September 24, 2007

Good article on why you need to be invested in foreign stocks as the US dollar collapses


I'll call this highlight from the Motley Fool article the donut example. Pretty easy to understand. If you haven't moved your holdings out of US$, better hurry. It's getting ugly and it's only gonna get worse (thank you Ben Bernanke you fu*king traitor idiot)

For example, U.S.-based investors in Canadian doughnut slinger Tim Hortons (NYSE: THI) have profited mightily over the past year as the greenback swooned against the loonie. And guess what? With U.S. interest rates declining, chances are that the dollar will continue to be weak.

The difference is dramatic: U.S. shareholders have seen Tim Hortons rise from US$25.15 to its current price of US$34.14. Canadian investors have seen the price go from CAD$28.00 to CAD$34.59.

In Canada, Tim Hortons shareholders have gained 24%. For U.S-based investors it was 36%. The difference? The dollar's slide.

Now, I'm not saying that the dollar will continue to go down. What I am saying is that investors who diversify away from their home currency do themselves a huge favor by looking overseas for investments. I'm also saying that a lower interest rate environment in the United States suggests that the trend isn't changing.

14 comments:

sugar shocker said...

Yeah, put those greenbacks into the Canadian version of KKD -- smooth move indeed.

If our economy crashes, equities in the rest of the world are going to drop as well.

Agent #777 said...

For the last 5 years, my 401K has been virtually 100% in FPBFX and/or DODFX. I have been rather happy with those two.

Anonymous said...

to everyone:
I am asking for advice. I am not very keen on market trends or banks or economics in general. Long time ago I realized that buying a house is out of the question for me (I am in the NYC area). My wife and I are renters and have been saving for few years now. Needless to say we dont have enough even for a down payment at the moment (it's usually 20% in the NYC area). With all this talk of recession and dollar losing value what is the best option for us? Is it too late to move our savings to gold or foreign money?
Thank you.

Anonymous said...

HA-HA

Just read this entry in the Blog while drinking a Tim Horton's coffee.

area 51 said...

But Keith you forgot your lessons from Manias, Panics and Crashes...

All the DOPES, DOLTS and Douches jumping on the FX bandwagon now are just like the greater fools who bought RE in 2005..........

It's too late, if you weren't in already...............

There is already whining on the part of Canadian and European politicians to weaken their currencies as their exports are hurting.....

And "sugar shocker" is right, if the US tanks, the ROW is going to be in agony as well.....

blt1984 said...

Keith,

Don't you think energy/oil stocks might be an exception?

Out at the peak said...

My Canadian energy equities have been paying over 10% dividend and have held good value except CNE over the last 20 months. (HTE, PWE, PVX, and CNE).

Don't put all eggs into equities in any country as values can drop faster than the dollar. Plain foreign CDs will pay some interest while being based on the currency.

keith said...

Yes, in addition to my ewg, ewz, ewj I love my COP and GLD

KO is also a good play, and also big exporters like Boeing

Key is to figure out how to protect your assets from the dollar destruction engineered by King of the Dicks Ben Bernanke

Anonymous said...

Putin speaks to "bubbles" and sovereignty. This is leadership folks.

September 24, 2007 (LPAC)--"Under no circumstances will we allow the emergence of so-called bubbles in the economy. We will not let this happen but will react swiftly to events taking place on world markets," Russian President Vladimir Putin said in his concluding remarks at the Sochi International Investment Forum, which included both Russian and foreign participants. The statement is posted on the Russian Presidential website today.

In his brief remarks, Putin first focussed on the real economy, saying that discussion at the forum had "gone beyond the limits of regional interests," to discuss the general energy sector, and the potential "impact this could have on the real sector of the economy, particularly on the metallurgy industry." He added later that Southern Russia "is an area of strategic interest.... Above all, of course, we will concentrate on infrastructure development. This concerns communications, telecommunications, railways, developing a network of highways and building new bridges, tunnels and ports (we did not talk about seaports today), all of which is extremely important for the implementation of large-scale projects."

He then shifted to the financial crisis, saying: "I would like to say from the outset that under no circumstances will we allow the emergence of so-called bubbles in the economy. We will not let this happen but will react swiftly to events taking place on world markets. The Russian economy, financial and banking system have reached a level of development that enable us to respond rapidly and effectively to events and guarantee that the Russian economy continues to develop normally. There should be no doubts in this respect."

area 51 said...

"Out At The Peak" just goes to show it's Amateur Hour in the investment discussion space on HP.

You guys gotta stick to your circle of competence, that is RE and Housing...........

Anonymous said...

"However you cut it, and from whatever angle you look at it, the bottom line will be a steeply lower standard of living for most Americans."

If you consider living in an $800,000 house making $50,000 a year then losing that house and becoming a renter that indeed would be a lower standard of living. That's not necessarily a bad thing however.

Anonymous said...

Canada is not overseas,

dumbass

Anonymous said...

Lower interest rates, and the world still doesn't know just how bad those CDOs and MBSs are. The dollar index has dropped from 120 to 78.xx. Is 40 really hard to imagine.

Osman said...

There's also a short-term arbitrage profit to be made by owning dividend paying stocks of company's whose earnings are made in primarily strong foreign currencies.