I updated my currency basket this weekend, it's seems pretty clear to me that CHF is well into 'silly' territory. Yes, Switzerland may have a relatively well-run banking system and so on, but it has a population of only 7.6 million, why do all these international investors who've done the "flight to safety" imagine that the whole world can use a currency with such a small base? It's like all the passengers from a sinking ship jumping into the same lifeboat and hoping that it will stay afloat.
The first chart shows from 1990 onwards, the second chart shows from 2008 onwards, as you can see, there was quite pull back a week or two ago:
Sunday 28 August 2011
Swiss Frank Silliness
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12 comments:
Things can stay silly longer than the retail punter can stay solvent.
Long dated US and UK government bonds are another silly one if you ask me, so is gold.
I've been watching as opposed to trading for the last couple of months. I'm coming to the view that the only successful trading stategy is following the trends, and the 'silly' money.
As tempted as I miht be to go long GBP against CHF, contrarian investing is not an easy strategy. Having said that, maybe it is time to start shorting CHF, US Gvt bonds, gold etc. BMW and Daimler look dirt cheap too.
Who actually carries the cost of income tax.
Italian football playing economists illustrate the question with a real life illustration of the question
http://www.dailymail.co.uk/news/article-2027039/Italians-uproar-footballers-threaten-strike-new-taxes-towns-face-merged-Berlusconis-budget-supercuts.html
SL, markets can stay silly etc, quite true. But currencies are a long game, you have to think in terms of years, and they always come back. GBP has been scraping along the bottom (between 0.75 and 0.8) for nearly three years, it won't go much lower and it come back one day. And never short them, just put your money into the most undervalued one and hope for the best.
Den, well spotted, the answer is here: "Most top players, especially foreign stars, negotiate their net income upon joining a team, and it is then up to the club to handle their fiscal obligations."
I think the stagnation in western economies means that there is a lot of money looking for an alternative to equities, hence bubbles are more likely. Commodities seem to be particularly susceptible. All the QE money seems to go this way too, exacerbating the problem.
Everyone should negotiate their net income, at least until we get LVT
DNA, yes, it's one bubble after another, the housing bubble pops, so we get an oil-price bubble; the oil-price bubble pops so we get a gold-price bubble; the gold-price bubble will pop, etc.
Anon, that's exactly what the Swiss tax system does. If you are non-Swiss but want to live there, you don't need to bother reporting your overseas income and paying tax on it, you just pay income tax on notional income of five times the rental value of the house you live in, which pans out at about 8% of its selling price.
The Swiss have been in the news quite a bit this week...
We've had Emmental on the business pages
And then there's that thing where their banks are paying money to our Exchequer. Mmmmm that sounds all wrong, isn't it usually the other way around?
Hey and good timing too... Sterling is worthless so I bet its mere pocket change to them.
I think its time to deleverage my cuckoo clock portfolio... Now where's that deleveraging tool in on my swiss army knife?
The best thing about Switzerland is that it is not part of the EU. And this is surely another reason for the recent strength of the CHF!
why do all these international investors who've done the "flight to safety" imagine that the whole world can use a currency with such a small bas
Because it's far more than just a currency and Switzerland is far more than just a country.
It's HQ.
So why has the Euro been doing so well recently (I'm talking about before the Swiss mentioned pegging CHF)
JP, fair play to our Treasury for prising money out of them.
DNA, and you're allowed to smoke in pubs, the streets are clean, the drivers polite etc. But the UK is not in the Euro and Norway and Iceland are not in the EU.
JH, d'you think so?
Anon, EUR has not been doing well at all, it's just that GBP has been doing marginally worse.
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