Time To Head Out of Dollar Dodge?

Includes: DIA, QQQ, SPY
by: Roger Nusbaum

I think I have read in five different places that Jimmy Rogers is moving all of his assets out of US dollars. He is said to favor Chinese yuan, Japanese yen and Swiss francs.

No doubt you are also aware he favors a whole myriad of commodities too.

The argument that the US is doomed is very popular in some circles, and always sounds smart and plausible.

I think this theory is correct directionally, but not correct in terms of magnitude.

I think the dollar will get weaker but not collapse in such a manner that life as we know it changes.

I think interest rates will be generally higher but not high like in 1981. Most of the current rates across the curve are very low by historical standards. I believe they will just head back up to normal or maybe a touch higher. This would crowd some people out of getting a mortgage and slow things down but again would not be ruinous.

I think US equities will return less than the average 10% we all read about. If the US market averages 6% per year, a US based investor will either need to save more, invest abroad or both. This necessitates more research/learning - not waiting in line at a soup kitchen.

I do believe the "US is doomed" argument is worth studying and understanding. First of all, it could turn out to be right. If it turns out to be correct directionally, regardless of magnitude, I think it will be people like Jim Rogers who we can learn from about what the problems are and how to mitigate them.

I have tried to explore other countries and asset classes in my writing and utilize some of these locations/investment products in accounts that I manage. I would expect to go further down this road for clients as this decade starts to wind down. My weighting to foreign has been in the mid-thirties for several years now, I have mentioned several times that I expect to get closer to 50% in the next few years.

A lot can happen between here and there, but the idea is to look down the road and think a little bit about how the US markets might evolve, how that impacts you and what you might do if things deteriorate by some amount in the US.