Swiss Franc: for every loser there is a winner

Member Mike S. wrote today, and probably speaks for the rest of the members investing with our Absolute Return Strategy:

I have been meaning to write and ask why the system keeps buying FXF….. like 12% of the account.

Looks like I do not have to worry about hedging, at least for TODAY!

Think its a beach day…

A nice day for us, but it’s also a reminder that for every winner, there is a loser:

“It’s Carnage”
Swiss Franc Soars Most Ever After SNB Abandons EURCHF Floor; Macro Hedge Funds Crushed

Over two decades ago, George Soros took on the Bank of England, and won. Just before lunch local time, the Swiss National Bank took on virtually every single macro hedge fund, the vast majority of which were short the Swiss Franc and crushed them, when it announced, first, that it would go further into NIRP, pushing its interest rate on deposit balances even more negative from -0.25% to -0.75%, a move which in itself would have been unprecedented and, second, announcing that the 1.20 EURCHF floor it had instituted in September 2011, the day gold hit its all time nominal high, was no more.

What happened next was truly shock and awe as algo after algo saw their EURCHF 1.1999 stops hit, and moments thereafter the EURCHF pair crashed to less then 0.75, margining out virtually every single long EURCHF position, before finally rebounding to a level just above 1.00, which is where it was trading just before the SNB instituted the currency floor over three years ago.

. . .

However, the best soundbites today will surely come from US hedge funds which are just waking up to the biggest FX shocked in years, and of course, any retail investors who may have been long the EURCHF, and who are not only facing epic margin calls, but are unable to cover their positions, and one after another retail FX brokerage has commenced “Rubling” the Swissy and as CHF pair as suddenly not available for trading.