Thursday, February 14, 2013

Soros Made Billion Shorting the Yen

WSJ reports:
Some of the biggest U.S. hedge-fund investors have made billions betting against the yen, exploiting Japan's determination to weaken its currency and boost its economy.

Wagering against the yen has emerged as the hottest trade on Wall Street over the past three months. George Soros, who made a fortune shorting the British pound in the 1990s, has scored gains of almost $1 billion on the trade since November, according to people with knowledge of the firm's positions. Others reaping big trading profits by riding the yen down include David Einhorn's Greenlight Capital, Daniel Loeb's Third Point LLC and Kyle Bass's Hayman Capital Management LP, investors say.
Shorting the yen and being long the Nikkei has been the play. Now where could you have gotten such advice?

From the December 12, 2012 EPJ Daily Alert:
A strong Japanese stock market and a weak yen are trends that should continue into the foreseeable future.

All indications are that [just-elected Japanese Prime MinisterShinzo ] Abe will pressure BOJ to aggressively ease monetary policy. This could be a multi-year boom in the Japanese stock market.

It makes sense to be long the Japanese stock market, but you have to hedge by being short the yen.

What would has happened to the Nikkei, which you should have been long:

What has happened to the yen, which you should have been short:


  1. How PROGRESSIVE of Soros


  3. That Nikkei chart is denominated in Yen. Convert that to dollar equivalents and you will see that Japan's stock market has actually underperformed US and Europe these past weeks.

    1. That's why Wenzel advised hedging by shorting the yen. Looks to me like he had it covered. But you would have profited even without the hedge, as he pointed out.

      If you put on both legs of the trade that he recommended, you would have been very profitable.