Dollar Strength and Your Portfolio

By Jim Wiandt

I've been chattering about the dollar move and its implications for weeks. Here's what to do about it.

Since the euro run was finally scuttled in July, I've been insistently saying that investors should be aware of the implications of the move and the state of current global markets. Mainly we heard a hearty "Hear, Hear!" from Matt Hougan. And now Bruce Zaro weighs in with the "Greenback Rebound" feature Murray Coleman put together.

So now that we all seem to be on the same page (while remembering that nothing is certain and it's always possible that the euro could reach new highs in 2 months), what does or doesn't this mean we should be doing about it? Well, my answer would be not a lot. If you've got a good allocation plan, you stick to it. Many market humiliations have absolutely convinced me that trying to time the market in any kind of sweeping way is folly, not to mention it's exhausting.

But at seminal moments in the market, it absolutely does behoove you to be alert and to pay attention to what is going on in your portfolio. So my answer is that what you should do is look at your allocation, and perhaps move up that year-end rebalance of your bubbly international developed and emerging allocation back over to some good old U.S. equities.

Exporters Index ETF

And speaking of that, Bruce Zaro has brought up a great idea for an ETF in this environment, and I bet someone can get it out there in 3 months if they put their mind to it. What say you to the Exporters Index ETF? You take companies that derive 75% or more of their revenues or profits from exports and you make that your index, and you put the ticker 'EXP' on it.

That's got Van Eck's or Claymore's or First Trust's or PowerShares' name all over it. Hopefully it's not already trading somewhere. That would be embarrassing... but it's getting hard to keep track these days.

Comments

[zeroman:]

What I don't get is this: how can a greenback rebound help exporters??

2008 Aug 27 11:29 AM

[User 30121:]

Dollar and strength should NEVER be used in the SAME SENTENCE!

2008 Aug 28 03:35 PM