Demise of the dollar

I read the article this morning. Over on the bogleheads website there is a lengthy discussion about the Harry Browne Permanent Portfolio - specifically, his book, "Fail-Safe Investing." The portfolio suggests 25% gold asset allocation. I haven't read the book yet, but I ordered it from Amazon. I believe this is the allocation:
25% stocks
25% (long term) treasuries
25% gold
25% cash

Correct me if I am wrong....
antmary
 
I have been thinking about adding more to International Stock, after hearing this on the morning news, it seems like it's another reason to do so.

-CC
 
CCdaCE said:
I have been thinking about adding more to International Stock, after hearing this on the morning news, it seems like it's another reason to do so.
Click to expand...
It's pretty fashionable to bash the dollar, but it looks to me like many other foreign currencies are in even worse shape than the dollar.

I wouldn't be surprised to see the dollar actually hold value or even rise against the likes of the euro, the yen and the pound, even as all of them drop relative to commodities and hard assets. This is a common problem for all the major fiat currencies. Having said that, the diversification is probably a good idea regardless.
 
The dollar bashing makes me want to short gold. If I was into that sort of thing. The bubble's got to pop eventually. It'd probably remain inflated longer than I'd remain solvent.

-CC
 
CCdaCE said:
I have been thinking about adding more to International Stock, after hearing this on the morning news, it seems like it's another reason to do so.

-CC
Click to expand...
Don't forget most of the big companies get large portions of their income
from foreign sources as well.
TJ
 
ziggy29 said:
It's pretty fashionable to bash the dollar, but it looks to me like many other foreign currencies are in even worse shape than the dollar.
Click to expand...
This does seem to be the issue du jour that the press is all over these days. It's gotten into the "mainstream". I heard there was another Santelli rant today.

But when the conventional wisdom gets too one-sided, it is usually wrong.

It's one thing to compare the US $ to other major currencies. It's a whole other thing to compare it against commodities. Be careful what you are using as hedges.

Audrey
 
Here's how I'm doing it...

My $15K recent grad portfolio is divided like this:

40% gold (3/4 bullion bars and 1/4 bullion coins)
25% silver (3/5 bullion coins, 1/5 bullion bars and 1/5 junk silver bullion)
20% cash divided evenly between a high-yield savings account and an HSA.
15% Federated Prudent Global Income Fund (symbol: PSAFX)

I got into PSAFX a long while back before it became a loaded fund and without paying a commission charge. (It used to be a Schwab One select fund). My initial gold buying price was $700 and my initial silver-buying price was $9, so those percentages are only disproportionate due to price appreciation in the metals.

Not counted in my portfolio is my large gold and silver jewelry collection, my rare comic books, and various items I have around the house that could easily be converted to large sums of cash if need be.

I recommend that before you even consider doing this, that you first take care of any variable rate debt that you have and have at least 3 months food supply on-hand.

One may notice that 20% cash means I have only about $3K sitting in the bank. That's fine, because I don't pay rent and live at home for now. I plan to increase that amount over the next two years as I prepare to move out. My goal is to have $10K cash saved and the rest invested. I plan to have my portfolio doubled to $30K by next year.
 
angelbaby said:
My $15K recent grad portfolio is divided like this:

40% gold (3/4 bullion bars and 1/4 bullion coins)
25% silver (3/5 bullion coins, 1/5 bullion bars and 1/5 junk silver bullion)
20% cash divided evenly between a high-yield savings account and an HSA.
15% Federated Prudent Global Income Fund (symbol: PSAFX)
Click to expand...

PSAFX: With a 1.28% expense ratio, I'd say goodbye to that one

I hope the very considerable precious metals gamble pays off for you.
 
angelbaby said:
My $15K recent grad portfolio is divided like this:

40% gold (3/4 bullion bars and 1/4 bullion coins)
25% silver (3/5 bullion coins, 1/5 bullion bars and 1/5 junk silver bullion)
20% cash divided evenly between a high-yield savings account and an HSA.
15% Federated Prudent Global Income Fund (symbol: PSAFX)

I got into PSAFX a long while back before it became a loaded fund and without paying a commission charge. (It used to be a Schwab One select fund). My initial gold buying price was $700 and my initial silver-buying price was $9, so those percentages are only disproportionate due to price appreciation in the metals.

Not counted in my portfolio is my large gold and silver jewelry collection, my rare comic books, and various items I have around the house that could easily be converted to large sums of cash if need be.

I recommend that before you even consider doing this, that you first take care of any variable rate debt that you have and have at least 3 months food supply on-hand.

One may notice that 20% cash means I have only about $3K sitting in the bank. That's fine, because I don't pay rent and live at home for now. I plan to increase that amount over the next two years as I prepare to move out. My goal is to have $10K cash saved and the rest invested. I plan to have my portfolio doubled to $30K by next year.
Click to expand...

What's your allocation to tinfoil? Might come in handy to keep the aliens from affeting you from mind control rays.

Seriously, someone starting out in life does not need to have an extreme portfolio like this. Build up some cash and diversify more broadly and you will be a lot better off over time.

I think the USD sell-off has gone too far. Tempted to short some Euros and JPY.
 
brewer12345 said:
What's your allocation to tinfoil? Might come in handy to keep the aliens from affeting you from mind control rays.

Seriously, someone starting out in life does not need to have an extreme portfolio like this. Build up some cash and diversify more broadly and you will be a lot better off over time.

I think the USD sell-off has gone too far. Tempted to short some Euros and JPY.
Click to expand...

I'm still pessimistic about the dolllar long-term, but I still monitor the short-term trends. To-date I haven't sold off any of my positions and have been better off for it. I breezed through October 2008 without worrying the slightest bit.

I tend to be rather unconventional in my investment approach. I was one of the people who threw $1,000 at XM Sirius stock when it dipped down to $0.05/share. A very risky bet, yes, but it was definitely worth the reward.

Perhaps even more extreme is the fact that I'm foregoing the buying of a house entirely. I'm instead going to take $16K and build myself a tiny house like one of these: Tumbleweed Lusby

The 30% of yearly earnings that would have otherwise went to rent or a mortgage will be invested and set aside for early retirement.

I guess you could say that I'm definite example of early retirement extreme, from a somewhat unconventional lens. :cool:
 
angelbaby said:
I'm still pessimistic about the dolllar long-term, but I still monitor the short-term trends. To-date I haven't sold off any of my positions and have been better off for it. I breezed through October 2008 without worrying the slightest bit.

I tend to be rather unconventional in my investment approach. I was one of the people who threw $1,000 at XM Sirius stock when it dipped down to $0.05/share. A very risky bet, yes, but it was definitely worth the reward.

Perhaps even more extreme is the fact that I'm foregoing the buying of a house entirely. I'm instead going to take $16K and build myself a tiny house like one of these: Tumbleweed Lusby

The 30% of yearly earnings that would have otherwise went to rent or a mortgage will be invested and set aside for early retirement.

I guess you could say that I'm definite example of early retirement extreme, from a somewhat unconventional lens. :cool:
Click to expand...

I buy lottery tickets too (NNA warrants most recently). But only with a tiny fraction of my portfolio.

The Tumbleweed homes look nice, but I think I would rather have a travel trailer or truck camper. Easier to remain "agile, mobile and hostile."
 
I've been retired 100 mondays and trying to stay that way. I had a nightmare recently that I had to go back to work.Guess it could have been worse. At least in the dream I found a job.
I've got a question for you seasoned investors out there.In the long term it's certainly possible that the dollar will continue to decline.I think my Vanguard foreign equity funds are currency hedged so if the dollar declines I don't get a currency boost.How about etfs like EPP or other funds.What's a good place to invest in equities that have currency exposure.
 
Speculating on the US$ is a great way to lose money. Betting against the US$ is like selling stocks short – more people lose than win, the downside is greater than the upside and here are lots of pros out there waiting for the losers to step up to the table with their cash.

FWIW my personal view is that the world’s main freely floating currencies (US$, Euro, Yen) are fairly valued and the greatest differences in valuation exist between $US/Euro and Asian emerging, which are not freely tradable.

Instead of focusing on the value of one currency, one should instead look toward obtaining total portfolio returns greater than inflation. The net result is similar –increasing the purchasing power of one’s assets. Invest in global equities using ishares int’l ETF products such as EFA, SCZ, EEM. Invest in commodities also using ETFs like DBC or GSG, or you can invest in commodity equity funds like Vanguard Energy and Vanguard Precious Metals and Mining. One can even invest some money in EM bond funds at Fidelity or PIMCO.

I've got a question for you seasoned investors out there.In the long term it's certainly possible that the dollar will continue to decline.I think my Vanguard foreign equity funds are currency hedged so if the dollar declines I don't get a currency boost.How about etfs like EPP or other funds.What's a good place to invest in equities that have currency exposure
Click to expand...
My understanding is that all Vanguard international equity funds are unhedged.


Build up some cash and diversify more broadly and you will be a lot better off over time.
Click to expand...
Venezuelan Beaver Cheese is a great diversifier ...
 
Thanks for the reply Michael. I already own DBC , Vanguard oil & mining &epp. If Vanguard int'l funds are unhedged it sounds like I already am diversified enough in respect to currencies. Alan
 
farmerEd said:
OK, so how do you position yourself for this one if you believe it is true
Click to expand...

A portfolio evenly split 50/50 between US and international investments?

I don't actively bet on changes in forex, but I would guess the dollar will regain strength at some point.
 
For those who are so pessimistic about the dollar, remember one thing... I have traveled all over the world and no other country has the human and financial resources that the US has. In other words, our strength is in our people; and people (with their brains and education) are the foundation that will rebuild our country and our dollar back to its former strength.

Example:About a week ago, I meet two American girls (from South Dakota) in Bali, Indonesia. At age 24 and they had hand sewn samples of clothing to be manufactured in in bulk in Bali. This was the second year they were operating their "global business" and the new enterprise was turning a nice profit.

You don't find the Chinese young people in Indonesia doing business. Multiply this uniquely American trait by the hundreds of thousands of young people who are determined not to be dragged down by the bankrupt mega-banks and the corporations that started with a good idea when their great grandfather was a young man (ie, General Motors).

America may be reeling because of some stupid business practices. But America still has the heart, soul, tenacity and initiative that no other country can compete with. This will keep our country strong in the future, no doubt in my mind.
 
Hobo - great point - however, for those of us living overseas in Europe being paid in dollars, it is a bit of a downer watching this.....
 
Lusitan said:
That's been my approach as well.
Click to expand...

My reason isn't to take advantage of forex changes as much as it is to cover the chance that the US isn't THE predominant world economic superpower over the next 5-6 decades.
 
I don't expect the US to be the predominant economic superpower going forward either. I keep a reasonable exposure to international equities - according to the M* x-ray, about 1/3 of my equity exposure is foreign companies.

In addition, when you invest in US-based companies, you really aren't investing in only the US economy. Most companies have global exposure. Multinationals have huge foreign sales. Even small companies tend to have some foreign sales - some significant.

I think as the US becomes less the dominant economic superpower, investments will naturally evolve to be more globalized. That is where money will flow, and investment products will follow.

Bonds is perhaps where it is more difficult to diversify internationally and away from the US$. This may also change in the near future.

Audrey
 
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