Where America is heading and your investments

Soupkitchen

I am preoccupied in the direction that the USA is heading in. It used to be that the dollar was the currency that the whole world used for transactions. Now, I am thinking that it will lose value as the country, presided over by a madman, seems to want to transform the government into a dictatorship. Do any of you hold currencies other than the dollar? Investing in foreign currencies in the USA, such as FXF, Swiss francs, are still tied to the dollar when it comes time to sell shares. What about holding currencies abroad? I hold Euros, but am thinking of diversifying out of the dollar even more into different currencies. Any thoughts?

JD_co

Would gold still be an effective hedge in this unique environment?

hank

@Soupkitchen - I’m weighing in on this because you posted it in off-topic. As a rule, I do not make comments about Trump or other political figures in the investing section and reserve the right to edit or delete my comments should the thread be moved elsewhere in the forum.

I agree with your premise that the dollar will weaken under Trump. Madman or not -Trump courts public favor. Wants to be liked. He mailed out autographed tax rebates to virtually everyone during Covid with ceremony and had plans to send another had he been reelected in 2020. So, despite all the tough talk now, I expect looser fiscal policies under Trump. And there will be pressure on the Fed to pursue looser monetary policies - likely some kind of coerced remake of the FOMC and personnel.

I’ve not had good luck investing in foreign currencies. But my equity mix is skewed about 2-1 in favor of foreign holdings (which would benefit from dollar weakness). And I recently put a slug into RAPAX which is a real assets fund - a bit more conservative then TRP’s PRAFX, although the latter is probably a better (and less expensive) long term play. (Note - RAPAX is overweight real estate @ 45%). Some stocks may also do well in a more inflationary environment. Currencies are tricky. Can be very frustrating.

JD_co said:

Would gold still be an effective hedge in this unique environment?

Bill Fleckenstein still likes gold. Commented about a month back that he thinks the rally is in the 5th or 6th inning of its bull run. But Bill has been a gold bull for as long as I can remember. Personally, I’m not willing to risk very much on gold. Probably have a 5% weighting indirectly thru a couple more broadly diversified funds but nothing directly. But your question is a good one. I’d expect it will run a lot higher - but too much of a gamble for me. Gold tends to run hot and cold. Fun on the way up - horrors on the ride down.

Added. Don’t overlook a good conservative international bond fund like JPIB for safer money. Not a “gold mine”, but should move up if the dollar declines. Risk is minimal.

stillers

We easily could be on a collision course with a prolonged, buffoon-induced black swan market event.

Like what?

Like maybe the nation's/world's ATCs and pilots go on a strike until the buffoon issues a public, factual apology (that'll never happen) for his tragic blabbering about the cause of the mid-air collision.

And if not this one, there will absofreakinglutely be another incident coming to a podium near you where the buffoon obliterates reality and pi$$es off another group that is "tired as hell and...not gonna take it any more," while bringing world markets and investors to their (read "our") knees.



My investments? Oh, I significantly de-risked during the period of Election Day to EOY 2024.

Crash

Can't bring myself to retreat and pull most of my stuff from the Market. Today's swoon was predictable due to the unpredictable and petulant Orange Doink. Yet I now do own more in bonds than in stocks, by a bit. Adding to MM fund lately, not at risk in the Market. Hanging on for dear life for four years. We will have to survive and rebuild from the ashes. There is no integrity. We cannot believe a word of the Trumpian double-speak. At every moment, we are all being gaslit. "Clowns to the Left, jokers to the Right. Here I am--- stuck in the middle with you."

"Send in the clowns... Don't bother, they're here."
Just hang onto the truth, do not drink the Orange Kool-Aid.

Crash

Soupkitchen said:

I am preoccupied in the direction that the USA is heading in. It used to be that the dollar was the currency that the whole world used for transactions. Now, I am thinking that it will lose value as the country, presided over by a madman, seems to want to transform the government into a dictatorship. Do any of you hold currencies other than the dollar? Investing in foreign currencies in the USA, such as FXF, Swiss francs, are still tied to the dollar when it comes time to sell shares. What about holding currencies abroad? I hold Euros, but am thinking of diversifying out of the dollar even more into different currencies. Any thoughts?

Since I have a Canadian connection, I check the exchange rate often. Lately, it's bounced from $1.45 to $1.41 tonight. I don't see how that would do me much good, to get into the C$ --- because it takes a huge stash for these pennies to make a difference. Am I missing something? The euro is up tonight vs. the dollar, too: $1.0491. (Hell, I remember 2009, when it took $1.51 for me to buy a euro, when I was over there.)

Observant1

J.P. Morgan estimates the U.S. Dollar is near multi-decade highs (adjusted for inflation differentials).
U.S. stocks have outperformed international stocks for an unusually lengthy period.
Domestic vs. international stock performance tends to be cyclical.
Unhedged foreign equity funds may provide relatively attractive opportunities for medium to long-term investors.

Where is the U.S. dollar headed in 2025?