For years, investors have used the carry trade to help earn profits from disparities in foreign-exchange and interest rates. But recently, that trade hasn't worked as well, raising questions about whether the carry trade has ended.
In the following video, Fool contributor Dan Caplinger discusses what the carry trade is and what has changed to make it less effective as an investment strategy. He goes through some of the factors that would be necessary for it to re-emerge as a profitable strategy, pointing to a key sector of the international stock markets and pointing out several stocks that have suffered as a result of the strategy's failure.
Fool contributor Dan Caplinger owns shares of WisdomTree Brazilian Real ETF. The Motley Fool recommends Petrobras and owns shares of Vale. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.