Paring Back On Weak-Dollar Holdings

I have been a big believer in the weaker dollar theme (not "sky is falling") for awhile now. The selling seems to have intensified a little since the Fed cut on Tuesday. Tony Crescenzi from Miller Tabak was quoted saying the dollar's slide has been "rapid and disorderly."

I have a lot of oars in the water on this theme, so I removed one by selling the Swedish Krona ETF (FXS), Thursday morning at just a hair above $153. I first bought it a year ago July in the $138s and we also took in a monthly dividend.

I didn't use a stop order because it seems like it moves around $2-$3 at a time pretty easily.

I still have foreign bonds, a foreign bond fund and some clients own the Australian dollar ETF (FXA) and of course the gold ETF (GLD).

The idea here is one of reducing exposure to an area that has done very well.

This type of paring back is something I have done quite a few times in the past. The idea here is maintaining exposure but reducing after a big run that creates a lot of excitement - but my opinion about the theme has not changed.

One final point about currency ETFs. I view them more as aggressive cash as opposed to conservative equity. A return in the mid teens is pretty big.

There are schools of thought about selling into strength or weakness. I tend to do a little of both. Some folks swear by one or the other ,but it seems to me that along with most things in investing, there is no one strategy that can always be best for every situation.

Comments

[Lisa:]

"There are schools of thought about selling into strength or weakness. I tend to do a little of both."

Does that mean that the only time not to sell is if a stock or ETF does nothing? Selll winners, sell losers, keep the ones that aren't doing anything... isn't that a recipe for poor performance?

2007 Sep 25 03:05 PM

[Roger Nusbaum:]

the post is about selling out one position. my comment about strength or weakness was made in passing and one short paragraph is not going to address every single aspect of selling.

2007 Sep 26 07:06 PM