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Investing in Foreign Bonds Hedges Against Falling Dollar

Posted by James Breen at 20 April 2008 18:9

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Posted by Michael Sexton on 4/10/2008 at 1:06 PM Posted in Investments It's a well known fact that most Americans invest their money in American-based companies and securities rather than looking to do so abroad. In part, this is due to a lack of knowledge about how to go about doing so and what the risk/rewards are. The purpose of this writing is to bring about awareness to a strategy being used successfully by many US investors .. Read the rest of this entry.

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Senator Barack Obama's "A More Perfect Union" speech on racism last week resonated widely and sparked loads of reaction across the political spectrum. The speech definitely provides us a teachable moment; one that I hope can extend beyond the typical duration of our collective cultural attention span and reach into our work in and with schools. Lest we succumb to all our competing distractions and affinity for selective amnesia, I've extracted and labeled what I think are some of the ..[More].

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While we're generally for keeping all-around courtroom bore Brad Grey out of Hollywood's legal spotlight in the future, a source tells Defamer that the Paramount boss and his Viacom overlords could face mutiny from hedge-funders unhappy with the way their studio investment is shaking out. Specifically, we hear the money men behind Melrose Partners -- which joined the 'Mount in 2004 under the Sherry Lansing/Jonathan Dolgen regime -- may take legal action challenging the underperformance of its ..next.

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Your hedging strategy can even be more focused than simply hedging the overall market. One example of a risk you can hedge is currency risk. If you own shares of a company with many foreign customers, such as Caterpillar ( CAT), your investment may be at risk of an increase in the value of the dollar. To hedge this risk, you could invest in shares of UUP (PowerShares DB US Dollar Index Bullish Fund). If the dollar increases in value, Caterpillar's profits and stock price will likely suffer. The increase in the value of your shares of UUP can help offset the loss in your Caterpillar investment. Along the same lines, Caterpillar has a large exposure to steel prices, so an increase in the price of steel will drag down Caterpillar's profits. The ETF to hedge this risk could be SLX, the Market Vectors Steel ETF.


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