Posted on 05/11/2002 8:37:44 AM PDT by shrinkermd
Edited on 04/22/2004 11:46:30 PM PDT by Jim Robinson. [history]
Last week, for the first time in more than a decade, a U.S. Treasury secretary was forced to testify on exchange-rate policy before the Senate. The unlucky secretary was, of course, Paul O'Neill, who tried to make the case that a strong dollar is in the best interest of the U.S. while Democratic senators trotted out witnesses from labor and manufacturing companies to protest that the strong dollar was killing them. Mr. O'Neill did a serviceable job of defending himself and his administration. Nonetheless, it is beginning to look like a weaker dollar may be necessary for a sustainable U.S. recovery.
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How would an individual best position his investment portfolio to take advantage of a declining dollar? Thanks in advance.
Well it might depend in part on why it is declining. But generally, the safest way would be to buy stocks of companies that depend in large measure on strong export markets, but do not need to import materials for their own production. When the dollar declines, it makes our goods more attractive to the rest of the world.
But again, you need to try to determine why the dollar is declining, so as to anticipate other trends.
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