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my exchange to euros is now up 7.09 % as of this am.. wish I'd been more aggressive...

I remember it being 1.47 (some years ago)..I wonder where it could get to this time around. anyone got an informed guess ? LT I think it could appreciate easily another 10% in the short to medium term.. but the uncertaintl is challenging..

Currencies are extremely hard to predict, to say the least. I have done a lot of FX trading, and I've made money, but it's by far the most difficult and riskiest way I've made money.

One thing to bear in mind is that t he general first result of tariffs, if and to the extent that they come to pass, is to drive up the currency of the importing/tariffing country.

Short term weakness and turbulence may lead to dollar weakness, but there is going to be a strong wind blowing in the other direction soon. If absolutely forced to wager on whether the US dollar would be higher in a year, I'd probably say higher.

Short explanation: a US consumer needs to buy euros in order to buy a nice Burgundy. (the currency on the invoice and the currency that the transfer actually takes place in don't matter: the seller will sell the dollars and buy euros if the buyer didn't). Higher US duties mean lower US imports--that's the whole point, and it works. Lower imports mean lower demand for non-US currencies like the euros in that example. Lower marginal demand for the euro will push it lower relative to the dollar. There may be (will be) other forces pushing the currencies around, but that is what will happen in the proverbial "other things being equal" scenario.

Anybody with a non-zero amount of cash (whether savings or debt) is implicitly, and unavoidably, making a currency wager.

I can suggest a newsletter that is an excellent source of advice on likely currency directions among other things like global equity and bond directions, but I think it starts at about $15000/year. They sell to institutions and don't really have a price list for mere humans.

Jim

Thanks Jim for that full explanation. Very interesting to me. I have been forced to watch currencies as I own a home in France as well since 2 years.., so a fair proportion of my living expenses are in euros. its that I am trying to "hedge" , if you will. LT I agree with you on the longer term macro directional movement.

I have a couple of projects in mind for this summer as well, though the big one can wait ( I also cant find anyone to do it !! rehabilitate a very large "ancien cuisine" , so not too worried about that. On my 3rd contractor already for "devis" but they want to put in crappy cupboards (I cant change the space or the flooring) instead of rehabilitate...so I guess I can wait with that.:-)

I spend between 4 and 6 months there each year and its all very doable ( I am dual EU/US citoyen). Thats why I try to "hedge" a bit.

I guess I'm hoping to make a little on the side just to hedge and exercise my brain during this near term volatility.
good luck to all of us in these challenging times. so glad I am rock solid in BRK for the most part !

Jim,

Framing this statement ! its so obvious, I'm oblivious to it.

"Anybody with a non-zero amount of cash (whether savings or debt) is implicitly, and unavoidably, making a currency wager."

Thank you !

Sorry to butt into this euro conversation…

For a know-nothing US based investor with all USD assets trying to hedge against the dollar falling over time, would it be “easier/safer” to buy a basket of foreign stocks rather than foreign currencies?

I see the dollar has gained about 40% since around 2012 to today. Is it logical to think that the dollar could fall 40% over the next 10 years or so while the US struggles with its bad decisions? Cutting my purchase power (or net worth?) by 40% basically?

Sorry to sound so obtuse, but I am when it comes to thinking about investments globally. It’s been so easy to just let it ride for the last 30 years on Berkshire and cash, and what I thought was our stable currency. Now I’m in need of a quick education. Smh.

I'm in pretty much the same spot as cardude and would also welcome some education.

And I apologize, now realizing this is the non-us stock board and not about stock funds or currency funds. I’m way too stupid to pick single currencies or non-US stocks however.

there are foreign funds available in the USA eg in Fidelity, FIEUX is one. I tend not to use funds or even ETF's much, but depending on which brokerage you use, you can search google for names, of euro investment funds, or swiss, or whatever, and do your normal due diligence on them.

Some folks have posted their "non us stock" picks on here , (incl. mungofitch/Jim) that might be a start point for your own research if you cant find a suitable fund/s.

hope this gets you started. you can also buy currencies in Fido. GLTA

top 10 holdings of FIEUX , I dont think its too bad software (SAP) , top euro semi (ASML) I own that. good pharma's NOVO has slimming drug,
rolls royce and rheinmetall will benefit from defense expenditure increases.

Top 10 Holdings
Company Symbol Total Net Assets
SAP SE SAPGF 4.26%
AstraZeneca PLC AZNCF 3.57%
ASML Holding N.V. ASMLF 2.96%
Novo Nordisk A/S Series B NONOF 2.70%
Shell PLC RYDAF 2.48%
LVMH Moet Hennessy Louis Vuitton SE LVMHF 2.40%
RELX PLC RLXXF 2.35%
Rolls-Royce Holdings PLC RYCEF 2.08%
UCB S.A. UCBJF 1.99%
Rheinmetall AG RNMBF 1.99%

european defence stock ETF on bloomberg.. I dont have access but this might be another possibility if you wanted sector exposure . again you need to feel comfortable in the defence sector . business wise I think its good, but it has to pass one's ethical filter on investments.

https://www.bloomberg.com/quote/EUAD:US?utm_medium...

For a know-nothing US based investor with all USD assets trying to hedge against the dollar falling over time, would it be “easier/safer” to buy a basket of foreign stocks rather than foreign currencies?

Sure.
If one is holding any financial asset for a reasonable length of time, it's the estimated real rate of return that matters. Companies have earnings, currencies usually don't. (inflation usually wipes out the interest rate, or most of it), so owning companies will offer a higher return...over time.

Personally I'm annoyed with what a bad deal most funds are, since most of them are cap weighted. If you can find something equally weighted (or almost anything but cap weight), and ideally with a tilt towards higher ROE firms, it would probably make a fine long term hold. It might do better than US stocks, or it might not, but it would be a certain amount of real diversification. The US administration has a firmly stated goal of dollar depreciation, so it makes sense not to dismiss the idea out of hand. They might accomplish their goals, they might not, but it would be silly to ignore them entirely.

The issue isn't where a company is based or where its stock is listed, but where their revenues come from. In the event of any possible problem with the dollar, better to have a US stock with mostly non-US revenues than a nominally non-US stock with mostly US revenues.

I think there are (relatively) more risks with US regulatory issues, broadly speaking, than with the US dollar per se. Tariffs tend to be positive for the currency of the country introducing them, but poor for their economy. That being said, a country can always drive its currency down by issuing more currency, if they are *really* determined.

Short term moves are not predictive, but the US dollar index (what a buck is worth compared to the other currencies with which the US trades) is at almost spot on 100 now. It was at about 108.25 on January 6, which I think was inauguration day. Generally speaking, a drawer full of US $100 bills has general purpose purchasing power 8% lower than it did then. This is true no matter what country the drawer is located in. Whatever your stock portfolio did since then measured in dollars, subtract another 8% to see how it did in general purchasing power for "stuff".

All that being said, I'm pretty cash heavy. I bought a lot of British pounds, a currency which has been gently rising against its trading peers for the last 8 years and offers interest rates of around 4 to 4.5% for almost any duration you choose. For now, I decided that's not such a bad place to park some money.

Jim

Thanks so much.

Lest the mention of inauguration day seem political, this site pretty much agrees with the numbers you quote, and also shows that sharp moves are not infrequent
https://tradingeconomics.com/united-states/currenc...

But the 'falling off a cliff' nature of the most recent part of the curve resonates with today's FT headline "Liquidity worsens in $29tn Treasury market as volatility soars", with their graph showing a bigly surge in yield of ten year and of thirty year U.S. bonds. If you squint, the currency curve looks pretty pandemic-like, where the Fed had to step in to preserve liquidity (the president of the Boston Fed was quoted in today's NTtimes as basically say "all is cool, but if not, we're here"). Gillian Tett has posted a couple of times in the FT about a possible contribution from very highly leveraged 'basis trades' on treasuries placed by hedge firms of an estimated trillion plus dollars, that are not going the way they had planned, and so they're trying to unwind them https://www.ft.com/content/d5986c38-6c60-4869-b28a...

I've frankly paid little attention to currency and related implications in the past, in terms of my portfolio. Perhaps because I'm in the U.S, the dollar was the reserve currency, and U.S. treasuries were the haven in a 'flight to safety'.

But that may be changing.
Peachy.

The Fed intervening to reduce instability in the economy seems fair enough.

I hope they are not going to intervene to reduce hedge fund losses.

For a know-nothing US based investor with all USD assets trying to hedge against the dollar falling over time, would it be “easier/safer” to buy a basket of foreign stocks rather than foreign currencies?

PS

One possibility one might consider having a look at is is one of the funds that tracks the "MSCI World EX-US Equal Weight Index". This tracks large equities in Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the UK.

I can't find a fund in the US (ETF or mutual) that tracks it, but there are several in Europe. One ETF is IE000OEF25S1 from Invesco. I find conflicting information on line, but a US person may be able to buy a UCITS ETF. (a registered European fund). You may have to be a "qualified investor" under US rules, and/or you may need to have a broker who is that more worldly than most.

Many European UCITS funds reinvest all the dividends. I really have no idea what the tax implications of that are for a non-European investor. It might simplify paperwork even if there is no tax advantage.

Note, there is another index with *almost* the same name, MSCI ACWI ex USA Equal Weighted Index. The "all countries world index" variant means you get a lot of Chinese stocks as well. I wouldn't go for that one, myself,. so skip it if it has the "ACWI" part in the name.

Top 10 holdings recently
Company/country/weight in this fund/weight in the cap-weight index/sector
SAAB B SE 0.19 0.07 Industrials
RHEINMETALL DE 0.19 0.33 Industrials
THALES FR 0.18 0.13 Industrials
DASSAULT AVIATION FR 0.18 0.03 Industrials
SINGAPORE TECH ENGR SG 0.18 0.04 Industrials
LEONARDO IT 0.18 0.10 Industrials
KONGSBERG GRUPPEN NO 0.17 0.07 Industrials
ELBIT SYSTEMS IL 0.17 0.05 Industrials
E.ON DE 0.17 0.18 Utilities
JDE PEETS NL 0.16 0.02 Cons Staples

About 20% industrials, about 20% financials, the rest pretty diversified.
Largest country weight is 24% to Japan. But of course no company-specific concentration...largest is 0.19% of the fund at the last report I found, as there are 776 holdings equally weighted.

Jim

Fidelity withdraws foreign taxes paid when any dividends are paid out,on that day. I have never seen cap gains taxed in Fido. That is declared at tax time.
(US taxpayer here)

One possibility one might consider having a look at is is one of the funds that tracks the "MSCI World EX-US Equal Weight Index".
I can't find a fund in the US (ETF or mutual) that tracks it, but there are several in Europe. One ETF is IE000OEF25S1 from Invesco. I find conflicting information on line, but a US person may be able to buy a UCITS ETF. (a registered European fund).

Sounds interesting, but the ETF from Invesco that you suggest is not “ex USA” and unfortunately I can't find any other ETF that tracks the “MSCI World Ex-USA Equal Weight Index” (UCITS would be suitable for me as a European anyway).

<<One possibility one might consider having a look at is one of the funds that tracks the "MSCI World EX-US Equal Weight Index".
I can't find a fund in the US (ETF or mutual) that tracks it, but there are several in Europe. One ETF is IE000OEF25S1 from Invesco. I find conflicting information on line, but a US person may be able to buy a UCITS ETF. (a registered European fund).>>

Sounds interesting, but the ETF from Invesco that you suggest is not “ex USA” and unfortunately I can't find any other ETF that tracks the “MSCI World Ex-USA Equal Weight Index” (UCITS would be suitable for me as a European anyway).

Yes, I couldn't find an ETF using the MSCI World EX-US Equal Weight Index, either.

The World equal weight is interesting, though, as a one-fund solution:

MWEQ Invesco MSCI World Equal Weight UCITS ETF Acc
https://www.invesco.com/lu/en/financial-products/e...

United States
39,22%
Japan
14,57%
Canada
6,17%
United Kingdom
5,63%
France
4,33%
Germany
4,06%

Compare to cap-weighted VT Vanguard Total World Stock ETF:
https://investor.vanguard.com/investment-products/...

United States
62.70%
Japan
5.80%
United Kingdom
3.50%
China
3.40%
Canada
2.70%
France
2.30%

Have you looked at VEU Vanguard FTSE All-World ex-US ETF?

Exp ratio 4bp.

The largest country is Japan at 15.6%, all others are below 10%.

Europe is 40%, Emerging Markets 27%, Pacific Region 25%

https://investor.vanguard.com/investment-products/...

Have you looked at VEU Vanguard FTSE All-World ex-US ETF?

Jims idea was ...having a look at one of the funds that tracks the "MSCI World EX-US Equal Weight Index"...
but all funds are "MSCI World EX-US" OR "Equal Weight" but not both.

Unlike QQQ or SP500, VUE is not excessively overweight a few stocks.

TSMC is the largest at 2.2%, Tencent is 1.3%, everything else is below 1%. The top 10 positions are below 10%. While Tech stocks dominate the top 10, pharma, food, luxury goods and oil and gas are also represented.

Unlike QQQ, you are not overly exposed to a handful of stocks in a single sector.

An equal weight world ETF, even if available, will likely have a much higher expense ratio than VUE’s 4 bp which will very likely lead to underperforming VUE.

I respectfully suggest that VUE is a good enough choice for non-US equity.

One possibility one might consider having a look at is is one of the funds that tracks the "MSCI World EX-US Equal Weight Index".
... One ETF is...
...
Sounds interesting, but the ETF from Invesco that you suggest is not “ex USA”

Sorry about the specific reference, failure in googling.
I think (?) I was able to find four European UCIT funds that track the ex-US equal weight index. But again, maybe even that was a failure in googling.

The all world equal weight might suit some folks, but of course it's not going to have relevance to anyone's goal of ex-US strategies.

Personally I am a big fan of rolling your own index rather than buying a fund. Get a broker that lets you buy stocks individually, and spend a weekend doing your own equal weight index. No management fees, and you can skip a few firms or industries or countries that you might find odious. You can give it a little bit of a "tilt" if you like, for example emphasizing higher-than-average ROE firms. (in the US in the last 30 years, the top 1/4 of stocks by ROE equally weighted beat the S&P 500 by around 2.7%/year...who doesn't like a tail wind?)

Jim

I share the desire to be ex-US and not overweight a handful of stocks.
But what is the forecast for VEU, both the reasoning behind, and the estimate of, future returns?

The past results have not been stellar (from 2007-03-08):
Annualized Return 3.74%
maxDrawdown 61.52%

There have been some better sub-periods e.g. from 2023 on
Annualized Return 11.34%

If take a typical investor's horizon, say 3 years, and look at annualized return over rolling 3 years, then the median (as well as mean) is about 4.5%

Jim wrote: <<Personally I am a big fan of rolling your own index rather than buying a fund. Get a broker that lets you buy stocks individually, and spend a weekend doing your own equal weight index.>>

As it turns out, that's what I'm doing now, or at least trying to. I'm a US citizen, residing (for all of my 76 years but perhaps not in the next 76) in the US. I've opened a Schwab Global account, which permits me to exchange dollars for common currencies and purchase many non-US stocks directly. I'm researching those stocks now (using a variety of tools but relying largely on M* reports on ADRs and summary stats via Yahoo! financial). For various reasons, I'm focusing on shares of European companies that do not rely heavily on sales to the US and/or have good moats, should tariff wars come to pass. I'm also trying (somewhat) to diversify across sectors.

Thus far, my list includes (in no particular order, and with awareness of the French bias):

ASML
SAP
Schneider Electric
Dassault Systemes
BNP Paribas
AXA
Orange
ENGIE
Carrefour
Hermes

I'm all eyes if anyone has comments/critiques, either to stocks on this list or ones that are not but probably should be. Thanks.

other than ones I already posted :

RACE
NOVO
BHP
ENB
ASML (new continuing buyback program just announced 3 days ago ) .

I think :

Airbus,
siemens and
ST Microelectronics
Rheinmetallschaft
Saab
(semicons and defence spending)

are worth a look. Have not gotten around to them yet myself as I dont have a global account yet, I think the poster who brought up

GRG.L (greggs bakery) is also a buy and hold.

Good Hunting !

Thanks. Siemens and STM are on my list. Fine companies and fit my criteria, but the stock prices don't look compelling right now. Of course, I'm quite likely wrong about that.

RACE looks bulletproof.

I'm kinda steering clear of pharmas and healthcare. Again, probably unfounded.

you may make out on the currency as well as the stock price.
I remember going to Catania for STM, and searching for office space in Dresden near Siemens. the whole mayors office came with us and set everything up . Lunch was at a wienscloss, and it was cucumber and egg sandwiches on white bread with green wine... the wall had been down about 10 years. amazing experience.

I'm all eyes if anyone has comments/critiques, either to stocks on this list or ones that are not but probably should be. Thanks.

Random thoughts

I'm not fond of banks and insurers unless you know them well, and have the SKILL to know them well. (it took me years of study to be able to realize that I don't) I would not own BNP for that reason. Doubly so for insurers, who have the means, opportunity, and motive to under-reserve and in effect legally cook the books for years. You never know if something is going to come back to bite you, unless you really really know and trust management and their skill and incentives. So, I personally don't know AXA to be in that category.

Telecoms providers have similar problems...for businesses whose primary function is moving bits from A to B, they tend to have no control of their pricing, yet a ton of capex and real depreciation expense. Don't ever look at the EBITDA of a firm like that, you'll get sucked in. So I would steer clear of Orange, myself.

So much for the disadvantages of your list. Other more constructive random notes:

I think the sell-off in booze is a bit overdone. Yes, people are drinking less. But no, alcohol is not going away.
See recent post https://www.shrewdm.com/MB?pid=448539467

If you're concentrated in France, it's hard to miss the attractions of the luxury business. LVMH, Richemont. Their prices go up and down with hemlines, so I guess you want to be careful picking your entry point. But I suspect there are some very good businesses in this list https://quartr.com/insights/company-research/the-1...

Ever looked at Investor AB?

I think there is some merit to a "shotgun" portfolio of small positions of all companies in an index that have the highest ROE (if not relying too much on leverage), say the highest 30%. Hold for a year or two, cull those no longer passing the tests (in the index and high ROE), replace with fresh firms with high ROE. I don't know how this would have worked ex-US, but it would have worked very nicely indeed with American firms. For other countries, it's sometimes good to insist on a meaningful (if not high) dividend. Management in many places has a habit of ensuring that the good results of a good business don't reach minority shareholders. France is more like a developing country in this regard; you can be a little more trusting farther north.

Jim

Mr. Fungi (and others)
article today in the Times on Airbus re-org.one of the stocks in my "worth looking at list)

https://www.thetimes.com/business-money/companies/...

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