Jill Kirby on Radio people with sums on deposit losing 10% recently due to fall in €

[Fiskar]

Chris

What pensioner over the age of 70 has the risk profile to make decisions on investments?
Most senior citizens want to know where their cash is, that it is safe and they can access it anytime.
A person of 82 years is not going to make the same decisions or investments that one in their 40's would make nor should they be advised on the maturity of their investments to invest again. Cash is King at the end of the day.
IMO there should be a hands off advising senior citizens to invest in risky markets, currencies and products. Investing when you are working and earning is different to managing what you have when you retire.

 

[Chris]

Chris

What pensioner over the age of 70 has the risk profile to make decisions on investments?
Most senior citizens want to know where their cash is, that it is safe and they can access it anytime.
A person of 82 years is not going to make the same decisions or investments that one in their 40's would make nor should they be advised on the maturity of their investments to invest again. Cash is King at the end of the day.
IMO there should be a hands off advising senior citizens to invest in risky markets, currencies and products. Investing when you are working and earning is different to managing what you have when you retire.

You are abolutely right that someone at 82 needn't be as diversified as someone at 65 (or 40 for that matter), but this all depends on the amount of assets and whether they intend on spending it all or leaving it to their estate.

In today's world fiat currency cash is NOT king. Telling people that everything will be OK as long as they hold Euros and bonds, while the very underlying currency and countries are hell bent on an inflationary binge and fiscal deficits, is diceitful at best.

Under no circumstances should a pensioner rely on foreign currency for short-term day-to-day income, and that is not the point of diversifying. The point is to protect some of you wealth from a demise in slowly rotting currencies (EUR, USD, GBP).

 

[Starbuck]

I hope those pensioners are getting this talk of fiscal rectitude, currency pairing, and Aussie property bubbles. They better - if they want to play that game....
Madness.

 

[Starbuck]

You are looking at a 3 month window!!! That is trading NOT investing.

Quote:
Originally Posted by Starbuck
How long do you think would be appropriate?

Years, not months.

Quote:
Originally Posted by Starbuck
I have no problem in re-visiting this in another 3 months and we'll see again what's happened. But for the moment - the pensioner has lost money thanks to Jill.

6 months is still a trading time frame. And unless Kirby, or anyone else here, advocated a pensioner invest ALL their funds in foreign currency or denominated assets, a loss (and lets face it, a miniscule one at that) on these is completely irrelevant for a 3 month time period. If you look at the actual numbers for the two currencies you mentioned then you'll notice that one has offset the other:
EURAUD 12/5: 1.4127 yesterday: 1.4477 (=-2.4%)
EURCHF 12/5: 1.4031 yesterday: 1.3749 (=+2%)

I've been reflecting on this conversation Chris, and I have to say your talk of currency 'investment' for OAP's is codswallop. On ANY timescale.

In fact I seriously question the notion of moving savings between currencies as anything more than an act of folly for anyone but a trained professional speculator.

Forex is NOT investment - it is HEDGING at best. And the timescale is utterly irrelevant, unless you have a crystal ball telling you exactly what global events will do to currency exchange rates in the next 3 - 6 - 9 or 12 months, or whatever you say is a safe 'investment window'. The timescale is irrelevant, and probably more risky the longer you hold on.

As the man said - sh1t happens - and when it does, the currency markets are the fastest to reflect changed perceptions because they are the most liquid. Forex speculators SHORT currencies, and get in and out in minutes or hours - not months. Hedgers take a longer term bet on a risk assesment which is normally counterweighted against the market cost of a product or service they are trading overseas.
The speculators are in the game bigtime, moving markets with massive resources to back them up - and plenty of megaphone volume SPIN to give things an extra little push. They know the huge profits they can make VERY QUICKLY if they succeed.
This is dangerous ground for the unwary or foolhardy.

Euro continues recovery, approaches 1.40USD

This what I mean.

A few short weeks ago the US speculators were busy talking of a euro implosion, and rapid parity with the USD. They underestimated the Europeans commitment, and never counted on a 750Billion euro rescue package being agreed so fast.
Now they're on the run, having been badly burned. They're off now, looking for a new victim. Who'll it be? Something overvalued - like perhaps the AUD or CAN? Why not, if there's money to be made they'll pile on the pressure.

The light is dawning that (in spite of your high hopes) the USD is NOT a safe haven any more. The Yen rose to a 15 year high against the USD today!

The USD is TOAST. The only thing that can save it now is a war - and who knows, maybe we'll get one.
That leaves the YEN and the EURO (and the Japanese are very unhappy about the rise in the Yen value).

The only advice I'd give to anyone worrying what to do with large EUR cash holdings in Irish banks is - open an account in France or Germany and send it all there - in euro. Open a few if you have to.

 

[Chris]

I've been reflecting on this conversation Chris, and I have to say your talk of currency 'investment' for OAP's is codswallop. On ANY timescale.
In fact I seriously question the notion of moving savings around as anything more than an act of folly for any but the professional speculator.

Well, that's where we disagree.

Forex is NOT investment - it is HEDGING at best. And the timescale is utterly irrelevant, unlkess you have a crystal ball telling you exactly what global events will do to currency exchange rates in the next 3 - 6 -9 or 12 months, or whatever you say is a safe 'investment window'.

Yes, for a pensioner having some funds in foreign currencies or equities would be more in line with hedging. But how is this a bad thing?!?!?

As the man said - sh1t happens - and when it does, the currency markets are the fastest to reflect changed perceptions because they are the most liquid. Forex speculators SHORT currencies, and get in and out in minutes or hours - not months. Hedgers take a longer term bet on a risk assesment which is normally counterweighted against the market cost a product or service they are trading overseas. This is dangerous ground for the unwary or foolhardy.

Daytraders make decisions in minutes or hours, but not all currency speculators are daytraders; days, weeks and months are very common time frames. Yes it is a dangerous ground, but only if you intend on jumping in and out of the market even on a timeframe of several months.

Euro continues recovery, approaches 1.40USD

Well, that headline may as well read "Euro recovery, approaches 1.60". Today's exchange rate is about 1.32.

This what I mean. A few short weeks ago the US speculators were busy talking of a euro implosion, and rapid parity with the USD. Now - trhey're on the run, having been badly burned. The light is dawning that (in spite of your high hopes) the USD is NOT a safe haven any more. They're even driving the Yen to a 15 year high against the USD today! The USD is TOAST. The only thing that can save it now is a war - and who knows, maybe we'll get one.

This is exactly why you shouldn't be looking at any short time frame, which is what I keep saying!!! Apart from that, I never said I had some high hopes for the USD, quite the opposite, I agree that it is toast, but so is the Euro, since the ECB is going down exactly the same road as the Fed. This is reflected in the

The only advise I'd give to anyone worrying what to do with large EUR cash holdings in Irish banks is - open an account in France or Germany and send it all there - in euro.

Good advice for certain, but not planning for a collapse in the value of the Euro is a bad mistake, especially for people that are dependent on their assets for income.

 

[Starbuck]

Yes, for a pensioner having some funds in foreign currencies or equities would be more in line with hedging. But how is this a bad thing?!?!?

It'd be a bad thing if they considered it an 'investment'which is what you called it.
Hedging - thats a whole other game, and not one for amateurs.

Daytraders make decisions in minutes or hours, but not all currency speculators are daytraders; days, weeks and months are very common time frames. Yes it is a dangerous ground, but only if you intend on jumping in and out of the market even on a timeframe of several months.

Currency SPECULATORS?? I thought this was about protecting SAVINGS?
I would highly recommend anyone reading this discussion to just put the term 'Forex Trading Forum' into Google and read some of the forums you'll find. They're an eye opener.

I never said I had some high hopes for the USD, quite the opposite, I agree that it is toast, but so is the Euro, since the ECB is going down exactly the same road as the Fed.

I understood you to term USD a 'hard currency' while saying the EUR is not? The point I'm making is that the USD is weakening (check the Yen rate) and the EUR is strengthening, contrary to Jill Kirbys forecast. And the EUR is not going down the same road as the Fed because the EU has not applied quantitative easing to the humungous levels the US has. The bailout package may never be spent. Its a ready weapon, which will be used to beat on the speculators if they want it.

German manufacturing is leading the EU recovery. The nouveau riche of China and the Far East have a big appetite for quality cars and consumer goods which Germany and (through them) the EU will supply.
They still make things in the EU that the world wants to buy.
The US makes less and less every year - except weapons!
The EUR is the hedgeing currency of choice - just watch it soar....

 

[rekhib]

I agree that the USD is on shaky ground what with the US deficit but talk of the USD being 'toast' is surely a bit far-fetched. I mean, if the USD plummets in value and investors become wary of t-bills/notes/bonds, then it's almost difficult to imagine the horror story that will play out across the world. China holds a massive amount of US debt and if they thought for a second that they'd be $1t in the red, you can readily expect them to not be purchasing European luxury goods anytime soon. IMHO, the USD will probably decline in value but a complete collapse, I just can't imagine it. If it did happen, where's the safe haven other than a bit of gold jewellery lying around the house and some land so you can feed your family? We'd all be facing economic anarchy. If the USD is without value, no fiat currency will carry a punch. Maybe I'm misunderstanding the term 'toast'? In that light, I would tend to agree that the best place for risk-averse EURs is in the relative safety of a German bank. If anyone has an idea on what currency to hold if the USD were to collapse, I'd love to hear it.

 

[Chris]

It'd be a bad thing if they considered it an 'investment'which is what you called it.
Hedging - thats a whole other game, and not one for amateurs.

No hedging is not some complicated game for some professionals. It means reducing the risk, in this case on part of a portfolio. Diversification is the simplest form of hedging against an outright loss on one asset class.

Currency SPECULATORS?? I thought this was about protecting SAVINGS?
I would highly recommend anyone reading this discussion to just put the term 'Forex Trading Forum' into Google and read some of the forums you'll find. They're an eye opener.

You are misunderstanding my point. You mentioned speculators with a time frame of minutes or hours. All I said was that speculators have time frames from minutes to months. Investors have time frames of several years! not a couple of months. Protecting your wealth when you need it over a 10+ year time frame does not mean that you are speculating in currencies!!!! Many pensioners put all their assets in Irish bank shares because it was believed to be a safe place. Putting all your eggs in one basket is never a good idea, and the goes for advising that pensioners keep all their assets in the Euro.

I understood you to term USD a 'hard currency' while saying the EUR is not? The point I'm making is that the USD is weakening (check the Yen rate) and the EUR is strengthening, contrary to Jill Kirbys forecast. And the EUR is not going down the same road as the Fed because the EU has not applied quantitative easing to the humungous levels the US has. The bailout package may never be spent. Its a ready weapon, which will be used to beat on the speculators if they want it.

On the USD we actually agree; it is not a hard currency, but neither is the EUR or the GBP. The EUR has strengthened against the USD, but that is hardly some great feat of an achievement. Yes I agree the EUR is a better currency than the USD, but it is not a hard currency, there are far better and stronger currencies. Yes, what the ECB has done so far is not quite as bad as the Fed, but it has made unlimited funds available to banks and is buying junk bonds.
It is also thanks to speculators that Greece didn't suddenly collapse at a bond auction and drag the EUR down with it; blaming speculators and saying that a fund is needed to beat them with is utter nonsense. When you make money available to politicians they will use it, just wait and see.

German manufacturing is leading the EU recovery. The nouveau riche of China and the Far East have a big appetite for quality cars and consumer goods which Germany and (through them) the EU will supply.

Yes, and at the same time a large part of the rest of the euro zone is running huge trade deficits. And the fiscal deficit policy is also offsetting the gains of German, not EU in general, exports.

They still make things in the EU that the world wants to buy.

Agree

The US makes less and less every year - except weapons!

Agree

The EUR is the hedgeing currency of choice - just watch it soar....

Disagree, there may be a short term boost against the USD, but not against countries that are not plagued by monetary and fiscal incompetence.

 

[george.shaw]

If anyone has an idea on what currency to hold if the USD were to collapse, I'd love to hear it.

Answer: GOLD

In the same way that investors need to diversify - so in these unprecedentedly uncertain times do savers need to diversify.

Any saver keeping all their savings in euros is unfortunately likely in for a rude awakening in the coming months and years.

Investors and savers need to DIVERSIFY.

 

[rekhib]

@george.shaw - I agree that gold and other precious metals are a safe haven in uncertain times but my point was that if the USD were to collapse, no fiat currency would be worth holding.

 

[george.shaw]

Think you are probably right - although the Swiss franc, Norwegian kroner, Singapore dollar and Chinese yuan would probably fair better than most fiat currencies but fall versus the finite currency that is gold:

Peter Schiff - GOLD $10,000 - May 11, 2010 CNBC Fast Money
http://www.youtube.com/watch?v=ikF54jVGlwE

 

[Duke of Marmalade]

I heard Jill Kirby on the Derek Mooney show on RTE1 this afternoon.

There was a discussion on personal finance where she referred to people having large sums on deposit losing 10% in the last few months due to the euros drop in value. She said this had cut the 'spending power' of cash in bank accounts by 10%.

The euro was trading at $1.20 and Jill was confidently predicting parity soon. The euro now trades at $1.37.

 

[george.shaw]

I don't think Jill Kirby put a time frame on it. Even if she did I think it is very harsh to criticise her as she is one of the few personal finance "experts" who advised people to diversify out of Irish property and Irish equities and into gold.

Those who have followed her advice have benefitted.

Stiglitz and other proponents of the Euro are now warning of the demise of the European Monetary Union. Should that happen the price of gold in Euro terms (currently just under €1,000/oz) will soar. And the price of gold in local currency terms (currently the euro) is the only gold price that Irish investors and savers should look at.

DIVERSIFY out of being overweight Euro denominated investments and savings.

 

[Duke of Marmalade]

euro falls to two year low against the dollar

The euro closed on Friday at $1.32, in June this year it was $1.19. How do these guys keep their jobs?

 

[Complainer]

How do these guys keep their jobs?

Isn't that strange?

From what you'd read here on AAM, anybody in the private sector who breaks wind in the wrong place gets immediately fired, whereas those wasters in the public sector are constantly breaking wind in their customers' faces, and can't be fired.

 

[Chris]

Isn't that strange?

From what you'd read here on AAM, anybody in the private sector who breaks wind in the wrong place gets immediately fired, whereas those wasters in the public sector are constantly breaking wind in their customers' faces, and can't be fired.

That is not an accurate representation of some of the public sector criticism. In the private sector there is choice, if someone farts in your face, to use your apt analogy, like the Sunday Tribune does, then I can ensure that none of my money goes to them (unless of course the government decide to give the Tribune some money). Other people may like the smell and fund the paper with their money, not mine. This is why the Tribune is struggling to get less than 5% of Sunday readership.
When a public sector employee or service farts in the face of its customers, there is no way to turn off the funding tap directly by the customer.

 

[Complainer]

That is not an accurate representation of some of the public sector criticism. In the private sector there is choice, if someone farts in your face, to use your apt analogy, like the Sunday Tribune does, then I can ensure that none of my money goes to them (unless of course the government decide to give the Tribune some money). Other people may like the smell and fund the paper with their money, not mine. This is why the Tribune is struggling to get less than 5% of Sunday readership.
When a public sector employee or service farts in the face of its customers, there is no way to turn off the funding tap directly by the customer.

No, Chris - You're missing the point again - presumably deliberately.

We have read on AAM about this fetish for firings the private sector - as some people seem to think that firing is the only way to manage the performance of staff. I just wanted to make the point (yet again) that this whole 'divide and conquer' approach is a nonsense. There is no such thing as a public sector person or a private sector person. We're all just people - good and bad.

 

[Firefly]

Isn't that strange?

From what you'd read here on AAM, anybody in the private sector who breaks wind in the wrong place gets immediately fired, whereas those wasters in the public sector are constantly breaking wind in their customers' faces, and can't be fired.

This is a good thread with some IMO, very interesting and informative posts. Any chance we can stay on topic?

 

[Complainer]

This is a good thread with some IMO, very interesting and informative posts. Any chance we can stay on topic?

Do you promise to come out with the same 'any chance we can stay on topic' request every time someone launches yet another off-topic attack on the public sector here on AAM?

 

[Chris]

No, Chris - You're missing the point again - presumably deliberately.

We have read on AAM about this fetish for firings the private sector - as some people seem to think that firing is the only way to manage the performance of staff. I just wanted to make the point (yet again) that this whole 'divide and conquer' approach is a nonsense. There is no such thing as a public sector person or a private sector person. We're all just people - good and bad.

No I am not missing the point deliberately, and saying that people are suggesting that firing is the only way to deal with performance is simply not true. People have been suggesting that the threat of being fired in the public service is miniscule at best when compared with the private sector.
I cannot speak for others but I have been advocating a reduction in public employees through the scrapping of unnecessary services regardless of the performance of individual employees. And I agree that employee performance needs to be managed, but when the threat of actually losing your job because you and/or your organisation are not being productive enough, as measured by the customers willingness to part with his/her money, then you take away the only way to measure successful employment of scarce resources.
Efficiency or competitiveness of performance cannot be measured at an organisational level in the public service, thus doing so at individual level is futile. Yes, you can measure costs per transaction, or per customer served in the public sector, but this is completely meaningless as it is impossible to say whether this is efficient or not due to the lack of ability for comparison.