Globe Investor – Last month, some of the sharpest investors on the planet got it wrong with the U.S. dollar.
Macro hedge funds invest in stock, bond, commodity and currency markets by monitoring large economic trends. They showed their worst returns of the year in October, stemming mainly from being short on the greenback. According to the CSFB/Tremont Hedge Fund Index, returns for this category dropped by an average of 0.86 per cent last month, with the bigger funds dropping more than 2 per cent. And then there’s the Oracle of Omaha, Warren Buffet, who pared back about 20 per cent of his $21-billion (U.S.) short position after losses of $900-million.
What’s going on here? Or better yet, why is the buck confounding the best and the brightest? It seemed such an easy call in September with the hurricanes, higher energy prices, problems in Iraq and U.S. President George W. Bush’s sinking approval ratings. How can the greenback strengthen when the U.S. ran a $66-billion trade deficit in September and has a yearly current account deficit getting close to $800-billion?
