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June 24, 2008


Keepin’ It Real

Here’s a ten-year view of the Brazilian Real. A case of Zero to Hero. See the devaluation back in January 1999 and the long terrible slide to four in October 2002. Reviewing monthly charts is a good way to grasp big trends; it’s something I recommend you do to form and maintain your perspective, and currency charts are especially telling.

This entry was posted on Tuesday, June 24th, 2008 at 6:04 pm (utc+8) and is filed under Currencies.

8 Responses to “Keepin’ It Real”

  1. Brian said:
    June 24th, 2008 at 11:06 pm

    The Real trade is one of the many reasons why I find it difficult to believe that Buffett does not pay attention to charts or TA. It was in Oct 07 that Buffett revealed the Real as the mystery currency that he said in May 07 he had been buying.

  2. Ravi said:
    June 25th, 2008 at 12:02 am

    Brian

    While Buffett does not pay attention to charts, he sure pays big attention to price.

    Ravi

  3. pete said:
    June 25th, 2008 at 12:56 am

    charts=price. always amuses me some people dont get that

  4. Ravi said:
    June 25th, 2008 at 1:52 am

    sorry I was not clear enough.

    when you look at a chart and make a decision, it is
    because you see current price against the context of
    past prices. If you are a trendfollower, you might buy if current price is going up relative to the recent past. If you are a countertrender, you might buy if current price is way too low relative to recent past.

    Buffett would be the last guy to make a buy
    just because chart looks good.

    He is more likely to pick a quality holding and wait for the right price.

    So,

    Making decision based on price is very different
    from making decision based on a chart.

  5. Brian said:
    June 25th, 2008 at 3:21 am

    Buffett can say whatever he likes, but the fact is that he was chasing the Real in May 07, as he was chasing UNP and BNI in early 07. If Buffett was purely looking for value he would not be buying after breakouts or at historical highs.

    I’m not saying he’s buying simply because the chart looks good, I’m only suggesting that he pays attention to charts and TA.

  6. C. Maoxian said:
    June 25th, 2008 at 7:03 am

    Brian, Ravi & Pete: You guys might be interested in reading my old post: Warren Buffett, Teenage Chart Fiend, Grows Up

  7. Markus said:
    June 25th, 2008 at 8:39 pm

    Buffett also says he is doing no macro trades, but I guess his shorting the US$ was one.
    Probably he pays not much attention to charts because he refuses to time the market.

    Cheers,
    Markus

  8. pete said:
    June 25th, 2008 at 9:08 pm

    my point being that price is one metric- all his evaluating metrics can be charted for signals. all the numbers are in his head

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