Polliesdividend

A stronger Dollar, Good or Bad??

Yesterday the Euro had fallen just beneath the $1.05! If I’m not mistaking, last year the Euro was still worth $ 1.39. Wow what a decline. And if I read all the blog post, articles and opinions of ‘experts’, this will go on for a while.

And I always try to look at the bright side of live! So the benefit of it is that my Vrijheid Fonds will be worth more. Because I will get more Euros for every dollar stock I own. Yippee and with almost 40% of my portfolio in Dollar stocks, this will be serious money.

However…

I personally do not like a strong dollar for two reasons. First, a trip to the US will be much more expensive for me. But this is the pleasure side of life.
On the business side, my second reason: A strong dollar is in my opinion not good for companies/multinationals that depend on foreign sales. If your currency gets stronger, within a short period of time, in relation to the currency of your most important business partner, I think it is not good for your export. For instance, for US companies it will be much more expensive to sell goods in the European Union or Japan for instance. And because the US is an exporting country, this will be felt. The profits of these companies will be influenced in a negative way.

Look at the list of Dividend Aristocrats. The majority of them are real multinationals. They get their profits from all over the world. A stronger Dollar (the currency of their financial statements) will be hard on them.

So how long does it take before the Fed will take action?
Or will we reach Dollar – Euro parity?
Is a strong Dollar Good or Bad?

A lot of questions in my head. But no answers. What is your opinion on the rising of the Dollar?
I like to hear from you.

And remember: This is just a blog post from a normal European guy, with no professional financial education. So what do I know! I’m not an expert. But I see it is affecting my Vrijheid Fonds, in a positive and negative way.

Cheers,

Pollie

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8 thoughts on “A stronger Dollar, Good or Bad??

  1. roadmap2retire

    As a Canadian who has felt the effects of the strong US$, I am in the same boat as you. Luckily, I invested heavily in the US companies over the past few years and I am seeing the benefits now. The strong dollar is a double edged sword imo, but overall, I think its bad for the economy – as it puts deflationary pressure on oil, gold etc. And as your mentioned, global companies based in the US will see their earnings decline becuase of the reduced overseas revenue.

    Its a good time for the Americans to shop overseas, whether to travel (lookout for more Americans visiting this season, Europe 🙂 or just buy assets. I wouldnt be surprised to see them buy up real estate and other assets outside US, now that the currency conversion is in their favor.

    As for us international investors, investing in the US becomes more dearer, but we can benefit from the earlier investmetns we made when the US$ was cheaper. Maybe its better to look closer to home for investments?

    R2R

    1. polliesdividend Post author

      Hello R2R,
      Thanks for taking the time to write a comment. I see we are in the same boat.
      And yes we can benefit from our earlier investments when the dollar was cheaper.
      And I agree it is a good time to look closer to home.
      A fellow blogger (No More Waffles) compiled a list of Euro Dividend aristocrats. I will take a closer look in the next couple of months.

      This month I think I will buy another US company from my watch list.
      I’ll keep you in the loop
      Cheers,

      Pollie

  2. No More Waffles

    Pollie,

    Even though the Dollar got stronger, the difference with the Euro is the result of the weak Euro and not because of the Dollar. Just look at the EUR to CHF or EUR to GBP exchange rates and you’ll see a similar picture.

    As a European investor it makes investing overseas a bit more expensive, but the advantages are also quite to my liking. European companies are going to make tons more money now that importing goods became cheaper. That’s why I’m looking to EU markets for the foreseeable time.

    Cheers,
    NMW

    1. polliesdividend Post author

      Hello NMW,
      I agree with you. Our economy is not that good at this moment.
      And that’s way the euro is weak.
      At this moment i also look at european stock. Pref euro stocks. Your list really helps me!

      Cheers,
      Pollie

  3. DivGuy

    As a Canadian, I experience something similar. Canadian dollar has gone down and down again! Europ economy (like the Canadian one) is fragile and the US got back in shape for some time now. I have both US and CAD investments so good and bad news on both sides… US will buy more here but sell less and vice versa. All in all, I’m guessing it’ll turn out not too bad. Not sure how much the impact is different in Europ though.

  4. My-Dividends.com

    As a european investor its bad to buy new stocks! The income from dividends is much better! As I started to invest beginning of the year its very bad for me. Value of my investments are fallen down while the stock price is similar to the buying price. Anyway, we have to handle it and we don’t know when EUR/USD will increase or decrease!

    1. polliesdividend Post author

      Hello My-Dividends,

      Thanks for stopping by and taking the time to write a comment.
      I agree we have to handle it. But as a european investor, I’m looking more at european stocks nowadays. Look at the site of NomoreWaffles.com for a good Euro stock list.
      Cheers,

      Pollie

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