Bullish the U.S. $ like never before!

A maverick investor loves headlines like this one:

“Mighty Greenback losing it’s lustre.”

What lustre?  The greenback has been in the doghouse for years now.  As a Canadian, I’ve been grateful – I bought my latest Harley-Davidson while the loonie was at a favourable exchange rate relative to the US$, and am stocking up right now on parts I’ve wanted but were always too expensive.  My demand for greenbacks has increased – now multiply this times the world buying oil (using the greenback), commodities (again, the greenback) and Dell computers.

The U.S. $ Index (which measures the value of the greenback against a bunch of other currencies) is about to become stronger.  When I was younger and there was turmoil (financial but especially warmongering) then the safe haven was the American dollar – even more so than gold.  There’s a number of trends I’ve discussed in earler postings that I believe support the turnaround in favour of the buck:

– as economies improve globally they require raw materials, and these are priced and traded in US$.

– investors are leaving emerging countries (where they invested mostly in local currency bonds), and must therefore channeling their funds into more developed countries (both equities and bonds) – like the United States?

– most important of all, NOBODY likes the U.S. dollar, which means it has nowhere to go but up (who’s left to sell them?)

In my book “An Maverick Investor’s Guidebook” I cover many examples explaining why the best opportunities are always where others fear to tread.  Investing in oil going to $200?  It may well happen, but it’s high risk.  Betting on a recovery in the US$ is LOW risk.   Of course, the easiest way to bet on the mighty buck for average folks is to leave it in the bank (if American), or buy US denominated securities or a new Harley (if not an American).

About Mal Spooner

Malvin Spooner is a veteran money manager, former CEO of award-winning investment fund management boutique he founded. He recently authored A Maverick Investor's Guidebook which blends his experience touring across the heartland in the United States with valuable investing tips and stories. He has been quoted and published for many years in business journals, newspapers and has been featured on many television programs over his career. An avid motorcycle enthusiast, and known across Canada as a part-time musician performing rock ‘n’ roll for charity, Mal is known for his candour and non-traditional (‘maverick’) thinking when discussing financial markets. His previous book published by Insomniac Press — Resources Rock: How to Invest in the Next Global Boom in Natural Resources which he authored with Pamela Clark — predicted the resources boom back in early 2004.
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One Response to Bullish the U.S. $ like never before!

  1. David Acker says:

    Mal,
    Great comments on the US buck.
    Let us not forget, we can trade $500 million in US$ and not move or even let anyone know we are trading. Liquidity counts, as well.

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