Mr. Panholzer is featured here for several reasons: I have known him for over 30 years; he represents a FOREX manager with a balanced trading methodology who has performed well for many years maximizing returns while minimizing risks; his website is a good paradigm for the kind and depth of information a money manager should offer prospects and clients.
Mr. Panholzer has one of the most respected names in the managed FOREX business.
Peter Panholzer, partner of DynexCorp, offers a brief summary of developments during his lifelong career as a currency portfolio manager.
I made my first currency trade in October 1973. After Bretton Woods, spot settlement rules were still in their infancy. At that time, you had a choice of forward swaps, such as 30 days, 60 days, and so on, which could only be realised at expiry. Arbitraging between 30â60 and 60â90 day swap spreads was a popular strategy. After 30 days, your swaps mutated to spot-30 and 30â60. If an expiry fell on a weekend and the mean-reverting arbitrage happened to be in your favour, you could either earn settlement interest or roll the swap positions forward. It was a win-winânow or laterâsituation.
Now we use statistical research as well as subjective sentiment-driven techniques. In 1988, we were first in performing Rescaled Range Analysis and plotting the Hurst exponent of five IMM currencies, relying primarily on Jens Feder's just published textbook, Fractals.
We demonstrated the declining memory effect in currencies since 1973âand thus the decreasing efficiency of trading systems, leading to our concept of baby markets being more useful for trading systems than mature markets (for example, emerging markets currencies are today's baby markets).
In 1988, we were also first to point to the odd fact that currencies do not scale logarithmically like commodities or stocks. This makes risk scaling easier.
Today we concentrate on obtaining intelligence about market flows, positioning changes, contrary opinion reports, and sentiment analyses. We pay particular attention to information offered gratuitously. News media are often an excellent source for contrarian positioning. Their gratuitous trading recommendations remain unpunished if they fail, since they escape the negative feedback from speculators who have followed them. When a particular market occupies a large part of public perception and becomes one-sided, alarm bells start to ring in tune with Bob Dylan's lyric, "You don't have to be a weatherman to know which way the wind blows."