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Earl wrote
>Date: March 28, 1999 1:07 PM
>Subject: Re:MKT Japan
>>Assuming my analysis is correct, this demonstrates the kind of
>>situation which is a profit killer: a rising foreign market combined with
a
>>declining foreign currency. This means that the foreign market will rise
in
>>local currency but not prove particularly rewarding in US currency.
>
Dan replied
>
>I don't disagree with your analysis, however, if one is trading dollar
>denominated mutual funds, such as the Scudder Japan Fund, fluctuations in
the
>currency market would be reflected in the fund price. In other words,
>couldn't straight technical analysis of the mutual fund be used to make buy
>and sell decisions without worrying about the changes in the currency
market?
>
>I will appreciate your thoughts on this subject.
>
>Dan
>Pocatello, ID usa
Of course you can use TA to make trading decisions without accounting for
currency fluctuations, but in that case you will be effectively charting or
trading mutual funds and currencies at the same time and without being able
to isolate the one from the other.
Earl's point as I understand it is that the American dollar value of
Japanese market investments may be offset by a decline in the value of the
yen. Unless the mutual funds are themselves hedging the currencies, the
dollar denominated charts of Japanese mutual funds will not emulate yen
charts of those funds (or the Nikkei) and the reported increase in the value
of Japanese investments will be illusory for American investors.
Regards,
Tony
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