4 ms·

From outside the US, all the 'stock market gains' have actually been zero or negative because of this. I wonder how long before inflation hits...

mrweasel 1y ago
Because stock market gains can't keep up with the lose of the dollars value? Assuming that you bought your stocks using Euros or some other currency?
- rsynnott 1y ago
  Yeah, that's what they mean. Here's a euro-denominated S&P500 ETF: https://finance.yahoo.com/quote/CSPX.AS/ https://finance.yahoo.com/quote/CSPX.AS/ and a USD denominated one: https://finance.yahoo.com/quote/SPY/ https://finance.yahoo.com/quote/SPY/ Have a look at the 1 year view. Note the fairly dramatic difference.
  - CalRobert 1y ago
    If only it were easier to buy etfs that aren’t PFIC’s
mindok 1y ago
Not in Australia. Our dollar has taken a beating too. I guess digging holes and selling property to each other at ever higher prices isn’t that interesting to the rest of the economic world.
- lifestyleguru 1y ago
  > I guess digging holes and selling property to each other at ever higher prices isn’t that interesting to the rest of the economic world. Wow this is the case in most of the Europe too, what a coincidence. Fancy investing in our premium real estate?
- patrickhogan1 1y ago
  Australia printed a lot more money relatively than the US from COVID-19 until now, largely to capitalize on a booming commodities sector. A factor that led to some do weakness. But I think any weakness is temporary. With a stable government and abundant natural resources that will be even more sought-after in an AI-driven world and largely insulated from automation Australia’s long-term prospects look strong.
- actionfromafar 1y ago
  If that doesn't work, let's try "one part of the population chasing another part into concentration camps!" That'll attract investors.
  - lifestyleguru 1y ago
    Every empire starts with free labour. Cheap labour is too expensive.
    - actionfromafar 1y ago
      While there's a lot of truth to that, I think that works better in undeveloped economies, and in the past, than now.
  - defrost 1y ago
    Australia's already tried that one: https://en.wikipedia.org/wiki/Aboriginal_reserve https://en.wikipedia.org/wiki/Aboriginal_reserve
- brummm 1y ago
  Lol, Australia and Canada seem to be very similar in this regard.
- mensetmanusman 1y ago
  The Hole just got 10 ft deeper!
patrickhogan1 1y ago
This is spot on and cuts both ways. Much of the Japanese market's recent "performance" in US media is actually just yen weakness against the dollar. Strip out currency effects and the story looks very different. Same with European markets "performance" - we're often seeing monetary policy divergence rather than genuine outperformance in foreign markets. Always check both local currency and USD returns when evaluating international markets.
- argsnd 1y ago
  European markets are doing fine in Euro terms aren’t they?
  - hx8 1y ago
    You should evaluate foreign market results based on your domestic currency. Here is the US centric example. 1. You exchange Dollars for Euros 2. You buy a stock in Euros 3. You hold the stock in Euros for a period of time 4. You sell the stock in Euros 5. You exchange your Euros for Dollars. The difference in the exchange rate in step 1 and 5 can have a very large impact on your total return, often times a larger impact than step 3.
  - patrickhogan1 1y ago
    MSCI Europe is up about 8-9% in euros so far this year—roughly the same as the S&P 500 in dollars. But the euro itself has climbed ~10% YTD vs the dollar (≈ $1.02 → $1.12-1.18). So you get an ~18% gain if you invest in MSCI Europe in dollars. Europe hasn't "beaten" US stocks because its companies suddenly out-executed; most of the gap is the stronger euro. Not that it matters who’s "winning." My gripe is with US headlines that shout "Japan stocks are on fire" or "Europe stocks are on fire," when what’s really happening is that global markets are rising together and currency swings make one region look better than another.

mrweasel 1y ago

Because stock market gains can't keep up with the lose of the dollars value? Assuming that you bought your stocks using Euros or some other currency?

rsynnott 1y ago
Yeah, that's what they mean. Here's a euro-denominated S&P500 ETF: https://finance.yahoo.com/quote/CSPX.AS/ https://finance.yahoo.com/quote/CSPX.AS/ and a USD denominated one: https://finance.yahoo.com/quote/SPY/ https://finance.yahoo.com/quote/SPY/ Have a look at the 1 year view. Note the fairly dramatic difference.
- CalRobert 1y ago
  If only it were easier to buy etfs that aren’t PFIC’s

mindok 1y ago

Not in Australia. Our dollar has taken a beating too. I guess digging holes and selling property to each other at ever higher prices isn’t that interesting to the rest of the economic world.

lifestyleguru 1y ago
> I guess digging holes and selling property to each other at ever higher prices isn’t that interesting to the rest of the economic world. Wow this is the case in most of the Europe too, what a coincidence. Fancy investing in our premium real estate?
patrickhogan1 1y ago
Australia printed a lot more money relatively than the US from COVID-19 until now, largely to capitalize on a booming commodities sector. A factor that led to some do weakness. But I think any weakness is temporary. With a stable government and abundant natural resources that will be even more sought-after in an AI-driven world and largely insulated from automation Australia’s long-term prospects look strong.
actionfromafar 1y ago
If that doesn't work, let's try "one part of the population chasing another part into concentration camps!" That'll attract investors.
- lifestyleguru 1y ago
  Every empire starts with free labour. Cheap labour is too expensive.
  - actionfromafar 1y ago
    While there's a lot of truth to that, I think that works better in undeveloped economies, and in the past, than now.
- defrost 1y ago
  Australia's already tried that one: https://en.wikipedia.org/wiki/Aboriginal_reserve https://en.wikipedia.org/wiki/Aboriginal_reserve
brummm 1y ago
Lol, Australia and Canada seem to be very similar in this regard.
mensetmanusman 1y ago
The Hole just got 10 ft deeper!

patrickhogan1 1y ago

This is spot on and cuts both ways. Much of the Japanese market's recent "performance" in US media is actually just yen weakness against the dollar. Strip out currency effects and the story looks very different. Same with European markets "performance" - we're often seeing monetary policy divergence rather than genuine outperformance in foreign markets. Always check both local currency and USD returns when evaluating international markets.

argsnd 1y ago
European markets are doing fine in Euro terms aren’t they?
- hx8 1y ago
  You should evaluate foreign market results based on your domestic currency. Here is the US centric example. 1. You exchange Dollars for Euros 2. You buy a stock in Euros 3. You hold the stock in Euros for a period of time 4. You sell the stock in Euros 5. You exchange your Euros for Dollars. The difference in the exchange rate in step 1 and 5 can have a very large impact on your total return, often times a larger impact than step 3.
- patrickhogan1 1y ago
  MSCI Europe is up about 8-9% in euros so far this year—roughly the same as the S&P 500 in dollars. But the euro itself has climbed ~10% YTD vs the dollar (≈ $1.02 → $1.12-1.18). So you get an ~18% gain if you invest in MSCI Europe in dollars. Europe hasn't "beaten" US stocks because its companies suddenly out-executed; most of the gap is the stronger euro. Not that it matters who’s "winning." My gripe is with US headlines that shout "Japan stocks are on fire" or "Europe stocks are on fire," when what’s really happening is that global markets are rising together and currency swings make one region look better than another.