Subject: Re: OT for Jim: ANCTF
Is there a simple “currency hedge for dummies” for US-based folks like me holding mostly Berkshire and cash, all in USD?

I presume your thinking here is that you think the US dollar will/might fall. The problem is that currencies are about the least predictable things there are, so I would be hesitant to recommend that anyone go down that road. As with any "hedge", one side of the position will always lose money. Very few people are comfortable with that--it takes a lot of practice to only ever look at the sum of the two positions.

If you just want to do it for a reason that doesn't actually involve a prediction, like a bit of diversification which might protect against a possible and potentially unexpected and large US dollar slide, the simplest hedge is to convert your USD cash to something else. I swapped a lot of mine for GBP lately, but various currencies have their pros and cons. You can also borrow US dollars and use them to buy something. You could buy a different currency, but you'd probably be richer buying equities of companies whose revenues are largely in a non-US currency. It's a good reminder that anyone with a non-zero cash position, positive or negative, is making a wager on currencies whether they realize it or not.

A very mile approach is to buy stock in good companies with very large percentages of their revenue in currencies other than the dollar. It doesn't matter where the stock is listed, or where their headquarters are.


After Brexit, didn’t the pound fall significantly? Is that a good comparison to what the US is going through?

This is the popular narrative. Technically, yes it did--but not in the logical this-follows-that way that most people think. If you look at a longer term view, the trade weighted pound was remarkably flat for many years before and after Brexit, except for a little rise before, which unwound just after. The 2016 drop (unwinding) is what makes all the headlines, but the trade weighted pound level after the drop was surprisingly close to its typical level 2009-2013. It's actually a bit higher than that pre-Brexit stretch now.

Some folks feel that current US policies in aggregate will drive the dollar up, for a while, then down later. The reasoning is compelling, but your mileage may vary...see comment above about near total unpredictability.

Jim