Thai Baht Expectations

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Undaunted
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Thai Baht Expectations

Post by Undaunted »

The baht expected to continue strong preformance against U.S. dollar:

https://www.bangkokpost.com/business/fi ... d-for-baht
"In the land of the blind the one eyed man is king"
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Gaybutton
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Re: Thai Baht Expectations

Post by Gaybutton »

The hope there is the fact that over the years there hasn't been even one exchange rate prediction that actually happened as predicted. Unfortunately, most of the time when the prediction was that the exchange rate would improve, instead it got worse.
Jun

Re: Thai Baht Expectations

Post by Jun »

Gaybutton wrote:The hope there is the fact that over the years there hasn't been even one exchange rate prediction that actually happened as predicted. Unfortunately, most of the time when the prediction was that the exchange rate would improve, instead it got worse.
Predictions should be mostly useless, as the forex market is made up of many informed participants. The people who think the baht will rise will be balanced by those who think it will fall. If that's not the case, the rate would already be changing to restore equilibrium.

Also, for forecasts about the direction of the baht, about 50% of them will be right.

What I've always found very odd is that people on boards keep speculating over where it will go next, when we know that we don't know.

Meanwhile, hardly any one is interested in discussing what to DO about it.

For example how to arrange their financial affairs to reduce sensitivity to exchange rate fluctuations. In many cases, people DO have some control over that, but they have no interest in the topic. Wonder why am I in the minority on this ?
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Re: Thai Baht Expectations

Post by gerefan »

Jun wrote:Predictions should be mostly useless, as the forex market is made up of many informed participants.
If they were that “informed” why haven’t they made a fortune and retired??
Jun

Re: Thai Baht Expectations

Post by Jun »

gerefan wrote: If they were that “informed” why haven’t they made a fortune and retired??
Because everyone else is working at it too and it's difficult to get far ahead of the competition.

Trading currency is a zero sum game, so for everyone who makes a profit, someone is taking a loss. To make consistent profits, you need to be consistently making better decisions than the average traders.

If all the currency traders in the world study like hell and improve their education, they are still competing with each other.

OK the likes of George Soros can make large amounts of money speculating on currency, but he's very much the exception.

Since we're not going to get any special insight into where exchange rares will go next, I think it makes more sense to make our finances robust to currency fluctuations.

I would however say that any country that's importing more than it exports, has consumers borrowing like hell and the government also borrowing like hell shouldn't really expect currency appreciation over the long term. The US and UK are examples.
fountainhall

Re: Thai Baht Expectations

Post by fountainhall »

Preedictions? Financial pundits? Soros can gamble huge amounts because he has massive amounts of cash. He also spends his life studying market movements.

As for me, I don't trust anyone. Remember financial "expert" Jim Kramer who continues today to dish out advice on MSNBC and his famous prediction in 2008 -



Bear Sterns went bust the following week!

Remember the speculators who bet against the Thai Baht in 1997? They got beaten off in the first round, but came back two months later and the economy tanked for years.

With all but two regional currencies devalued in the ensuing crisis, those same speculators then turned on one which could not be devalued because it was pegged to the US dollar. The Hong Kong economy was suffering and the speculators bet that the US dollar peg would be either ditched or the peg rate altered with the HK$ effectively devalued. In August 1998 they mounted a sustained attack on the Hong Kong dollar. They borrowed huge amounts of Hong Kong dollars and then shorted a massive amount of Hong Kong stocks. But the Hong Kong government knew it was coming and for every stock shorted, it bought the same amount. The government ended up spending US$15 billion - 10 times more than it had originally estimated. But the peg held. The speculators were caught off guard and were forced to retreat after suffering massive losses.

For the Hong Kong government these stocks became a huge financial windfall. It offloaded the stocks at a substantial profit into a special bond fund open to other investors. Since then it has reaped further huge profits from its share in the bond fund.

Speculate and some win; some lose.
fountainhall

Re: Thai Baht Expectations

Post by fountainhall »

I am sure you are right and that the pundits are more often also right than wrong. I guess it is much more people like me who never had much interest in stock markets. I always had a feeling that they were a sort of lottery, a gamble which could result in some modest short term gains after which I'd take the profit. Of course, too often a stock would go down and I'd start to panic and sell.
Jun

Re: Thai Baht Expectations

Post by Jun »

rocket wrote:Most would do well with an index fund which is a proxy for the market.
That is clearly better than nothing. Although it is possible to do better.
rocket wrote:But if you look at a chart it does look like the market has gone parabolic. The next few years should be interesting.
THE market ?
I presume you are referring to the S&P500 or some other US index, since the MSCI all world index certainly hasn't gone parabolic.
The big secret is there are loads of markets. People can choose to diversify overseas. If that includes some funds investing in SE Asia, then you have the dual benefits of moving some exposure away from the US market which is looking overvalued (see link) and holding something which may correlate more closely with the Thai baht, so reducing currency risk (for people spending some of their money in baht).

I have about 39% of my portfolio in Asia & about 2.4% in the US, although of course I'm not a US citizen.

http://www.multpl.com/shiller-pe/
Jun

Re: Thai Baht Expectations

Post by Jun »

The US market has had a very good run.

However, what matters now is where it goes from here.
Markets that are already on a high valuation tend to under perform. Mean reversion is a factor & investing in what has done well in the last 5 years tends to be unsuccessful.
The companies which are in the top 10 by global market capitalization tend not to be in the top 10 10 years later.
Exceptional growth is required to justify the valuations of some of the large cap tech stocks. Historically, companies of that size have tended not to have exceptional growth.

I agree that some of the developing markets should be on a lower rating due to corruption, theft etc, but in many cases they are on a much lower rating than the US, such that they provide relatively good value.

Also, steering back to the thread topic, which was exchange rates, either we can invest 100% in our home currency (USD, GBP etc) and be at the mercy of exchange rate variations for overseas expenditure. Or we can diversify globally to reduce that risk.

In Britain, the latter option has worked well in recent years.
The idiotic fiscal policy from Mr Trump cannot help the medium and long term prospects for the US dollar either.
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