About 3 years ago, we started writing about our concerns within Europe.  At that time, we took a short position in the Euro given the myriad of problems we thought Europe was facing.  Ten years ago, it would have been very difficult for individual investors to make money on the currency markets.  However, with the creation of Exchange Traded Funds (ETFs), it is now possible for small investors to invest in currency movements.  This position proved to be very profitable for our clients as the Euro has fallen dramatically over the past 5 years against the dollar (See chart below).

We had a more meaningful position at the beginning of 2015 that was reduced during the year as we took some of the gains off of the table and on Friday, we closed out our remaining short position in the Euro.  We believe the major part of the move downward is over and the current market turmoil is creating better opportunities elsewhere for positive returns over the next 3-5 years.  In addition, currencies are driven by many factors, with interest rates and economic growth being the two most important.  European interest rates are much lower than the US, which is creating economic growth across the continent.  If that economic growth continues, the Euro is more likely to strengthen against the US Dollar in the near term.