Long USD: implementation?

[acronymous]

This article lays out a case for taking a long position on US dollars.

https://seekingalpha.com/article/439...k-super-bubble

Is this accomplished by merely holding cash or does it involve trading on Forex, or something else?

Thanks!

[triangle]

I might think investing in a money market fund, treasuries (TLT) or something approaching cash.

That said I think more people are expecting USD to soften over time. I find these macro issues hard to predict or analyze as there are far too many factors involved.

https://www.lynalden.com/fraying-petrodollar-system/

[Closet_Gamer]

I think if you really wanted to go for it, you could short foriegn ETFs.

Strong dollar should mean foriegn ETFs go down.

Note: I do not recommend doing this.

[CaptTom]

Interesting takes, on both sides.

My macro view is that the US is looking inward, while China and others are filling the vacuum created by lessening US interest overseas. China has global trade figured out, just as we're leaving that stage. Isolationism can't be good for the reserve currency.

[Sunset]

The USD is already going lower, and I expect this will continue for some time.

I'm long USD by default, by investments in US stocks and savings accounts/CD in USD.

I plan on buying some VXUS (non US stock etf) and other non-US stock etf's to capture some of that few % change downward in the USD per year.

[acronymous]

Thanks for the replies. That Lyn Alden piece was fascinating.

[RobLJ]

I noted, probably inappropriately, on the Investment Performance thread, that the outperformance of international and emerging markets versus the S&P over the last 3 months was a bit surprising--but welcome, since I keep 1/3 of stock investment in foreign funds. They often lag the S&P--and often for years at a time--but when they outperform, they can outperform yugely, often not much in correlation with the S&P, which is attractive.

This outperformance often accompanies dollar weakness, which appears to be the case the last 6 months or two.

I expect dollar weakness to continue for a while, so I tapped some of my over-large cash and put it in a broad international and Asian fund; the former is dollar hedged, so I will probably look for an unhedged similar fund, since I expect to continue this for the next year, to use some of my excess cash. The "resolution" of Brexit may (or may not) help the Euro versus the dollar; we'll see; the outperformance of Asian economies I suspect definitely have helped their currencies versus the US dollar.

This is not germane, but I was surprised to see my (small) gold miner fund up 6.5% today and 36% over one year. I mostly keep it to alert me to weird moves, usually currency/inflation fears related. This also usually accompanies dollar weakness.

But sooner or later the dollar will strengthen; I suspect later, after the COVID recession. At the current pace of vaccination, that may take a bit of a while, but there are other factors at work to dollar weakness, including probably excessive dollar strength for quite a few years. But I'm no currency guru--just interested for years at the apparent correlation with foreign fund performance versus S&P.

[OldShooter]

Quote:

Originally Posted by RobLJ ... This outperformance often accompanies dollar weakness, which appears to be the case the last 6 months or two. ...

Well, Mr. Market is always moving the game pieces around, but the reason that investments denominated in other currencies appreciate when the dollar declines is just arithmetic.

Say tomorrow the Euro was trading at par to the dollar and you buy two Euros. On Wednesday, the market is the same and you sell one. You'll gt a dollar (less trading costs of course). Now say something happens on Thursday night and on Friday the dollar has declined by 10%. You sell your second Euro and get approximately $1.10. Are you ahead for the week by a dime? Maybe. If the dollar's buying power in the US has not changed, then you can buy on Friday more than you could have bought with the $2 you started with. But if, in the mean time, the market has reduced your US buying power to reflect the international decline, you are not ahead at all. You are down by the amount of your transaction costs on three trades.

Quote:

Originally Posted by RobLJ ... I mostly keep it to alert me to weird moves, usually currency/inflation fears related. This also usually accompanies dollar weakness. ...

Sure. Same arithmetic.

I am not betting for or against the dollar, just holding all the stocks in the world, market cap weighted. If I had to bet, though, I would bet on a long-term decline and on the demise of the dollar as the world reserve currency. Last week's The Economist included a chart showing that the dollar was still dominant but other currencies were held to the tune of something like 1/3 of reserves. Harbinger? I think so. Here is an Economist comment from November:

"Can you identify what or whom the following describes: is widely disliked around the world; might have been ditched by some supporters earlier had convincing alternatives existed; has had a difficult six months; and refuses to go quietly? ... The answer is the dollar. It is the most unloved of major currencies, apart from all the others. ... "

[tmm99]

I live in Canada with most of my money in USD. I retired 5 years ago in Canada and it's been great. I was getting around 20% to 25% gain on my USD into CAD 5 years ago (although just a few years before, CAD was stronger than USD) and it's been even better than that the last few years (30%+). I am hoping this trend will continue, but we will see... I sure hope USD won't get too weak...

[Sunset]

We missed out on a trip to Europe last year due to covid.
Besides losing around $300, I see now the Euro has gotten strong, so a rebooking of the trip etc will be so far 10% more costly..

Not booking anything yet, maybe in a year the USD will strengthen again.