A Financial Hello from a long time member...

[Bryan Barnfellow]

FIREd, Un disastro! I had been using an exchange rate of .90 CHF for $1 USD in all of my modelling for the last few years. Then in the last six months we had this rebound in the dollar and earlier this week it was trading at 1.02 CHF for $1 USD, a nice 2% above parity, instead of the 10% below parity I was using. So, after researching probable short term trends I gave in to optimism and changed to .98 CHF. It was fun allocating all the new money that was going to come our way in July, when we are finally FIREd.

Talk about being blindsided! I think the exchange rate settled at the end of yesterday at .87 CHF to $1 USD. However, this is an export-driven economy, and Swatch, Nestle, Rolex, etc. are howling. There is some sense that the SNB will introduce new measures specifically to get better balance with the USD, so I remain hopeful that this anomaly won't last.

That said, I'm back to modelling at .90 and reluctantly removing the extras that I just built in to the budget:-( It's better this way; we can always bank any benefit of a rate higher than .90 at the end of the year. That said, the USD has been in a 40 year macro level decline against the CHF and this trend will likely continue in the future. So, we will stay vigilant.

clifp, Thanks for probing! It is one of the things that make this forum so incredibly helpful and interesting. The taxable portfolio is 100% US stocks, focused mainly on dividend growth, and consists of blue chip "dividend aristocrats" (25 years or more of dividend increases) plus a few carefully selected and monitored MLPs and REITS. This is how I get the $80,000 in dividend/distribution income.

-BB

 

[2B]

Talk about being blindsided! I think the exchange rate settled at the end of yesterday at .87 CHF to $1 USD. However, this is an export-driven economy, and Swatch, Nestle, Rolex, etc. are howling. There is some sense that the SNB will introduce new measures specifically to get better balance with the USD, so I remain hopeful that this anomaly won't last.

Hopefully, you'll make out all right. I don't know what the issue would be with a more favorable dollar exchange rate. The euro is the problem. If the ECB starts pushing QE, the euro will seriously weaken and many people will likely be trying to bale out before it happens. The CHF is the best game in town. If the SNB tries to keep up the 1.20 exchange rate, they will be riding the euro down at what may be a near infinite amount of francs.

I suspect that something will happen when the euro plans are clearer. Unfortunately, the Swiss export economy will take it in the shorts when it comes to the euro exchange rate.

 

[Bryan Barnfellow]

Hopefully, you'll make out all right. I don't know what the issue would be with a more favorable dollar exchange rate. The euro is the problem. If the ECB starts pushing QE, the euro will seriously weaken and many people will likely be trying to bale out before it happens. The CHF is the best game in town. If the SNB tries to keep up the 1.20 exchange rate, they will be riding the euro down at what may be a near infinite amount of francs.

I suspect that something will happen when the euro plans are clearer. Unfortunately, the Swiss export economy will take it in the shorts when it comes to the euro exchange rate.

Alas, very true. Defending 1.20 in the face of QE would have been difficult and unadvisable. But just on Monday they reported that there was no plan to change their strategy; so it caught everyone unawares.

-BB

 

[2B]

Alas, very true. Defending 1.20 in the face of QE would have been difficult and unadvisable. But just on Monday they reported that there was no plan to change their strategy; so it caught everyone unawares.

-BB

The US had no plans to extend FDIC insurance to money market funds but changed their minds after the short term paper market was in the process of being drained of trillions of dollars. Ultimately, reality trumps their misguided intentions.