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Euro Soars to Record High

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February 27, 2008 – Comments (9)

Those of you who have read my CAPS blog (both of you ;)) know that I have been and continue to be bearish on the U.S. dollar. The decline of the U.S. dollar continued this morning. The Euro soared to a new record high of $1.5057 this morning. The British Pound continues to climb versus the dollar as well, it is approaching $2 again.

Bernanke is scheduled to speak in Washington today. It will be interesting to see if he hints at the Fed leaning towards the Fed making additional rate cuts. Donald Kohn, who seems to be the only other Fed speaker besides Bernanke that one should pay attention to when they speak, seemed to hint yesterday that more cuts are coming. Any additional rate cuts would likely add to the dollar's weakness. I hope they do cut rates, it would likely add some serious juice to my portfolio's results. I have substantial positions in foreign companies and U.S. companies that export goods. Both would benefit from a fall in the dollar. I also am very long oil and natural gas, both of which are priced in dollars. Lastly, I used the recent downturn in the markets to load up on companies that pay massive (and which I believe are safe) dividends. The lower interest rates are, the more attractive these dividend payments become. A cut in the federal funds rate is not necessary for the companies that I have invested in to perform well, it would be pretty risky place all of one's bets on a move like that, but it would likely add some rocket fuel to my returns.

It's a good thing that I'm not planning on heading to Europe any time soon. I was going to leave the country for a cruise that I had booked in a couple of months, but I was only going to the Bahamas. Well, I have good news and bad news about that trip. The bad news is that I had to cancel my much needed vacation. The good news is the reason, my wife is expecting our second child. It's still fairly early, but I figure that it has already leaked out to almost everyone in my life so why not share it here :).

http://biz.yahoo.com/ap/080227/euro_dollar.html

Deej
Soon to be long diapers...again 

9 Comments – Post Your Own

#1) On February 27, 2008 at 8:01 AM, Capsperson wrote:

Congratulations, Deej, on expecting your second child.

I am planning a trip to Europe this spring and watch that exchange rate every day.  I must be out of my mind to travel.

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#2) On February 27, 2008 at 9:00 AM, floridabuilder2 (99.35) wrote:

now 3 people are reading your posts

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#3) On February 27, 2008 at 9:10 AM, zygnoda (27.39) wrote:

maybe four!

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#4) On February 27, 2008 at 9:49 AM, Gtrinvestor (99.76) wrote:

DEEJ - Agree w/ the types of investments you are getting into, although I believe oil in the short term might take a dip (to say the 80s) if the dollar ever gets stabalized.  That being said, I think any such dip will be short-lived, and then back to ever increasing oil prices. 

As for dividend paying companies, you are right on point.  Not only do those company's dividend rates become more appealing, many of them also have some debt, which will now be cheaper (allowing them to juice their dividends even more).

Finally, re: foreign investments, I think in both the short and long term, that is where all the money is to be made.

Congratulations on the new kid... it will certainly leave you less time to be on the boards here, but will also be more rewarding.

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#5) On February 27, 2008 at 9:55 AM, telcomac99 (78.14) wrote:

So, making a very practical application, I'm planning on taking an adventure over to Europe this summer. I haven't bought plane tickets yet and am planning to fly British Airways...

 Is it worth while for me to wait on buying the tickets? Will I see any relief with the exchange rate between now and July? Hopefully the answer is a resoudning "yes", but I'm less than confident. This trip is going to be a lot more expensive than my wife and I were budgeting for last fall with an exchange of about 1.36ish...

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#6) On February 27, 2008 at 10:03 AM, TMFDeej (99.29) wrote:

Thanks for the congratulations everyone :)

Deej

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#7) On February 27, 2008 at 10:58 AM, telcomac99 (78.14) wrote:

So, making a very practical application, I'm planning on taking an adventure over to Europe this summer. I haven't bought plane tickets yet and am planning to fly British Airways...

 Is it worth while for me to wait on buying the tickets? Will I see any relief with the exchange rate between now and July? Hopefully the answer is a resoudning "yes", but I'm less than confident. This trip is going to be a lot more expensive than my wife and I were budgeting for last fall with an exchange of about 1.36ish...

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#8) On February 27, 2008 at 11:18 AM, TMFDeej (99.29) wrote:

Hi telcomac99.  It's difficult to preduct what will happen between now and July, but if I had to make an educated guess I personally would say that despite the fact that it is already at an all time low versus the Euro the dollar will continue to weaken as the year progresses.  As long as the U.S. government keeps running up massive deficits and the Federal Reserve cuts interest rates while the EU keeps them unchanged I don't see any rebound in the dollar.  Perhaps some sort of short term bounce, but longer term I believe that this weakness will persist.  If I was going to Europe right now, and man I wish that I was going on vacation, I personally would at least pick up some currency to use while I was there and possibly pay for the entire trip now.  Then again, like I said it is very difficult to say exactly what will happen.  This is just an opinion.

Deej

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#9) On February 27, 2008 at 12:09 PM, telcomac99 (78.14) wrote:

So, making a very practical application, I'm planning on taking an adventure over to Europe this summer. I haven't bought plane tickets yet and am planning to fly British Airways...

 Is it worth while for me to wait on buying the tickets? Will I see any relief with the exchange rate between now and July? Hopefully the answer is a resoudning "yes", but I'm less than confident. This trip is going to be a lot more expensive than my wife and I were budgeting for last fall with an exchange of about 1.36ish...

Report this comment

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