It also benefits multi-nationals as they repatriate profits back into dollars. (They get more dollars for every euro, etc.)
Well, maybe it’s time for the wind to change direction – or to re-think that wisdom. Gary Kaminsky, the former Neuberger Berman managing director says “a stronger dollar does not equal a weaker market.”
And he’s far from alone. In fact, Bespoke research shows that equities do better when the dollar rallies. During the last 5 dollar bull markets the average return on the S&P was 59%.
That’s largely because the stronger dollar signals strength in the US economy. And it generates new sectors of leadership. Typically, the industrials, airlines and retailers all benefit as the dollar gains. And it keeps a lid on prices at the pump – arguably the most important influence of all.
If we are heading into a period of dollar strength, what must you know?
I’d reposition my portfolio with some of the consumer names that benefit such as Proctor and Gamble as well as the airlines that benefit as oil comes down. And I’d consider the UUP, the ETF that tracks the dollar. says Kaminsky.
Especially, if you own energy and commodity related stocks I’d definitely put a hedge on and you can do it with the UUP, Kaminsky adds.
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