Currency exchange and US assets - stock marketI am blessed to live in Singapore , a country well known for its stability and peace.
Assuming I had invested 100K SGD dollars in US stock market - SPX in Jan 2016 at exchange rate of 1.44 to 1 USD.
That means I would have only 69,444 USD available to invest. And if I stayed in the game long enough and say I decide to cash out half of my positions, I am winning on both ends - profits from the SPX , from the low of 2000+ to 5000+ now , a difference of 3000+ points profits.
Also, the exchange rate is now in my favour, 1.29 to 1 USD as compared to 1.44 to 1 USD back then.
I am of the opinion for a very long time, at least in my generation, I would not be able to witness the US dollar being replaced by any currency. The whole world borrows in USD dollars and invest in their assets - stocks, gold, treasury bonds, etc. This appreciation of the currency wars we are seeing now is temporary and whilst it last, I would be investing more in US assets like stocks and gold.
I suggest you DYODD and not listen to gurus/experts telling you that the US market is collapsing, inflation is coming and overvalued or use WB holding 1/3 of his position in cash to get you out of the market. Yes, you can trim your position to take some money off the table but to quit completely is foolish.
Let's put things in context, WB is reducing his positions and not liquidating all his positions , considering he has billions of cash as capital to play the game. If your capital is 10k , you probably need 8% to make 800 bucks for the year. In WB case, just say he used 100 million to invest in the same SPX and at conservative 8% returns, he would have made 8 million in profits.
See, the position size matters a lot ! The smaller your capital base, you either need a longer time frame to ramp up your returns on compounded basis or choose to invest in riskier assets to gain higher returns (20-50%) eg. picking individual stocks, crypto, etc.
Do not neglect the exchange rates profit and loss over the years, it eats into your returns slowly but surely.........
