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Friday, July 12, 2013

Short Japanese Yen again

Early Apr, I talked about buying the J-stocks and shorting Yen via. EWZ and YCS. Here is what I said: "please keep in mind this is not a short-term trade as Yen may likely fluctuate in the near term. However, 6 months to one year from now, I'm quite confident that this trade will be quite profitable." Well my timing was nearly perfect as both these trades went up +20% within just a few weeks. But also as I said, they could fluctuate over the course. Indeed, both J-stocks and Yen crashed in days about 2 weeks ago. There was some concern that the J-government money-printing might not continue as they intended. But what has been happening next? Both have bounced back strongly and recouped most of the loss. Keep in mind, it is very unlikely that the Japanese central bank will slow down their money-printing as long as the current government is still in power. After all, it is Abe's mandate to boost the J-economy with the loose money policy and he hopes that he can re-write the history by taking the J-economy out of the 20-years long muddy pool. It is quite possible that Yen will further weaken from the current level of 100 (US$ to Yen) to 115 or even more. I think now is another good opportunity to use any short-term Yen strengthening to short Yen again by buying YCS. It is a 2 x leverage ETF shorting Yen. So if Yen indeed weakens 15% by year end, YCS should jumps 30% higher. The big trend should be on your side.

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