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mcfez
Elite Nomad
Posts: 8678
Registered: 12-2-2009
Location: aka BN yankeeirishman
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I agree.....I am a little confused on this matter too............in fact..........I am sure that there are a few thousand of us that don't understand
your wizardly ways of financial wonders..............please, could you take us all through a step by step explanation?
I want to get rich just like you
Old people are like the old cars, made of some tough stuff. May show a little rust, but good as gold on the inside.
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LaPazGringo
Nomad
Posts: 237
Registered: 2-28-2012
Location: La Paz
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I'm trying to wrap my mind around this and am having a hard time. Consider me a beer-swilling, simple-minded gringo with a few dollars whose been
taking out $1000 USD worth of pesos every day at around 13:1. Put it simply for me. Should I stop doing that and wait for the peso to devalue against
the dollar even further?
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thebajarunner
Ultra Nomad
Posts: 3752
Registered: 9-8-2003
Location: Arizona....."Free at last from crumbling Cali
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Mood: muy amable
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Well, after my analysis of Skeet's 'system' I too am confused.
However, you wanted it simple, so here goes.
If you think the peso will rise against the dollar (at least 10 or 12 people in the world believe this) then by all means leave your money in a peso
account, and keep your funds in pesos.
On the other hand, if you think the peso will decline in value against the dollar (I guess that is the other 8 billion or so of us in the world) then
get your peso accounts, and pesos on hand back into dollars ASAP.
Simple as I can make it.....
If you believe in the peso, keep your funds in pesos.
If you do not believe in the peso, then get your funds into something else.
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LaPazGringo
Nomad
Posts: 237
Registered: 2-28-2012
Location: La Paz
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| Quote: | Originally posted by thebajarunner
Well, after my analysis of Skeet's 'system' I too am confused.
However, you wanted it simple, so here goes.
If you think the peso will rise against the dollar (at least 10 or 12 people in the world believe this) then by all means leave your money in a peso
account, and keep your funds in pesos.
On the other hand, if you think the peso will decline in value against the dollar (I guess that is the other 8 billion or so of us in the world) then
get your peso accounts, and pesos on hand back into dollars ASAP.
Simple as I can make it.....
If you believe in the peso, keep your funds in pesos.
If you do not believe in the peso, then get your funds into something else. |
Okay, thanks! So hold dollars, sell pesos. Simple enough!
But now what confuses me is that the OP says he's not opening a peso account at this time and you say "if you think the peso will decline in value
against the dollar (I guess that is the other 8 billion or so of us in the world) then get your peso accounts, and pesos on hand back into dollars
ASAP."
If I, errrr I mean a friend of mine, was dumb enough to have been buying pesos at an alarming rate over the last 90 days, and now wants to convert
them back into dollars, what's the best way? Am I going to lose on the exchange?
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Riom
Nomad
Posts: 492
Registered: 12-17-2004
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| Quote: | Originally posted by thebajarunner
If you think the peso will rise against the dollar (at least 10 or 12 people in the world believe this) then by all means leave your money in a peso
account, and keep your funds in pesos.
On the other hand, if you think the peso will decline in value against the dollar (I guess that is the other 8 billion or so of us in the world) then
get your peso accounts, and pesos on hand back into dollars ASAP.
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The other factor is over what time period? Sure, in the short-term there may be a bit of a "save haven" (ha!) blip in favor of the US$ as people rush
out of the Euro etc - really a case of the least-worst option.
But longer term (several years onwards) it's hard to see how the USD can sustain value compared to the resource-based currencies including the
Canadian and Australian Dollars, and (to a lesser extent) the Mexican Peso. So many dollars have been printed (under both recent presidents) that the
value has nowhere to go but down.
I have regular income and expenses every year in five, sometimes six, different currencies and I've learnt that's it's foolish to try to second-guess
the currency market - it doesn't work on logic, but emotion and herd instinct (hence the "safe haven" rush to a devaluing USD).
Like any investment, the least risky approach is to diversify - hold some money in each currency that you expect to have expenses in, and understand
that by being safer you might loose out on the highest gains (and losses). I hold a float in each of my five primary currencies, and try to avoid
switching amounts as it's hard to time it right. I certainly wouldn't base any switching on discussions of just one currency pair over an unstated
period of time in a non-specialist forum. :-)
Rob
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willardguy
Elite Nomad
Posts: 6451
Registered: 9-19-2009
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| Quote: | Originally posted by LaPazGringo
I'm trying to wrap my mind around this and am having a hard time. Consider me a beer-swilling, simple-minded gringo with a few dollars whose been
taking out $1000 USD worth of pesos every day at around 13:1. Put it simply for me. Should I stop doing that and wait for the peso to devalue against
the dollar even further? |
sounds like someone's got a serious habit!
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DavidE
Ultra Nomad
Posts: 3814
Registered: 12-1-2003
Location: Baja California México
Member Is Offline
Mood: 'At home we demand facts and get them. In Mexico one subsists on rumor and never demands anything.' Charles Flandrau,
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To complicate matters even further...
This is an election year. The PAN is all but ready to pack it in. The election occurs this summer. No comes a dozen or two if's, rotten stinking
caveats. Remember what follows are IF'S:
The USA consumer index, manufacturing index, and new home sales keep slipping, unemployment claims keep increasing..
AND
Crude oil futures get the rug pulled out from under them
AND
France, Spain, Portugal and Greece tell Germany to Go Take A Flying ....... which means the € no longer means €urope
AND
The PRI, PRD and PT, Have Their Way with the PAN in the election
AND
There is massive unrest in China due to factory closures due to a large decrease in consumer goods in the USA (look for Wal-Mart stock to flatten out
and then start to decline)
I would not want to be fondling a large wad of high denomination peso banknotes.
+++++++++++++++++++++++++++++++++++++++++++++++++++
If I was holding say 80,000 MN or more I would get a bunch of receipts proving it wasn't drug cash, head for San Ysidro and do the best I could at one
of the casas de cambios. I would make sure it totaled nowhere the limit allowed by US Customs. I would not tell a soul my plans, and I would have
exchanged everything to thousand peso bank notes to save space to hide it from the army.
I would shop Wal-Mart for some 300 dollar laptops, buy a 26" flat panel TV, buy a home theater sound system, color laser printer on sale, maybe a high
power modem repeater also on sale, and return with everything carefully packed to make it appear to be near worthless. I would pull into the
declaration lane, say "Everything for my own personal use" and then squeak home. I would brag to everyone "Gee I bought all of this brand new stuff
but maybe I don't really need it, but then it cost me a fortune to go up and get it".
Entiendes?
Or I could wait, do nothing and see eighty thousand pesos become worth, say
a hundred US dollars over time.
In 1900 a peso was worth roughly a dollar. For decades Banco de Mexico gave me 12.49 pesos for every dollar.
Today, the peso is worth THIRTEEN THOUSAND PESOS for every dollar.
A Lot To See And A Lot To Do
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Riom
Nomad
Posts: 492
Registered: 12-17-2004
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| Quote: | Originally posted by DavidE
If I was holding say 80,000 MN or more I would get a bunch of receipts proving it wasn't drug cash, head for San Ysidro and do the best I could at one
of the casas de cambios.
...
I would shop Wal-Mart for some 300 dollar laptops, buy a 26" flat panel TV, buy a home theater sound system, color laser printer on sale, maybe a high
power modem repeater also on sale,
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Whether or not you think the peso will devalue, I can't see the sense in exchanging real money for a bunch of toys that will be obsolete in a short
time, might as well just give the money away locally. Exchanging pesos for a basket of other currencies (NOT just the USD!), with a little gold and
silver for insurance, would stand a better chance of preserving value, if you think the peso is risky (and that's very debatable).
Or if you feel the need to go shopping, at least buy durable goods (furniture, building materials etc) rather than items which are near-worthless soon
after they leave the store. Given the likely inflation in USD in a while (same thing as devaluation, when compared to other countries) there's
certainly an argument for buying nice long-lasting stuff now rather than hoarding cash.
| Quote: | Originally posted by DavidE
Or I could wait, do nothing and see eighty thousand pesos become worth, say
a hundred US dollars over time.
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So what? You're spending it in Mexico, so you should have pesos. If you're not, fine, keep some in dollars (rather than spending it now as you
suggested). Or maybe AUD or BRL - perhaps you'll be able to buy 10 USD for 1 AUD in a few years.
Maybe it'll be less than 8 pesos per USD instead (personally I think this is likely in 2015-2020), in which case you'll be kicking yourself for having
changed it all to USD back in 2012 (if you didn't blow it all on toys). Who knows? Way too many variables in the current world to know either way,
so taking hasty action to dispose of a currency on a hunch or a bad experience from a few decades ago seems pointless. But certainly leaving
everything in a single currency (peso, USD, even AUD) would be careless, there's no one currency that is a safe bet.
Rob
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thebajarunner
Ultra Nomad
Posts: 3752
Registered: 9-8-2003
Location: Arizona....."Free at last from crumbling Cali
Member Is Offline
Mood: muy amable
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Man, I hate to give investment advice,
have spent an entire career avoiding doing so.
Having said that, if you are really concerned, then the concept of holding several types of currency/liquid assets is good.
However, that will likely cancel itself out, one against the other.
The real issue is, do you trust the (Obama) dollar or the (PRI) peso.
Not a good question IMO
Personally, I would look at history, and the dollar is still the spot that the world seeks to hold itself together.
The peso, historically, has been a very dark hole, and likely will not improve.
So, I am not advising, but I am continuing to be very nervous about the peso.
A personal story....
In the early 80's an elderly friend approached me and said, "I sold some cattle that the IRS will never track and I want to put the money somewhere
safe where they will not see it."
So, being a good pal, en route to one of our Baja races I took $5,000 and opened him a dollar account at Banamex... They had never invaded dollar
accounts in Mexico, in history, and that was a sure thing.
Over the next couple of years, and the next race trips, I added another $5k to his stash, now well over $10k with interest.
Those of you that know your history know what happened next- somewhere in the mid-80's the government decreed that all dollar accounts would revert to
pesos, and the peso then dived down to absolute zero.
I think when all was said and done he ended up with a couple hundred bucks and that is the end of a story of trusting Mexico, Mexican banks, Mexican
currency variables, etc.
So, I leave it to you to read my story and make your own conclusions,
my conclusion, I would never again trust the banking system down in the land that I love....Sorry Baja, your record is against you.
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Iflyfish
Ultra Nomad
Posts: 3747
Registered: 10-17-2006
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| Quote: | Originally posted by shari
great idea Dennis...you are so wise....hmm...maybe we should switch focus from B&B to rehab! |
http://www.youtube.com/watch?v=KUmZp8pR1uc&ob=av2e
Sweet Irony. I'd come to your rehab..yes...yes...yes.
Iflyfish
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Riom
Nomad
Posts: 492
Registered: 12-17-2004
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| Quote: | Originally posted by thebajarunner
somewhere in the mid-80's the government decreed that all dollar accounts would revert to pesos, |
Mexico doesn't have a monopoly on that type of action. Executive Order 6102 had a similar effect (although less extreme). Printing money (to run
excessive deficits year after year) has the same effect (eventually).
History does tell us that no country (not even the US) can be trusted. And that it's usually hard to guess which country is going to screw their
citizens next. Could be Mexico again. Could be the US again. Could be Canada. Seems unlikely to be Canada (unless they go to war with Russia over
the Arctic), but I'd certainly put the risk of the US doing something drastic to their monetary system on a par with Mexico over the next decade.
Rob
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Skeet/Loreto
Ultra Nomad
Posts: 4709
Registered: 9-2-2003
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One of the Key Factors might just be the 28 Day Notes that you can buy at nearly all Mexican Banks.
At one time in the devalue i was getting 148 %. check it out
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vandy
Senior Nomad
Posts: 538
Registered: 10-10-2003
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One way people can make good money when they believe that a currency will fall against the dollar is to buy a "put option" on a currency future.
Let's say you get a contract for a million pesos with an option to sell them at 13.4 per dollar in three months. Somebody has to commit to buy them
for the contract to be valid, hence the cost of the contract, say, $3000US.
If the pesos devalue 10% in this time, the contract is exercised and you make 100,000 pesos minus your $3000US.
This is a greatly simplified example, not showing the layers of corporate insurance involved, keeping it all in dollars US, etc., but it shows how it
can work.
If you KNEW the peso would devalue by 50% in one week compared to the dollar (it HAS happened), your shorter term contract would be much less
expensive and you would make a killing. Hello Skeet.
CORRECTION: The above should read "will pay one dollar for 13.4 pesos", not the other way around. So when the peso drops to 15 pesos per dollar, you
can still get your dollar for 13.4 pesos, and therein lies the profit.
[Edited on 5-9-2012 by vandy]
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Skeet/Loreto
Ultra Nomad
Posts: 4709
Registered: 9-2-2003
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Very good Vandy.
If you go back and look at the way the peso Devalued and to what amounts there are a couple of ways to make some money.
It is much more Fun to figure it ou on your own!
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thebajarunner
Ultra Nomad
Posts: 3752
Registered: 9-8-2003
Location: Arizona....."Free at last from crumbling Cali
Member Is Offline
Mood: muy amable
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Skeet- sorry but your stories don't jibe
| Quote: | Originally posted by Skeet/Loreto
David E: There are ways to make some money if this Peso goes to 4,000 to one in the next couple of years.
Last time around I made $40,000 playing the Game. I had a very good connection which would call and let me know when the Govt. was getting ready to
devalue. You must be able to havethat connection to have time to change the Peso to dollars and back to pesos.
Be careful |
Now you are agreeing with the suggestion that a "put" was your strategy.
Puts do not match the story you previously gave,
there you were timing your "change the peso to dollars and back to pesos" game,
not the same, old friend,
just still trying to get a handle on this moving target..
and, who was to know, without reading Nomad, that Canada and Russian will soon be at war over ownership of the Arctic,
simply amazing the things you learn on this turf.....
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comitan
Ultra Nomad
Posts: 4177
Registered: 3-27-2004
Location: La Paz
Member Is Offline
Mood: mellow
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And More:
http://www.cbc.ca/news/world/story/2010/09/16/canada-russia-...
Strive For The Ideal, But Deal With What\'s Real.
Every day is a new day, better than the day before.(from some song)
Lord, Keep your arm around my shoulder and your hand over my mouth.
“The sincere pursuit of truth requires you to entertain the possibility that everything you believe to be true may in fact be false”
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thebajarunner
Ultra Nomad
Posts: 3752
Registered: 9-8-2003
Location: Arizona....."Free at last from crumbling Cali
Member Is Offline
Mood: muy amable
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OK I read the article
An article, two years old, out of a Canadian source,
hardly puts the world on the edge of all out war now, does it???
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Barry A.
Select Nomad
Posts: 10007
Registered: 11-30-2003
Location: Redding, Northern CA
Member Is Offline
Mood: optimistic
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I personally like RIOM's thinking the best.
Like Shari, I have lost all faith in the Mexican "system" of money-matters after years of supporting and investing in same (and making a lot, and also
losing a lot---- of money.) I did get out ahead, but not by much.
No more direct investing in "Mexico", ever. I now stay with world-wide stocks, and lots of them to spread the risk, and let-er-buck.
As for the USA-------huge inflation (the insidious TAX) is inevitable, it's only a matter of when, not "if", IMO. You can't keep printing money
without eventual big-time inflation.
The world money-matters are mostly crazy now, and the hand-writing appears to be on the wall.
Depending on Skeet's personal position vis-a-vis his "source's" position, what he did probably does not qualify as prosecutable "insider trading".
All really successful investors rely on our "sources" of info, coupled with analytical skills and experience------without "info" it's largely a
Casino. Good educated guesses make for good investing.
Barry
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Bajatripper
Ultra Nomad
Posts: 3151
Registered: 3-20-2010
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| Quote: | Originally posted by Skeet/Loreto
If you can not figure it out you should not be involved. Go to some very safe Transaction. |
What a friggin cop-out, Skeet. You are full of it, as usual, trying to sound like the Big Man that you aren't. But I do enjoy the laughs you bring to
this board and wouldn't trade you for all of the rattlesnakes on whatever island that was that you infested.
There most certainly is but one side to every story: the TRUTH. Variations of it are nothing but lies.
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DavidE
Ultra Nomad
Posts: 3814
Registered: 12-1-2003
Location: Baja California México
Member Is Offline
Mood: 'At home we demand facts and get them. In Mexico one subsists on rumor and never demands anything.' Charles Flandrau,
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PLEASE PLEASE PLEASE
Keep in mind during all this simply delicious B... (er Gossip) the last three words within the title of this thread ".............. AT THIS TIME"
I am a lot more worried (Not a joke) about a massive slowdown in the Chinese economy. China is not homogenous. It is similar to what the USSR was,
even to different languages. Beijing lives in holy terror of a popular unrest that would threaten to topple it. China would lapse into civil war.
We would be cut off, totally, absolutely, and completely from a major portion of our consumer goods. I did my college thesis (back when there were
wooly mammoths roaming the earth) on Latin Americas economy focusing on Mexico. But. A meltdown in China would mean a "Black Friday" in the USA to
make the one in 1929 pale in comparison. Sorry, but this is not theory.
Can you imagine all the doors on all the Wal-Mart's chained and padlocked? Can you imagine tire stores queued up with customers trying to find scarce
tires no longer made in the USA but were made once upon a time in China?
A Lot To See And A Lot To Do
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