Short the Dollar
Short the Dollar: Bureaucratic Gambling
by Steve Sjuggerud
“Contrary to what nearly everyone believes, you don’t make money buying an investment when it ‘looks good’ and everybody knows it. It’s ALREADY gone up.”
“The dollar is going down, there’s no question,” Bill Gates said on Friday at the World Economic Forum in Switzerland.
Since it’s such a certainty to Mr. Gates, the world’s richest man, is putting his money where his mouth is. “I’m short the dollar,” he said in an interview. “The ol’ dollar, it’s gonna go down.”
Gates’ reason? “We’re in uncharted territory when the world’s reserve currency has so much outstanding debt.”
The world nods in agreement.
Short the Dollar: The Contrary View
Me? I actually find it unbelievably silly…
Contrary to what nearly everyone believes, you don’t make money buying an investment when it “looks good” and everybody knows it. It’s ALREADY gone up. For example, “you can’t go wrong in real estate on this island now,” is something I hear all the time where I live. This just tells me that the boom in real estate here must be close to over.
So I have a property up for sale.
Equally and oppositely, you don’t make any money shorting an investment when it looks very bad and everybody knows it. It’s ALREADY gone down. Sorry Mr. Gates…
If I wanted insight into where computers are headed, I’d love to talk to Bill Gates. But if I’m interested in where currencies are headed, I’d rather talk with someone like 30-year global investment analyst Marc Faber, with a proven track record of seeing what nobody else sees when it comes to investments.
And nowadays Marc Faber says: “The only asset that is undervalued is the U.S. dollar. In the long term it is a doomed currency, but now it has a good chance to appreciate.”
Short the Dollar: The Worst Traders and Investors
The absolute and arrogant comments Bill Gates made remind me of doctors as traders… When I started out as a broker, I quickly discovered that doctors were by far the worst traders and investors. It wasn’t for lack of study. They knew some facts (things like “the dollar should fall because of U.S. debt,” or “this stock should go up because I know their drug works”). But they didn’t know how to trade or invest on those facts.
What Bill doesn’t understand, just like the doctors don’t understand, is that WHAT THEY KNOW IS ALREADY PRICED IN. Despite their smarts, their insights are not as unique as they believe they are. For example, everybody knows about U.S. debts and deficits. It’s not a secret. And therefore everyone is short the dollar, right alongside Mr. Gates. The trade is too crowded.
At some point, Mr. Gates will close out his bet against the dollar. And how does he do that? By buying dollars… which drives the value of the dollar up. And it’s not just Bill. Warren Buffett has a $20 billion dollar bet against the dollar. But his bet is already on. For him to close out his bet, he has to buy $20 billion worth of dollars, driving the dollar up. It’s the same way for the collective world of investors, who are all short the dollar. To close out their bets, they all have to buy dollars.
Starting today, the DollarBull CDs are available from Everbank. These FDIC-insured CDs are the safest way to bet against the euro, and in favor of the dollar. (contact Chuck Butler and his team at: 800-926-4922 or chuck.butler@everbank.com)
Yes, by doing this you’ll be taking the opposite of a bet being made Bill Gates and most of the doctors, stockbrokers, and bureaucrats of the world.
Call me crazy, but that’s actually where I want to be.
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