ok, so the dollar depreciated but has any one read anything about what the G7 plans to do if they can float their currencies like they want? do they want more power to appreciate their currencies against the dollar? Was todays market a result of foreign investors jumping or mostly a confused, American reaction? Cause if the dollar stays down that should mean a tough short-term market but means good things for the market overall. just wondering if anyone knows more than what they wrote on yahoo, thanks
Basically my interpretation is the U.S. will allow the dollar to free fall quite a bit, which is very bad for domestic companies who do not export, but good for companies who export most of their goods. As far as the stock market is concerned, a falling dollar is no good. If you were an investor in a stock, and the dollar lost 20% of it's value, but your stock went up 5%, how would you feel? You picked a good company but monetary complications stuck you with a real loss. The stock market must outperform by a large degree to the insidious devaluing of the purchasing currency! This means we need monster earnings, and given valuations and projections they just aren't there. I'm a trader so I'll take what I see in price action and work with that, but from a fundamentals standpoint this is really bad news. I would say it's not a bad idea to hedge with gold or some other currency if you have a significant mid-long term stock portfolio. Goodluck,