Remember Dollars Spend
We're generally bearish on the US dollar for the long-term at Global Gains, but that doesn't mean investors should go rushing into other more speculative currencies. I was reminded of this as I watched the premiere of The Amazing Race on CBS the other day. Here's what went down in that episode:
But the confusion and cluelessness that clouded several teams' decisions started before the flight even took off. Brothers/cowboys Jet and Cord (you can't make up these names) exchanged their U.S. dollars for Brazilian currency, rather than Chilean, as it was the "closest" thing that the currency exchange had on offer.
To compound this mistake the brothers found when they reached Chile that the bus driver there would happily take payment in US dollars, but had no interest in touching their reais.
Now, in their defense, American airports only offer a few currency options (Chile generally not among them), so it's not like they chose Brazlian money of Chilean money. Rather, they picked the option closest to Chile. Sutpid, yes, but no inexplicable for someone who doesn't do a whole lot of interenational traveling.
The lesson, though, is that dollars spend. I've traveled many places in the world, and if we don't have local currency, cab drivers, shopkeepers, etc. are always more than happy to take dollars (this is particularly true in places such as Vietnam where the black market exchange rate differs dramatically from the official exchange rate). Thus, there's a cost to giving up your dollar when you invest, so you want to make sure you're being compensated for that as you choose international investments.