RetireJapan

The strengthening yen has caused my NVIDIA holding (in SBI) to plummet by 500,000 yen since last week....

On the flip side, I'll be able to buy more units of eMaxis Slim with my regular monthly investment of 100,000 yen.

Swings and roundabouts...!

Wonder how much the yen will strengthen by?

I don't mind 100jpy/usd even if it means destroying my existing portfolio...

(I still have some tens of years to go)

I’ve been buying DCA every day this week…. And will continue to DCA next week by the look of things - though if the ¥ is really strengthening long term now together with a proper market correction (dare we even suggest bear market possibility here?) we Japan based investors in international equities might be entering the wilderness for a longgg while.

Retire Japan emotional support group get ready!

Lets hope its not as severe and as long as the Lehman recession...
WIll not be selling any of my index funds, I had individual stocks at the time of Lehman which took a beating..
Like to think I am in a better position this time, I am also older though, so do not want to wait too long for the recovery..

smalldog wrote: ↑Fri Aug 02, 2024 1:51 pm I’ve been buying DCA every day this week….

Every day seems a bit too frequent to me… although it depends how long you intend to buy for I guess.
I largely missed the opportunity to buy during the corona induced mayhem so maybe yours is a good plan!?

And will continue to DCA next week by the look of things - though if the ¥ is really strengthening long term now

Looking at a long term chart of USD/JPY, I will observe that at around 146, the rate is well above the 2023 lows around 130.

So it’s possible that we have witnessed the start of a change in the “long term” trend last month, but personally I think it’s too early to conclude that.

Yes, the sad thing is one would have to see the rate improve beyond some lows from last year to really make a data-based call about a change in trend, which would mean a lot of lost money (acting now, versus acting then) if things do turn out that way. (Flip side is it might be the worst possible moment to sell right now, who knows.)

But over the long term, things do bounce up and down within the long term trend, so I prefer to have objective evidence (something visual) before jumping to conclusions.

At the moment I can’t see much reason the change my portfolio allocation or some such. I’m letting my monthly tsumitate do its usual thing. I am a bit overweight in foreign bonds though so perhaps I might sell some of those for something I am underweight in.

It is worth taking a look at the long term USD/JPY chart. Similar large moves in forex occurred in 2022 and 2023. There are some differences in circumstances, but I recall that at the end of last year markets were forecasting 7 FOMC interest rate cuts in 2024, and so far there have been zero. (They might catch up if things really turn to custard though I guess… but that’s not my base case!)

It's really hard to see how yen will depreciate in the near term with BOJ raising interest rates and FRB starting to cut them soon.

I am seriously concerned about my foreign equity and even gold positions, which have taken a beating in the last couple of weeks. I am considering cutting those positions.

Remember to focus on the long term for your equity positions. Try not to get spooked out by short term noise that will all be water under the bridge in five or ten years.

sutebayashi wrote: ↑Sat Aug 03, 2024 4:31 am

smalldog wrote: ↑Fri Aug 02, 2024 1:51 pm I’ve been buying DCA every day this week….

Every day seems a bit too frequent to me… although it depends how long you intend to buy for I guess.
I largely missed the opportunity to buy during the corona induced mayhem so maybe yours is a good plan!?

This is exactly why I - since missing out on the whole Covid opportunity 4 years ago thinking I knew better than the market - now always try to buy more than usual when the market has downturns. This has served me well so far at least and should do so fine from now on too if history is anything to go by.

I’m not planning on selling for 20 or 30 years so anything I can do to get my annual returns above 6/7/8% are welcome - and times like this present an opportunity to do that for a boring bogglehead buying only VT (as EMaxis All Country) like me.

The Forex meanwhile is a factor which IMO is impossible to calll - we have no idea where it will sit when the time we prefer (or might need to) to sell comes, so I have decided to treat it is irrelevant (though mind you if we go back to a level close to ¥100 I might not be able to resist upping my investment more!). In q4 2012 we had USD/JPY at 78… last month it was just below 162 which seemed impossible 12 years ago (it seemed impossible 4 years ago!).

A little off topic but how do companies manage these large swings in currency exchanges, especially if they have foreign debt. Like Rakuten. They’ve got billions in USD debt due next year. These are massive swings in what they owe.

Maybe a follow up question is what does a volatile currency say about a countries business environment?