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Currency Speculation - Iraqi Dinars

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Re: Currency Speculation - Iraqi Dinars

Postby Nikachelle » Wed Jul 28, 2010 8:10 am

Perhaps I should've disclosed all the details. He didn't HAVE that money to spend. He took it off his credit cards. So he was paying ~25% interest to have that money converted to IQD already. And in my years at the branch, I never saw him pay that off.

You are also presuming that the guy was clever. Loads of people invest money that they hope will make them big bucks, regardless of how much they actually have.
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Re: Currency Speculation - Iraqi Dinars

Postby Invisusira » Wed Jul 28, 2010 8:15 am

Stuff like this has been around ages. Currency trading is exactly like playing the stock market - it's just not as well known.
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Re: Currency Speculation - Iraqi Dinars

Postby Vanifae » Wed Jul 28, 2010 8:19 am

I will buy stock in kittens.
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Re: Currency Speculation - Iraqi Dinars

Postby Nikachelle » Wed Jul 28, 2010 8:22 am

Vanifae wrote:I will buy stock in kittens.

I think this is the best thing I've ever heard you say.
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Re: Currency Speculation - Iraqi Dinars

Postby Lightbeard » Wed Jul 28, 2010 9:05 am

Vanifae wrote:I will buy stock in cuteness.


fixed
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Re: Currency Speculation - Iraqi Dinars

Postby Sabindeus » Wed Jul 28, 2010 10:08 am

So is this a thing you can do with most trading sites? where do I sign up?

well actually after reading that other article it seems like a bad idea
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Re: Currency Speculation - Iraqi Dinars

Postby Fivelives » Wed Jul 28, 2010 11:09 am

It's not exactly a bad idea as far as currency trading is concerned. There are a few factors to consider:

1) the relative strength of the national economy vs the US economy.
2) whether or not the trend is at a low enough point to consider buying. The lower the value when you buy, the higher return on your initial investment

Just like any other stock, it's best if you sit on it until it's enough of a return to justify selling. Like with the yen - I sat on those for 9 years (actually, they were in a box in my closet, forgotten until I was packing up to move) before selling them and tripling my money.

Currency is generally a safe investment, because it's almost never a catastrophic loss. Sure it's not a "get rich quick" investment, but it's not as if it'll lose you a ton of money as a general rule. I'm betting that as people start investing in Iraq, the currency will valuate in comparison to the dollar.
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Re: Currency Speculation - Iraqi Dinars

Postby Dorvan » Wed Jul 28, 2010 1:31 pm

If it sounds too good to be true.....

Certainly there's money to be made (and lost) in currency trading, but Joanadark's theory is certainly bunk, a pie-in-the-sky dream. Why? Simple: if it was certain that the Iraqi currency was going to be revalued soon to a few orders of magnitude above it's current worth, lots of money would be going into Iraqi currency, quickly driving up the price to near the point it was going to be set to anyway. The fact that that hasn't happened indicates to me that either:

1) This revaluation information is a tightly guarded secret that big money movers don't know about

or

2) The revaluation is either not going to happen, going to be much smaller than expected, or has a small probability of actually going through.

Given that the information has found itself here of all places and it sounds like it's a widely circulated rumor in the military, I don't think (1) applies, therefore I'm pretty sure the answer is some form of (2). There are a lot of people out there looking to make a lot of money. If such a giant sure thing opportunity really existed, the price on the currency would have already been bid up astronomically by now.
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Re: Currency Speculation - Iraqi Dinars

Postby Fivelives » Wed Jul 28, 2010 2:13 pm

It could also be that people don't trust any sort of investments right now, and are waiting to see what's going to happen at home before investing heavily enough in currencies to make a splash in the market. Either way, it's a decent investment at the price.

Or, it could be that there aren't many people that think about investing in/buying foreign currencies outside of some mutual and hedge funds. With the advent of E*Trade and other sorts of online investing tools, people are relying less and less on stock brokers and investment managers to manage their portfolios.

There's also the possibility that people just outright think it's too good to be true. That combined with the general recession we're in would be reason enough not to spend any money on a longshot investment, which a too-good investment scheme would count as.

Either way, if you've got the money to spare and don't mind sitting on it for a few years, you will make a profit. Currencies tend to rise in value at around the inflation rates for each country - it might not be a HUGE gain, but it'll still be a gain.
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Re: Currency Speculation - Iraqi Dinars

Postby knaughty » Wed Jul 28, 2010 2:18 pm

Revaluations as described in the OP happen relatively frequently. A dozen or so in the last 100 years. There have been ZERO opportunities to make a lot of money. In many cases, you just lose all of it.

Lets say the current rate is USD$1 = 1,000 Dinars and new rate will be 1 Dinar = USD$10.

If you buy 100,000 Dinars, and they do the revaluation, how much money do you make?

Two possible answers, based on historical outcomes.

(1) You lose ALL of your money, because the "old" Dinar is worthless. This is particularly frequent for non-native investors, AKA Speculators. The Reserve bank says "Fuck you, foreigners, you can't turn your old dinars into new ones."

(2) You make zero bucks. You get to turn your 100,000 old Dinars (USD $100) into 10 new Dinars (USD $100).

Revaluation cannot work by the Iraqi government saying "Our currency is worth ten thousand times as much as it used to be, just because we say so". It's just printed paper. Fiat currency has no intrinsic value other than the reputation of the country issuing it.

It would be the same as Chrysler saying "We've decided we don't want to be bankrupt, and we think our shares should be worth $100 each, not $0.01 - please buy and sell them at $100 now, KTHXBI". The market says "Get fucked, you're bankrupt."

Go read wikipedia on hyperinflation. Buying Dinars now is a horrifically bad investment if they're going to revalue the currency. As I said, either you end up with no gain, or you lose everything. There's no possible outcome where you get to increase your money 100-fold, you're misunderstanding basic economics.

The fact the the new currency and the old currency might both be called "Dinars" is meaningless. They're not the same currency.
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Re: Currency Speculation - Iraqi Dinars

Postby Dorvan » Wed Jul 28, 2010 2:36 pm

Fivelives wrote:It could also be that people don't trust any sort of investments right now, and are waiting to see what's going to happen at home before investing heavily enough in currencies to make a splash in the market. Either way, it's a decent investment at the price.

Or, it could be that there aren't many people that think about investing in/buying foreign currencies outside of some mutual and hedge funds. With the advent of E*Trade and other sorts of online investing tools, people are relying less and less on stock brokers and investment managers to manage their portfolios.

There's also the possibility that people just outright think it's too good to be true. That combined with the general recession we're in would be reason enough not to spend any money on a longshot investment, which a too-good investment scheme would count as.

Either way, if you've got the money to spare and don't mind sitting on it for a few years, you will make a profit. Currencies tend to rise in value at around the inflation rates for each country - it might not be a HUGE gain, but it'll still be a gain.


None of the reasons you suggest apply to big investment firms, which would be the real drivers in this case. Are you seriously telling me that there isn't a single investment firm willing to take a sure bet (or even a slightly unsure bet) on a 100,000% return in a matter of weeks? Sorry, that's just not credible.

I also don't see where you get the idea that it's a guaranteed winner in real dollar terms. If both currencies are undergoing inflation at the same rate, there's no net profit in storing your assets in one currency or the other...you only make money if you think the Dinar will increase in value relative to the dollar, which is by no means guaranteed to happen.
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Re: Currency Speculation - Iraqi Dinars

Postby Fivelives » Wed Jul 28, 2010 3:33 pm

You're not taking into account relative economy strengths. After the US leaves Iraq, their economy will naturally recover. It won't be an instant OMFG I JUST MADE MILLIONS! recovery, no, but over the next 5-10 years, it will.

Investment firms are cautious because of the state of the global market, and any futures they'll be investing in will most likely be commodity related rather than currency. Farming is a safe, sound investment, and that's what people look for during recessions - things that are safe. You can't get much safer than the harvest. or other natural resources. There's a boom right now in renewable energy investing since we have a "green" administration, and that will also make foreign currencies a less attractive investment.

And no, investment firms do not take longshots. They invest in much safer markets than commodities - that market has historically been driven by individual investors that are willing to take high risks for the chance at high returns. Commodities, banks, precious metals and gemstones have always been low but steady earners, the risks that big firms will take are generally individual companies.

Even if the big investment firms did put millions into the IQD, it still would be a relative drop in the bucket as far as affecting the relative value of the currency is concerned - individual investors make up the largest percentage of market trades, followed by banks, then private businesses followed by venture capitalists then the investment firms are on the bottom of the list. If they were the majority as far as market shares and trades are concerned, then they would be making more profit than a couple hundred million out of the billions that change hands yearly on the markets.
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Re: Currency Speculation - Iraqi Dinars

Postby Dorvan » Wed Jul 28, 2010 3:44 pm

Fivelives wrote:You're not taking into account relative economy strengths. After the US leaves Iraq, their economy will naturally recover. It won't be an instant OMFG I JUST MADE MILLIONS! recovery, no, but over the next 5-10 years, it will.


You seem to be addressing something entirely different than the subject at hand. The OP is claiming that investing in Dinar is a near guaranteed way to make thousand-fold returns in a matter of weeks. That's what I'm addressing, I don't see how it can be taken otherwise. Obviously there's potential for long-term investment in Iraqi currency, which may or may not be profitable over the next 5-10 years. While I'd like to be optimistic, it's also entirely possible that Iraq may get embroiled in civil war again within the next 10 years, wiping out an investment, it's no sure thing. Alternatively, given that the US economy is in a low point right now, it's possible that when it does start to recover, it will do so faster than the Iraqi economy is growing. Now all of that is speculation, but there are plenty of plausible scenarios, and to say that any investment in Iraqi currency is a "sure thing" seems overly optimistic at best and foolishness at worst.

I'd agree that currency investments are unlikely to be catastrophic when dealing with stable governments that have a track record of sound fiscal policy. I don't think those conditions hold in Iraq right now. It may be a good investment, but it's neither a ticket to instant riches as Joana claims, nor a sure winner as you're suggesting.

Fivelives wrote:And no, investment firms do not take longshots.


High risk mortgage-backed securities anyone? Of course, the real point is the acknowledgement that this is in fact a longshot *at best*, far from the sure thing being advertised in the OP.

There's plenty of money out there looking for big returns, arbitrage opportunities (which this is practically being talked about as), and the like. If there's a certain way of getting a 100,000% return (which is what Joana is claiming) in a matter of weeks, there are firms out there looking to pump as much out of that opportunity as they can before the markets correct for it. I've worked with people who do exactly that: spend all their time looking for inefficiencies in the market that allow for guaranteed returns.

If there's a promise of a 100,000% return in a matter of weeks, the most rational conclusion isn't that it's an amazing opportunity, it's that there's a 0.01% chance of the return being realized.
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Re: Currency Speculation - Iraqi Dinars

Postby knaughty » Wed Jul 28, 2010 4:40 pm

Fivelives wrote:And no, investment firms do not take longshots.

Did you spend the last two years in an isolation cube?

What the hell do you think caused the Global Financial Crisis?
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Re: Currency Speculation - Iraqi Dinars

Postby Fivelives » Wed Jul 28, 2010 5:23 pm

High risk mortgage backed securities were a bank problem, which led to major name banks going under when speculation building oversaturated the housing market leading to a drop in prices. This made it more attractive for Joe Consumer to give up their homes to the banks and default on the loans then buy a new, cheaper house, than to continue paying more than their houses were worth. The government stepping in and telling banks to offer sub-prime mortgage rates to new homebuyers only exacerbated the problem, instead of helping to fix it as planned.

Banks run their own investment firms, but Wells Fargo, Washington Mutual, and JP Morgan etc aren't as big names as Merrill Lynch or Goldman Sachs, or even AIG, and between Freddie Mac, Fannie May, and government subsidized high-risk mortgages that were made attractive to banks regardless of the risk, they got hit BIG by the housing bubble.

The banks that went under were higher on the food chain than investment firms, so the Downhill Shitslope Theorem came into effect and the major investment firms started losing money since they were pretty heavily invested in companies like Wells Fargo and JP Morgan. This was followed by general panic among the investors at the top who all went "sell sell sell!" and boom - market crash (not as bad as in 1929, but still pretty damn bad, all things considered).

So no, the investment firms weren't taking high risks - that's partially why they survived as well as they did. They took a hit, but they're still in the black. Banks have historically (at least since the depression) been considered very low-risk investments with steady rates of return.

In other news, working on-call sucks. I'll edit or post more later.
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