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I see a lot of people out there (at least on CAPS) who are bearish on the U.S. dollar, yet they are short all sorts of stuff. Being short U.S. stocks and bearish on the dollar at the same time seems inconsistent to me.

The recent weakness in the greenback has actually pushed the S&P 500 to its most affordible level ever relative to other markets. According to a this Bloomberg article,

The S&P 500 is priced at 19.9 times earnings, the biggest discount to the MSCI World Index of 23 developed countries since May 2003, according to monthly data compiled by Bloomberg. For Europe-based money managers, currency translations push the average cost for a dollar of U.S. profits down to 13.6 euros, the lowest level ever relative to global equities and a discount that investors in America have never enjoyed, data compiled by Bloomberg show.

Overseas investors that hold almost $2.5 trillion in U.S. equities are getting a bigger slice of corporate America with each euro, yen and pound they spend just as S&P 500 companies from PepsiCo Inc. to General Electric Co. post higher overseas sales. While more losses in the dollar would cut returns, the last time U.S. stocks were this inexpensive, in 2003, the S&P 500 began a four-year, 62 percent advance.

If one expects the recent dollar weakness to stick, or for it to continue to weaken it doesn't make sense for them to be short U.S. equities as well.

Rallying S&P 500 Never Cheaper in Europe on Dollar

Global Gains Home Fool
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