Currencies and currency markets play a crucial role in a portfolio, especially over the long term. By taking advantage of the long term economic global trends one can really lower his investing risk and increase his rewards.
I discuss what gives strength to a currency, long term currency outlook, how inflation affects currencies, and where are the current investment opportunities to buy currency investments on the cheap for proper international portfolio diversification.
I also discuss forex but it is a bit complicated.
Emerging markets are the key from every aspect.


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Comment (13)

  1. Sven, how do you decide when to exchange your local currency into USD when looking to invest in the US market? or any foreign market for that matter.

  2. Guys don't you dare and lose the last chance of being rich, I mean it GO invest in SpreadCoin (SPR) its 27Cent right now by the end of the year it will go to 2$ , I invested 1 bitcoin on it and the profit will be super HUGE it only has 9Milions suply and only 2 milions invested on it , you don't wanna miss this chance.

  3. I agree, according to pure economic growth less developed countries are the place to be. However most successful companies (world leaders) come from developed countries. I can't think of a single russian company offering any famous product. And I suspect that technological innovatioins mostly comes from countries with high living standards too, because if people are satisfied and happy (not struggling to fullfill their basic needs and not living in fear) than they are creative and powerful. And I think it's also about how innovative a society can be. Some cultures don't support thinking on your own. So, I think free minds are helpful (and nice of course). There are studies that a team works best if there is trust for example (maybe pressure and fear works too for a while – but than you only have Zombies in your company).

    For pure economic growth (like all those internet service companies in China) a country where not all people have a certain product or service yet are very good to invest. You buy a sector leader and that's it. But I wouldn't ignore the developed world completely. I havn't done any research, it's just what I think.

  4. Soro's Does currencies…and bets against it 🙂 – Black Wednesday: George Soros' Bet Against Britain
    Stock Market Videos 177/500 Subscriber Goal

  5. Hi Sven,

    I appreciate this video as I am always looking for cheap stocks. But there is a danger, that you get stuck with value traps, even though the CAPE-PE and PB-ratio remain very low:

    Russia received a top score from Starkapital. As there are mainly energy stocks in the RTS, one would first have to know where the oil price will move. Australia for example has lots of mining stocks. The prices are not likely to move up, if the world economy stagnates, etc..

    Europe is not so negative. There are several countries with high scores on the Starkapital list: Italy, Portugal, Austria, Norway, Emerging Europe. Wouldn't it be safer to invest in these countries? Where do you see a bad outlook? (Look at the debt situation in China, for example).

    How come that so much money keeps on flowing into US-stocks although everybody knows that the US-market is totally overvalued? (The annoying thing is that when the US-market drops, everything drops).

    I wonder what methodology Dalio used to predict the GDP growth for the next 10 years. A lot depends on politics, on the Central Banks and on a healthy world economy. In Dalio's graph it looks like the GDP growth will decrease in most countries (except India). Dalio thinks that Europe will not have solved the Greek/Italian/Spanish problem within the next 10 years. Oh dear!

    By the way: I do not follow inflation and interest rates in Argentina, but the Macri-government placed a 100-year bond with a mere 7.25% coupon recently, if I remember correctly. (It was shocking to me that they can sell a 100-year-bond – and with such a low interest – as Argentina defaulted twice only recently).

    In sum, I agree with your outlook. But if there will be a downturn you have to run fast as EM stocks drop a lot more. The US-markets are still setting the pace. Probably also in the future, or not?

  6. re CAPE, countries move in ranges. For example, UK rarely goes over 20 whereas France & Germany average a CAPE of 24 since 1999. Australia & Asia generally is reasonably cheap.

  7. It's a subject that is often overlooked "Base Currency" I have a portfolio base currency in USD (as I trade 99.9% the US markets) and as it's a large account I currently hold 8 currencies (10 if you include Gold & Silver) and increase my portfolio returns by switching between currencies (also used for hedging). This wouldn't be doable for everyone but in an investors/traders life occasions will present that if you have the correct mindset you can really make great FX trades. One of my greatest trades was back in 08 when GBP/USD (cable) was 2.1, at that time I had a large amount of GBP (well over 6 figures) and started scaling in buying the dollar at 1.9 all the way up to 2.1 till I run out of GBP. Within a few weeks cable had its biggest weekly fall in 20 years. The mindset I had was at 2.1 it's a gift. Now since the events of Brexit I have been scaling in the other direction and into precious metals (50%v50%) which I now see as today's gift. Only time will tell if I'm correct.

  8. Emerging markets contribute to 35% of worldwide GDP but make only 10% of total market capitalisation.

  9. Hi Sven! In relation to currencies and interest rates… do you think the banking sector in those specific countries (Brazil, Russia, China) could be perhaps attractive? I remember you didn't like Chinese banks… what was wrong about them? They trade below book value, with low PEs and high div yield. I guess they take advantage of positive interest rates in relation to inflation.

  10. Speaking of Russia, I wanted to invest in SELG (PE=1.6), ALRS (PE=7.5) and AFLT (PE=4.3), but they are traded at the Moscow stock exchange. Do you know a way to get access to such stocks? I have an advantage of reading their financial documents in Russian, but I don't want to fly to Moscow to open a bank account…

  11. Sven- Nice video and a good take on the emerging market. What's your take on USD and Indian Rupee (INR) in the long run? Would INR grow stronger in valuation than USD? Currently, 1 USD= 64 INR. What do u think the exchange would be in the coming years as Indian market grows? Thanks

  12. Sven this was one of your most brilliant videos. Extremely helpful. I am bullish on the US dollar and your post about the fed minutes and how they are “surprised to see inflation staying lower than expected” adds confidence to my bullish bias. What do you think of that scenario?