Why Investors Shouldn’t Short the Dollar: Strategist

It has been a rough 2009 for the U.S. dollar—it’s almost down 11 percent, but 2010 could be a different story. David Dietze, president and chief investment strategist at Point View Financial Services shared his insights on the greenback.

“The dollar has been one of the most crowded trades and it’s almost like a negative bubble,” Dietze told CNBC. “It’s so fashionable now in investment circles to bash the U.S. dollar whether it’s due to inflation, towering budget deficits, runaway spending.”

Dietze said most investors are negative on the dollar and as a result, they are building their portfolios on foreign stocks, currencies and commodities.

However, Dietze said he expects a “bounce” in the dollar and the key metric is to look at interest rates.

“We’re looking at plays that would benefit from a stronger dollar,” he said. “We’re now looking at domestic plays—United States treasury debt, smaller utilities, telecoms and potentially regional banks could profit by a strengthening in the dollar.”

• Watch Dietze's Previous Appearance on CNBC (Dec 4, 2009)

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• Dollar May Continue Rising Even Without Fed's Help
• Art Cashin: Dollar Trade Could End 'Very Badly'

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Disclosures:

No immediate information was available for Dietze or his firm.

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