Long-term, are you bullish or bearish on the U.S. dollar?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.

Will the greenback strengthen or weaken?

Strengthen
3
21%
Strengthen
3
21%
Weaken
4
29%
Weaken
4
29%
 
Total votes: 14

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RisingSun
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Long-term, are you bullish or bearish on the U.S. dollar?

Post by RisingSun »

Over the long-term (a year or more), do you think the greenback will weaken or strengthen? Please give a brief explanation to support your answer.
Last edited by RisingSun on Mon Sep 05, 2011 11:22 am, edited 1 time in total.
donocash
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Post by donocash »

I believe that currencies are no more predictable than debt or equities markets.

I also believe with all my heart that one function of currency markets is to prey on the innocent small investor who thinks he can sucessfully trade currencies with the currency desks of major trading firms, and relieve him of his money.
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Post by fishndoc »

If I recall correctly, even Warren Buffett lost a big currency bet several years back.
Diversifying your currency exposure is probably wise - making a big bet one way or the other is likely foolish.
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Post by nisiprius »

A year is "long-term?" :!:
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Post by gkaplan »

I don't know, and I don't care.
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Re: Long-term, are you bullish or bearish on the U.S. dollar

Post by dmcmahon »

RisingSun wrote:Over the long-term (a year or more), do you think the greenback will weaken or strengthen? Please give a brief explanation to support your answer.
Versus what?
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Post by kbrinaldi »

Yeah, vs. what is the question.

In purchasing power it will decline, since it makes sense for the government to print more money so it can pay back it's debt easier.
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Post by SP-diceman »

I would say bullish because of problems in the EU.
The dollar will be viewed as a safe haven.

…but its just an opinion.



Thanks
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Post by SP-diceman »

nisiprius wrote:A year is "long-term?" :!:
It is to a fruit fly. :)
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Post by baw703916 »

I think someone could only be "bullish" if they were expecting persistent deflation.

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greg24
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Post by greg24 »

I'm not quite sure what "bullish or bearish on the U.S. dollar" means, and I'm 100% sure I can't profit on it.
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Post by Grt2bOutdoors »

When the rest of the world is dependent on us for either one thing or another - what do you think?

I can see this thread being locked in 3....2.....1.......
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Re: Long-term, are you bullish or bearish on the U.S. dollar

Post by Ed 2 »

dmcmahon wrote:
RisingSun wrote:Over the long-term (a year or more), do you think the greenback will weaken or strengthen? Please give a brief explanation to support your answer.
Versus what?
Vs Iraqi denar :wink:
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RisingSun
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Post by RisingSun »

nisiprius wrote:A year is "long-term?" :!:

I recall the training material on one of the forex sites saying that in the forex market short term is literally seconds, mid term is less than a full day.

I was looking at some currency ETF's and ETN's instead of the forex sites, so I would be long term.

Versus any of the major world currencies.
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Post by umfundi »

To paraphrase Winston Churchill (he was speaking about democracy):

The dollar is the worst investment you can make.

Except for the alternatives.

(I also heard that Churchill said, the Americans always do the right thing. But only after trying every other option.)

Keith
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RisingSun
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Post by RisingSun »

umfundi wrote:To paraphrase Winston Churchill (he was speaking about democracy):

The dollar is the worst investment you can make.

Except for the alternatives.

(I also heard that Churchill said, the Americans always do the right thing. But only after trying every other option.)

Keith

That was 65 years ago. Times have changed. We live in a totally different environment now. Seems that a lot of financial analysts are predicting a very different economic future for America. When Churchill made those statements, China wasn't even on the economic map.
Last edited by RisingSun on Thu Sep 01, 2011 10:17 pm, edited 1 time in total.
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Post by Noobvestor »

GRT2BOUTDOORS wrote:When the rest of the world is dependent on us for either one thing or another - what do you think?
I confess I'm not sure what you mean. They are dependent which will bolster the dollar? If so, why hasn't that happened over the last decade? Or they are dependent so we can get away with inflating?
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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Re: Long-term, are you bullish or bearish on the U.S. dollar

Post by umfundi »

RisingSun wrote:Over the long-term (a year or more), do you think the greenback will weaken or strengthen? Please give a brief explanation to support your answer.
Prediction: No one knows. Explanation: No one knows.

Ask me to explain after a year, I will give you a very believable post-diction.

Keith :lol:
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Post by HongKonger »

I believe it will weaken.
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Post by Valuethinker »

RisingSun wrote:
umfundi wrote:To paraphrase Winston Churchill (he was speaking about democracy):

The dollar is the worst investment you can make.

Except for the alternatives.

(I also heard that Churchill said, the Americans always do the right thing. But only after trying every other option.)

Keith

That was 65 years ago. Times have changed. We live in a totally different environment now. Seems that a lot of financial analysts are predicting a very different economic future for America. When Churchill made those statements, China wasn't even on the economic map.
In my lifetime:

- America was doomed, USSR was going to take over the world

- America was doomed, the beatniks were taking over, and the military would stage a coup to restore order, and end democracy

- America was doomed, the Ay-rabs with their oil were going to take over the world, Americans would freeze in the dark

- America was doomed, Germany was the future superpower

- America was doomed, Japan would be the world's largest economy and most powerful country, Japan would remilitarize and dominate Asia

- Dollar was doomed, Euro would surpass the dollar as the world's currency of denomination

- America will be overrun by Mexicans, take up Sharia Law, have hyperinflation, China will dominate the world.....

In other words, I've heard this one a few times before, I remain, shall we say, just a little bit sceptical...

Readers should be aware than in 1900 both Britain and Germany had (serious) plans drawn up to invade the USA. Of course in the 1920s the US drew up war plans to invade Canada, and they probably exist somewhere still...

PS 'Rising Sun' is deeply ironic as a nick, because of course the 'Rising Sun' that was going to buy up America in the 1980s was.... Japan.

How did that one work out, then?
Last edited by Valuethinker on Fri Sep 02, 2011 10:47 am, edited 1 time in total.
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Post by Valuethinker »

baw703916 wrote:I think someone could only be "bullish" if they were expecting persistent deflation.

The Mattress Portfolio for the Long Run?
US dollar would weaken if its deflation were less than the deflation suffered by Japan and Euro zone.

US dollar would weaken if it had inflation *higher* than Yen or Eurozone.

Except Purchasing Power Parity does not work that well, relative interest rates do better. And the country with the highest GDP growth tends to appreciate its currency, even if the trade balance goes to hell.
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Post by Valuethinker »

umfundi wrote:To paraphrase Winston Churchill (he was speaking about democracy):

The dollar is the worst investment you can make.

Except for the alternatives.

(I also heard that Churchill said, the Americans always do the right thing. But only after trying every other option.)

Keith
He did. And he was right (at least about that issue ie entering WWII against the Nazis, and perhaps someday some others).

Note that Churchill was wrong about invading Italy, and Marshall and FDR right, so we cannot exactly score Churchill as the perfect seer.
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Post by Valuethinker »

umfundi wrote:To paraphrase Winston Churchill (he was speaking about democracy):

The dollar is the worst investment you can make.
You are right about the second assertion (what Churchill, whose mother was American, said about Americans)

but the first

I thought it was Aristotle who said Democracy was the worst political system, excepting all the others?
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Post by Valuethinker »

nisiprius wrote:A year is "long-term?" :!:
in politics... ;-).

-- Harold Wilson

http://thinkexist.com/quotation/a_week_ ... 09269.html
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Post by umfundi »

Valuethinker wrote:I thought it was Aristotle who said Democracy was the worst political system, excepting all the others?
Churchill did say it, though it seems he did not originate it.

http://richardlangworth.com/democracy-i ... government

Keith
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Post by Grt2bOutdoors »

Noobvestor wrote:
GRT2BOUTDOORS wrote:When the rest of the world is dependent on us for either one thing or another - what do you think?
I confess I'm not sure what you mean. They are dependent which will bolster the dollar? If so, why hasn't that happened over the last decade? Or they are dependent so we can get away with inflating?
When the world needs to defend itself against tyrants like those who have the gumption to call us a "parasite", who do they turn to buy planes, missile defense and other assorted knicknacks - Libya or Iraq? No, they buy US goods with US dollars.

Now, when the world is in need of grain to make bread (umm the Chinsese for example), do our farmers accept Yuan or do you have to pay in dollars?

When the Chinese want to sell us goods - what is payment made in? And they accept it, don't they? or do you think for a second they would decline dollars because it isn't good enough?

When the crap hit the fan a few weeks back, where did the money go - it went into US Treasuries paying a negative yield, they were buying dollars to buy those securities, not Euros, not Yuan and not Japanese Yen. That in itself is a statement, they were running out of their own functional currencies to buy dollars. Too bad the POTUS can't use that as a statement of confidence in his proclamations.

Last I looked foreign consumers still clamor for American goods - when I was in Europe, I didn't see anyone wearing Chinese branded goods, no Chinese Coca-Cola, no Chinese brand automobiles, no Chinese anything. The analysts can say anything they want - that's there job, to blabber idiotic statements of which they have no clue about - all it is....is noise. We ignore "noise" in this forum. Someone with a handle "RisingSun" ought to know better than to throw stones when living in a glass house, just look at the malaise in the land of the Rising Sun.

You can say it's different this time, but at the end of the day, we as a country are the only ones standing between evil and the rest of the world. Now, do you still think the dollar is on the implosion track?
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Post by GregLee »

I just started an investment with the TRowePrice Emerging Markets Local Currency Bond fund, with the idea of giving myself some protection against a weakening dollar (as well as some diversification, since otherwise I have only stocks and cash). Does that strike anyone as an especially good or an especially bad idea?
Greg, retired 8/10.
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Post by Grt2bOutdoors »

GregLee wrote:I just started an investment with the TRowePrice Emerging Markets Local Currency Bond fund, with the idea of giving myself some protection against a weakening dollar (as well as some diversification, since otherwise I have only stocks and cash). Does that strike anyone as an especially good or an especially bad idea?
These EmergingMarket Local Currency - unhedged funds are today's fad, yesterday's were the Internet Funds. I would not place more than 3% of my fixed income allocation there. Just look to Argentina to see what these 3rd world countries do, when they decide they'd rather not pay you back on your terms, rather it will be on their terms. Professionally managed or not, I highly doubt Troweprice or any other mutual fund will be able to sway the minds of folks who would think nothing of harming others and for no particular reason at all. Have fun with your Yemenian bonds.
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Post by Noobvestor »

GRT2BOUTDOORS wrote:
Noobvestor wrote:
GRT2BOUTDOORS wrote:When the rest of the world is dependent on us for either one thing or another - what do you think?
I confess I'm not sure what you mean. They are dependent which will bolster the dollar? If so, why hasn't that happened over the last decade? Or they are dependent so we can get away with inflating?
When the world needs to defend itself against tyrants like those who have the gumption to call us a "parasite", who do they turn to buy planes, missile defense and other assorted knicknacks - Libya or Iraq? No, they buy US goods with US dollars.

Now, when the world is in need of grain to make bread (umm the Chinsese for example), do our farmers accept Yuan or do you have to pay in dollars?

When the Chinese want to sell us goods - what is payment made in? And they accept it, don't they? or do you think for a second they would decline dollars because it isn't good enough?

When the crap hit the fan a few weeks back, where did the money go - it went into US Treasuries paying a negative yield, they were buying dollars to buy those securities, not Euros, not Yuan and not Japanese Yen. That in itself is a statement, they were running out of their own functional currencies to buy dollars. Too bad the POTUS can't use that as a statement of confidence in his proclamations.

Last I looked foreign consumers still clamor for American goods - when I was in Europe, I didn't see anyone wearing Chinese branded goods, no Chinese Coca-Cola, no Chinese brand automobiles, no Chinese anything. The analysts can say anything they want - that's there job, to blabber idiotic statements of which they have no clue about - all it is....is noise. We ignore "noise" in this forum. Someone with a handle "RisingSun" ought to know better than to throw stones when living in a glass house, just look at the malaise in the land of the Rising Sun.

You can say it's different this time, but at the end of the day, we as a country are the only ones standing between evil and the rest of the world. Now, do you still think the dollar is on the implosion track?
The only one ... wha? I'm not going to go political on this, but the US is widely viewed as a self-interested, overly-aggressive nation in many parts of the world - not its knight in shining armor. Neither extreme is 'the truth' IMHO, but both have truth in them.

And regardless, is the proof not in the pudding if we are talking about currency valuations? The US dollar has gone steadily down over recent years, suggesting that regardless of what counter-arguments you come up with they simply don't reflect reality.

Meanwhile, the standard of living in Japan is pretty good overall ... take a look at their stats on health, crime, etc... and ask yourself: how much does it really matter to the average Japanese person that their stock market is relatively stagnant or currency mediocre?

As to the original question: am I bullish or bearish? Neither, in particular ... I globally diversify and stay the course. I am fine with the dollar coming back out strong (which would probably help me more overall than not) but hedge the possibility that it continues to deteriorate. I don't really see that speculating excessively about the result either way is a particularly Boglehead approach.
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Post by Grt2bOutdoors »

Noobvestor wrote:
GRT2BOUTDOORS wrote:
Noobvestor wrote:
GRT2BOUTDOORS wrote:When the rest of the world is dependent on us for either one thing or another - what do you think?
I confess I'm not sure what you mean. They are dependent which will bolster the dollar? If so, why hasn't that happened over the last decade? Or they are dependent so we can get away with inflating?
When the world needs to defend itself against tyrants like those who have the gumption to call us a "parasite", who do they turn to buy planes, missile defense and other assorted knicknacks - Libya or Iraq? No, they buy US goods with US dollars.

Now, when the world is in need of grain to make bread (umm the Chinsese for example), do our farmers accept Yuan or do you have to pay in dollars?

When the Chinese want to sell us goods - what is payment made in? And they accept it, don't they? or do you think for a second they would decline dollars because it isn't good enough?

When the crap hit the fan a few weeks back, where did the money go - it went into US Treasuries paying a negative yield, they were buying dollars to buy those securities, not Euros, not Yuan and not Japanese Yen. That in itself is a statement, they were running out of their own functional currencies to buy dollars. Too bad the POTUS can't use that as a statement of confidence in his proclamations.

Last I looked foreign consumers still clamor for American goods - when I was in Europe, I didn't see anyone wearing Chinese branded goods, no Chinese Coca-Cola, no Chinese brand automobiles, no Chinese anything. The analysts can say anything they want - that's there job, to blabber idiotic statements of which they have no clue about - all it is....is noise. We ignore "noise" in this forum. Someone with a handle "RisingSun" ought to know better than to throw stones when living in a glass house, just look at the malaise in the land of the Rising Sun.

You can say it's different this time, but at the end of the day, we as a country are the only ones standing between evil and the rest of the world. Now, do you still think the dollar is on the implosion track?
The only one ... wha? I'm not going to go political on this, but the US is widely viewed as a self-interested, overly-aggressive nation in many parts of the world - not its knight in shining armor. Neither extreme is 'the truth' IMHO, but both have truth in them.

And regardless, is the proof not in the pudding if we are talking about currency valuations? The US dollar has gone steadily down over recent years, suggesting that regardless of what counter-arguments you come up with they simply don't reflect reality.

Meanwhile, the standard of living in Japan is pretty good overall ... take a look at their stats on health, crime, etc... and ask yourself: how much does it really matter to the average Japanese person that their stock market is relatively stagnant or currency mediocre?

As to the original question: am I bullish or bearish? Neither, in particular ... I globally diversify and stay the course. I am fine with the dollar coming back out strong (which would probably help me more overall than not) but hedge the possibility that it continues to deteriorate. I don't really see that speculating excessively about the result either way is a particularly Boglehead approach.
State your source on "standard of living in Japan is pretty good" - for whom?, the Emperor or the millions of underemployed or unemployed Japanese, or perhaps those over-worked Japanese. Yes - let's look at their stats - they have a high incidence of cancer, anything else, oh yes, they had a nuclear melt-down, anything else? Not sure what you do for employment, but I have a bit of experience with the country you quote as having an good standard of living for the average Japanese person. IMO, you are off the mark.
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Post by gerntz »

I don't see how commodities can go anywhere but up long-term as long as the Fed keeps printing more $ & the deficit remains high. Stop the madness.
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Post by umfundi »

Let me get my 2 cents in before this gets locked.

It seems to me that if you have a domestic budget deficit, you will get inflation. It also seems that if you have a trade deficit, your currency should weaken. Both these types of deficits have existed for a couple of decades for the USA, but we have not seen my expected consequences.

The problem is that to bet against the USD, you have to bet on something else. The Euro? You must be kidding!

That was my original point with my misquote of Winston Churchill: The USD doesn't look so bad, if you consider the alternatives.

Keith
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Post by letsgobobby »

in the very long term*, very negative.

*By very long term, I mean 1,000,000 years from now.
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Post by Valuethinker »

GregLee wrote:I just started an investment with the TRowePrice Emerging Markets Local Currency Bond fund, with the idea of giving myself some protection against a weakening dollar (as well as some diversification, since otherwise I have only stocks and cash). Does that strike anyone as an especially good or an especially bad idea?
- wildly bad if you think this is like a typical bond investment (ie staid and boring). You are going to have economic volatility and currency volatility and credit risk-- squared

- if it is part of your equity portfolio then fine-- there could be an anomaly there. I'd rather have EM equities, but there is no doubt 'locals' have been overlooked (until now)

When you see that Indonesian dollar bonds are trading at less than 200 basis points over US Treasuries, though, you have to wonder. Anyone remember 1998? How many people died in Indonesia in the rioting?

And even if they have got religion, a lot of the Latin American countries most probably have *not*.
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Post by GregLee »

Valuethinker wrote:
GregLee wrote:... TRowePrice Emerging Markets Local Currency Bond fund ...
- wildly bad if you think this is like a typical bond investment (ie staid and boring). You are going to have economic volatility and currency volatility and credit risk-- squared

- if it is part of your equity portfolio then fine-- there could be an anomaly there. I'd rather have EM equities, but there is no doubt 'locals' have been overlooked (until now)
Thanks for your comments --- they help me get oriented to this sort of investment. I don't expect this to be much like ordinary bonds, and I do expect volatility. Currency volatility is sort of the point. You mention EM equities -- that means European Market? Are there mutual funds specializing in European stocks that expose one to currency risk? I haven't run into any.
Greg, retired 8/10.
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Post by DoWahDaddy »

Bearish. Nowhere to go from here but to "former reserve currency" status. That's why we all invest internationally. Isn't it?
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Post by Dale_G »

I am Ambivalent.

The dollar goes down: My international investments go up in dollar terms, but the imported goods I buy also go up in dollar terms.

The dollar goes up: My international investments go down in dollar terms, but the imported goods I buy also go down in dollar terms.

To some extent it is a wash.

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Post by Tim_in_GA »

I'm a bit bearish but mostly just unsure. It worries me when my plans for retirement are to live overseas. Right now my destination loosely pegs its currency to the USD but who know how much longer they'll keep that up.
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Post by Grt2bOutdoors »

GregLee wrote:
Valuethinker wrote:
GregLee wrote:... TRowePrice Emerging Markets Local Currency Bond fund ...
- wildly bad if you think this is like a typical bond investment (ie staid and boring). You are going to have economic volatility and currency volatility and credit risk-- squared

- if it is part of your equity portfolio then fine-- there could be an anomaly there. I'd rather have EM equities, but there is no doubt 'locals' have been overlooked (until now)
Thanks for your comments --- they help me get oriented to this sort of investment. I don't expect this to be much like ordinary bonds, and I do expect volatility. Currency volatility is sort of the point. You mention EM equities -- that means European Market? Are there mutual funds specializing in European stocks that expose one to currency risk? I haven't run into any.
EM equities - aka Emerging Markets Equities.
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Post by GregLee »

GRT2BOUTDOORS wrote: EM equities - aka Emerging Markets Equities.
Ah. But I would still like to know about currency risk, whether it's Emerging or European.
Greg, retired 8/10.
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Post by allsop »

GRT2BOUTDOORS wrote:
Noobvestor wrote:
GRT2BOUTDOORS wrote:When the rest of the world is dependent on us for either one thing or another - what do you think?
I confess I'm not sure what you mean. They are dependent which will bolster the dollar? If so, why hasn't that happened over the last decade? Or they are dependent so we can get away with inflating?
When the world needs to defend itself against tyrants like those who have the gumption to call us a "parasite", who do they turn to buy planes, missile defense and other assorted knicknacks - Libya or Iraq? No, they buy US goods with US dollars.

Now, when the world is in need of grain to make bread (umm the Chinsese for example), do our farmers accept Yuan or do you have to pay in dollars?

When the Chinese want to sell us goods - what is payment made in? And they accept it, don't they? or do you think for a second they would decline dollars because it isn't good enough?

When the crap hit the fan a few weeks back, where did the money go - it went into US Treasuries paying a negative yield, they were buying dollars to buy those securities, not Euros, not Yuan and not Japanese Yen. That in itself is a statement, they were running out of their own functional currencies to buy dollars. Too bad the POTUS can't use that as a statement of confidence in his proclamations.

Last I looked foreign consumers still clamor for American goods - when I was in Europe, I didn't see anyone wearing Chinese branded goods, no Chinese Coca-Cola, no Chinese brand automobiles, no Chinese anything. The analysts can say anything they want - that's there job, to blabber idiotic statements of which they have no clue about - all it is....is noise. We ignore "noise" in this forum. Someone with a handle "RisingSun" ought to know better than to throw stones when living in a glass house, just look at the malaise in the land of the Rising Sun.

You can say it's different this time, but at the end of the day, we as a country are the only ones standing between evil and the rest of the world. Now, do you still think the dollar is on the implosion track?
Methinks that you can be the poster boy for the home country bias club :P
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Post by Valuethinker »

GregLee wrote:
Valuethinker wrote:
GregLee wrote:... TRowePrice Emerging Markets Local Currency Bond fund ...
- wildly bad if you think this is like a typical bond investment (ie staid and boring). You are going to have economic volatility and currency volatility and credit risk-- squared

- if it is part of your equity portfolio then fine-- there could be an anomaly there. I'd rather have EM equities, but there is no doubt 'locals' have been overlooked (until now)
Thanks for your comments --- they help me get oriented to this sort of investment. I don't expect this to be much like ordinary bonds, and I do expect volatility. Currency volatility is sort of the point. You mention EM equities -- that means European Market? Are there mutual funds specializing in European stocks that expose one to currency risk? I haven't run into any.
Yes there are ETFs and mutual funds which specialize in investing in Europe. But then do we mean the Euro zone? The EU (which includes the UK, Sweden, etc.), the European Free Trade Area? Emerging Europe like Ukraine? Usually they just track the relevant European index (FT-Europe or MSCI-Europe).

EM means Emerging Markets here and in pretty much any financial commentary. Which rather worries me re investment strategy in that it implies you haven't thought much about this? Haven't done a lot of research?

Note there are also 'Frontier Markets' which are outside EM definitions. The truly brave go to the frontier: Zimbabwe, Nigeria etc. Good luck. I would *not* buy the bonds of these countries, but the stocks are interesting (not safe, not sane, but interesting).

BTW most equity funds do *not* hedge currency. So pretty much all overseas investing (from the US) involves currency risk.

Again that you don't know that gives me pause.

'currency volatility is sort of the point'. The long run return from currency volatility is zero so if you seek to profit from that, you need a hedge fund strategy (ie trading the volatility) and that's not something it's easy for a retail investor to do.
Valuethinker
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Post by Valuethinker »

GRT2BOUTDOORS wrote:
Noobvestor wrote:
GRT2BOUTDOORS wrote:When the rest of the world is dependent on us for either one thing or another - what do you think?
I confess I'm not sure what you mean. They are dependent which will bolster the dollar? If so, why hasn't that happened over the last decade? Or they are dependent so we can get away with inflating?
When the world needs to defend itself against tyrants like those who have the gumption to call us a "parasite", who do they turn to buy planes, missile defense and other assorted knicknacks - Libya or Iraq? No, they buy US goods with US dollars.
The thing to remember is this is not entirely altruistic. The US also benefits from being the world's largest military power eg securing oil supply, prestige, influence.

The US did not enter WWII out of altruistic reasons (and FDR wanted to fight the Germans on European soil, not American) but because Japan attacked it.

Last I looked foreign consumers still clamor for American goods - when I was in Europe, I didn't see anyone wearing Chinese branded goods, no Chinese Coca-Cola, no Chinese brand automobiles, no Chinese anything.
Ah think Huwai (sp?). World's second largest telco equipment provider. Do we count the Taiwanese? Then HTC -- largest seller of Android phones.

Brand is owned by companies, which are international. Production? A big chunk of that is done in China.

Rise of Indian multinationals is in some ways even more interesting than rise of Chinese: Tata owns Jaguar-Land-Rover etc. But, rest assured, the Chinese are coming. Japanese manufacture was once, in America, synonymous with cheap and of low quality.

Honda nearly pulled out of the US market because of quality control issues in the 60s.

'Rising Sun' btw is *Japan*. Japan is the land of the Rising Sun.

China is the Middle Kingdom. Middle between Heaven and Earth that is.

Brasil is the country of tomorrow and always will be-- a common Brasilian saying.

You can say it's different this time, but at the end of the day, we as a country are the only ones standing between evil and the rest of the world. Now, do you still think the dollar is on the implosion track?


Just because other countries are bad does not mean the US is always on the side of the Angels or that the US does not do things out of naked self interest or that are very detrimental to the locals . A review of US history would tell you that.

The USD will remain the currency of international commerce for the foreseeable future. However the time horizon of foresight is not long.

Remember: the British Pound is still a perfectly useful and tradeable currency, even though it's no longer the world currency. The virtues of what economists call 'seigneurage' are not necessarily huge.
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GregLee
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Post by GregLee »

Valuethinker wrote: EM means Emerging Markets here and in pretty much any financial commentary. Which rather worries me re investment strategy in that it implies you haven't thought much about this? Haven't done a lot of research?
Not a lot. This is me doing research. My level of investment in EM bonds is so far quite small -- less than 1%. I find it difficult to stay interested until I have at least a little of my money at stake. Now, I've got to decide whether to increase the EM bond investment to something meaningful.
Greg, retired 8/10.
TigerNest
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Post by TigerNest »

DoWahDaddy wrote:Bearish. Nowhere to go from here but to "former reserve currency" status.
So like the British Pound?
NERD777
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Post by NERD777 »

Short term bullish. The US gets its debt downgraded and people flock to treasuries. It's still the safe haven. Like others have said, it seems internationally there is a demand for a replacement, problem is nobody knows what. The Euro is doomed IMO (unless they rid themselves of Greece, Spain, Italy and somehow manage to get Great Britain in), and Canada and Australia have their own housing bubbles ready to go. Right now you are seeing high demand for the Yen and Swiss Franc, but they are not large enough economies to be a long term safe haven or reserve.

Now long term I'm bearish simply for the fact that as the reserve currency their is not a whole ton of upside long term. Perhaps a stronger Euro coalition, perhaps an Pan-Asian currency, maybe even a North American currency. Although with our political clout (read military!), I highly doubt we will be on the outside looking in on any scenario within a time-frame of 30 to 40 years that would take us to the woodshed.
Valuethinker
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Post by Valuethinker »

TigerNest wrote:
DoWahDaddy wrote:Bearish. Nowhere to go from here but to "former reserve currency" status.
So like the British Pound?
To explain the move of the GBP from $4.85 USD to $1.60 or so now you do not need to anchor on the pound's loss of a world role.

You need merely to note that UK inflation was much higher than US inflation for much of that time period. In addition, we won 2 world wars, by borrowing in each case over 3 times GDP, chiefly from the USA.

What was extraordinary was where we started. The nation of shopkeepers, as Napoleon contemptuously called us, that conquered the world. Much to do with our sea faring ability, and the building, fighting and colonizing ability of our Celtic subjects: Irish and Scottish in particular. The Empire was built on the backs of our subjects.

Where we wound up is perhaps not surprising-- a middling power with a middling economy off the coast of Europe. It's where we began that is so amazing. 400 hundred years of piratical greed, imperial pride, scientific curiousity and Christian Mission, in about equal measures: Spanish treasure ships, African slaves, Spices from the Orient, Opium to China, Albion's seed to the shores of the Americas and Australia, a mad lust to dominate the world in the name of God and the House of Saxe Coborg Gotha, whose daughter Elizabeth reigns over us still.

What is left is tatters. The Commonwealth, a talking shop. Our former colony in America far surpassed us, and the Indian one on the horizon.

And yet the first, or maybe the second, global empire.

And it is still Greenwich Mean Time. And it is still the BBC World Service.
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Post by allsop »

Valuethinker wrote: What is left is tatters. The Commonwealth, a talking shop. Our former colony in America far surpassed us, and the Indian one on the horizon.
All nations have their zenith. Once upon a time Sweden was a major power engaged in various brutal wars in Europe. Before that Norwegian Vikings made their mark on your island, and according to legends stole all the beautiful women with everlasting effects :-)

I'd say that UK have done very well after being dethroned as an empire, despite the hardships of two WW.

Edit: A couple of decades ago I met an English gentleman living in Germany and he said he thought that England had the administration and the attitudes as if they still where an Empire. Once they shed that they would be much better off.
Last edited by allsop on Sun Sep 04, 2011 2:01 pm, edited 1 time in total.
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FrugalInvestor
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Post by FrugalInvestor »

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Have a plan, stay the course and simplify. Then ignore the noise!
dharrythomas
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Post by dharrythomas »

I'm bearish long-term on all Fiat currencies.

Historically, bad money drives out good money and Governments ALWAYS EVENTUALLY resort to inflation. Of course that's in the 'long term' and as a famous man said 'in the long term we're all dead.'

Unfortunately my analysis while accurate is not really actionable since we all live in the short term and 'markets can remain irrational longer than you can remain solvent'.

Good Luck

Harry
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