Dec. 27 (Bloomberg) -- The dollar is poised to end a two- year slide against the euro in 2008 as government-backed funds in Asia and the Middle East purchase U.S. assets, currency strategists say.
The currency will gain 3.5 percent to $1.40 per euro, according to the median estimate of 42 strategists surveyed by Bloomberg News. The dollar is down 9.9 percent this year to $1.4502 per euro, after weakening 10 percent in 2006.
However, if you've been a reader of mine through this blog or my free e-letter called "My Two Cents", then you know that I called for a dollar rally in 2008 a while ago. Everyone thought I was crazy but now some are starting to jump on my bandwagon. Now there's 42 strategists that think the dollar will rally.
They also called for the yen to rally further against many currencies. Well you know that I've been telling my readers this for a while now. So you heard it here first....and got tomorrow's news today.
This is why the professional has to be an independent thinker and has to constantly re-evaluate and challenge the common thoughts of the day...such as the dollar will continue to fell philosophy. This was true for years and I agreed with it. But every so often I have to re-analyze it all. In my last round of analysis, I came to the conclusion that things were finally going to line up for the dollar even when most didn't see it.
When readers got adamant and almost ticked at me, I knew I was onto something. Because the same emotional intensity was present at Nasdaq 5000. You couldn't hardly convince anyone that the Nasdaq would fall from those loft levels. They thought I was the one that just came in from another planet.
However, time will always sort things out. In the end, after it was too late...they finally realized I was right in my call. However, why not recognize while you still have profits and avoid the erosion that the masses will experience.
If someone is a "herd follower" then they are destined to lose money in any financial market. However, if they can learn to reassess and challenge the common thoughts of the day, then they can be some of the first in on a newly forming move when almost no one realizes it at that point.
This type of thinking is a necessity to success in financial markets. Some just can't seem to muster it up because they always have to "go with the crowd" and they don't want to be the only one with their lonely opinion. However, it's not the crowd that makes money in the end....it's the lonely few. The ones that stood their ground when others thought they were crazy.
Keep things like this in mind and let it be "food for thought" going into 2008. Always be willing to re-assess even your own opinion as time goes on. This is what I do constantly.
Well, I just wanted to allow you to crawl into my mind for a bit this morning. I hope it helped.
Happy trading!
Sean Hyman
Editor/Trader, www.money-trader.com
Comments