Comments on: The Weakening Dollar – I http://livingoffdividends.com/2007/11/28/the-weakening-dollar-i/ Join me on my journey to achieve financial independence through dividends, passive income and investments Tue, 16 Mar 2010 21:22:11 -0700 http://wordpress.org/?v=2.8.1 hourly 1 By: Living Off Dividends http://livingoffdividends.com/2007/11/28/the-weakening-dollar-i/comment-page-1/#comment-1092 Living Off Dividends Sat, 01 Dec 2007 19:46:22 +0000 http://www.livingoffdividends.com/2007/11/28/the-weakening-dollar-i/#comment-1092 while one cannot predict the future, you can get an idea from what has happened in the past. the fed will continue to drop rates through 2008. this will likely keep the greenback weak. for non-US investors, the scenario is indeed difficult. your wife's vacation would now have cost half as much as it the last time. I guess it's time to take some time off and travel the USA!!! while one cannot predict the future, you can get an idea from what has happened in the past.

the fed will continue to drop rates through 2008. this will likely keep the greenback weak.

for non-US investors, the scenario is indeed difficult. your wife’s vacation would now have cost half as much as it the last time. I guess it’s time to take some time off and travel the USA!!!

]]> By: Larus http://livingoffdividends.com/2007/11/28/the-weakening-dollar-i/comment-page-1/#comment-1087 Larus Fri, 30 Nov 2007 08:53:59 +0000 http://www.livingoffdividends.com/2007/11/28/the-weakening-dollar-i/#comment-1087 Weakening USD seems to be just an inconvenience for USD-based investor but for, say, EUR-based investor it's a menace. Most freely available stock information (price ratios, screening, etc.) is only available for US traded stocks. So you have to solve a trade-off whether to buy easily screenable US stocks and have most of your gains eaten by exchange rate changes or you have to do the harder work of finding non-USD based investments. The currency of my coutry (CZK) is one of the most strenghtening in the world which together with lack of investing possibilities in CZK creates a real investing nightmare. I can even possibly be better off by putting all of my money to the money market account than investing in US stocks. My wife spend the summer of 2001 in the USA when the exchange rate of CZK/USD was about 40 (one greenback for 40 CZK). Today the rate is below 18. So I'm currently seeking GBP and EUR based investments alongside with non-USD tied ADRs (because eg. electronics suppliers may be based in Taiwan but they trade their goods in USD). Nevertheless I'm still losing ~5% a year versus EUR just due to the changing exchange rate. A USD-based passive investor could probably profit from buying Euro Stoxx, DAX or MDAX-based total return (dividends reinvested) ETF index fund. It's not too widely discussed but Germany's economy is similar in size to China and it is a developed market meaning a relatively safe investment comparable to S&P 500 or DJIA (and no long-term problems like in Japan). But hey, USD can also stop weakening any time because nobody can know the future, right? Weakening USD seems to be just an inconvenience for USD-based investor but for, say, EUR-based investor it’s a menace. Most freely available stock information (price ratios, screening, etc.) is only available for US traded stocks. So you have to solve a trade-off whether to buy easily screenable US stocks and have most of your gains eaten by exchange rate changes or you have to do the harder work of finding non-USD based investments. The currency of my coutry (CZK) is one of the most strenghtening in the world which together with lack of investing possibilities in CZK creates a real investing nightmare. I can even possibly be better off by putting all of my money to the money market account than investing in US stocks. My wife spend the summer of 2001 in the USA when the exchange rate of CZK/USD was about 40 (one greenback for 40 CZK). Today the rate is below 18. So I’m currently seeking GBP and EUR based investments alongside with non-USD tied ADRs (because eg. electronics suppliers may be based in Taiwan but they trade their goods in USD). Nevertheless I’m still losing ~5% a year versus EUR just due to the changing exchange rate.
A USD-based passive investor could probably profit from buying Euro Stoxx, DAX or MDAX-based total return (dividends reinvested) ETF index fund. It’s not too widely discussed but Germany’s economy is similar in size to China and it is a developed market meaning a relatively safe investment comparable to S&P 500 or DJIA (and no long-term problems like in Japan).
But hey, USD can also stop weakening any time because nobody can know the future, right?

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