Q. If I want to bet the continued fall of US dollar, how should I adjust my investment?
A. In the current environment, investing in foreign stocks have two major benefits:
1) Foreign stocks are less expensive than stocks n the U.S.
2) Foreign stocks benefit from rising foreign currencies.
The chart below illustrates such benefits:
Since the start of 2017, Germany iShares outpaced the DAX by 20%. That was mainly due to a 16% gain in the euro. UK iShares outpaced the FTSE by 18%. That was largely due to a 12% jump in the pound. And that was mainly due to a falling dollar. Which demonstrates that foreign stock ETFs are one of the best ways to benefit from rising foreign stocks and a falling dollar.
A. In the current environment, investing in foreign stocks have two major benefits:
1) Foreign stocks are less expensive than stocks n the U.S.
2) Foreign stocks benefit from rising foreign currencies.
The chart below illustrates such benefits:
- The blue line is a ratio of Germany iShares (EWG) divided by the DAX Index.
- The red line is a ratio of UK iShares (EWU) divided by the FTSE Index.
- The green area is the US dollar.
Since the start of 2017, Germany iShares outpaced the DAX by 20%. That was mainly due to a 16% gain in the euro. UK iShares outpaced the FTSE by 18%. That was largely due to a 12% jump in the pound. And that was mainly due to a falling dollar. Which demonstrates that foreign stock ETFs are one of the best ways to benefit from rising foreign stocks and a falling dollar.
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