[Derek in NYC]

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Buffet has lost his shirt betting against the dollar.

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Perhaps we have different definitions of the word "shirt."

Here is a quote from Mr. Buffett in BRK's 05q3 10q:
"Berkshire first began “shorting” the U.S. dollar in 2002 and since inception in 2002 through September 30, 2005, has recognized pre-tax gains of $2.1 billion from foreign currency forward contracts."

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If you're going to quote the 10Q, please quote all of it. "During the first nine months of 2005, the value of most foreign currencies decreased relative to the U.S. dollar. Thus, forward contracts produced pre-tax losses in 2005 of $897 million for the first nine months." It is widely known that Buffett lost $1B last year shorting dollars.

My point was this. Moving into non-dollar investments might make sense as a long-long term issue, but as a short term macro factor, you can be dead wrong. One reason is that, so long as the current account deficit continues, Asian central banks will pile up dollar reserves. If they sell them, they screw themselves because the value of their holdings decline. Thus the Asian central banks continue to buy Treasury long bonds, and will continue to do so for the forseeable future.

Second, even if the dollar were to decline against other currencies, for a domestic investor who pays for things in dollars, it's not the sort of issue that immediately hits your pocketbooks. Over the longer run, you will see a weaker dollar reflected in the form of more expensive imports, and possibly, inflation, but from Ed's point of view, dollar investments arent necessarily a bad thing short term.