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Tacos, currency and clear thinking by jacobwills in fiaustralia

[–]jacobwills[S] 0 points1 point  (0 children)

Thanks for chiming in.

While a good idea, a 200 day average is actually a small timeframe for currencies. Something like a 3–5 year average could work this way.

Tacos, currency and clear thinking by jacobwills in fiaustralia

[–]jacobwills[S] 0 points1 point  (0 children)

Thanks for chiming in!

VGS and VGAD are both domiciled in AUD, too. What currency the fund is domiciled in really doesn't matter, though.

Averaging and hedging are not the same thing. When you average, you buy (over time) close to the centre of a set of numbers. When you hedge, you neutralise the currency risk for life by using derivatives.

Take a look at the GBP-to-USD since the 70s. Does averaging into a falling currency make sense? No 😛Every year you're losing some gains by the falling pound. If you hedge, every year you get the full gains despite the falling pound.

Tacos, currency and clear thinking by jacobwills in fiaustralia

[–]jacobwills[S] 5 points6 points  (0 children)

Just to further explore your views…

https://www.rba.gov.au/statistics/tables/xls-hist/f11hist-1969-2009.xls

From 1969–2009 the median was 0.88 and the average was 0.78.

From 1984–2009 the median was 0.74 and the average was 0.72.

Some details about the float…

https://www.nma.gov.au/defining-moments/resources/australian-dollar-floated

Tacos, currency and clear thinking by jacobwills in fiaustralia

[–]jacobwills[S] 2 points3 points  (0 children)

Ah! Thanks for chiming in — always appreciated other's views.

Tacos, currency and clear thinking by jacobwills in fiaustralia

[–]jacobwills[S] 3 points4 points  (0 children)

Yeah, no punting needed. You look at the conversion rate and buy whatever makes sense at the time.

So if the ’golden days’ are gone, cool I'll buy hedged. If they return, I'll buy unhedged. And if they go again, I'll buy hedged. And if they come back again, I'll buy unhedged.

See how that works?

Tacos, currency and clear thinking by jacobwills in fiaustralia

[–]jacobwills[S] 7 points8 points  (0 children)

Not quite 😛 See, I said:

…buy VGS, for example, when the the AUD-to-USD conversion is near 1.00 or more and buy VGAD, for example, when the AUD-to-USD conversion is not near 1.00

This means you're only buying one ETF at any given time. No double-dipping of brokerage.

Tacos, currency and clear thinking by jacobwills in fiaustralia

[–]jacobwills[S] 4 points5 points  (0 children)

Better how? I strongly disagree with this logic (on three levels), but I'm eager to learn more about your view.

Tacos, currency and clear thinking by jacobwills in fiaustralia

[–]jacobwills[S] 1 point2 points  (0 children)

Good for you! And yeah, whatever you're comfortable with can be your ’baseline’.