Hedging the dollar...........

[brewer12345]

Quote:

Originally Posted by BigNick You would have to be confident that Sterling is going to outperform the dollar.

No, you would not. In this case, the poster is only seeking to hedge future expenditures denominated in pounds. As such, he does not really care what the absolute performance of the pound is, on that he has hedged away some unwanted currency exposure.

[Independent]

I'm in the "most of my purchases will be US sourced" camp, so I'm somewhat immune to currency swings. I also buy the notion that large cap "US" stocks are usually multinationals so they provides some diversification. Then I have TIPS and SS, both tied to the CPI. It seems that the primary risk of dollar declines higher costs for imports, which turns up in the CPI. I know there is still some residual risk, but it's not my biggest worry.