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How Did Investors Interpret Foreign Investment Earnings?



August 08, 2008 – Comments (2)

Reading various things on the markets there has been a lot of hype about investing in foreign markets.  When you consider the declining US dollar, well businesses that did business with other countries made a killing as their US price increased dramatically due to the weakening dollar.

I am not so sure investors completely understood where beating those earning expectations came from.  They've been reading foreign investments are the way to go and wow, look at the results.  But the big gain is a one shot deal, due to what happened with the dollar.

Going forward if the exchange rate remained constant the results would likely flatten right out.

The US dollar has gained strength.  This means that companies that benefited from that one shot increase are going to have a one shot decrease now.

If these investments have been priced to recent earnings or a mistaken believe that the growth was due to it being foreign markets and would continue, well, investors are going to be disappointed.

2 Comments – Post Your Own

#1) On August 08, 2008 at 10:25 AM, dwot (28.95) wrote:

CR has an interesting post about displaced tenant through the foreclosure mess.

What I found interesting to consider is that historically not a lot of tenants are displaced as rents generally cover costs.  And there in is the root of the credit crisis and ...

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#2) On August 08, 2008 at 10:31 AM, dwot (28.95) wrote:

Not a happy giggle, but one did escape when I read the title on Yves's post "Your Pension Is Safe on Wall Street."

The giggle at the title quickly turned to horror as I read through...

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