If I were to invest $10,000 into 2-3 foreign currencies, which should I pick ? PLEASE READ ADDITIONAL DETAILS.
This is the prompt for a project in a business class I'm taking. Do not respond with suggestions to invest the money elsewhere, assume that it must be in one or more foreign currencies.
IMPORTANT: Pay attention to the timeframe (2-3 months) a stable foreign currency with a low interest-rate might be ideal over a long period of time, but I'm looking for an ideal currency for the 2-3 months between September and November of this year. Using financial data and credible sources is very likely to get a 'best answer'. Balancing risk, returns, and the timeframe is the key!
Answer:
I recognize that you have to do this for a class and thus have no choice. But as a disclaimer I will say that asking for an investment, including currencies, pick to "maximize gains over a 2-3 month period" is not a good idea. There are no guarantees over such a short time span. Short-term investments are too subject to the natural fluctuations of the market and rely too heavily on luck. You might as well throw darts at a piece of paper listing currencies. Successful investors, from Warren Buffett to Peter Lynch to Ralph Wanger will tell you to invest in predictable and reliable long term value investments.
I'd look into the Brazilian real, Canadian dollar, and some Scandinavian currencies: the krone, the kroner or the krona. Midsized countries with robust, growing economies. Mostly at lows or recent lows so good return possibilities.
I have to comment on the Euro, obviously. It has exploded a bit (esp. against the yen) too much as of late for my taste. It has dropped against the dollar, but risen against about everything else. On the one hand, perhaps it is undervalued against the dollar. On the other, I feel it unlikely that investors would flee one stable currency (dollar) to go to another similar stable currency. It would be a momentum play if anything. That's all. IMO more important than winning this currency challenge is developing your own investing style and philosophy. Thus, more important are your ideas and conclusions.
Good luck!
Open an account at www.interbankfx.com. Buy (Long) USD/CAD pair now.
USD/CAD is rock bottom now. Take a look at the monthly charts and you'll understand why I said buy.
High return often means higher risk. To offset that, time is your friend. In your case, you want high return without risk in short period of time? That is kind of hard.
RMB (China) is clearly undervalued. They are appreciating slowly but surely.
try easy forex:
http://www.bernanke.cn/easy-forex/.
good Luck
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