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How hard is it to predict the exchange rates of Forex markets?

I often write on Quora.com, where I am the most viewed writer on financial matters, with over 355.5 million views in recent years.

In the answers below I focused on the following topics and issues:

  • How difficult is it to predict the forex exchange rates, and beat the stock market with this kind of currency speculation?
  • Has it really gotten more difficult to get on the “housing ladder” compared to in previous decades, or is it a misconception that too many people believe? I compare big cities to smaller towns in my analysis.
  • What is the easiest way to own your own business by age 30, in a world where everybody seems to want to go down that path?

If you want me to answer any questions on Quora or YouTube, or you are looking to invest, don’t hesitate to contact me, email (advice@adamfayed.com) or use the WhatsApp function below.

Some of the links and videos referred to might only be available on the original answers. 

Source for all answers – Adam Fayed’s Quora page.

How hard is it to predict the exchange rates of Forex markets?

How many people do you know who saw the Turkish Lira collapse coming?

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After the financial crisis, the Federal Reserve in the US reduced interest rates to 0% and did aggressive QE.

Many people predicted a sharp fall in the US. It actually strengthened to such an extent that some populist politicians spoke about weakening it.

Then Covid-19 came along. The central bank was even more aggressive in doing QE.

Many merchants of doom, often the same people who predicted a crisis after 2008, once again predicted dollar weakness.

What has actually happened is that the USD has lost a bit of its strength, but is still trading at very high levels:

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With FX, you have another issue as well. Currencies don’t pay much in income these days because the bank deposit rates are close to 0% globally.

What is more, the USD can’t go up against the British Pound, at the same time as the Pound goes up against the USD.

So, it is very hard to be up with FX trading. It is very very hard to beat the stock markets with FX trading, at least consistently.

I have never met one person who has gotten rich by FX trading. I haven’t even met a person who has met a person who has gotten rich by FX trading.

In comparison, I have met countless people who have gotten wealthy, over time, from buying assets and holding them for the long term.

Has it gotten more difficult for people to buy a first home over the decades?

It depends where you live. Take the UK as an example:

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House prices have outstripped earnings in London, despite the dips that have happened.

They have always outstripped earnings ultra long-term for a simple reason – women started joining the workforce in greater numbers in the 1950s, 1960s, and 1970s.

That one-off stimulus ensured that many people could afford to take out bigger mortgages.

Plenty of two-income, middle-income, households were just as well-off as a higher-income household with only one income.

That stimulus won’t happen again unless it becomes more normal for groups of friends to buy as a three.

What we have seen in the last twenty years, as per the graph, is that house prices outside of big cities haven’t increased a lot compared to earnings.

The big question is whether the remote working culture will change this dynamic.

Already we have seen prices increase in smaller towns and cities compared to the bigger places.

As the graph below shows, London house prices have been weak relative to the rest of the country:

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Considering the starting values of the houses in London are higher, that 10k “increase” is tiny in percentage terms.

I am not sure if this will continue, but similar trends seem to be happening in many other countries.

So, buying has become more difficult compared to the 1950s, and much more difficult in the big cities.

Yet buying in an average town, isn’t any more difficult than say in 2005.

How can an individual own their own business by the age of 30 years old?

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The media presents running your own business as glamorous, so it is no surprise that many people want to do it.

People also have laudable reasons for going it alone, as shown by the figures below:

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The issue is, those without experience in the domain seldom succeed

That is because execution matters, not your ideas, no matter how great they are. It is more difficult to execute without experience.

Therefore, the easiest way to do this is

  1. Get a job. In any industry. Get good at it in your 20s. Spot gaps in the market, common customer complaints, and so on.
  2. After five or more years of experience, consider going it alone, armed with that experience.
  3. Then scale the business once you have established it.

A 30-year-old with eight years of business experience has almost as much chance as a 50-year-old with 28 years experience in the domain, as there is declining marginal utility above a certain level of experience.

Yes, it is pretty boring. Much more boring than going out, looking for finance, with that great idea.

But it is also the most tried-and-tested way to get business success.

If you really want to start a business with little or no experience, try creating a business in a new industry, or a developing country.

It is easier to succeed as a newcomer with fewer incumbent players.

Pained by financial indecision? Want to invest with Adam?

Adam is an internationally recognised author on financial matters, with over 760.2 million answer views on Quora.com, a widely sold book on Amazon, and a contributor on Forbes.

Further Reading

In the post below, I spoke about the following topics and issues:

  • Is the US stock market the S&P500 the easiest way to get wealthy for the average person?
  • Is paying a migrant worker 300 British Pounds a month in the UAE modern day slavery?
  • How much money are you losing in the bank relative to inflation?

To read more click on the link below

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