The last time the carry trade became undone was in the fall of 1998. The carry trade brought down the likes of Julian Robertson and his Tiger Fund. Are we witnessing again the unwinding of the carry trade.. For those of you who do not know about the carry trade...it is a neat idea that hedge fund managers caught on to... they could borrow Japanese Yen and pay .5% interest...and take those proceeds and purchase currencies.. stocks.. bonds... etc... in higher producing currencies such as the New Zealand Kiwi.. the Aussi Dollar.. the South Africa Rand. ... To make the returns even more interesting they would leverage themselves even more.

Now as Warren Buffett would say.. we will see who has been swimming in the water without a bathing suit. Leverage always works two ways... in good times... returns are enhanced... and in times of uncertainity... Leverage comes back and destroys investors who do not understand the concept of risk and money management.. On a monthly chart the Jy ( YEN) is taking out its 10 period moving average...

Maybe the carry trade is just starting to unwind?

Andrew Abraham
My Investors Place
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capitalinvestor1836