So I woke up this morning and all I heard and saw on the news was Canadian dollar talk. Insane how the news outlets really can glom onto a topic and really blow it up from something fairly insignificant into a big deal. I'm not saying that the rise in the Canadian currency is not without consequences but the rise we have had versus the US dollar and other currencies to a lesser extent over the past 4 years has been far more significant than the move over the past week.
I guess the attraction to the story is the psychology involved with round numbers or multiples of 10. I don't know why round numbers have such a psychological impact but they do. Maybe we are all just a little obsessive compulsive.
On a contrarian investing note, it is likely that now would be a good time to invest into solid companies the USA (GE, Pfizer, Johnson and Johnson, Proctor and Gamble, Monsanto, Intel, Microsoft for some decent examples), unhedged to the Canadian currency. On a personal consumption note, it is certainly a lot more attractive to go on vacation to Hawaii, Florida or California now than it ever has been in my memory.
The story really should be about the devaluation of the US dollar and not the rise of the Canadian but we have home country bias and see things through a Canadian lens. I remember hearing Marc Faber say that his investment thesis for the next 25 years was the systematic and competing devaluation of currencies around the world. He said that he expected the US dollar to lead and the devaluations will come in fits and starts but that countries around the world, in order to prop up their exports, will purposefully devalue their currency. I don't know whether his thesis will prove true but it is interesting food for thought. The alternate side of that is that every other country around the world could say 'screw off USA, you are more trouble than you're worth!' I doubt the latter.
I guess the attraction to the story is the psychology involved with round numbers or multiples of 10. I don't know why round numbers have such a psychological impact but they do. Maybe we are all just a little obsessive compulsive.
On a contrarian investing note, it is likely that now would be a good time to invest into solid companies the USA (GE, Pfizer, Johnson and Johnson, Proctor and Gamble, Monsanto, Intel, Microsoft for some decent examples), unhedged to the Canadian currency. On a personal consumption note, it is certainly a lot more attractive to go on vacation to Hawaii, Florida or California now than it ever has been in my memory.
The story really should be about the devaluation of the US dollar and not the rise of the Canadian but we have home country bias and see things through a Canadian lens. I remember hearing Marc Faber say that his investment thesis for the next 25 years was the systematic and competing devaluation of currencies around the world. He said that he expected the US dollar to lead and the devaluations will come in fits and starts but that countries around the world, in order to prop up their exports, will purposefully devalue their currency. I don't know whether his thesis will prove true but it is interesting food for thought. The alternate side of that is that every other country around the world could say 'screw off USA, you are more trouble than you're worth!' I doubt the latter.
No comments:
Post a Comment