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I’ll take today’s euphoria as a sign to start feeling anxious. All of the talking heads can’t agree on anything; recession vs inflation, credit crunch vs global growth; there are a dozen different viewpoints on either side of every argument. Except for the ever-weakening USA dollar. Nobody is forecasting anything other than continued weakness against just about every other currency out there.

As a strong ‘globalist’ (both politically and economically…) I believe that most folks are far too cautious with their 10 or 15% invested outside of the USA. I’m closer to 40% with my mutual funds and even my domestic individual stocks all have strong global operations.

But I’m beginning to wonder if that really offers me adequate protection against a dollar in free-fall? Even if GE earns 40% of their profits overseas, my investment is still denominated in USA dollars. When the dollar collapses, so does my investment, even if GE made 80% of their profits overseas. (and I take no solace in the fact that purely domestic transactions shouldn’t be affected by a weak dollar. Example : “If a coke cost a dollar today, and it costs a dollar tomorrow, who cares that the dollar is worth less against foreign currencies tomorrow?” - Sorry, but that argument stopped being relavent about the time NOTHING in our stores had a “Made in the USA” sticker; it’s a global economy and nothing is self contained anymore, least of all our economy.)

To wrap this up, what danger would an investor face if he moved HEAVILY out of USA stocks and into stocks valued in other currencies? In this modern interdependent world economy I can’t see any situation where the econmies of the rest of the world fail while the USA remains strong. But I can imagine a situation where the USA dollar trades evenly for pesos. Other than false pride, (those big foam fingers that shout out “USA #1!, #1 what? #1 debtor?) what might be lost when moving most all investments into foreign stocks/currencies? If good, solid investments can be found not tied to our dollar, why not move there, heavily and soon?
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When Life Gives You Lemons
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