Questions on hedge against US dollar decline?

[sjl333]

Hello All,

*All this question is meant to be purely a thought exercise and isnt meant to be controversial - I am not trying to get into any arguments w/ people*

If a friend feels there will be a decline in the USD relative to other currencies.

He has all his 401K money invested into FDGRX (Fidelity Growth Company) and wants to switch it over to FDIVX (Fidelity Diversified international).

Is that the right move if a person has conviction that the USD will decline relative to other currencies? Or should that person invest somewhere else? Note, he is confined to the investment options within my 401K (see investment options below)

Note, friend is a newb and trying to learn and understand what is the best hedge against inflation and the USD going down.

Thanks in advance.

Name/Inception Date Asset Class 1 Year 3 Year 5 Year 10 Year/LOF* Returns As Of Bench- mark
FID BLUE CHIP GR (FBGRX)
12/31/1987
Stock Investments 62.23% 29.82% 24.77% 19.43% 12/31/2020 Show
FID CONTRAFUND (FCNTX)
05/17/1967
Stock Investments 32.50% 19.01% 18.16% 15.39% 12/31/2020 Show
FID EQ DIV INCOME (FEQTX)
08/21/1990
Stock Investments 1.84% 5.38% 9.12% 9.25% 12/31/2020 Show
FID FOCUSED STOCK (FTQGX)
11/12/1996
Stock Investments 33.28% 22.63% 20.10% 15.68% 12/31/2020 Show
Investments you currently own FID GROWTH COMPANY (FDGRX)
01/17/1983
Stock Investments 67.51% 30.33% 26.27% 20.59% 12/31/2020 Show
FID LARGE CAP STOCK (FLCSX)
06/22/1995
Stock Investments 9.00% 9.22% 12.43% 12.22% 12/31/2020 Show
FID OTC PORTFOLIO (FOCPX)
12/31/1984
Stock Investments 46.79% 25.53% 23.10% 19.48% 12/31/2020 Show
FID TOTAL MKT IDX (FSKAX)
11/05/1997
Stock Investments 20.78% 14.41% 15.38% 13.74% 12/31/2020 Show
GLENMEDE LG CAP CORE (GTLOX)
02/27/2004
Stock Investments 7.30% 6.83% 11.06% 12.77% 12/31/2020 Show
FID EXTD MKT IDX (FSMAX)
11/05/1997
Stock Investments 32.16% 15.31% 16.05% 13.16% 12/31/2020 Show
FID GROWTH STRAT (FDEGX)
12/28/1990
Stock Investments 29.41% 18.04% 15.47% 12.95% 12/31/2020 Show
FID LOW PRICED STK (FLPSX)
12/27/1989
Stock Investments 9.32% 7.03% 9.99% 10.61% 12/31/2020 Show
FID MID CAP STOCK (FMCSX)
03/29/1994
Stock Investments 11.37% 9.30% 12.24% 11.17% 12/31/2020 Show
FID VALUE (FDVLX)
12/01/1978
Stock Investments 9.31% 5.95% 9.81% 10.02% 12/31/2020 Show
FID SMALL CAP VALUE (FCPVX)
11/03/2004
Stock Investments 11.18% 4.51% 9.22% 9.97% 12/31/2020 Show
NORTHERN SM CAP CORE (NSGRX)
09/30/1999
Stock Investments 14.46% 8.21% 11.57% 10.82% 12/31/2020 Show
FID DIVERSIFD INTL (FDIVX)
12/27/1991
Stock Investments 18.91% 9.34% 9.77% 7.45% 12/31/2020 Show
FID OVERSEAS (FOSFX)
12/04/1984
Stock Investments 15.42% 8.14% 10.10% 8.44% 12/31/2020 Show
FID REAL ESTATE INVS (FRESX)
11/17/1986
Stock Investments -7.93% 3.45% 4.47% 8.33% 12/31/2020 Show
FID FREEDOM 2005 (FFFVX)
11/06/2003
Blended Investment* 9.66% 6.27% 7.02% 5.58% 12/31/2020 Show
FID FREEDOM 2010 (FFFCX)
10/17/1996
Blended Investment* 11.06% 6.99% 7.95% 6.49% 12/31/2020 Show
FID FREEDOM 2015 (FFVFX)
11/06/2003
Blended Investment* 12.42% 7.71% 8.85% 7.05% 12/31/2020 Show
FID FREEDOM 2020 (FFFDX)
10/17/1996
Blended Investment* 13.76% 8.36% 9.55% 7.55% 12/31/2020 Show
FID FREEDOM 2025 (FFTWX)
11/06/2003
Blended Investment* 14.65% 8.83% 10.11% 8.16% 12/31/2020 Show
FID FREEDOM 2030 (FFFEX)
10/17/1996
Blended Investment* 15.59% 9.39% 11.14% 8.79% 12/31/2020 Show
FID FREEDOM 2035 (FFTHX)
11/06/2003
Blended Investment* 17.07% 10.10% 12.08% 9.42% 12/31/2020 Show
FID FREEDOM 2040 (FFFFX)
09/06/2000
Blended Investment* 18.16% 10.49% 12.36% 9.59% 12/31/2020 Show
FID FREEDOM 2045 (FFFGX)
06/01/2006
Blended Investment* 18.15% 10.51% 12.36% 9.63% 12/31/2020 Show
FID FREEDOM 2050 (FFFHX)
06/01/2006
Blended Investment* 18.18% 10.49% 12.37% 9.61% 12/31/2020 Show
FID FREEDOM 2055 (FDEEX)
06/01/2011
Blended Investment* 18.20% 10.50% 12.37% 9.58% 12/31/2020 Show
FID FREEDOM 2060 (FDKVX)
08/05/2014
Blended Investment* 18.12% 10.51% 12.34% 9.97% 12/31/2020 Show
FID FREEDOM 2065 (FFSFX)
06/28/2019
Blended Investment* 18.05% N/A N/A 18.31% 12/31/2020 Show
FID FREEDOM INCOME (FFFAX)
10/17/1996
Blended Investment* 8.93% 5.78% 6.14% 4.69% 12/31/2020 Show
FID PURITAN (FPURX)
04/16/1947
Blended Investment* 20.56% 11.89% 11.81% 10.50% 12/31/2020 Show
FID INTERMED BOND (FTHRX)
05/23/1975
Bond Investments 7.21% 4.92% 3.96% 3.41% 12/31/2020 Show
FID INVST GR BD (FBNDX)
08/06/1971
Bond Investments 9.90% 6.34% 5.65% 4.44% 12/31/2020 Show
FID SHORT TERM BOND (FSHBX)
09/15/1986
Bond Investments 3.70% 3.02% 2.33% 1.80% 12/31/2020 Show
FID GOVT MMKT (SPAXX)
02/05/1990
7 day yield as of
12/31/2020 0.01%
Short-Term Investments 0.26% 1.19% 0.82% 0.42% 12/31/2020 Show

[netrammgc]

Can you provide more detail on what your US dollar collapse would look like? Percentages/numbers please.

[sjl333]

Can you provide more detail on what your US dollar collapse would look like? Percentages/numbers please.

No idea to be honest in terms of #'s and percentages.

I just think sooner rather than later we will see some kind of drop, I just dont know when so I am trying to be proactive.

Note this post isn't meant to be controversial - you do not have to agree with my assessment.

[annu]

Buying Gold is probably the way to go if you are convinced. https://etfdb.com/etfs/commodity/gold/

[Ramjet]

Gold would be my suggestion, but just note that such extreme views hardly ever come to fruition

[geerhardusvos]

Can you provide more detail on what your US dollar collapse would look like? Percentages/numbers please.

No idea to be honest in terms of #'s and percentages.

I just think sooner rather than later we will see some kind of drop, I just dont know when so I am trying to be proactive.

Note this post isn't meant to be controversial - you do not have to agree with my assessment.

What exactly is your assessment? Like you say, I don’t think you have any idea what you’re talking about. Having 20 to 50% of your equities in non-US TSM is a reasonable approach, but it’s for diversification not because the dollar is going to collapse.

I think you would be helped by basic understanding of how dollars work and how money is created. Check out the latest RR: https://rationalreminder.ca/podcast

[hi_there]

A collapse in US dollar could also result in an increase in nominal value of US stocks. Observe how Nikkei 225 and JPY show a negative correlation of returns. The reason is that price inflation will boost nominal earnings, and greater value of foreign currencies will boost foreign earnings of multinational corporations.

Your action should depend on why you think US dollar will depreciate. For example, if it is driven by a credit crisis of US debt, then you'd want to go with only foreign high grade bonds. An economic crisis in the US will destroy the economies of every country in the world, making foreign stocks a poor investment choice.

However, if you believe in a different scenario - for instance, that US purchases of foreign goods spike due to economic strength - then, you would probably prefer some mix of US and foreign equities.

If you don't know what the scenario is, then maybe it is better to think about what you are doing.

[sjl333]

Can you provide more detail on what your US dollar collapse would look like? Percentages/numbers please.

No idea to be honest in terms of #'s and percentages.

I just think sooner rather than later we will see some kind of drop, I just dont know when so I am trying to be proactive.

Note this post isn't meant to be controversial - you do not have to agree with my assessment.

What exactly is your assessment? Like you say, I don’t think you have any idea what you’re talking about. Having 20 to 50% of your equities in non-US TSM is a reasonable approach, but it’s for diversification not because the dollar is going to collapse.

I think you would be helped by basic understanding of how dollars work and how money is created. Check out the latest RR: https://rationalreminder.ca/podcast

Relax man. I stated from the beginning that I dont know what im talking about. I am just asking a simple question and want to pick the experts brain. I am not saying I am actually going to pull the trigger, this is meant to start a conversation and learn from the experts...

[drumboy256]

I may be young and stupid (turning 40 this year) but why would you go from a super tilted US based growth fund to a even MORE concentrated international holding? Regardless if the USD implodes (spoiler alert, it won't) you're moving from 520 holdings down to 165 with the new fund which I'm assuming you'll just swap the mutual funds. I would guess (putting on my Bogel hat for a bit) that you're not capturing any international stocks within your portfolio currently?

The bogelhead advice would be hold FTIHX which gives more than 4700 companies outside of the US (if the USD does collapse) then you have a low ER fund that scratches your itch.

[alpine_boglehead]

How likely do you estimate scenario to be? Nothing is 100% certain in this world (apart from death and taxes).

So you probably shouldn't bet 100% of your money on that scenario. A "nobody knows nothing" portfolio would be world market weights at 55% US, 45% international.

In 2008/2009 all stocks collapsed, international diversification was of little help then.

If you think the US will see major problems, why do you assume that the rest of the world won't be drawn into this? The popping US housing bubble triggered the 2008/2009 crash. Afterwards, the US stock market went on a tear, while many European markets still are
in the neighborhood of their 2000 highs

[geerhardusvos]

Can you provide more detail on what your US dollar collapse would look like? Percentages/numbers please.

No idea to be honest in terms of #'s and percentages.

I just think sooner rather than later we will see some kind of drop, I just dont know when so I am trying to be proactive.

Note this post isn't meant to be controversial - you do not have to agree with my assessment.

What exactly is your assessment? Like you say, I don’t think you have any idea what you’re talking about. Having 20 to 50% of your equities in non-US TSM is a reasonable approach, but it’s for diversification not because the dollar is going to collapse.

I think you would be helped by basic understanding of how dollars work and how money is created. Check out the latest RR: https://rationalreminder.ca/podcast

Relax man. I stated from the beginning that I dont know what im talking about. I am just asking a simple question and want to pick the experts brain. I am not saying I am actually going to pull the trigger, this is meant to start a conversation and learn from the experts...

We aren’t experts. We are normal investors like everyone else. We don’t know the future, and neither do you. Pick an asset allocation that you can stick with over the next 50 years. There’s always some sort of crash or collapse coming...

https://jlcollinsnh.com/2012/04/15/stoc ... -save-you/

If you want to learn about the philosophy of investing created by one of the best experts in the industry, check out the wiki and “getting started” here on the Bogleheads.

[sjl333]

Can you provide more detail on what your US dollar collapse would look like? Percentages/numbers please.

No idea to be honest in terms of #'s and percentages.

I just think sooner rather than later we will see some kind of drop, I just dont know when so I am trying to be proactive.

Note this post isn't meant to be controversial - you do not have to agree with my assessment.

What exactly is your assessment? Like you say, I don’t think you have any idea what you’re talking about. Having 20 to 50% of your equities in non-US TSM is a reasonable approach, but it’s for diversification not because the dollar is going to collapse.

I think you would be helped by basic understanding of how dollars work and how money is created. Check out the latest RR: https://rationalreminder.ca/podcast

Relax man. I stated from the beginning that I dont know what im talking about. I am just asking a simple question and want to pick the experts brain. I am not saying I am actually going to pull the trigger, this is meant to start a conversation and learn from the experts...

We aren’t experts. We are normal investors like everyone else. We don’t know the future, and neither do you. Pick an asset allocation that you can stick with over the next 50 years. There’s always some sort of crash or collapse coming...

https://jlcollinsnh.com/2012/04/15/stoc ... -save-you/

If you want to learn about the philosophy of investing created by one of the best experts in the industry, check out the wiki and “getting started” here on the forum.

i am not saying I know the future.

Why does it matter how i approach my investment philosophy, just because it doesnt align with yours?

I used to be a BH investor investing in VOO but i switched my philosophy to invididual stocks and high growth ETFs and have done far better than just sticking with VOO.

I understand that this isnt the best forum to ask these kind of questions because most people on here are so religiously confined to the "boglehead" philosophy and want to stick with their 3 fund portfolio and do not market time.

But it is very disconcerting here on these forums when somebody asks a question that challenges their viewpoint, and start to criticize their questions and behaviors just because it doesnt align with their thoughts and actions.

You dont have to agree w/ my assessment, I am simply asking as a thought exercise.

[geerhardusvos]

No idea to be honest in terms of #'s and percentages.

I just think sooner rather than later we will see some kind of drop, I just dont know when so I am trying to be proactive.

Note this post isn't meant to be controversial - you do not have to agree with my assessment.

What exactly is your assessment? Like you say, I don’t think you have any idea what you’re talking about. Having 20 to 50% of your equities in non-US TSM is a reasonable approach, but it’s for diversification not because the dollar is going to collapse.

I think you would be helped by basic understanding of how dollars work and how money is created. Check out the latest RR: https://rationalreminder.ca/podcast

Relax man. I stated from the beginning that I dont know what im talking about. I am just asking a simple question and want to pick the experts brain. I am not saying I am actually going to pull the trigger, this is meant to start a conversation and learn from the experts...

We aren’t experts. We are normal investors like everyone else. We don’t know the future, and neither do you. Pick an asset allocation that you can stick with over the next 50 years. There’s always some sort of crash or collapse coming...

https://jlcollinsnh.com/2012/04/15/stoc ... -save-you/

If you want to learn about the philosophy of investing created by one of the best experts in the industry, check out the wiki and “getting started” here on the forum.

i am not saying I know the future.

Why does it matter how i approach my investment philosophy, just because it doesnt align with yours?

I used to be a BH investor investing in VOO but i switched my philosophy to invididual stocks and high growth ETFs and have done far better than just sticking with VOO.

You dont have to agree w/ my assessment, I am simply asking as a thought exercise.

Speculating about the future of something you don’t understand isn’t a thought exercise, it’s futility. Your current investment philosophy may have done well recently, but in the long run you will likely be beat out by broad based index fund approach. Will you stick with your strategy over the next 30 or 40 years? If not, it’s not a good approach.

Also, VTSAX is up around 600% since 2010. You don’t miss out on much by keeping it simple.

[sjl333]

What exactly is your assessment? Like you say, I don’t think you have any idea what you’re talking about. Having 20 to 50% of your equities in non-US TSM is a reasonable approach, but it’s for diversification not because the dollar is going to collapse.

I think you would be helped by basic understanding of how dollars work and how money is created. Check out the latest RR: https://rationalreminder.ca/podcast

Relax man. I stated from the beginning that I dont know what im talking about. I am just asking a simple question and want to pick the experts brain. I am not saying I am actually going to pull the trigger, this is meant to start a conversation and learn from the experts...

We aren’t experts. We are normal investors like everyone else. We don’t know the future, and neither do you. Pick an asset allocation that you can stick with over the next 50 years. There’s always some sort of crash or collapse coming...

https://jlcollinsnh.com/2012/04/15/stoc ... -save-you/

If you want to learn about the philosophy of investing created by one of the best experts in the industry, check out the wiki and “getting started” here on the forum.

i am not saying I know the future.

Why does it matter how i approach my investment philosophy, just because it doesnt align with yours?

I used to be a BH investor investing in VOO but i switched my philosophy to invididual stocks and high growth ETFs and have done far better than just sticking with VOO.

You dont have to agree w/ my assessment, I am simply asking as a thought exercise.

Speculating about the future of something you don’t understand isn’t a thought exercise, it’s futility. Your current investment philosophy may have done well recently, but in the long run you will likely be beat out by broad based index fund approach. Will you stick with your strategy over the next 30 or 40 years? If not, it’s not a good approach.

Also, VTSAX is up around 600% since 2010. You don’t miss out on much by keeping it simple.

Wrong, it is not futility, it is a learning experience.

We shall see? If i dont beat index approach, that is fine w/ me, i understood the risk. As of now, I am winning. In the long run, we shall see who comes out ahead?

You can go ahead and stick with your VOO plans, and I will stick with my own individual stocks and high growth ETFs.

You come off as very condescending and quite rude.

[Dottie57]

I may be young and stupid (turning 40 this year) but why would you go from a super tilted US based growth fund to a even MORE concentrated international holding? Regardless if the USD implodes (spoiler alert, it won't) you're moving from 520 holdings down to 165 with the new fund which I'm assuming you'll just swap the mutual funds. I would guess (putting on my Bogel hat for a bit) that you're not capturing any international stocks within your portfolio currently?

The bogelhead advice would be hold FTIHX which gives more than 4700 companies outside of the US (if the USD does collapse) then you have a low ER fund that scratches your itch.

This.

[sjl333]

I may be young and stupid (turning 40 this year) but why would you go from a super tilted US based growth fund to a even MORE concentrated international holding? Regardless if the USD implodes (spoiler alert, it won't) you're moving from 520 holdings down to 165 with the new fund which I'm assuming you'll just swap the mutual funds. I would guess (putting on my Bogel hat for a bit) that you're not capturing any international stocks within your portfolio currently?

The bogelhead advice would be hold FTIHX which gives more than 4700 companies outside of the US (if the USD does collapse) then you have a low ER fund that scratches your itch.

my current 401K elections do not have the option for FTIHX. When i look over my options i see are related to interntional are:

FID DIVERSIFD INTL (FDIVX)
12/27/1991
Stock Investments 18.91% 9.34% 9.77% 7.45% 12/31/2020 Show
FID OVERSEAS (FOSFX)
12/04/1984
Stock Investments

[drumboy256]

I may be young and stupid (turning 40 this year) but why would you go from a super tilted US based growth fund to a even MORE concentrated international holding? Regardless if the USD implodes (spoiler alert, it won't) you're moving from 520 holdings down to 165 with the new fund which I'm assuming you'll just swap the mutual funds. I would guess (putting on my Bogel hat for a bit) that you're not capturing any international stocks within your portfolio currently?

The bogelhead advice would be hold FTIHX which gives more than 4700 companies outside of the US (if the USD does collapse) then you have a low ER fund that scratches your itch.

my current 401K elections do not have the option for FTIHX. When i look over my options i see are related to interntional are:

FID DIVERSIFD INTL (FDIVX)
12/27/1991
Stock Investments 18.91% 9.34% 9.77% 7.45% 12/31/2020 Show
FID OVERSEAS (FOSFX)
12/04/1984
Stock Investments

Ahhh ok, apologies missed that.

The difference it looks like is FOSFX is even MORE tilted however lower ER than FDIVX.

[sjl333]

I may be young and stupid (turning 40 this year) but why would you go from a super tilted US based growth fund to a even MORE concentrated international holding? Regardless if the USD implodes (spoiler alert, it won't) you're moving from 520 holdings down to 165 with the new fund which I'm assuming you'll just swap the mutual funds. I would guess (putting on my Bogel hat for a bit) that you're not capturing any international stocks within your portfolio currently?

The bogelhead advice would be hold FTIHX which gives more than 4700 companies outside of the US (if the USD does collapse) then you have a low ER fund that scratches your itch.

my current 401K elections do not have the option for FTIHX. When i look over my options i see are related to interntional are:

FID DIVERSIFD INTL (FDIVX)
12/27/1991
Stock Investments 18.91% 9.34% 9.77% 7.45% 12/31/2020 Show
FID OVERSEAS (FOSFX)
12/04/1984
Stock Investments

Ahhh ok, apologies missed that.

The difference it looks like is FOSFX is even MORE tilted however lower ER than FDIVX.

I modified my original post. I dont think there will be a USD collapse, I have a strong conviction that the USD will decline relative to other currencies. Sorry for the confusion!

[drumboy256]

I may be young and stupid (turning 40 this year) but why would you go from a super tilted US based growth fund to a even MORE concentrated international holding? Regardless if the USD implodes (spoiler alert, it won't) you're moving from 520 holdings down to 165 with the new fund which I'm assuming you'll just swap the mutual funds. I would guess (putting on my Bogel hat for a bit) that you're not capturing any international stocks within your portfolio currently?

The bogelhead advice would be hold FTIHX which gives more than 4700 companies outside of the US (if the USD does collapse) then you have a low ER fund that scratches your itch.

my current 401K elections do not have the option for FTIHX. When i look over my options i see are related to interntional are:

FID DIVERSIFD INTL (FDIVX)
12/27/1991
Stock Investments 18.91% 9.34% 9.77% 7.45% 12/31/2020 Show
FID OVERSEAS (FOSFX)
12/04/1984
Stock Investments

Ahhh ok, apologies missed that.

The difference it looks like is FOSFX is even MORE tilted however lower ER than FDIVX.

I modified my original post. I dont think there will be a USD collapse, I have a strong conviction that the USD will decline relative to other currencies. Sorry for the confusion!

Given that--- the lesson I have learned over the last 12 months is a quote I got from this very board---- goes something like this: 'Money is like soap, the more you handle it, the less you have...'

That said, the one thing that may not be obvious is the opportunity cost of to you of changing funds and by default, not doing a damn thing with your money. We can't answer that tho but hopefully you can help your friend.