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Better Decisions, Better Results

Seeds of Thought
Cognitive Science Meets Investment Management
Issue 15-20
April 17, 2015

EUR Surprise!
As you know, I dont buy into the idea that the US economy is somehow different from the rest of the
world. Weve seen other episodes since the financial crisis when investors (and policymakers) were
lulled into thinking that one country or another was uniquely positioned vis-a-vis the global economy,

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only to have the data come back in line, and the rate
differentials and currency snap back as a result.
According to the data, I believe its time to position
for a potentially dramatic reversal in EUR/USD.
When the same setup occurred in October 2010,
EUR/USD experienced a 26% reversal over the next
10 months. Given the macro fundamentals, it isnt
surprising that the expected reversal of Q1s
disappointing results isnt materializing, even with
the positive shock offered by the collapse in energy
prices. The US economy is not immune and at some
point, discussion around the Fed will shift back from
when to if, and with it the interest rate
differentials and exchange rate should follow.

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CNY Still Under-appreciated, But Some Are Catching On

Almost daily, I receive at least one call asking what I think about getting into this emerging market or
that, one high yielding credit play or another. In a world where investors are supposedly desperate for
yield while being incredibly risk averse, I often wonder why I am never asked about a currency that
offers better carry than USD/MXN, but with less than 1/10th the volatility. For years, China has been
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Bija Advisors Seeds of Thought

every investors favorite source of

schadenfreude, no matter how often
they are disappointed. Well, for those
who are willing to think a bit outside
the box, take a look at what has quietly
become a one of the best carry to vol
trades in the world.

About the Author

For nearly three decades, Stephen
Duneier has applied cognitive science
to investment management, and life
itself. The result has been top tier
returns with near zero correlation to
any major index, the development of a
billion dollar hedge fund, a burgeoning
career as an artist and a rapidly
shrinking bucket list.

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Mr. Duneier teaches Decision Analysis in the College of Engineering at the University of California
Santa Barbara. Through Bija Advisors' publications and consulting practice, he helps portfolio managers
and business leaders improve performance by applying proven decision-making skills to their own
As a speaker, Stephen has delivered informative and inspirational talks on global macro economic
themes, how cognitive science can improve performance, and the keys to living a more deliberate life, to
audiences around the world for more than 20 years. Each is delivered via highly entertaining stories that
inevitably lead to further conversation, and ultimately, better results.
Stephen Duneier was formerly Global Head of Currency Option Trading at Bank of America and
Managing Director of Emerging Markets at AIG International. His artwork is represented by the world
renowned gallery, Sullivan Goss. He received his master's degree in finance and economics from New
York University's Stern School of Business.

Bija Advisors LLC

Twitter: @BijaSeeds
Phone: 805 452 9429

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available information, obtained from sources that we consider reliable. However, Bija Advisors LLC does not represent that it is accurate and it should not be
relied on as such. Opinions expressed are current opinions as of the date appearing on Bija Advisors LLCs publications only. All forecasts and statements
about the future, even if presented as fact, should be treated as judgments, and neither Bija Advisors LLC nor its partners can be held responsible for any
failure of those judgments to prove accurate. It should be assumed that, from time to time, Bija Advisors LLC and its partners will hold investments in
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Issue No. 15-15

April 17, 2015