Tuesday

Investing Rule #1: Buy Low Sell High

Post a Comment March 10, 2009 – 6:44 am |   | Permalink |  Print This Post |

Jim Rogers and Warren Buffett share one investing strategy in common: Buy low and sell high. That is the universal rule to investing. Unfortunately, this is often a counter-trend appproach. The pain one has to withstand before reality sets in may be more than one handle. Some prefer “confirmation” of a change in trend before taking a position, which is probably the right thing to do if “confirmation” can be reliably achieved.

The Euro is on the move higher again. The jury is split in terms of the outlook for Europe. Jim Rogers argue that it is a “flawed currency” and will “probably fail to exist” in the future. There are many others who share that view (us included). Being at all time high, it is the perfect long term trade. Countries we favour include Brazil, Canada, Australia, and New Zealand - being rich in commodities and agriculture. We already have a position in the Euro/AUD, and are watching the movement of the Euro/NZ closely. The New Zealand Central Bank are expected to cut interest rates on 12 March 2009. When expectations are not met, we know what will happen to this preemptive rise in the Euro against the Kiwi.

We aim to fire a short Euro/NZ at 2.65 (mini). This all time high anchor should be a long term position. If your broker uses NZ as the currency for this position, a long position would minimizes losses and maximizes profits.

Euro vs AUD and NZ