day (or some other regular interval) in sequence. Normal (Gaussian) behaviour has a fairly dense price pattern with undulating peaks and trending or 'drifiting' mean values. A sudden large price jump would typically be considered an outlier in this situation. This is (or used to be until recently) the basis of risk models for most trading desks.

If the relationship is not normal (Gaussian) and becomes heavy-tailed (meaning the tail of the probability density more gently approaches zero) a much higher incidence of big jumps in price can occur. This becomes a very dangerous situation, if the distribution has double tails, as occurs in the Levy distribution.

Gold/Fiat crosses have been jumping all over the place during the last 2 months or so. Perhaps more than usual. Hourly, daily, on almost any scale. This can be said to be self similar, and heavy tailed, classical features of a process that is underlain by chaos (at least Mandelbrot would see it that way).

That's why I think that anyone who tries to predict the relative valuation of fiat currencies is a bit barkers at the moment.

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this is what i said back in December

december

Had to update it recently over a longer time frame to get the full picture

july

All going rather spiffingly so far and if the next decline happens as such the goldbugs are going to get decimated, as are the equity bugs as are the bond bugs, as will the housing bugs, in fact if it happens we're globally fcked :D

So where does one park their wealth to preserve as much as possible? Goal being to purchase property at some point with minimal mortgage.

Looking at your projections, if you are looking at 0.7 GBP per USD by 2013 and gold at around $500 then the change in £s from now £821 2010 vs £714 2013 is minimal.

So would it not be wise to wait this out in gold as opposed to sterling? I guess you think the $ would be a better bet?

Appreciate any info/thoughts on my waffling above.

Obviously I don't make a living out of this kind of stuff - merely looking to ensure that I secure the best future for myself and my family. I'm not sure if there is any potential to increase one's net worth in this or if it is purely damage limitation.

About to get evicted from current rental and got every man and their dog telling me to buy a house aaaaaaaaarrrrrrrrrrghghhhhhhhhhhh Hell i'm this close to just signing up to that 5x salary death pledge.

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So where does one park their wealth to preserve as much as possible?

That's my question too. My best guess so far is to stock up on lithium. If resources shoot up in value and people increasingly use electric vehicles, you're sitting on a gold mine ... err ... lithium mine. And if they don't, well, at least you've got a way to deal with your depression.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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