lawman
Thinks s/he gets paid by the post
what would you invest in?
crash - GIM (international bonds) or some foreign currencies to some extent; foreign equity mutual funds for equities exposure.
crash crash end of the USA - just the foreign currencies and maybe a little GIM.
But I think crystal ball gazing of this sort if ineffective. I do have 1/2 my portfolio in international investments which own underlying securities priced in foreign currencies. So I'm pretty well hedged against a big drop in the USD should it happen.
There are dollar-denominated and non dollar-denominated funds. The ones that are dollar-denominated "hedge" currency fluctuations out of it. The ones that are not dollar-denominated will rise and fall with changes in the exchange rate. For example, if you own the Freedonia Fund -- a mythical fund that holds assets denominated in foreign currency -- and Freedonia's currency rises relative to the dollar, the NAV of that fund (expressed in dollars) will be higher because you get more dollars per unit of Freedonian currency. The opposite is true as well; if the dollar rises against the Freedonian currency then the NAV will fall when expressed in dollars.I've never understood international funds that are priced in dollars..Do they really protect against a decline in the value of the dollar?
I've never understood international funds that are priced in dollars..Do they really protect against a decline in the value of the dollar?
Ammunition for sure!
There are dollar-denominated and non dollar-denominated funds. The ones that are dollar-denominated "hedge" currency fluctuations out of it. The ones that are not dollar-denominated will rise and fall with changes in the exchange rate. For example, if you own the Freedonia Fund -- a mythical fund that holds assets denominated in foreign currency -- and Freedonia's currency rises relative to the dollar, the NAV of that fund (expressed in dollars) will be higher because you get more dollars per unit of Freedonian currency. The opposite is true as well; if the dollar rises against the Freedonian currency then the NAV will fall when expressed in dollars.
But I go back to what I said before -- there's a difference between the dollar falling in a vacuum and the dollar plunging in tandem with most other fiat currencies. In the former case, just diversifying in other currencies and buying something like the "Freedonia Fund" will help you, but if most or all fiat currencies are melting down together, you want hard, physical assets because Freedonia's currency (and many others) is following the dollar's on the way down.
What's the liklihood of all currencies falling in tandem?....Is that possible?
In the crash scenario - Probably real estate and then pay the mortgages using tomorrow's almost valueless dollarsIf you were going to invest in hard, physical assets what would you buy?
It is possible (but unlikely). If the dollar did crash, more likely "Developed" nations would follow more closely then "Developing" as some of these countries are on sounder financial footing!What's the liklihood of all currencies falling in tandem?....Is that possible?
What's the liklihood of all currencies falling in tandem?....Is that possible?
You can either go with Fuego... but I think he is wrong...
Currencies fall in relationship to other currencies..... one can not fall if another does not go up...
Now, inflation can hit all currencies at the same time... like oil going up for everybody and making it hard to purchase other things with the money you have, but that is not (IMO) the definition of a falling currency....
what would you invest in?
For example, foreign stocks might look like a good hedge for US-based investors, but if, at some point, you need the money, you have to sell your foreign stocks and what do you get in exchange? A wheelbarrow full of worthless dollars.