Get Out Now!

I've successfully scared the heck out of some of you with predictions of the dollar's looming demise.

Yet I've not said it nearly as forcefully as Swiss banker Dr. Konrad Hummler. Here's what he wrote in his recent Wegelin Investment Commentary: "It's time to take advantage of the recovery of the U.S. dollar to get one's currency diversification in order."

Read between the lines. He's telling you the dollar is going down . . . hard.

But don't just take my -- or Dr. Hummler's -- word for it
But we're not the only ones giving such advice. If you've been paying attention, then you know that Warren Buffett came out against the dollar in an August New York Times editorial.

And Hummler, in his commentary, points out two other investing luminaries who have taken high-profile stands against the dollar:

  • "Bill Gross of Pacific Investment Management Co. (PIMCO), which manages the biggest bond fund in the world, advises investors to sell dollar investments 'before the central banks and sovereign wealth funds do.'"
  • "[C]ommodities specialist Jim Rogers . . . announces his new favorite currency -- the Chinese yuan."

Now, you can heed these words of warning, or you can stick to your U.S. investing guns. But allow me to suggest that the latter is an irrational position.

After all, there's limited downside to diversifying into great companies that do business outside of the United States. There is, however, significant downside to investing in nothing but dollar-denominated investments.

It'd be crazy to stash your entire life's savings in one company. It's just as crazy to stash your entire life's savings in one currency.

But there's opportunity in the meantime
Despite the dollar's precarious, debt-laden position, the currency is in a pretty good place relative to other world currencies -- thanks to investors having abandoned emerging markets for perceived financial safe havens during the recent financial crisis.

In other words, should you opt to sell some of your dollar-denominated investments (like U.S. stocks) and buy investments that are denominated in Chinese yuan, Brazilian real, South African rand, and so on and so forth (like foreign stocks), you have stronger purchasing power today than you'll likely have in 6 or 12 months.

In other words, this is a temporary opportunity. But there's still time to take advantage.

Have a look at this table
To make this simple, I've put together a quick chart of popular U.S. investments and their foreign counterparts -- all of which are recommended by Motley Fool Global Gains and which offer similar advantages with significantly more foreign currency exposure.

If you own...

You should look at...

Altria (NYSE: MO  )

Philip Morris International (NYSE: PM  )

AT&T (NYSE: T  ) or Verizon (NYSE: VZ  )

Telkom Indonesia (NYSE: TLK  )

Devon Energy (NYSE: DVN  )

CNOOC (NYSE: CEO  )

These are all solid companies with somewhat similar profiles -- because what makes a good company outside of the United States isn't at all different from what makes a good company inside the United States.

Altria and Philip Morris, for example, both sell a top-notch brand, pay a hefty dividend, and generate significant recurring cash flows. Furthermore, because foreign economies are smaller than the U.S. economy, you'll often find that in a sector like telecom, you can find a company with far more market share than anything you'd find in the U.S. (which is another good thing).

So, again, don't change your approach when you go searching for stocks abroad -- simply change your purview.

At the end of the day, however, the most important point is that the stocks on the right will make sure that your life's savings aren't 100% aligned with the health of the dollar. Konrad Hummler, Warren Buffett, Bill Gross, Jim Rogers, and I all think that's a very smart move.

Sufficiently freaked out?
If you're worried about the dollar, and you want more compelling international investment opportunities, click here to join us at Global Gains with a free 30-day guest membership. You'll enjoy access to all of our premium research and stock picks with no obligation to subscribe.

Already subscribe to Global Gains? Log in at the top of this page.

Tim Hanson is co-advisor of Motley Fool Global Gains. He owns shares of Philip Morris International. Philip Morris, Telkom Indonesia, and CNOOC are all market-beating Motley Fool Global Gains recommendations. Telekom Indonesia is also an Income Investor choice. Enter the Fool's disclosure policy.


Read/Post Comments (54) | Recommend This Article (217)

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  • Report this Comment On September 17, 2009, at 1:07 PM, rferrari wrote:

    Hi Tom,

    I'm a Canadian and an investing newbie. Given the Cdn$'s significant gains against the US$ since March, would you make the same recommmendation to Canadians? It strikes me as a pretty good time for Cdns to buy US stocks.

    Would appreciate your (and others) thoughts.

  • Report this Comment On September 17, 2009, at 1:23 PM, senmike wrote:

    Of course, the reason I invest in Devon is "because of their lack of exposure to governments who have no respect for private property or contract agreements." Most of Devon's exploration is in the USA, Canada, and our off-shore waters. I don't want to own part of a company who would sign a contract with any communist named Hugo Chavez, or any nation named China or Russia. I also don't want to own any company doing a lot of business in the Mideast, where they have nationalized property and agreements in the past. I will continue to pay for Devon stock with US dollars and when I sell, I will receive US dollars. I'll see most of Devon's oil and natural gas sold and used in the USA and Canada and will smile all the way to the bank. The 4th of July is still my favorite holiday, after Easter.

  • Report this Comment On September 17, 2009, at 1:47 PM, senmike wrote:

    Ultimately the USA will reach a measure of energy independence when we convert to natural gas for most of our vehicles. The relatively cheap oil has not encouraged conversion. It's a chicken and egg question on "natural gas" pumps at retail outlets. I will convert my car but I don't want to be 'held-up' when filling up between Oklahoma City and Austin because someone has the "only store in town".

    Devon not only has large oil holdings but large natural gas holdings also. The oil produced in the USA will always have a market but our reserves in natural gas are among the largest of any nation.

  • Report this Comment On September 17, 2009, at 2:27 PM, RaceCoach wrote:

    @rferrari I am Canadian, too.

    Your should be concerned about the relative value of the Canadian and US dollar. At this point, we don't know what the Canadian government will do if the US dollar devalues. Canadian exports are so dependent on US purchasing that a huge disparity between the two currencies could cause all kinds of problems. Having said that, purchasing any stock, as a Canadian, in US currency could be dangerous if you believe the USD will devalue - RELATIVE TO THE CANADIAN DOLLAR. This would happen if you purchased a stock that's listed on NYSE, NASDAQ, etc. from your Canadian brokerage account. Note, you may find some stocks listed on both Canadian and US exchanges.

    If this explanation is too elementary, my apologies. I do not mean to insult anyone, but just highlight the effect of exchange rate changes (that hit me hard this year). To demonstrate the potential pitfalls of a relative change, consider these numbers:

    # shares US$ cost US/CDN CDN$ value

    100 10 1.08 1080

    So, to purchase 100 shares right now at $10 you will pay CDN$1,080. (I have left out brokerage fees for simplicity).

    Then suppose the US dollar drops relative to the CDN dollar by 10% (it has already dropped by 20% since March '09). Let's say the stock has stayed the same price. Now you sell, and you earn only $972 (10% loss) - even though the stock has held it's "value".

    # shares US$ cost US/CDN CDN$ value

    100 10 0.972 972

    Let's say you want to get your money back. With the reduced exchange rate, how much does the stock need to go up, to offset the 10% drop in exchange? 11.1% from the original price - just to break even.

    I have eliminated all my exposure to the US market. I am currently purchasing all my stock on Canadian exchanges, because I believe there will be a relative devaluation.

    I just wish TMF would increase their coverage of our market and exchanges.

  • Report this Comment On September 17, 2009, at 2:43 PM, voraces wrote:

    This recession is far from over. To buy stocks, bonds, the dollar or any other product besides gold or silver is to crazy for me. You need to wait until you know what is happening before you spend your money. Find you a good gold and silver seller and purchase what you can. Our government is printing money faster than ever so look for inflation and all the problems that come with it are are getting ready to raise its ugly head. Don't buy any stock.

  • Report this Comment On September 17, 2009, at 3:07 PM, RaceCoach wrote:

    voraces would have you think the sky is falling. Buy gold and silver and hide in a hole 'til the sun shines again.

    There is HUGE opportunity right now. This economy is going to create new millionaires. Gold is not the only avenue.

    But, to voraces point, at the rate that the governments are increasing the money supply, devaluation is inevitable. Whereas "cash" used to be king, "gold" will become the new king. Everyone should have large exposure to gold or gold mining companies.

  • Report this Comment On September 17, 2009, at 3:45 PM, senmike wrote:

    Some of those same arguments for buying 'gold' are the same reasons I'm buying oil. One main reason I chose Devon is because of their oil and gas in the ground. If I sell a barrell of oil in Canada, I'll get Canadian dollars. If it's worth 200 Euros, and I sell it to an EU member, I'll get 200 Euros converted to the then rate of exchange. You should not buy any company which doesn't have assets or expected earnings from services to give you a profit.

    I've never been big on this buy gold and go hide in a cave thing.

  • Report this Comment On September 17, 2009, at 5:20 PM, CoffeeExplosion wrote:

    Now that the stock market has collapsed what should you do now. There are two ways this market might go. One is further down and more sell offs. The other is for the stock market to just stagnate around its current levels. So the best solution for this market is still the old solution, big companies with lots of cash and paying out dividends. I've always like Philip Morris (PM stock symbol) and Altria (MO stock symbol) as they pay very good dividends.

    Companies with no cash or heavy in debt can't protect themselves in this market. They will have to go deeper in debt and then be at risk of going bankrupt. Cash will have dried up so any company that hasn't saved loads of money will have to pay high interest rates to borrow money. If they can't afford the high interest rates they will have to sell themselves and bargain basement prices. Stick with stocks you something about. You will be surprised how much you know. Wal-Mart (WMT) is a good stock we all know. They will lose some market share but pick up more market share as their low prices are appealing. Proctor and Gamble (PG) is another large stock that will do ok. They make many staples that people must have. McDonalds (MCD) will be the inexpensive restaurant that will gain market share as people forego expensive restaurants and head to McDonalds.

    Yes you must do your own research. I advise against (against I said!) hiring a financial advisor. I've met so many people that have lost a fortune listening to financial advisors. Financial advisors charge you a lot of money and they don't beat the street as they say. You've probably heard about the monkey that threw darts on a board to pick stocks. Then they had a financial advisor pick his favorite stocks and they waited a year. The monkey won. I could go into why and how managers siphon off all the profits off and thus it is futile to try to find great companies. I recommend buying an index fund or a mutual fund if you don't have time to research your own stocks.

    -------------

    Money is like muck, not good except it be spread.

    http://www.topinvestingtips.com

  • Report this Comment On September 17, 2009, at 5:59 PM, plange01 wrote:

    the big dividends from altria,att and verizon make up the differance they are not worth selling if you own them.in fact if you get a better entry point buy them as i am......

  • Report this Comment On September 17, 2009, at 6:39 PM, afleetfeet wrote:

    Senmike - my favorite day is April 15. Being such a good Christian patriot, I figured that would be yours, too.

  • Report this Comment On September 17, 2009, at 7:46 PM, Akiraiaia wrote:

    RaceCoach: I can't agree that the exchange plays a role. Companies listed on 2 exchanges will move in tandem, regardless of the home currency. What really matters is where the company makes its profits. A US company making 70% of its profits abroad (in non US currency markets) will gain value the more those currencies gain values vs the USD. Because it reports profits in USD and foreign profits get more valuable vs the USD. Makes sense?

  • Report this Comment On September 17, 2009, at 8:11 PM, gilsh wrote:

    if there is one lesson the last crisis has taught us all, it is that globalisation has brought with it one clear rule: when one of the primary engines of the world is hurt, the entire stock markets of the world go down.

    if you accept the logic behind this article, then gold and silver are the only rational hideouts.

  • Report this Comment On September 17, 2009, at 9:58 PM, sentinelbrit wrote:

    No one is positive on the U.S. dollar and the dollar has fallen a lot already. So a lot of the bad news is discounted. I do not believe there can be an economic recovery in Europe or Japan without a recovery in the U.S. The big surprise would be that the US economy continues to recover (ahead of Europe) and market participants start to believe it is sustainable. US interest rates would rise sooner than expected which would attract money from weaker growing, low interest rate economies and boost the dollar. I'm not saying the dollar is not in a long term secular decline, it may be, but the universal bearishness on the dollar indicates it could rally over the next year.

  • Report this Comment On September 18, 2009, at 6:50 AM, LessGovernment wrote:

    Dollar? Rally?

    !2 Trillion current national debt

    2 Trillion hiding on the books of the Fed

    80 Trillion unfunded entitlements and federal retirement

    9 Trillion additional debt within 10 years

    7 Trillion in guarantees for GSE's, corporate debt, bank debt, etc.

    Let me see now. That totals 110 Trillion dollars in debt and guarantees.

    Stated another way, this is more than double all the net worth of everyone in the USA.

    Rally?

    Yeah. I expect a dollar rally - NOT.

    It looks to me like the damn idiots in Washington are now the biggest writers of credit default swaps and as in the past, lack the resources to stand behind the guarantees they are making.

  • Report this Comment On September 18, 2009, at 11:08 AM, Huayra wrote:

    If you're a US investor the dollar decline isn't necessarily a bad thing as it indeed supports corporate profits of US companies with sales oversees.

    As a european investor the dollar's decline has had a negative impact on overal profits and I have sold about one third of my US stocks this week. Is was around 20% in cash last month. At the moment I'm back to about 40 %. I already have emerging market exposure, but want to increase along with acquiring some european stocks.

    Selling some stocks to lock in some profit around 10.000 for the DOE was the plan anyway, as I believe we won't go much higher then that for the next two quarters, but the dollar decline in the last month has resulted in less EUR profit on the US stock sales due to the conversion rate.

    Furthermore I think there is a likelyhood that the EUR/USD may reach 1.60 in the next year if the US doesn't raise interest rates, increases taxes and cuts spending. Although the stimulus package was the right approach, the US and its citizens will have to become more fiscally responsible. If it does reach that point I would however expect some sort of rebound. But it's clear that the shift to the emerging markets and new economies have happended and that it will have an impact on relative importance and strength of the dollar and US economy in the next 50 years.

    Best to invest accordingly and buy high quality, good value companies in different markets and currencies instead of focussing the majority of investment in one sigle market, whatever that may be.

  • Report this Comment On September 18, 2009, at 3:33 PM, holosys wrote:

    I always skim an investment article first to catch the "gotchas" that could invalidate the entire premise of the article. (Drum roll, please...) Here is the gotcha take-away in taking this article's dubious advice, and I quote:

    "In other words, should you opt to sell some of your dollar-denominated investments (like U.S. stocks) and buy investments that are denominated in Chinese yuan, Brazilian real, South African rand, and so on and so forth (like foreign stocks), you have stronger purchasing power today than you'll likely have in 6 or 12 months.

    "In other words, this is a temporary opportunity. But there's still time to take advantage."

    End quote.

    Translation: If you sell any dollar-denominated assets like U.S. stocks to buy foreign stocks (denominated in foreign currencies), you better be very good at timing the market... because you're going to have to "time" the selling of these foreign stocks in less than six months!

    Kids, there's a reason for the warning "Read the prospectus carefully"! Articles like this one are for currency speculators, and market timing is very risky business. Many an investor has lost his/her shirt/blouse over trying to time the market.

    Unless you like playing the financial equivalent to "spin the bottle" and you can afford extreme risk to see your partner lose her blouse (now there’s a tantalizing thought), I suggest you hold on to your U.S. denominated assets so you can profit AFTER the 6 to 12 months mentioned in the above quote in the above article!

    Learn to spot these little "disclaimers" and take them seriously.

  • Report this Comment On September 19, 2009, at 7:16 PM, artbros wrote:

    Howard Ruff predicted much the same back in the 1970's. Others have followed. Turns out that the economy has much more resiliance than expected. But perhaps this time the doom and gloom crowd is right.

  • Report this Comment On September 22, 2009, at 11:34 AM, Johnnicash wrote:

    This is all about timing. I wasn't really "in" the market much before this crash (I still had bad taste in my mouth from 2000). However, when these stock prices hit their lows...i figured buy because if they went any lower the world was kaput anyhow. So if your suggesting i "get out now" while I'm doubling, tripling and quadrupling virtually every mindless investment I made!??? As far as I can tell, late 2008/early 2009 may have been some of the best investment opps in quite a LONG time...

  • Report this Comment On September 22, 2009, at 12:15 PM, djdd11 wrote:

    Don't panic. Yes, the dollar will depreciate. It will affect the global economy, and then followed by intervention by G20 to see that the depreciation is gradual if depreciation is inevitable. They have been doing that all the time, so it will not fall like a rock otherwise we are going to have another global crisis on hand. Recall China has been doing that for its yuan. This is nothing new.

    So if it is going to depreciate 5% a year, would there be a real risk if you are making more than 30-40% kill?. One should not panic and scramble for cover, you would lose more as a result.

  • Report this Comment On September 22, 2009, at 12:18 PM, XMFSinchiruna wrote:

    Great article, Tim!

  • Report this Comment On September 22, 2009, at 12:30 PM, TMFMmbop wrote:

    Thanks, man. And the dollar is showing additional weakness today. Sign of things to come?

  • Report this Comment On September 22, 2009, at 12:39 PM, djdd11 wrote:

    Don't panic. Unlike stock, dollar is just a medium of exchange, its value is determine by the trade that is going on in the global economy.

    Since US economy is sound and there is no hyperinflation, the dollar will not drop like a rock. Moreover G20 will be intervening to make sure it will be gradual if depreciation is inevitable. My guess is that the drop is about 5 to 20%/year. But if you can make a kill in the stock of more than that, then that should not irritate you, esp when it is only a temp phase.

    If you are into Forex, then I think perhaps you need to panic and scramble for cover.

  • Report this Comment On September 24, 2009, at 6:29 PM, milleniummk3 wrote:

    I feel like an idiot telling you that after UBS destroyed my account, decided that people with acct's below a certain level, could no longer use their finance advisors. This puts me in a bad position since a car accident in 96 and taking medication for constant pain, am left to make decisions which to be honest i cannot.I guess this is a call for Help !

    I am holding 3 stocks BP,RDSA, and ED, for the dividends, with some cash, but need to take more risk than i might of wanted a few yrs back.

    I bought the "Stock Advisor" and bought 4 of their stocks yesterday (great timing ) to add to my portfolio . One was Moody, to find its under investigation which led to an immediate sell. I now have CUB, ATVI,ADBE along with my other 3.I have no clue if this makes sense to anyone. I have been making money on the oil as well as ED with good dividens. With those gains falling over the last 3-4 days. I was hoping if someone would make some recommendations even if i have to change what i have and find out if i would be better off in this sector vs Stock Finder based on my situtation.

    I really feel like an idiot to put it out there this way for everyone to read but i cannot "go back to school" to be retrained with my situation. I would appreciate any feedback to restart again especially with what has happened yeseterday and today if its still no to late.

    Thank you.

  • Report this Comment On September 24, 2009, at 8:23 PM, milleniummk3 wrote:

    I think you may be right. One of the reason for the 2 oil stocks was the .84 per share dividend paid. I am still up $2500. I'm down a $1000.00 combined but i have gone down this road before. Watch the gain go up and then down.You keep playing the same game. I don't know what eveyrone would do if they held these stocks themselves. With the weak dollar i have seen the stocks up then the dollar gaines in value in one day and their down. The last two day drops worries me . Do you get out of these dividened stocks and find others or do you hold on like my situation with BP,RDSA,ED. to keep the high dividens ? I keep hearig the day of holding stocks long is gone with the economy last year.

    I have been on a free test of Vector Vest but there is so many choices and the constant rotation of stocks, i could never keep up with it. It seems each day there is a new money winner. How would you know what one to get. Anyone have any experience in anyway with Vector Vest for another view point ? So far i have been just an observer.

    Thanks for the reply

  • Report this Comment On September 25, 2009, at 10:09 AM, confusedxx wrote:

    It is not only a question of having investments in companies with substantial earning outside the US, but what about an investment account demoniminated in a foreign currency (Eur or Swiss Franc)?

    Are there US brokers like Think of Swim who accept EUR deposits?

  • Report this Comment On September 25, 2009, at 10:37 AM, seymourfroggs wrote:

    Though the dollar is falling, it is still one of the world's great currencies, and that will prevent (I suggest) a 'run' on it. The Chinese rimibi or whatever it's called will theoretically gain, but that's no good if it's not tradeable. The euro is strong, not because of the strength of the European economy, but because it's become an alternative to the dollar.

    I think the dollar fall will be >10%, because a graph (I can't show here) shows the dollar already down >10% against a trade-weighted basket of goods.

    Canada. Great place. Banks run by canny Scots, so not in trouble. But outside of mining resources, what Canadian companies are there? I bet there are some super ones, say truck haulage, removalists, etc. Isn't RIM Canadian? But not cheap?

    Me, as I said on the Value board years ago, I'd buffered my portfolio with euro stocks. A good one is Norwegian STO which pays its taxes (ie running clean), has good metrics, has a huge gas resource near Spitzbergen which it's not broadcasting (tho' it hasn't needed to spend the mega bucks to access it), is looking hard at big offshore wind turbines (one on trial, might not work! Who knows!). EON is a good energy company constrained by euro-socialism, but giving a dividend and also bound to plod upwards. The German Banks are worth avoiding - might not be as debt free as they make out. RSTI is well managed and is the sort of thing that has an edge. I don't like Altria because I don't like tobacco but for pure money, it's value.

    Australia has some good companies. It effectively avoided the recession because it just sells quarried materials. The gold miner Dominion (DOM.AX) has good gold reserves, enough for 5 - 10 years and good metrics. I think it's marginally cheap at present - fair value, I'd say would be A$4.50 but a true rise in gold price as the Asians start buying again will be interesting, never mind the "hedge" garbage. It is very honestly managed, unlike the typical Australian gold mine! But a really steady company, off the radar, with great management and good metrics is WWA.AX (removals). And the ANZ bank is good and recovering from a stupid scandal where people who'd borrowed to Buy shares on margin, blamed the bank for lending!

    And ANZ gives a great dividend.

    But there are still great US companies which have an edge. I suspect CSCO is an example (I invite comment).

    All in all, I have split my savings (trying to look for value, or dividends) across 3 continents - four if you include Chinese CTRP (thankyou, Fools) and SVA will bounce and should profit and grow, I believe. Both companies I have had for >6 years. And I hope but might be wrong that the undervalued Chinese currency will give these an extra leg-up.

    Heavens, is anyone still reading?

    Good mottles to all

    Malc

  • Report this Comment On September 25, 2009, at 11:02 AM, Huayra wrote:

    milleniummk3..

    I totally agree with the advice which 'truthisntstupid' has provided you.

    You have to understand that their is no such thing as easy money and keep in mind that if everybody really new where the markets where going then we would all be millionairs by now.

    The simple fact is that the majority of people which had stock investment during the last 10 years would actually have been (much) better of keeping their savings in an interest bearing account given the events of the last 2 years.

    The markets are now back at a point, since the lows of March, whereby most stock valuations are at reasonable levels, so given the difficulties ahead in 2010 and beyond you will most likely see a lot of fluctuation in the stockmarket from this point. For most people on this forum this is fine as we are pretty active investors with a clear gameplan and have the stamina to stay the course.

    You indicated that you feel like a fish on dry land with no clear indication where to invest. In that case it's always best to invest in established companies which are not related to commodities. The problem with commodities and companies in the commodities sector is that they are as much depended on the strength and weakness of the US dollar as they are on depended on supply and demand.

    If you use morningstar.com or the CAPS-system here on TMF you can still find many established companies with dependable dividend yields which are still between 5 and 10% and have solid earnings and future growth potential.

    A couple rules that I've personally learned through trial and error:

    1) Never, never invest more then 20% of your total portfolio in one specific stock, fund, REIT, commodity, etc. Even if you think that specific company is or has the best new thing since sliced bread and internet.

    2) Don't get distracted by daily fluctuations and events in the news and the stock market unless you have a huge game-changer like we saw with 9/11 and last year when Lehman collapsed and credit suddenly froze. At that point you sell, otherwise stay put.

    3) Make your investment choices purely on the bases of company fundamentels, dividend history and valuation to book value as this limits down-side risk and not merely on hype.

    4) Once you buy something which you know is fundementally sound keep it, as transaction costs can amount to a big drag on your profits.

    5) Don't invest money you may need within the next year or 2.

    I which I could give you some great stock picks but the fact is that nothing is certain in life. I believe in everyone of the positions I currently have in my portfolio, but at the same time I have reduced my holdings in the last couple of weeks from 80% to 62,5%.

    Whatever the market does you just try to give yourself some room to react, regardless if the market goes up or down. if it goes up to 11.000 your existing investments will appreciate. If the market goes down, have some cash on hand to buy some good quality assets on the cheap. The Warren Buffet & Jim Rogers approach!

    Good luck with your investment decisions.

  • Report this Comment On September 25, 2009, at 12:05 PM, zildog wrote:

    Has anyone remembered that an unprecedented 65% of all the worlds currency is the almighty American Dollar?

    This reckless injection of trillions upon trillions of dollars by the US Government is going to be the straw that breaks the camels back. Instead of letting the downturn run its course somewhat naturally, the US has FORCED the economy to make a recovery, going against the fundamentals that contradict it.

    What do you think this reckless printing of money will do? All answers are bad. America is asking -no, demanding, that China and Japan continue to buy its debt so it can continue printing more money!!

    Who the hell can trust people who act in this way? America thinks it can write I.O.U on a piece of paper, hand it to the Chinese and expect them to comply. No wonder the Chinese are fed up and sick of this.

    America is not worth the paper it writes it's I.O.Us on.

    The dollar is finished and the fact that 65% of all the worlds currency is in this denomination, means that massive amounts of trouble are ahead.

    You don't need charts and experts to know something is seriously wrong with the way this is all being handled...

    It is all very, very clear something is about to break in a gigantic way.

    The upward V we are experiencing is a truly staggering thing to behold - I was in with Tata motors when they were 3 dollars, Cat when they were at 8, Goldman when they were 58, Apple when they were 80 and Elpida memory when they were 300 yen.

    I have made hundreds of thousands of dollars but am seriously reevaluating my position because of the sheer unadulterated recklessness the US is showing in trying to force a recovery.

    It is positively stupifying.

  • Report this Comment On September 25, 2009, at 12:07 PM, TMFAdmiral wrote:

    Hi Tim,

    I agree with you on the natgas side of Devon but the oil side has the price set internationally. Commodities denominated internationally in US dollars are generally a reasonable hedge on the dollar - if the US dollar goes down the price of oil will go up in dollars even if it stays stable in other currencies. So Devon's costs stay in US dollars but its revenue goes up at least on the oil portion.

    Regards

    Philip

  • Report this Comment On September 25, 2009, at 1:00 PM, foolinthecabin wrote:

    I'll keep this short. i basically have turned into a "under the mattress" type of investor and have not reinvested cash for a long time. Should I keep my "mattress cash" in another denomination?

  • Report this Comment On September 25, 2009, at 1:13 PM, myhanoon wrote:

    I am sick and tired of this scare tactic to get your to read the article in the first place and at the end try to sell you something. Is site needs to find a real identity: Is it a sales site or information site by subscription? I try hard to learn something new from this website but unfortunately nothing comes to mind. Please make up you minds and tell us what you want to do so we can take action accordingly.

  • Report this Comment On September 25, 2009, at 2:01 PM, Morfax wrote:

    I have about 25% of my portfolio in Canadian stocks 10% in British stocks, 10% in the Bahamas now (GRMN). I also own PCU and GE which have a lot of overseas exposure.

  • Report this Comment On September 25, 2009, at 2:03 PM, crepinginflation wrote:

    a few years ago ...the dollar took a beating and all the international funds had a ten percent premium locked in ...scinx was one mutual fund and looked at there portfolio and saw all the big cap companies that we see in america but only that they were in europe and asia ...but what suprised me was no nafta companies ...the theroy of nafta is how to beat a slow boat from china is with a fast truck from mexico ....with respect to china ...they are the competition not the enemy ...we don;tr throw hangranades at each other ...and i hope we don;t become a sue happy society either ...wto ... a care bear story from calloway golf is that the bought currency options to protect profits on overseas operations and even told the goverment that they were not cornering anybody currency ...were they the father of transparency in goverment ...go CALLOWAY and taylor will be chinese driver ...see if you can read between the lines on this one

  • Report this Comment On September 25, 2009, at 2:55 PM, whatsupprahalad wrote:

    The dollar collapse is imminent. Mr Obama also agreed to the point of having another global currency sometime in April 2009 (World bank/IMF) meeting I think..

    - SDR (Special Drawing Rights) are being touted as the replacement currency.

    - SDR is the IMF(International Monetary Fund) Currency and is already being used within the IMF. Also since SDR is a virtual currency (dependent on a basket of currency) it will be immune to the push and pull of politics that is happening with dollar or any other currency for that matter.

    (chinese RMB)

    IF you are really looking for a safe haven I would suggest India over China..

    1. India is the largest democracy in the world.

    2. Has strong legal systems in place.

    3. India also has a vibrant stock market. Bombay Stock Exchange is the oldest stock exchange in Asia and has the greatest number of listed companies in the world (4700+) http://en.wikipedia.org/wiki/Bombay_Stock_Exchange

    4. Indian options market is also the largest by volume in the world.

    5. Most companies have promoter holdings and there are quite a few companies in MID CAP space which are strong companies selling at a discount.

    6. You can directly buy the midcap, large cap and small cap index which can be an excellent initial investment. (specially midcap and Small cap have deep value)

    I would suggest the following stocks as first cut. ( I really dont have an idea how to trade in Indian stocks..but it would be well worth the effort..)

    1. Gammon India.

    2. Venkys India (80% of indian poultry market)

    3. Camlin Fine Chemicals (world's largest Food Grade Anti oxidant manufacturer)

    Annual reports for companies are available on their website or govt run EDIFAR (Electronic Data Information Filing and Retrival System) website : sebiedifar.nic.in

    =happy investing

  • Report this Comment On September 25, 2009, at 3:01 PM, xscharm wrote:

    OK, economic wizards, what happens to the dollar if China falls apart before the dollar crumbles? China's grown fast and recklessly but its major source of blood (that being us) has dried up. Does China use its US$1-2 trillion to buy more gold, or? If you know the answer or just have a strong opinion I'd really like to hear it....

  • Report this Comment On September 25, 2009, at 3:54 PM, zildog wrote:

    Hey xscharm, before you posted did you stop to consider the fact that China has SURPLUS supplies of cash on hand???

    They buy US debt because in the end the US has to COME GOOD on those promises or else other things are going to happen!

    Please, don't remind me of a global war...please.

    America is screwed and when a drug junkie, on the last of his cash and strapped for options gets desperate, we all know and have seen the consequences so for all those concerned XSCHARM please read between the lines before commenting.

  • Report this Comment On September 25, 2009, at 4:14 PM, whatsupprahalad wrote:

    XSCharm:

    I think thats a good question. China is export dependent but with a billion people I am sure local consumtion increase of say 5% actualy translates to 3 times that number (China population 1 billion US population 300 million)

    I have'nt visited China but the fact that its a controlled economy I think it will be much easier to stimulate demand or contract demand.

    Chinese dollar reserves will most likely be pushed into

    - resources it will need (it can buy in today's dollar oil, coal, iron ore)

    - Influence (control over African states and their neighbouring country and in the world)

    - Financial Assets which will hold value SDR's (future reserve currency, Gold)

    The only problem with China is the controlled economy. Also Demand in US would mean consumer goods while demand stimulation in China could result in additional asset creation (property, stock market, gold).

    I dont think China will fall apart but there could be a slump in factories that produce consumer goods as demand stimulation might not increase consumer good consumption.. so there is going to be excess capacity of certain type of production facilities.

    I hope I got your question and hope that it makes sense.

    =happy investing

  • Report this Comment On September 25, 2009, at 7:15 PM, christ4me wrote:

    I am confident that the dollar will devalue and inflation will increase. I have no doubt at all about that. I am a bit frustrated with articles and reports that seem to indicate that it is some inevitable force coming upon the USA. That is NOT the case at all. It is the strategy set forth by the government and Federal Reserve to alleviate the burden of debt.

    The huge debt will shrink in relation to the money supply. $3/gallon for gasoline seems very expensive today for a citizen earning $60k/year but no more so than $9/gallon for gasonline for someone earning $180k/year.

    The devaluation of the dollar and subsequent inflation is a good and necessary event. It is the only way the USA can survive with its government spending money as if it grows on trees. It has no self-control at all. There is NOTHING patriotic at all about holding fixed-income USA equities expecting them to somehow grow faster than inflation.

  • Report this Comment On September 25, 2009, at 7:16 PM, shooter9mm wrote:

    Buy gold & silver, that I hear everywhere. If you really wish to buy metals for safety, I suggest a lot of Lead & Brass. Remember the world collapse in 2000, I still have a 1000 pieces or so of each & some powder to make them work more efficiently, just my thoughts............As far as Devon Div & Yield: 0.64 (0.90%) NAH I'll pass...........

  • Report this Comment On September 25, 2009, at 9:57 PM, JSinvestmentguru wrote:

    As the Fed continues to print the dollars, at some point the Chinese worker wakes up and says, "I can't work for 75 cents/hr any more, I need about $25/hr. At that point workers here start to feel like they can work for that....We must disassociate health care from the workplace and free small business. With increased workers and taxes, government can pay for the health care. I have a lot of investments but some debt, With the investments soaring and the debt at low interest, I think the old adage of paying off debt with cheaper dollars will return. We also will do that as a nation to China, Saudi, etc. They will have to raise their prices so I expect at some point for Exon, etc to rise. I don't see the doom and gloom as noted elsewhere on this board. Everything is going to be ok,,,J

  • Report this Comment On September 25, 2009, at 10:09 PM, supscro wrote:

    A compelling argument with some valid points. I always remain skeptical of advice from this site becaues about a year and half ago one of the writers recommended Washington Mutual for its triple dividend play. Where was the prophecy then???

  • Report this Comment On September 26, 2009, at 12:20 AM, jkellyca wrote:

    The forex markets like equities are made up of diversified opinions, but frankly, this near recommendation or comment on teh US dollar is one of the worst I have ever seen.

    The truth behind all market movements lies in trends and cycles and as the Great W.D. Gann (an American) stated over one hundred years ago - all market movements, ever major high and low (inflection point) and mathematically ALL price movements follow these laws and science.

    Anyone - and I do mean anyone who has a relatively decent handle on technical analysis and the mew science analysis of trends and cycles SHOULD tell you as I will now - the USDX or US dollar index is extremely close to a MAJOR BOTTOM and thus buying opportunity. FYI and the record there are al least THREE simple math and scientific ways of following trends and I would think these BIG NAME ADVISORS and teh MOTLEY FOOL quoted herein may soon be wearing egg on their face.

    Expressed more logically for the fundamentalist and logical mind - ALTHOUGH the USA is indeed in big monetary debt and problems - the simple fact is that OTHER G7 and G20 Nations are EQUALLY and in many cases EVEN WORSE OFF so frankly - the BIG PICTURE OR RELATIVE WORLD THEORY should be remembered.

    STRONG HINT - although the US$ trend has been down now for many months - a KEY REVERSAL IS NEAR and also FYI and the record - the only truth about future price movements including that of the US$ is in the CHART and thus the job at hand is to SPOT THE TREND and KNOW HOW TO QUICKLY SPOT REVERSALS.

    Summary - Follow the trend and CYCLES and NATURAL LAWS and not the so called GURUS who often have a self-interest.

  • Report this Comment On September 26, 2009, at 1:59 AM, mojo1871r wrote:

    honestly at 21 years of age theres not a lot of money i have lying around for me to invest but i must say that because of this crisis i was able to buy shares of stocks that were pennies of the dollar....stocks like aig and freedie more than tripled for me when i invested at 25 cents or 33 cents a share. so for me this is an awesome time to buy,,,,yes i know the U.S is in bad shaped but i dont beilive that we would fail...the economy must get better if other countries didnt beilive that then they themselves would not be investing

  • Report this Comment On September 26, 2009, at 2:01 AM, BarneyFrank wrote:

    Yabba Dabba Doooo! Rufus Paul Harris said this would happen back in January! A new basket of currencies, one backed by gold all interconnected to each other. This is old news fools. I'm gay and Rufus is my bed buddy. We're tight like that...in a brokeback kinda way I guess you could say.

  • Report this Comment On September 26, 2009, at 5:32 PM, jesatiu wrote:

    Report this Comment On September 24, 2009, at 6:29 PM, milleniummk3 wrote:

    milleniummk3,

    I'd like to offer you an opportunity. Send an email to me at terraverse.support@gmail.com.

    This isn't spam and I don't advertise any product or service, or have any mailing lists. I'd like your feedback on a personal matter.

    best,

    Jess

  • Report this Comment On September 26, 2009, at 7:53 PM, Oldfool666 wrote:

    "I've successfully scared the heck out of some of you"

    -- Well, isn't that what you guys are all ABOUT ???

    ...Keep the mouthbreathers scared, so they buy into your advice ??

  • Report this Comment On September 26, 2009, at 10:02 PM, amadeusfg wrote:

    In response to senmike. . . in regards to investing in Devon because they are so strong for the USA . . . do you know they are actively engaged into turning many USA heartland communities into toxic cesspools, drawing down their water tables and undermining the stable social fabric of many USA smalltowns ? And that's supposed to be good for America ? God help us. Ride your bike to work (rain, sleet or snow) that would be good for America.

  • Report this Comment On September 26, 2009, at 11:29 PM, xperio wrote:

    rferrari ! maybe look at countries who begin to raise interest rates. I think Norway will soon. I can have a depot with danish, swedish and norway kroner+us and cda$+the euro, but what I can tell you is that the cdn have gone down on the norway kr the last week to about 5,30-32 from 5,52, it has been 5.80 this year was down to about 4.80-90 last year, but I have some cdn$ also, cause I invest in a compagny listed in both norway and on TSX, called Questerre, QEC, it could hold one of the biggest NG finds ever in canada. They have the land and Talisman(TLM) as operator(+Forest), have farm out to some others like Junex(JNX), Gastem from who they get 50% working interest and they get royalties from all, well you must do your own deed. It's shale gas and 39% oil. They(TLM) have just begun a very important horisontal drilling. little by little the value will be exposed(30-35 Tcf recoverable til now). What I can say is that the scandinavians will folow this very close and they will take it high, higher than they have once=6-7cdn$. Last price was 2,45 low, finished at 2.50. It could go to 4-5cdn$ this year. A target at 41,55cdn$ has been rated. This should cover any dollar devaluation:) Risky ofcause, but read about it. Quebec, B.C. and Canada could profit from this find. Never heard about the Utica, San Lawrence Lowlands and Antler, Southeast Saskatchewan,Beaver River, Greater Sierra, also this year they bought a spot in the Horn River bassin. They have money, made private placements, but again read about it. Be in for long, 2-3 years. This was a free tip. Happy investments:) Buy on dips, but we could go for 14-16Nkr next=2.62-3cdn$ or if the results are good go directly to 20-25Nkr=3.75-4.68(it has been as high as 30nkr=5,63

  • Report this Comment On September 27, 2009, at 12:04 AM, PeterLCS wrote:

    If Warren Buffett publically announces that he is coming out against the dollar… once should think the opposite. Remember the BIG fish eating the small fish theory? It’s always work for the big fish.

  • Report this Comment On September 28, 2009, at 12:37 AM, parcore wrote:

    To invst in the Chinese currency is a good idea, but can anyone tell me if there is a chance in doing it with a currency call? As far as I know the Chinese currency is not free tradeble? Any investment ideas beside stocks are welcome.

  • Report this Comment On September 29, 2009, at 10:46 AM, tsmithe48 wrote:

    Does this also mean that US based mutual funds that are invested in international stocks can face the same demise?

  • Report this Comment On January 10, 2010, at 9:34 AM, TopAustrianFool wrote:

    This doesn't make any sense. If the dollar is bad shape, buy Yuan? Give me a break... The Chinese do not manipulate their currency? No... they right out of the Austrian School of Economics. Sure... The Fed prints money, but they keep an eye on how much money the other countries print and the Fed stays under that. Meaning dollar depreciates, but only at a slower rate than every other currency. Its a game and the Fed wins everytime. People loose because they are stealing money from us. But US govt is less of a thieve than anyone elsse.

  • Report this Comment On February 12, 2010, at 10:55 AM, khoonie wrote:

    If you read this article again carefully, it implies that if the dollar dips, US stocks will suffer. It doesn't work like that! Go and back-test data on USD and US stock performance, there simply is no significant correlation.

    Diversify your portfolio with foreign stocks by all means with Chinese stocks or whatever, but for pete's sake, don't do it out of fear just because someone says so and is trying to sell you subscription to a newsletter!

  • Report this Comment On March 08, 2010, at 6:06 PM, stan8331 wrote:

    There's nothing wrong with hedging currency risk - PM is a good investment on its own terms, in addition to offering an excellent currency hedge.

    However, for the dollar to have an apocalyptic collapse along the lines of what's being suggested here, the American economy would have to also see a total collapse. If the American economy heads south into another Great Depression, good luck finding any other world economy that won't be equally devastated. Pretty much all currencies are manipulated these days, and none of them are strong enough to stand on their own in the face of a worldwide Depression. In that scenario, any apparently shining oasis will turn out to be just a mirage...

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