Worst trade of all time

C

Cutten

Let's discuss some of the worst trades ever made. Ideally this would be a gigantic loser that the trader/investor either sat on, or kept adding to, despite the market obviously being in a huge trend against them, and the value being non-existent.

I would like to nominate Asian Central Banks, for continuing to buy US treasuries yielding 3-5% per annum during a secular uptrend in inflation, and a collapsing dollar. These morons must have lost *trillions* purely on the dollar devaluation alone in the last 5 years or so. Instead, they could have made a risk-free investment with a much higher return simply by paying down their own government's debt.

Just imagine the per capita cost of this gigantic trading blunder - probably several years' worth of income per citizen. A classic central bank "anti-trade".

The funniest thing is that they didn't even buy TIPS - they went mostly for nominal treasuries. This really is one of the biggest financial blunders of all time.
 
This has got to be up there:

In 1626, Peter Minuit acquired (the island of) Manhattan from native peoples in exchange for trade goods, often said to be worth $24.
 
That's not a fair thing to say for our foreign investors.

Many of them have complex treaties with the United States and various goodwill relationships that they would like to keep enforce.

They probably figure buying treasuries which lose value due to inflation is a much better option than having the US beat the crap out of them any day of the week.
 
I don't think that counts as a "trade". For their purposes, it's more like a hedge, depending on which Asian country we're talking about. First of all they have no choice but to buy the debt if they want to continue the *huge* trade surplus, accumulation of dollars, and keep their populations employed. Once they stop/slow down their debt purchases, the dollar goes to crap and eventually their products become less competitive/desirable.

So, it's not a "simple trade", more like a huge macroeconomic decision.


Quote from Cutten:

I would like to nominate Asian Central Banks, for continuing to buy US treasuries yielding 3-5% per annum during a secular uptrend in inflation, and a collapsing dollar. These morons must have lost *trillions* purely on the dollar devaluation alone in the last 5 years or so. Instead, they could have made a risk-free investment with a much higher return simply by paying down their own government's debt.

Just imagine the per capita cost of this gigantic trading blunder - probably several years' worth of income per citizen. A classic central bank "anti-trade".
More...
 
Quote from MandelbrotSet:


They probably figure buying treasuries which lose value due to inflation is a much better option than having the US beat the crap out of them any day of the week.
More...

If you only told Saddam this.
 
Quote from Cocaine:

This has got to be up there:

In 1626, Peter Minuit acquired (the island of) Manhattan from native peoples in exchange for trade goods, often said to be worth $24.
More...


Actually, it was a smart move because they probably would have killed the natives if they didn't give it up.
 
Haha, probably true. But its crazy to think that for a measley $24 worth of goods, one could have the island of Manhattan. Shit, you probably can't even buy a Gucci knockoff bag on Canal street for that little (i know $24 then was a lot more but still!) :D

Quote from trader_arb:

Actually, it was a smart move because they probably would have killed the natives if they didn't give it up.
More...
 
Quote from Cocaine:

This has got to be up there:

In 1626, Peter Minuit acquired (the island of) Manhattan from native peoples in exchange for trade goods, often said to be worth $24.
More...
Minuit had the connections to make Manhattan a trade center.
Natives did not, much less in 1626.

However, natives were benefited with the increased trade, and the resulting jobs, in a once remote island.
 
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