Suppose you have a strong Sell on the Euro.. and you take a trip to Europe

Suppose you’re an analyst and you have a Strong Sell on the Euro. You go on vacation to Europe and you need the Euro because simply no other currencies will be accepted for payment for food, lodging, and other general expenses. So you exchange your dollars for Euros anyways.

Have you violated any standards?

(Under the strictest interpretation of the code and standards, I don’t see this as a severe financial hardship… you don’t “need” a vacation to Europe anyways.)

I don’t think so. It’s like I have issued a strong buy in the domestic currency, and I live in that country. So what now… shall I abandon the daily use of the domestic currency, and instead carry out every transaction with another foreign currency?

^ You mean sell.

I think you’d find it a financial hardship to go on holiday and spend no money

I think you’re obligated to cancel your trip to Europe unless not going to Europe will bring you financial hardship.

I suppose this is one of those situations that Schweser comments as “there’s room to talk about in the real world but you must follow the strictest guidelines on the exam.” And I’m referring to the strictest interpretation of the Code and Standards here.

No.

No, because - as you said - “you need the Euro because simply no other currencies will be accepted for payment for food, lodging, and other general expenses.”

Your sell recommendation is analysis as an investment opinion. Your vacation to Europe is consumption, not investment. Even as an investor with a negative outlook on a currency, you’ll often need to keep some around for liquidity needs, because barter or comstantly looking around to exchange stuff racks up transaction costs, which are bad for the client.

Strict application of the standards of proactice does not require being stupid, it just requires you to be honest and forthright and not offer advice contrary to what a rational and ethical person would do if they were in your client’s position.

bchad’s got it. it depends on what you’re buying the euros for. if its for its function as a medium of exchange, then no. if its for its function as an investment, then yes. i would say that if you held the position for more than a month (give or take) it could be considered an investment. compare this situation to JNJ. does initiating a strong sell on JNJ mean you have to stop buying baby shampoo or even sell it on Kijiji/Craigslist? heck no. it just means you have to stop buying the stock.