Recap for Week Ending 7/20

Net Asset Value: +0.83%
Change in Contributed Capital: 0
Cash Reserve (USD): 53%

This week saw a further decline in the purchasing power of the U.S. dollar. The Greenback depreciates against most major currencies and especially vis-à-vis gold. In the first case, devaluation of the USD is needed to make American exports more attractive to non-U.S. consumers; this helps to reduce/eliminate U.S. current account deficit with the rest of the world. In the second case, oil and risk aversion are to blame. When financial assets are downgraded left and right, it's sensible to increase one's holding in the precious yellow metal.

The portfolio I had built last week worked very well this week. On Tuesday, when I checked, my net asset value had gone up 7%. For fear that I might give back some or all of those gains, I decided to close my EUR/TRY short and CAD/JPY long positions. Then I waited for EUR/TRY to rebound and CAD/JPY to dip to reset. EUR/TRY never rebounded until early today at the end of the London session and into the New York session, at which point the risk-averse crowd ruled the market.

While Japanese grannies unloaded their NZD/JPY contracts, I was snoozing like a baby. See, I was so confident that everything was hedged that I didn't even bother to add to CHF/JPY short position before I went to bed. As a result, this mistake caused me to be in near-zero-return territory for the week. 0.83% is pathetic, really. In real terms, I have actually lost some purchasing power.

	13-Jul	20-Jul	change	real return
CHF	1.2022	1.2004	-0.15%
CNY	7.5655	7.5680	0.03%
EUR	0.7257	0.7235	-0.31%
GBP	0.4917	0.4865	-1.07%
JPY	121.89	121.22	-0.55%
XAU	0.00150	0.00147	-2.41%
ORORCL	classified	classified	0.83%	-1.58%
DJIA	13,907.25	13,851.08	0.40%	-2.01%
Nasdaq	2,707.00	2,687.60	0.72%	-1.69%
S&P 500	1,552.50	1,534.10	1.19%	-1.22%

Once again, the USD lost most of its purchasing power to gold. 2.41% in one week is hard to beat. All the U.S. major indexes are actually in negative territory for the week. Yesterday was good when the Dow broke the 14,000 psychological resistance and made an all-time high. Today, ha! I'm just glad I don't bet the farm on U.S. common stocks as I once did.