Author Topic: Domestic vs International Allocation and Currency fluctuations?  (Read 2701 times)

xenon5

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Domestic vs International Allocation and Currency fluctuations?
« on: February 11, 2015, 07:50:36 PM »
In the past year, The US dollar has gained about 25% value compared to the euro.  Theoretically the value of European companies probably hasn't gone down by 25%, but my USD should buy me roughly 25% more international equities than a year ago all else being equal.  Does a strong dollar make this a good time to go a bit heavier in European stocks than usual, for example 50/50 US/Intl rather than 70/30?  Or is it wiser to leave my asset allocation alone and let annual rebalancing take advantage of these disparities automatically?  What are the arguments for and against? 

I ask because I'm trying to form my own opinion on this and want to hear other's perspectives.  While US stocks have outperformed in the past, assuming I can't know whether US or international will outperform in the future, intuitively it sounds like a good idea to tilt international when currency exchange rates are favorable and tilt US when they're not.

What are your thoughts?
« Last Edit: February 11, 2015, 08:11:42 PM by xenon5 »

REfinAnon

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Re: Domestic vs International Allocation and Currency fluctuations?
« Reply #1 on: February 13, 2015, 04:28:25 PM »
Bump. I'm interested to hear this discussed as well.

tooqk4u22

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Re: Domestic vs International Allocation and Currency fluctuations?
« Reply #2 on: February 16, 2015, 01:53:52 PM »
Interesting ? just bumping as a reminder.  In the meantime this might help:

http://www.joshuakennon.com/basic-overview-happened-swiss-franc-nestles-share-price/


Dodge

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Re: Domestic vs International Allocation and Currency fluctuations?
« Reply #3 on: February 16, 2015, 05:13:04 PM »
I recommend staying the course.  You can't time the currency market any better than you can time the stock market.

innerscorecard

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Re: Domestic vs International Allocation and Currency fluctuations?
« Reply #4 on: February 16, 2015, 07:17:01 PM »
I recommend staying the course.  You can't time the currency market any better than you can time the stock market.

Far worse, in fact, seeing as how they are far more liquid and far more efficient. The corollary is that if you could accurately trade the currency markets, you could easily make millions very fast with the large amount of leverage you could get. You don't really see people doing that (unlike how you do see some investors consistently do well in stocks).

hodedofome

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Re: Domestic vs International Allocation and Currency fluctuations?
« Reply #5 on: February 16, 2015, 09:29:41 PM »
Managed futures guys have been making money on currency trading for decades, but it's just a part of their portfolio not the whole thing. As well, they just follow the trend, rather than attempt to make any predictions.

Now if your name is George Soros, then please do whatever you want. If you'll allow me to invest with you, my kids will be grateful.