Evaluating Managed Funds

[DesertCat]

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Probably not many more increases, but everyone's figuring on at least one more. At that's 1 more than the EU plans. With the deficit increasing this year the Fed tightening of the money supply has managed to strengthen the dollar.


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I don't believe that fed interest rate increases directly impact the dollar much. I believe the fed has increased rates something like 13 times over the last few years. This year, the dollar went up, last year and previous years it went down. I think the clearer correlation is dollar inflows/outflows caused by the deficits and the tax repatriation bill. I think there is a much clearer correllation between Clintons balanced budgets and strong dollar, and Bush's deficits and weak dollar. The one exceptional year to the deficits argument is this year, the year of repatriation.

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FWIW, I just don't think rising/declining dollar is much of an issue for someone with there money in US markets.

It might be a reason to get into europe markets.

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I'm an active investor so I pretty much ignore the dollar. I don't feel I have the time or ability to invest internationally and am getting good returns in the U.S. market.

But if you are a passive investor, I think it makes sense to invest some of your portfolio internationally, say 20% or so just for broader exposure. An index fund is only useful if it gives you broad exposure to the market. Well there is more than a U.S. market, so why skip international exposure for your portfolio? That's the basic argument.

But the "world is coming to an end argument" is, as long as the U.S. runs large deficits, why not keep some of your money where investments don't lose purchasing power because of their currencies? Because of our deficits, if I was a passive investor I would definitely consider upping intl. exposure to 30-40% or more.

At least until we elect another Republican president like Clinton who'll balance the budget [img]/images/graemlins/grin.gif[/img]