overseas stocks in recession?
i have a good portion of my stocks in overseas funds. they typically perform well although they are considered to be aggressive. their performace has dramatically slowed down and with the weakening dollar, i'm wondering if i should take a more conservative route like money markets or mutual funds. any thoughts?
Public Comments
- To properly answer your question,I would need to know what overseas funds you have.In general,the weakening dollar is good for the performance of international stock funds.
- A weakening US dollar increases the value of foreign investments when you measure their value in US dollars. And if you think that the US dollar will decline further. Then you should put more money into something that isn't tied to the dollar, such as gold or foreign bonds. But if you invest in foreign stock markets. Then you may gain on the weakening US dollar and loose on declining stock prices. And in the end you may end up loosing money instead of making it. In a global economy, domestic and foreign stock market price movements are correlated to a high degree. And this means that when US stock markets go down, foreign stock markets go down also. The direction of all stock markets is more or less the same everywhere. But the amount of price increases or decreases varies from one place to another. It may be more profitable to invest your money in a foreign stock market that often changes by a large amount. Of course, such investment is also more risky, because that tendency to change more may lead to bigger losses too.
- This is a very difficult question to answer with any assurance that the answer is going to be worth more than the electons it costs to send it. As one responder has already pointed out, with the dollar falling investments based in foreign currencies have advantages. As you have pointed out foreign investment performance has indeed dramatically slowed down (actually fallen might be a better term) For the time being there is global financial panic which owes its origins to corporate greed and stupidity and Alan Greenspan. There is not a small chance that this house of cards built on Greenspan's 1% interest rates has not finished falling down. There is also not a small chance that before it has completed its collapse the U S economy could be in very serious straights. Gold is not trading near $1000 an ounce because everything is in fine shape. It is trading at that level because things are not good. Money funds are only a lesser of evils. With inflation running at 6%++ percent and rising rapidly and money funds paying 4% and dropping rapidly and taxes taking 1/3 of that they are no bargain. Of course loosing only 5% annually does beat loosing 30% annually. I am somewhat of the opinion that maybe investing in TIP might be an option. And investing in GIM another option. And investing in oil a 3rd option.
