December 7, 2004

NO WAY OUT:

Dollar daze (Steven Syre, December 7, 2004, Boston Globe)

The dollar is falling, so the smart money is moving into international stocks and mutual funds, right?

Many investors take away exactly that message from the torrent of headlines about the declining dollar and the virtues of international investing. Not so fast.

There certainly are benefits to diversification into international investments these days. But the slumping dollar is a complicated, mixed bag that can benefit many American stocks as much or more than foreign alternatives.

''Investors should not think of international stocks as a way to play the weak dollar," says Bernie Horn, president of Polaris Capital Management, a Boston firm with extensive international investments.


Ya' gonna move your money to a Europe where the overvalued euro is sending them back into recession or a corrupt China with rising social unrest?

Posted by Orrin Judd at December 7, 2004 10:38 AM
Comments

More to the point, it's too late; buying international securities with dollars is only useful if the dollar continues to weaken.

Posted by: Mike Earl at December 7, 2004 10:41 AM

Hold that thought Mike.

You don't necessarily have to buy foreign stocks, but have to move your money to the market segments that are benefitting from the expansion in Asia. Like: oil/energy(uranium), metals, food. Basically the commodities sector.

Or you can short the sectors that have bubble written all over them - real estate, finance, retail.

Posted by: Robert Duquette at December 8, 2004 11:35 AM
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