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Dollar and Dow meltdown hedge
Old 11-02-2007, 07:15 AM   #1
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Dollar and Dow meltdown hedge

My retirement investments are all in the US, but I plan to retire to the UK, so I'm frightened by the fall of the dollar and what I think will be future weakness ie a recession in the US. I've been spliting my investments 40% European/International mutual funds, 40% US equity and 20% Inflation linked Bond fund, basically TIPS.

Do you have any advice to further insulate me form the weakness of the dollar and the US economy, move more into a European fund, more TIPS?
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Old 11-02-2007, 08:14 AM   #2
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If you are going to retire in the UK; why not open a UK offshore banking account now and put some of your money in foreign currencies?
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Old 11-02-2007, 09:06 AM   #3
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If you are going to retire in the UK; why not open a UK offshore banking account now and put some of your money in foreign currencies?
I don't want the hassle of complicating my US taxes and I want to keep things
relatively simple and use my existing US based mutual fund/brokerage company
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Old 11-02-2007, 09:22 AM   #4
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Can you get some UK bonds? Maybe raise your UK stock exposure a bit?

Otherwise, you're probably not in too bad a shape... Meaning, you are not too far from global-market-neutral as it is now, so unless you know something the rest of the world doesn't know, you haven't made
any extreme bets.
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Old 11-02-2007, 09:44 AM   #5
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I'd throw in some commodities exposure and unhedged foreign bonds, probably taking it from the US stock allocation.
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Old 11-02-2007, 09:48 AM   #6
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With all the doom and gloom talk I've heard lately, I'm surprised no one has created a "U.S. Financial Meltdown" fund that includes gold, commodities, oil and foreign-denominated stocks and bonds.
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Old 11-02-2007, 09:50 AM   #7
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Can you get some UK bonds? Maybe raise your UK stock exposure a bit?

Otherwise, you're probably not in too bad a shape... Meaning, you are not too far from global-market-neutral as it is now, so unless you know something the rest of the world doesn't know, you haven't made
any extreme bets.
Well I can buy pretty much what I like through the brokerage side of things, is there something like an EFT that is UK bonds based?
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Old 11-02-2007, 10:37 AM   #8
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I don't want the hassle of complicating my US taxes and I want to keep things
relatively simple and use my existing US based mutual fund/brokerage company
For US taxes you need to declare profit/loss and that you have a foreign bank account. Offshore accts. operations are similar to US banks.
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Old 11-02-2007, 11:19 AM   #9
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For US taxes you need to declare profit/loss and that you have a foreign bank account. Offshore accts. operations are similar to US banks.
.....and form TDF etc.....I have looked into high interest accounts in the IOM for some taxable money, but most of my funds are in US IRAs so offshore isn't applicable
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Old 11-02-2007, 11:23 AM   #10
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There are also foreign currency ETFs, like FXE, that you might want to look into.
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Old 11-02-2007, 11:36 AM   #11
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There are also foreign currency ETFs, like FXE, that you might want to look into.
Thanks I'll do that, but isn't my investment in a European Stock Index fund sort of similar as I'm converting my dollars to Euros/Pounds as I'm buying shares in European based companies.
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Old 11-02-2007, 11:39 AM   #12
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Well, they're about as similar as stocks are to cash.
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Old 11-02-2007, 12:08 PM   #13
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Well, they're about as similar as stocks are to cash.
Yes, Yes , but I was think about it from the converting dollars into Euros/pounds perspective rather than form the type of investment angle
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Old 11-02-2007, 12:17 PM   #14
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Originally Posted by ziggy29 View Post
With all the doom and gloom talk I've heard lately, I'm surprised no one has created a "U.S. Financial Meltdown" fund that includes gold, commodities, oil and foreign-denominated stocks and bonds.
There are a couple that contain roughly those sorts of holdings, although I think the fund names are a little bit more marketing friendly.

Problem is, they dont do well for the 97.5% of the time that the US markets and economy are doing well. Some go sideways for 15-20 years at a pop. That needs a lot of patience...
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Old 11-03-2007, 11:29 AM   #15
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I'm looking at the cost of oil, the Fed increasing interest rates, and the big US debt and I worry about inflation, so would it be a good time to move some of those equity investments into an inflation indexed bond fund based on TIPS?
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Old 11-03-2007, 02:12 PM   #16
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Blood in the streets! Eh! Time to dump that foriegn crap and Buy American.

If one were a dirty market timer that is.

Soooo - whatever happened to hold a balanced index portfolio based on your age. And if you are actually ex pat holding enough fixed instruments in the local/regional currency to weather a market cycle.

All of which begs 'The Question of the Age?' Is there an all world portfolio in the accumulation phase of the cycle - impervious to region, market cycle?

Sort of all world cap weighted plus some?fixed? - with maybe the fixed being oriented to where/which currency you are spending?

Hmmm - heh heh heh
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Old 11-03-2007, 03:14 PM   #17
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Seems that some of the diversification is broken these days. US market goes down, foreign markets go down. Small and large caps fall together. Value and growth. Everything drops at once. Everything rises at once.
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Old 11-03-2007, 04:10 PM   #18
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Buy some Euros or Pounds. Globex has currency futures too. For taxes, you'd just have to file form 6781.
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Old 11-03-2007, 07:51 PM   #19
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Seems that some of the diversification is broken these days.
Not aimed at you, CFB, but this kind of statement always bugs me. "Diversification fails when you need it most, in a panic." Well, no, diversification is not there to insulate me from short-term panics. Panics will happen, whether I like it or not, and if I can't stand the heat I should just get out of the kitchen. The point of diversification is long-term hedging.
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Old 11-03-2007, 07:54 PM   #20
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Well I can buy pretty much what I like through the brokerage side of things, is there something like an EFT that is UK bonds based?
Not that I know of, at least in the US. You might try to buy individual bonds through a UK broker or something.
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