[jively]

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Why should Ed have to be concerned about a major drop in the US dollar [...]


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Well there is taking advantage of the "tailwind" foriegn equity values get from the declining dollar.
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Also, with the Fed increasing rates and the EU unlikely to do so[...]

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How much longer will the Fed increase rates? How much longer CAN the fed increase rates? Not much longer I think. [...]

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Probably not many more increases, but everyone's figuring on [...]

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Whoa, why all the need to make forecasts? The dollar may go up or may go down - who knows? Who cares! It's still a great idea for US investors to invest internationally.

From 1970 to 2004, the S&P 500 compounded at 11.3% per year, with a SD of 17.2%. The EAFE Index (Europe, Asia, Far East) in US dollars compounded at 11.1% per year, with a SD of 22.4%.

A portfolio of 70% S&P 500 and 30% EAFE index compounded at 11.5% per year, with a SD of 16.9%. So over this time, diversifying with international stocks increased your return and lowered your risk, without having to make any forecasts about the dollar moving up or down. The dollar has flung around a lot over the last 35 years.

I recommend globally diversifying (we use 30% international), and never changing your allocation because of forecasts.

-Tom