Strong Aussie dollar and international shares

Discussion in 'Share Investing Strategies, Theories & Education' started by jomond, 8th Apr, 2008.

Join Australia's most dynamic and respected property investment community
  1. jomond

    jomond Member

    Joined:
    1st Jul, 2015
    Posts:
    5
    Location:
    Melbourne
    The Aussie dollar is very strong at the moment in comparison to places like the US. It seems like a great time to invest in these countries, assuming that the dollar will weaken as the interest rate gap gets smaller in the future.

    I've been thinking about taking advantage of it and investing in American shares. Is this a good idea at the moment?
     
    jomond, 8th Apr, 2008
    #1
  2. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    3rd Jun, 2015
    Posts:
    12,412
    Location:
    Sydney
    It depends on your timeframe I guess.

    In the short to medium term, I would actually expect the interest rate gap to widen somewhat ... I don't think we've seen the last of the rate rises in Australia, and I think the US in recession will likely see rates drop further. I know this isn't the only thing that affects the AUD, but I do think it will continue to be strong for some time yet. I still hear commentators suggest parity or higher within the next couple of years.

    However, if you are looking for longer term investments - the US markets are down quite a bit from their highs last year - so now might be a good time to picking up bargains ... especially in the financial sector (if you are sure you can pick stocks which aren't going to go bust !!!). One question you have to answer first though is ... has the US market bottomed, or is worse still to come ??
     
    Simon Hampel, 8th Apr, 2008
    #2
  3. BillV

    BillV Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,555
    Location:
    Sydney
    Jomond,

    As Sim said, there could be further drops in the US$.

    Additionaly, the problems with the US economy won't go away in a hurry and they haven't resolved the subprime problems either so I wouldn't touch stocks at the moment and particularly financial stocks.

    My 2c

    Cheers
    Bill
     
    BillV, 8th Apr, 2008
    #3