Theme: Managed Foreign Exchange Accounts - High Return With Low Draw Down Is It Possible?
July 31, 2010As it currently stands it appears we’re starting to emerge from what’s widely being proclaimed as the worst economic crisis since the Great Depression of the 1920’s. Given this fact you would think that investors and investment advisors would be doing some serious introspection and reassess the virtues of investing in the same investment automobiles. The same investments that have seen investors suffer such heavy loses in such a short period of time. Many investors saw their plans for a comfortable or early retirement ended quite literally overnight.
So what’s the answer to this eternal problem of trying to increase returns whilst working to diversify a portfolio across multiple asset classes? The solution for some investors who have the required risk capital may be a managed forex account or forex fund. Forex is more popular as being a high risk, high return investment car that is not co-related to the tradition equity markets. For numerous reasons the foreign exchange market behaves in a thoroughly different manner to the stock markets.
Another fact about the foreign exchange market that appeals to potential investors is the high residual value of Currencies. Unlike the stock market, currencies are invariably backed by their respective governments. Especially if you are trading the major currencies it is extremely unlikely that a whole developed country with a GDP in the top 10 in the world will go bankrupt overnight. Typically a countries central bank controls monetary policy and therefore has large resources at its disposal to ensure a currencies relative stability, hence why it will always maintain a very high residual value.
The post financial crisis global economy is prone to face a whole paradigm shift where people will seriously reassess the use of traditional asset classes such as stocks, bonds and other derivatives. Considering in the US alone 72 banks went under, small investors were simply not protected by those institutions charged with governing the industry.
Regulatory authorities were either grossly incompetent or simply lacked the tools and authority to put the required measures in place. In the end of course it was the small investor who came of worse.
The economic crisis highlighted many inadequacies in our whole economic system, not the least of which was that ANY sized bank can fail, and the fact that you can’t rely on governments to protect the individual from the excesses of Wall Street and huge business in general. As we witnessed the government was happy to give bailouts to a choose number of massive businesses and institutions but the generosity didn’t extend as far to small businesses and investors.
Many witnessed their retirement funds and investments disappear altogether. Obviously in times like these it’s important to take charge of your own financial destiny and diversify your own investment portfolio, across numerous asset classes. Think about looking at the latest asset class in managed forex funds. Once considered amongst the very high risk end of the investment classes Forex now represents a serious alternative for well qualifiedforex investors.