MAY 31, 2010 - How to Short the Euro is a primer on a speculative tool of the times. Now that we're well into the major credit event mentioned in my 2010 World Forecast Highlights - published last year - as foreshadowed in January-February, and then setting in in earnest in May, time's a wastin' when it comes to figuring out what to do. (This is far from over! But have you not been paying attention to my forecasts these past few years?) I expected that "this will likely strengthen the dollar and depress US equity markets," and indeed it has. I further noted that "the dollar’s strength will be relative to other major currencies, more than in relation to precious metals," adding that "Any dip in precious metal prices should be viewed as a buying opportunity." So, with May in the books - the worst May decline in the Dow since 1940, gold hitting an all-time record high price in May, and the euro dropping against the dollar - how's a nest egg to be protected? Sure, we'd all like to see some return on capital, or at least a return of capital. But in all this volatility, what's a body to do? I'm no financial adviser, so I'll make no recommendations: other than the principles I follow, including diversify and don't put all your eggs in one basket. (No, they're not the same thing!) But I'd be remiss if I didn't point out one possible way to play at least part of the scenario I predicted (viz. the euro's fall against the dollar), and that's what How to Short the Euro is all about. Again: do not take this as a personal recommendation on my part. If you're thinking about one of these plays, you should discuss it with your financial adviser. I did. He said it was a purely speculative move. (Duh. Like buying and holding the blue chips isn't a speculative move - and a bad one, of late?) Frankly, if you've waiting until now to get in on shorting the euro, I think you've missed a lot of the action. But probably not all of it . . . Just remember that the dollar's strength relative to the euro is a trend that won't last. Again, that's in my 2010 forecast.
