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US dollar index is down -10.3% year to date.

So, for example, Berkshire's stock price is up +7.3% year-to-date measured in shrinking US dollars, but down -3.8% measured in the average other currency.

Snip from the FT today:
"Investors are fleeing long-term US bond funds at the swiftest rate since the height of the Covid-19 pandemic five years ago, according to Financial Times calculations based on EPFR data.
Why it’s happening: America’s soaring debt load is causing jitters among the institutional investors that use these funds..."

A lot of folks living in the US don't realize how big a deal this sort of change is. It's like a fish doesn't notice the water they're swimming in. But every price you see quoted in US dollars should be taken with a grain of salt, because the yardstick has been shrinking lately. Generally speaking, a big fall is a pay cut as it generally shows up as inflation later on. For investors in assets priced in US dollars, it's an immediate fall in the value (purchasing power) of the portfolio.

The US dollar is still fairly high compared to the levels this century--it was never this high 2004-2014. The optimist could see that as "it's no big deal, normal fluctuation", and the pessimist could see it as "there could be a long way yet to fall".

I personally anticipate a bounce, followed by a longer term sliding trend. The reasoning for expecting the longer term slide is that the US dollar's level is set in large part by a balance between the US current account deficit (largely driven by the federal budget deficit) and the constant influx of portfolio investment into stocks and bonds from elsewhere in the world. If the latter slows to some extent (as I think it will) and the deficits don't change (I don't think they will), the dollar will fall. Maybe.

Jim

This has been keeping me up late at night. Too late, for too long.

I don't have a pathological need to win at investing, I just want to preserve savings and grow in proportion with my slice of the pie. For various technical reasons, I don't think cryptocurrencies are viable. I don't think actually owning gold is viable - security, trust, and storage problems never go away regardless how indirect the investment is.

I don't like the idea of maintaining forex balances, though I've been kicking myself from USD:EUR of .93 as it free falls (.85 as of this message).

It feels like companies and countries may find a way to reach equilibrium. I've bought small amounts of the UK property companies mentioned in Non-US stocks, and wish I'd bought more. I have a feeling that at some point, I would regret having excessive foreign holdings for the same reason you want to avoid US holdings. My sense is to expect a worse variant of Japan/JPY following the 1980s, as experienced as a Japanese citizen. Your thoughts and suggestions for investments have been very appreciated, though.

It seems like we are approaching the logical conclusion of electing a dishonest person who serially filed for bankruptcy to the chief executive position the country and maybe the consequences are inescapable. After all, money is just a high level representation of trust.

This has been keeping me up late at night. Too late, for too long.
I don't have a pathological need to win at investing, I just want to preserve savings and grow in proportion with my slice of the pie.

Currency moves are a real thing, but I don't think your goal warrants losing sleep : )
Very few things do. Heck, even serious tragedies are better with a good night's sleep.

The best way to preserve wealth is to ignore things that are designed to preserve wealth. Instead, own things that are actually earning money in real terms, which generally means equities (only occasionally real estate). Preferably equities that are earning money most of the time, and that aren't painfully overvalued so the disappearance of exuberance doesn't lead to a permanent loss.

If you do that in general the wealth will stick around, even if the market value bounces around. Profitable companies always bounce back from price dips. If there is a bit of currency diversification then so much the better. Pay attention to the revenues of the companies in question, not where the stock is listed or what currency the price is quoted in.

So be of good cheer! The world may have some serious cracks these days, but those with assets usually come out fine. Maybe that's not fair, but it is what it is.

Jim

So be of good cheer! The world may have some serious cracks these days, but those with assets usually come out fine. Maybe that's not fair, but it is what it is.

The lack of sleep is a multifactor problem, at least, and probably not avoidable. For some lines of work quiet time is invaluable, and in certain lines of engineering work one has to overtrain their brain on complex system failure conditions. Human brains are funny, and "know thyself" is timeless.

The longer I've think about most problems, the "dumber" I get in my approach, and this hasn't been much different so far. I think, for my residency, life constraints, and everything else going on my answer has been shaping up to be: some short term treasuries, low fee index funds in familiar allocations, some BRK, and a sub 5% allocation of off-beat investments to scratch an intellectual itch while hopefully not losing too much. But the amygdala is ever-skeptical and I appreciate your reply (as always).

Instead, own things that are actually earning money in real terms, which generally means equities (only occasionally real estate).

I confess, real estate seems to be the only asset I understand these days, with the stock market being too bipolar for my limited skills to handle the seeming lack of reason. And cash, which we are too exposed to, giving me concerns as already discussed in this thread. This crazy real estate market has the bargain hunters out there, which I really can't complain about as we are one, making it nearly impossible to sell a property without gifting the buyer with a 20% price cut. So it looks as though our current residence will become a rental, (though we thought we were out of that business.) Our carrying costs are crazy low with our 2% mortgage and pre-Covid purchase, and with conservative numbers it should return along the lines of roughly 10%/year. At some point, life will go on and buyers will come back out of hiding, but the damage to new construction permits will reduce their options and we will likely go back to bidding wars as rates decline. Hopefully that time will be less than 2 years, but if the alternative is giving a seller more than the $100K we could get in capital gains exclusion by selling now, our primary reason for selling now is eliminated. As the bargain hunter we just scooped up a new construction home whose sale fell through when the gov't employee lost his job and couldn't close on it. Our new home comes with about 18% equity, with all the discounts, and the builder is thrilled not to be stuck with paying on a construction loan. More importantly, we get to move on.

IP

The drop in the US dollar is traditionally very bullish for the US (and by extension, others as well) stock market. The profits companies report on foreign sales in terms of US dollars is inflated by the drop and makes companies seem like they are knocking it out of the park when they are merely treading water.

The inverse relationship between the two has been broken for a number of years as, I'm guessing, Fed wrestling with the bond market, followed by COVID largess overwhelmed the connection.

Just when we feel it's safe to go into the water, the effects of tariffs on inflation are about to start kicking in.

Macro relationships are about to start forcing the curves. Buckle your seat belts. Coming to a channel near you: the US deficit, SS and Medicare challenges, loss of cheap labor in some fields, etc.

Jeff

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