You may recall that John Maynard Keynes once cautioned against such a strategy by warning that “The market can stay irrational longer than you can stay solvent.” One explanation for this is that speculating against the market requires a critical mass of investors that will act in synchronised or coordinated manner and will be able to push prices back towards fundamental values.
The recent crisis on sub prime mortgages in the United States is a classical example. While this crisis appear to have a long tail, we are somewhat insulated from its impact by our fixed exchange rate and the narrow range of our allocation of foreign assets. You see for Fiji we only have cash in our investment portfolio. This is not entirely by choice.