Investing

Should I be worried for my USD investment?

  • Last Updated:
  • Feb 16th, 2018 11:24 am
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[OP]
Sr. Member
Jun 15, 2012
977 posts
78 upvotes
MB

Should I be worried for my USD investment?

Question is quite simple, some of my investments in USD deposits, others in USD nominated common shares. In worse case scenario what should happen to them?

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The federal government ran a budget deficit of $666 billion in fiscal 2017, the biggest shortfall since 2013. The numbers: The federal government finished fiscal 2017 with a budget deficit of $666 billion, an increase of $80 billion over the previous year.
https://www.marketwatch.com/story/us-en ... 2017-10-20
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By 2027, according to projections by the Committee for a Responsible Federal Budget, the annual deficit will total $2.1 trillion (assuming extension of the tax cuts and spending increases, as will almost surely happen).
These deficits will increase the nation's total debt, which is now $20 trillion, and increase it to as much as $35 trillion.
http://www.businessinsider.com/budget-d ... rts-2018-2
"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."
- Warren Buffett
15 replies
Deal Addict
Oct 6, 2015
1300 posts
684 upvotes
US dollar, toast over the long term. Its already lost ~95%+ of its value since the inception of the Federal Reserve.

US exporters probably will do okay. Railways too.

US equities that are related to consumer consumption, entertainment, etc., for the domestic market or even for export to other "legacy" economies in the same circumstances likely will have problems. This includes the "FIRE" sector (Finance, Insurance, and Real Estate), and a good chunk of the contemporary "Social Media" tech sector.

Timing is difficult though. Lots of people thought the USD$ was going to die in 2008 with the housing bubble popping, but quite the opposite happened, and he we are.
Sr. Member
User avatar
Oct 19, 2016
562 posts
166 upvotes
Toronto
Whats the alternative ? where else can we invest ? we have no choice.


ukrainiandude wrote:
Feb 14th, 2018 12:20 am
Question is quite simple, some of my investments in USD deposits, others in USD nominated common shares. In worse case scenario what should happen to them?

---
The federal government ran a budget deficit of $666 billion in fiscal 2017, the biggest shortfall since 2013. The numbers: The federal government finished fiscal 2017 with a budget deficit of $666 billion, an increase of $80 billion over the previous year.
https://www.marketwatch.com/story/us-en ... 2017-10-20
----
By 2027, according to projections by the Committee for a Responsible Federal Budget, the annual deficit will total $2.1 trillion (assuming extension of the tax cuts and spending increases, as will almost surely happen).
These deficits will increase the nation's total debt, which is now $20 trillion, and increase it to as much as $35 trillion.
http://www.businessinsider.com/budget-d ... rts-2018-2
Deal Addict
Nov 24, 2013
4744 posts
1447 upvotes
Kingston, ON
We went through this ‘sky is falling, hyperinflation is coming, buy gold, the US dollar will no longer be the global reserve currency’ thing a few years ago. That was when the economy wasn’t strong, and fiscal and monetary (QE) stimulus were high. But the stimulus worked, the business cycle came around, QE’s been reduced, interest rates are rising, and corps are making profit.

There’s always going to be another downturn and some other crisis, but as they say, “Don’t Panic!” Many of the most profitable and successful going-concern corporations are US-domiciled, US-listed, and will maintain that equity value even if USD inflates. If ‘08/‘09 wasn’t enough to crumble the dollar, this won’t either.

I think the US fiscal situation and debt:GDP are ridiculous too, but that doesn’t change US stocks being a global nexus for profit and investing opportunity.
Sr. Member
Jul 27, 2017
962 posts
331 upvotes
OP, your choice is doing nothing or sell off your USD investments
Deal Fanatic
Mar 24, 2008
5503 posts
1539 upvotes
Toronto
Unless you are hoarding USD as cash or trying to time USD/CAD, I don't see how US dollar going down will affect your investments. For example, if you have shares of Royal Bank on NYSE (in USD), the "value" of your investment will be based on RY and not USD. If the currency goes down, you'll get more of it when you sell your investments.
Illegitimi non carborundum
Newbie
Feb 12, 2018
3 posts
1 upvote
Kincardin
Low USD is good for US Economy. The Tax reform is also good. But now other countries also changing gear to respond to TRUMPONOMICS...China is working on its own TAX reform. On one side he wants low USD bring jobs...but also playing protectionist - how does that balance out?
Hidden Order
Deal Addict
Mar 22, 2012
1573 posts
154 upvotes
Toronto
You may experience FX loss but your investments should ideally get CG, which may offset it.
Newbie
Jul 28, 2007
76 posts
15 upvotes
if anything I want more USD equities, I'm more worried about my CAD investment
Deal Addict
Oct 17, 2004
1468 posts
77 upvotes
I would be more concerned about Trump enacting laws that affect your accounts.

Heck, TFSA is 10-years old and still isn't recognized by the US despite them having a similar account.
Jr. Member
Aug 22, 2012
139 posts
92 upvotes
Mark Town
TFSA tax issue has to be resolved with a treaty, which the current trudeau government has no interest in. RRSP is free of US withholding only, you still have to pay tax if you purchase a Germany stock.

I am more concerned about CAD investment with a government that spend more time pondering minority rights other than economy.
[OP]
Sr. Member
Jun 15, 2012
977 posts
78 upvotes
MB
mrtrump wrote:
Feb 14th, 2018 6:58 am
Whats the alternative ? where else can we invest ? we have no choice.
Canadian dollar? Debt and deficit fairly small.
"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."
- Warren Buffett
Deal Addict
Nov 24, 2013
4744 posts
1447 upvotes
Kingston, ON
ukrainiandude wrote:
Feb 14th, 2018 7:13 pm
Canadian dollar? Debt and deficit fairly small.
I wouldn't limit my portfolio to banks, resource companies, utilities, and weed stocks just because they're denominated in home currency.

The actual investment matters far more than what currency they're priced in.
[OP]
Sr. Member
Jun 15, 2012
977 posts
78 upvotes
MB
Mike15 wrote:
Feb 15th, 2018 10:34 am
I wouldn't limit my portfolio to banks, resource companies, utilities, and weed stocks just because they're denominated in home currency.

The actual investment matters far more than what currency they're priced in.
Based on this the ideal currency would be Chinese yuan ( everything is made in China, zero budget deficit, huge positive trade balance, not to mention enormous reserves ( which unfortunately not in previous metals). But there's no way to open yuan trading account.
"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."
- Warren Buffett
Deal Addict
Nov 24, 2013
4744 posts
1447 upvotes
Kingston, ON
ukrainiandude wrote:
Feb 15th, 2018 1:33 pm
Based on this the ideal currency would be Chinese yuan ( everything is made in China, zero budget deficit, huge positive trade balance, not to mention enormous reserves ( which unfortunately not in previous metals). But there's no way to open yuan trading account.
I disagree with that premise. The investment matters, not the currency. US corps with operations all over the world funnel profit to shares that happen to be priced in USD. The profit is what matters, not whether it ends up in USD, CAD, GBP, EUR, etc.. The profit attributable to USD shares doesn't only come from USD sources, so even if there's some massive devaluation of the USD, and the company is still profiting from global operations, it just translates to a higher nominal USD profit and share price with a decrease in what that converts to. Unless there's some fundamental decline in profitability, that's zero-sum. It really doesn't matter what the state of US government debt or trade balance is.

To your other point about CNY investing, there's ADRs (in USD) for some of the largest Chinese corporations like PetroChina, or ways to buy them on the Hong Kong exchange (ICBC, Bank of China) if you really wanted to own them.

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