Declining Dollar Plays

[madcowdisease]

The American markets and the underlyig stocks that drive it, namely the DJIA, have performed quite well this year. One reason tossed out there is the declining dollar is good for earnings as these companies receive more export orders since goods are cheaper for overseas clients. Also, one must consider our markets themselves look cheap as well assuming one converts euros to dollars to buy shares here.

But, as we all b!tch and moan about how much everything is costing the Amercan consumer more, and it is considerably, have we ever thought how to hedge against the risk of losing purchasing power? It wasn't but 18 months ago gold was seting records due to inflation worries. Isn't the declining value of the dollar apropos foreign currencies the same thing? It is in my mind. I still have to pay more out of my pocket.

Ergo, shouldn't we be looking to gold and gold related stocks as the next market mover to outperform as a hedge against the dollar?


Lastly, are there any other suggestions with regard to the declining dollar outside of what we've already witnessed (e.g. massive moves in international co.s like those in the Dow)?

[MoMoney4Me]

As stated the large cap multinationals have and will continue to do well with the declining dollar. Instead of looking for domestic opportunities though, I'm buying the emerging markets. Easiest way to play them is through an ETF. I personally like the VWO and have been trading the swings in it.

[aiki14]

I like the Aussie and Kiwi dollars right now and going forward at least 18 months. Direct plays, structured products, and stocks with big exposure to these currencies are attractive and should be so for the medium term.

[TonyM]

US dollar looks ready for a bounce imo, maybe of the dead cat variety but a bounce nonetheless, that'll take the wind out of the sails of earnings season.

[Bman409]

Constellation Brands (NYSE:STZ)


As the dollar decreases, European, Canadian and Australia booze gets more expensive, and US booze gets cheaper.



Constellation Brands, Inc. engages in producing and marketing beverage alcohol brands in wine, spirits, and imported beer categories. The company operates in three divisions: Constellation Wines, Constellation Spirits, and Crown Imports. The Constellation Wines division produces and markets table wine, sparkling wine, and dessert wine under various brands, such as Robert Mondavi Winery, Inniskillin, Simi, Franciscan Oakville Estate, Kim Crawford, Estancia, Toasted Head, Ravenswood, Jackson-Triggs, Blackstone, Robert Mondavi Private Selection, Ruffino, Nobilo, Rex Goliath, Alice White, Hardys, Goundrey, Kumala, Woodbridge by Robert Mondavi, Vendange, Arbor Mist, Almaden, and Stowells. It also exports its wine products to other wine consuming markets worldwide. In addition, this division produces and markets cider under Blackthorn and Gaymer's Olde English brands in the United Kingdom; wine kits and beverage alcohol refreshment coolers in Canada; and bulk wine, and other related products and services. The Constellation Spirits division produces, bottles, imports, and markets distilled spirits under Black Velvet, Chi-Chi's prepared cocktails, Barton, Sk?Fleischmann's, Canadian LTD, Montezuma, Ten High, Mr. Boston, and Inver House brands. The Crown Imports division has the right to import, market, and sell Corona Extra, Corona Light, Coronita, Modelo Especial, Pacifico, Negra Modelo, St. Pauli Girl, and Tsingtao brands of imported beer in the United States. In addition, the company has a joint venture with Punch Taverns plc to distribute wine, distilled spirits, cider, beer, RTDs, and soft drinks. Constellation Brands distributes its products through wholesale distributors, and state and provincial alcoholic beverage control agencies; and directly to retail chains, wholesalers, hotels and restaurants, and pubs and clubs in North America, the United Kingdom, Australia, and New Zealand. The company was founded in 1945 and is headquartered in Fairport, New York.

[madcowdisease]

I guess where I was trying to go with the opening of this thread is to ask the question: does anyone feel the declining dollar is inflationary? Our purchasing power is in decline therefore shouldn't at least some portion of our portfolio be seeking a hedge against this phenomenon?

[Bman409]

I guess where I was trying to go with the opening of this thread is to ask the question: does anyone feel the declining dollar is inflationary? Our purchasing power is in decline therefore shouldn't at least some portion of our portfolio be seeking a hedge against this phenomenon?

Yes, a declining dollar is obviously deflationary

I'd say you could invest in any sort of natural resource stock or fund, as a hedge.

Gold and silver are good too, although gold didn't act as much of a hedge against inflation during the 80s and 90s.

[MoMoney4Me]

Here's a recent article on Business Week that addresses your question.
Five Ways To Keep Inflation at Bay http://www.businessweek.com/investor/content/jul2007/pi20070711_247543.htm

[Bman409]

Yes, a declining dollar is obviously deflationary

.

I meant to say "inflationary" here.

Sorry..