How low the U.S. dollar?

by | Feb 13, 2004 | Archives

About two years ago a message at this site reviewed my portfolio when I was holding about 40% in Euros. My goal then was to balance my portfolio’s purchasing power, plus earn the higher interest rates that Euro’s paid.

This Euro portion of my portfolio has appreciated dramatically and my advisors have recommended that I increase it to 50%.

Here was my reply:

Regarding our cash reserves, I still am not too comfortable adding more euro. I know this could lose some extra profit and everyone says it will rise further and I remember well the U.S. dollar's big fall in the 70s.

Yet when I look at the huge deficits in Germany and France, I hold back. The strong yen is a question in my mind as well with the Japanese deficit being the largest of any industrialized nation at over 7% f GDP. These fundamentals are very different from the 70s when the US had a huge deficit but Europe and Japan were then sensible. I am probably wrong but cannot commit too much to something where I do not see fundamental support.

I expect (and already see) a lot of inflation here and everywhere, but feel that our added investment in business and real estate will protect us. I may leverage a bit on the real estate side as well while interest rates are low. As an investment I am looking at a couple of apartments ($200K) here in Naples, plus I am looking at the potential of lending to one of the magazine owners who wants to buy another successful Natural Awakenings magazine so I am holding this liquidity for a moment.

See tomorrow another reason why to be cautious of the falling U.S. dollar.

Until then, Good investing.