gera wrote: ↑
Wed Jan 01, 2020 4:18 pm
Jun wrote: ↑
Tue Dec 31, 2019 7:50 pm
there is always the option of investing the spare income in Asia
What does it mean investing the spare income in Asia? If it means investing in Asian stock markets, there is much higher risk in dropping 30-50 percent of Asian stock markets than one's own currency ( unless your currency Iranian pound or Venezuelan bolivar). The only true investment strategy is maximal possible diversification of assets.
Current drop of US dollar versus Thai baht was very sharp and I believe temporal. But whether I am correct or not my reaction will be to temporarily stop spending US dollars in Thailand (including using US credit cards in safe places like supermarkets). I have plenty of other options including the simplest one:drawing funds from my Thai bank account.
That is a matter of opinion.
Also, frankly I couldn't care less if the markets dropped 30-50%. Often when that happens, the loss is recovered very quickly. What I'm interested in is expected returns over the next decade, after ignoring short term volatility. Due to current high valuations in the US -high PE and high CAPE, some of the expert analysts I follow are predicting higher returns for Asia and EMs over the next 7 years.
https://www.gmo.com/asia-pacific/resear ... mber-2019/
As for the hedging, with 45% of my portfolio in Asia plus good proportions in other markets, when the pound fell sharply in 2016, the value of my portfolio measured in pounds went up sharply, therefore preserving my purchasing power in Asia. That's how It's supposed to work.
Also, with some western leaders borrowing excessively and building unsustainable debt piles, I think diversification reduces my risk.
Of course if anyone prefers to spend most of their money in baht, whilst choosing to invest solely in another country, that's their choice. They just have a big unhedged exposure to exchange rates.
Incidentally, there are some Asian funds and trusts that pay dividends of 3-5% approximately. For all the stock price volatility, the dividend payments have just kept on growing.
For anyone who can choose where their assets are invested, options exist.
For anyone whose main asset is a traditional government or company backed defined benefit pension, that's usually a high quality lower risk asset, but with less opportunity to protect against currency fluctuations.
I presume there are some board members in each category ?