US Dollar So Sad.....

[ShokWaveRider]

Soon the Greenback will be worth nothing anywhere other than the USA. In the last 5 years the currency has lost approximately 50% of it's value. It does not seem to bother the government. But I suppose they just keep printing Money. But for us who are USED to be FIRED it makes a big dent when travelling and paying for foreign goods.

Am I the only person this effects? I hear very few complaints here.

SWR

 

[d]

all coins have two sides ... declining value of the $ will increase demand for US exports and lessen our demand for imports, thus improving our "net exports" situation.

 

[Robert the Red]

It's got a ways yet to go on the downward path -- another 20-40%, I'd guess.  Annoying?  Yes.  That's why about 50% of my equity allocation is international now.  As for travel, places like Thailand will still be inexpensive by US standards.  Just don't dream of Paris in the springtime.

 

[johnlw]

It's not over yet either, expect the dollar to continue losing more of it's value.

Not to revive the Gold argument, but it's one of the reasons why Gold has been blowing through the roof.

 

[brewer12345]

I've certainly felt it, but hedging with investments in commodities, non-US stock, and foreign bonds has helped a lot.

 

[Craig]

Yeah, but inflation is only running 3.6% annually ... :

 

[unclemick]

Nope - that's why I'm looking hard at American mutli national growth stocks - with the falling dollar - I'd rather own Budweiser than cash.

heh heh heh heh heh - a little tongue in cheek!

 

[SteveR]

- I'd rather own Budweiser than cash.

You never really own beer.....you just rent it.

 

[preben]

For a FIREe like me not being from the US but using US-based products (ETFs/funds - you guys are SOO spoiled compared to the rest of the world!) it is even more important to ensure to diversify away the risk by owning lots of foreign/un hedged/commodities Etc. Even my fixed income part (30%) is 20% foreign bonds (PFUIX/PLMIX). Cheers!

 

[jerryo]

Has the dollar really lost 50% of its value? It's down less than 30% against the Euro and was clearly over valued at its peak.

 

[brewer12345]

For a FIREe like me not being from the US but using US-based products (ETFs/funds - you guys are SOO spoiled compared to the rest of the world!) it is even more important to ensure to diversify away the risk by owning lots of foreign/un hedged/commodities Etc. Even my fixed income part (30%) is 20% foreign bonds (PFUIX/PLMIX). Cheers!

Ben, it looks like PFUIX and PLMIX are holding a lot of USD cash? I'm looking for a substitute for GIM in case it goes to a significant premium to NAV. Any odeas would be appreciated.

 

[preben]

Brewer; Well, both are fairly new funds so I guess they are loading up daily so the data at Morningstar Etc. is probably very old for these funds. (I also wonder whether some of that cash is held in high paying foreign currency interest accounts/MM products - if anybody could do it it is Pimco) - so maybe it is cash but held in foreign currency too.
Cheers!

 

[brewer12345]

Brewer; Well, both are fairly new funds so I guess they are loading up daily so the data at Morningstar Etc. is probably very old for these funds. (I also wonder whether some of that cash is held in high paying foreign currency interest accounts/MM products - if anybody could do it it is Pimco) - so maybe it is cash but held in foreign currency too.
Cheers!

Nope, there are the 12/31/05 data on Bloomberg. They show a breakdown by geography and both funds were ~50% US.

 

[ShokWaveRider]

Has the dollar really lost 50% of its value? It's down less than 30% against the Euro and was clearly over valued at its peak.

When I checked, the Euro was 85 cents now it is 1.26 That is 33%, but against the Canadian Dollar which was $1.60 and is not $1.10 that is 38%.

OK I exaggerated a little, but I was making a point. I still think it is sad because the government does nothing about it or any other issue. What is the point of having them

Could this also have anything to do with the price of oil. If I were trading on the world market today, I would not want to touch the US dollar at all. I would deal in Euros, pounds or Deuchmarks. With that attitude, it will only get worse. It is as if the whole world, not just Al Queda has a vendetta to paralize the US. What did we do to deserve it? Stick our nose in everyone elses business', probably. Iran is next. Why don't we pull our troops out of Bagdad and move them to Tehran? Not too far away.

If we spent more time Money looking after our own people and not so much everyone else perhaps we could fix health care, immigration and other important items currently in the news but on the back burner government wise.

Worried about Iran bombing us with Nukes? Then use our early detection technology (which we have) to blow the things up before it get's here, or turn it around. Let other countries worry about themselves.

Look after No 1 is what I think we should start doing before it is too late.

SWR

 

[Maximillion]

The declining value of the greenback makes US Manafacturers more competitive.

The $CDN has crossed $ 0.90, now they are predicting par or even more than its' $US Counterpart.

A strong $ is not good for our Auto Manafacturers, jobs will move from Ontario to Michigan, our Manafacturers will have a tougher time competing.

Canadians will once again start shopping across the border which hurts our own Stores, and travelling to the US just got cheaper.

Many of us own US Stocks, our portfolio's will decline as now they are worth less $ CDN.

We have a small Factory in our town, the company has another factory in the U.S.., being a U.S. company I would not be surprised to see ours' closed and the US one expanded.

 

[brewer12345]

orried about Iran bombing us with Nukes? Then use our early detection technology (which we have) to blow the things up before it get's here, or turn it around. Let other countries worry about themselves.

Look after No 1 is what I think we should start doing before it is too late.

SWR

Uhoh, I feel a sermon coming on the need for C rations, firearms and underground bunkers as part of a diversified portfolio...

 

[Gone4Good]

Although I love hate being a kill-joy on these types of issues, I can't help but throw a wet blanket of facts over things like this.

The truth is that the USD has not declined by 50%.  It may be down against some currencies by ~30% or more from peak to troth, but it has been generally stable over many decades.  The Euro debuted in 1998 at something like 1.16 / $ and now it has risen back to 1.26 / $ after falling to something like .8 / $.

Here is a graph of the British Pound since 1971.

The image is difficult to read, but the GBP was at 2.4 / $ in 1971 and is at 1.84 / $ as of the end of April 2006.

 

[Maximillion]

3 years, at one point the Euro was 0.90 US, the trend has not finsihed it is continuing, the condition of your economy is just sinking in.

Currencies can, and do , move fast, the Greenback will be hammered, Japanese and Chinese are raising rates, U.S. Treasuries are less attractive, the control of the US $ is in the hands of Foreigners.

Gold is not going up, it just takes more pieces of paper with Dead Guy's faces to buy an ounce.

 

[Gone4Good]

3 years, at one point the Euro was 0.90 US

And before that it was 1.16 . . . so what.

 

[Focu$ed]

Many of us own US Stocks, our portfolio's will decline as now they are worth less $ CDN.

Interesting point. Do you think people outside the US who hold US stocks will be inclined to sell them and move into something else?

 

[BigMoneyJim]

As someone who plans to work, live, retire and die in the U.S., I never have quite the point in investing heavily internationally. I have about 10% of my portfolio in foreign stock (Vanguard Total Int'l) for balance and diversification, but so far I don't feel comfortable increasing that or looking into foreign bonds. Ben has been a big proponent for international diversification, but perhaps it is more important for him since he doesn't live in the U.S. but invests there.

I intend to continue visiting other countries, and that will be affected by the value of the dollar, but I can choose to visit cheaper places. (I'll even visit Canada and say nothing bad about it, but don't tell Max.)

 

[Maximillion]

for BMJ

http://www.newfoundandandlabradortourism.com/home.zap

 

[Craig]

The point is that as a local currency (the greenback) declines in value relative to other currencies, some international investments in your portfolio will rise in dollar terms. And, if you liquidated those investments, you would have more dollars to spend here in the U.S., pay off U.S. debt, etc.

IMHO, it doesn't matter where you live and work ... some international diversification protects against domestic challenges. Hedging can be a very good thing.

 

[preben]

Brewer: December 05!? Did you miss what I wrote? Anyway here is a newer link showing some 20% US for PFUIX - I can live with that. http://www.allianzinvestors.com/mutualFunds/profile/PMFBU/portfolio_A.jsp

PLMIX states in the strategy: Currencies or fixed income securities denominated in currencies of non-U.S. countries (0-8 yr. avg. duration) so I am convinced that the "cash" held is other currencies too.

BMJ: yes - with my international life I see no need to take on the extra risk of currency risk and instead ensure that I am "self-hedged" by owning equities/bonds/cash/RE spread around the world. Oh; and for me USA IS foreign .

Cheers!

 

[ladelfina]

I still  think it is sad because the government does nothing about it or any other issue. What is the point of having them

Could this also have anything to do with the price of oil. If I were trading on the world market today, I would not want to touch the US dollar at all. I would deal in Euros, pounds or Deuchmarks. With that attitude, it will only get worse. It is as if the whole world, not just Al Queda has a vendetta to paralize the US. What did we do to deserve it? Stick our nose in everyone elses business', probably. Iran is next. Why don't we pull our troops out of Bagdad and move them to Tehran? Not too far away.

...

Worried about Iran bombing us with Nukes? Then use our early detection technology (which we have) to blow the things up before it get's here, or turn it around. Let other countries worry about themselves.

Look after No 1 is what I think we should start doing before it is too late.

SWR

I read some very compelling arguments to the effect that we are in Iraq to pre-empt the possible switchover of oil pricing from dollars to euros. If that were to occur, I think the US would consider itself royally f*'d. Hence our spending $8billion or so per month to stop it from happening.

http://ist-socrates.berkeley.edu/~pdscott/iraq.html

As far as WMDs in Iran.. I have 2 words to say: "Valerie Plame." Bush burned her and her whole supply chain.  Go figure.