Friday, November 09, 2007

Is China Bottom-Ticking the US Dollar?

You remember some of the signs of a market bottom or top, right? One often mentioned is magazine covers citing how wonderful or poor the market is.  Maybe a major news release citing that investors are doing one thing en masse.  Because when the crowd all agrees on something, that's usually when people feel safe with the underlying opinion.  But that's often the time that whatever the trend has been, is about to change.

I bring this up because of the new Chinese policy towards the US dollar.  China said they'd diversify away from the US dollar to "stronger currencies."

Isn't this selling low and buying high?  Isn't this what investors do all the time?  I hear and read stories about folks selling their stocks in October 2002 or March 2003 because they don't want to lose anymore and they want to invest in something better.  Same thing in early 2000, when it was a new paradigm in the stock market and folks leveraged up to buy equities.

Is China selling the dollar low?  Have they bottom-ticked the falling dollar?

Just thinking out loud!

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