My boss keeps asking me about hedging the dollar as he thinks it is going to tank...
First thing I ask is 'against what'... IOW, you have to have a stronger currency to get into... I do not think China is it yet.. nor India.. nor Brazil... now, NZ or AUS might be, but their economies are just not big enough to make a difference when you are talking about the world reserve currency... so I do not see where to put my $$$$s...
Second... what am I hedging
I mean, my income is in dollars and my expenses are in dollars... if the dollar actually drops a lot, it will not make that big of a difference in my life that a hedge can protect... commodity prices might go through the roof, but that is INFLATION, not a currency hedge...
Last... how long do you 'hedge'
By definition, a hedge is to mitigate a potential loss... but there is a time period... are you going to hedge for a year, 5 years
Because at some time the dollar will come back IF it falls through the floor... this is another question that I can not answer....
So a currency gamble (since we have established it is not a hedge) is something I would not want to do... I would much rather invest in some overseas companies and hope their earnings go up so my investment goes up...
(IOW, this is like investing in gold.... you are playing the market and hoping you buy low and sell high... not something that is a long term investment)...