| Published:
June 4, 2008 If you've traveled abroad
recently, then you probably understand the impact of a weaker dollar
when it comes to purchasing power.
In early 2002, it took about $0.83 to buy one euro -- now it will
cost you about $1.57.
In other words, the same 200
euro-per-night
Paris hotel room that cost $166 several years ago will now set you
back about $310.
Fortunately, what's bad news for the U.S. traveler can be great
news for the U.S. investor. And the best way for you to make money
off the tumbling dollar?
Buying foreign securities.
Suppose you invested 10,000 euros ($8,600) in a European stock in
2002. Even if its share price went nowhere, thanks to a falling
dollar you could sell your shares, and those same 10,000 euros
would now be worth $15,500.
That's an +80% gain from the currency
fluctuation alone -- with no share price appreciation. Of course,
most foreign stocks have been surging lately, which would make the
gains even more dramatic.
Likewise, dividends paid in foreign currencies are worth more when
converted into U.S. dollars.
Suppose you invested in a European
stock that paid an annual dividend of 5 euros per share.
This dividend would have been worth only
$4.15 annually in 2002. But thanks to the falling dollar, the same
5 euro dividend is now worth $7.75 -- an increase of +80%. How
many U.S. stocks have you run across that have raised their
dividends +80% since then?
Currency Fluctuations Lead to Big Gains for U.S. Investors
Whether you're investing in Zanzibar or on the NYSE, you're making
a currency bet.
Get the currency right and you've already won more than half the
battle. If you can get into a country when its currency is 200
units to the dollar and get out when it's 100 to the dollar,
you've already doubled your money. And that's on top of any
capital gain on the stock, or interest on the bond.
I hate to discourage all the stock pickers out there, but the
simple fact is that it's much more important to be in the right
countries than the right stocks. An appreciating currency pushes the dollar-value of your
investment ever upward, even if its price in local currency
doesn't move a bit.
Take Australia, for example. You could have bought any Australian
stock five years ago, and with the currency doubling against the
dollar, you would have had an extra 100% in your pocket -- on top
of whatever the stock returns. The +135% return of Australia's All
Ordinaries Index became a +245% gain for U.S. investors.
Almost the exact same thing happened in New Zealand. Over the past
five years, stocks have soared +75% there.
But American investors
gained +245% because of the currency effect.
In Germany, stocks rose +138% in euros, but in dollar terms they
were up +214%.
It goes on and on around the world. In Great Britain, stocks rose
+81% for British investors, but +118% for their U.S.
counterparts.
In Brazil, the currency effect was like rocket
fuel. Local investors saw their shares soar +441% . . . but in dollar
terms Brazilian stocks gained an eye-popping +892%!
Profit from Today's Most Attractive Currencies . . . and Lock in Dividend Yields of up to 24.9%
Over the next several years, foreign currencies should continue to
skyrocket versus the U.S. dollar. After all, U.S. economic growth is slowing, foreigners are pulling their
money out of U.S. treasuries, and money is flowing into other
countries like Brazil, Norway, Poland, Australia and New Zealand in an effort
to capture strong returns and relatively high interest rates.
With all of these factors in mind, I believe the U.S. dollar will continue to fall versus many other foreign currencies, leading to
an ever-increasing stream of capital gains and dividends for U.S.
investors.
In fact, millions of investors have already locked in gains of up to
+892% and healthy dividend yields of 8.2% simply by investing in foreign stocks
. . .
|
Global
Stock Market Performance
5-Year Total Returns
(May 2003 - May 2008) |
|
Country |
What
Local Investors Earned |
What
U.S. Investors Earned |
Current
Dividend Yield |
| Brazil |
+441% |
+892% |
2.5% |
|
Norway |
+300% |
+425% |
3.3% |
| Poland |
+205% |
+424% |
3.0% |
|
Philippines |
+195% |
+260% |
4.6% |
| Australia |
+135% |
+245% |
4.0% |
|
Thailand |
+151% |
+223% |
3.7% |
| Spain |
+143% |
+221% |
3.8% |
|
Germany |
+138% |
+214% |
3.5% |
| Singapore |
+141% |
+207% |
4.0% |
|
Netherlands |
+106% |
+172% |
3.9% |
| France |
+93% |
+155% |
3.9% |
|
New Zealand |
+75% |
+139% |
8.2% |
| Italy |
+33% |
+76% |
5.9% |
|
United States |
+59% |
+59% |
2.2% |
|
These recent returns have been nothing short of spectacular,
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Nick Lanyi
Editor
High-Yield International
About High-Yield International
High-Yield International is
a monthly investment newsletter focused on bringing subscribers the
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About Nick Lanyi
Nick Lanyi has spent
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most widely read investment advisory services in history. At Louis Rukeyser's
Wall Street, Nick spent the better part of a decade as Rukeyser's trusted
lieutenant, covering the entire investment waterfront. Earlier, Nick refined his
touch at Fidelity Insight, a leading mutual-fund newsletter, and
wrote for the venerable general-interest financial newsletter, Personal
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Chicago Tribune, Bloomberg and Forbes.com. He has also appeared on CNN/fn
and CNBC.
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High-Yield International -- please
visit
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|