In less than 3 months, the Japanese Yen has moved from 79 to 94. A huge move in terms of currencies. And for those who read this site regularly, I had been arguing for a while that such a move was coming. Add to that, I commented at the outset of 2013 that short Yen would be a great levered trade. So, why then haven’t I done much to capture it? I had a small put position on FXY that made a bit of money, but closed it out in January very early. And since then I have just watched as the currency seems to implode on itself.
When Shinzo Abe announced in November that he was running his campaign on the premise that he could raise inflation in Japan from 1% to 2 or 3%, the next era in a world of money-printing was set to be unleashed. As compared to the U.S., Japan’s debt-to-GDP levels and demographics are further along in the process of becoming unhinged. So announcements of the sort by Abe and subsequent implementation push that country even further towards a crisis of some sort. Starting with the currency. And at the point where control over exchange rates is lost, it becomes very hard for anyone to get it back.
And I knew this and thought I would strike when the moment finally arrived. But, I hesitated. Apparently I am subject to the same flaws of human nature as everyone else. I’d rather be wrong or miss out on an opportunity with the majority, then step up and fail greatly (or succeed greatly, as the case may be with the Yen).
The other possibility is that I am like most folks who look at gold as it continues to rise and still won’t buy just because it seems like so much has happened already. But, when a trend begins, it often continues for a long time. We are at the crescendo moment for the big economies that have been relying on a printing press for several decades. I even said last year that it would start in Japan before it hit my shores. So, maybe I need to wake up to my own advice.
I feel like I let myself down here. I will try not to let it happen again.
