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Stocks B / Berkshire Hathaway


Subject:  Re: Stock Picking Getting Harder Date:  11/24/2017  1:10 PM
Author:  OrmontUS Number:  232796 of 250452

Actually, JeanDavid is absolutely correct. I probably misused the term "risk". I have, for many years kept funds in foreign currencies abroad as a hedge against unforeseen disaster in the US. Unfortunately, while the US remains the biggest tax haven in the world, the aggressive actions of the US Internal Revenue Service against foreign banks has turned US citizens into pariahs in many jurisdictions. My accounts and activity has always been above board, reported and taxes paid (but I guess I am in the minority?).

There is also the obvious(?) fact that currency valuations are basically ratios, rather than measured against any absolute benchmark (like gold, in previous years). It is hard to separate the "value" of an asset from what it's worth in your native currency and similar to how most foreigners still do arithmetic in their native tongue, unless you travel a lot, it's hard to think ion terms of a foreign currency without doing the conversion to your native one to establish the value of an asset. I think Jim uses something he calls the North Atlantic buck which is a composite of the USD, CAD and Euro. I admit to rationalizing my holdings in USD, but am willing to use other currencies (and other domiciles for them) as a way to hedge against both geographical and currency issues. Since this strategy doesn't always necessarily work to one's financial advantage as measured in terms of "home" currency (though, so far, so good), there is risk involved as well as potential benefits. That was the risk I was referring to, rather than the alternative risk of having all of one's eggs in a single basket.

The origin of the Swiss position is that it is a vestige of a much larger CHF holding which, while reported to the IRS etc., I was no longer allowed to hold in Switzerland (Swiss banks got paranoid about Americans after the UBS thing and after moving from bank to bank, it just didn't work anymore) . I moved it to New Zealand, where it was eventually assessed at a negative interest rate and they were giving me a hard time as an American, so I transferred to Interactive Brokers and, again because of what amounts to a negative interest rate, converted most to USD (paying a substantial capital gain) and bought stocks with the rest.

The origin of the Australian position was when I noticed that, during the financial crisis, the Aussie dollar was at about $.60US and one of their banks (Westpac) was paying 8% on five year term accounts. I moved a load of USD (about 10% of my net worth) into the currency. Much has been repatriated (again paying capital gains) into USD, but I put some of the interest payments into Aussie shares (again at IB).

Incidentally, I also keep a multi-currency account in Hong Kong (in HKD and RMB) "just in case". It also offers the opportunity to invest directly - either in Hong Kong or Shanghai, should I decide the time is ripe.

Hope that explains more than confuses.

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