Monday, January 31, 2005
Even rich guys do dumb stuff
So what are we supposed to make of both Bill Gates and Warren Buffett betting against the U.S. dollar? I'm with HedgeFundGuy:
Gates and Buffet need to know that 1) the dollar is already undervalued on a purchasing power parity basis vis-a-vis Europe and close with the Yen (see the latest Big Mac Index) and 2) only revisions to current deficit projections will hurt the dollar. Instead, they look at the current deficits (in the upturn of a business cycle), and see disequilibrium that can only be fixed by a falling dollar, neglecting the existing knowledge and foresight of the FX speculators.The word is 'hubris'. Hopefully these two didn't bet the farm.
