Why trade in USD for NYE & nasdaq if USD is going to be worthless soon?
care to share your opinion?
Ignored
... really?
What do you think happens to stocks when mass inflation kicks in? The companies don't lose value just because the dollar does.
Being in the stock market is an inflation hedge. Mind you, it's also pure market risk which might negate any positive moves due to inflation, but protection from a declining dollar value non-the-less.
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That aside, if the USD becomes worthless overnight, we'll all have way more problems than picking a market to trade. I can't see it going anywhere at a pace different than what we've seen (slow and gradual decline over decades.)
I partially agree with Jack that all things being equal, inflation will generally take stocks higher BUT we must also realize that a fast depreciating currency can have a negative impact on local businesses & their profits too, & accordingly a negative impact on their stock-prices.; of course, multinationals might be less affected.
I agree that it's unlikely that USD will become worthless overnight, although I don't think the decline will be "slow" as such but it will likely be gradual.
In fact, there's a good chance that Euro might become worthless overnight, if one of the major countries, say Germany, decides to leave EU or any other significant event (may be collapse of Japanese govt-bonds market!). It was already predicted that a monetary union won't last without a fiscal union, so either EU will have to be turned into "United States of Europe" making it into single country to ensure monetary & fiscal union or else the Euro will be dead; & there's a growing Euro-skepticism within people inside EU as their socialist-dreams crumble; so last thing I'd do is keep my savings in Euro.
Asian currencies aren't too prominent, most of them are pegged partially or fully to USD or Euro & many of those countries lack self-confidence to drive themselves forward on their own when US & Europe tumble because they have bought into the Keynesian myth that consumption drives growth rather than production.
I'd look to regularly convert at least half of my income & profits into gold/silver but it might be worth the risk to keep a reasonable amount of paper-currencies to hedge oneself against short & mid-term pullbacks in precious metals since we can't be sure of exactly when precious metals will return to the fore as monetary medium. For diversification & short-term risks, apart from USD, CHF might be worth a look as Swiss are known for their strong policies, some AUD mightn't hurt.
So if you want to trade other markets then that's ok but don't think that it's going to protect you from currency-risks, only precious metals, commodities & other tangible assets can; at the end of the day, USD is toilet-paper but so is Euro, Yen & others.
i do like the CHF..in fact i switch from USD to them few months back..
but you know the euro break up can deal an impact on swiss too?
the reason is swiss is peg with euro?
Ignored
Peg is maintained by buying/selling of both currencies, that is, when EUR goes down, Swiss issue more CHF & buy EUR with them, causing the market-demand for EUR to go up while increase in supply of CHF lowers its value; this is a deliberate process, not some automatic thing. So when EUR collapses all of a sudden, Swiss aren't going to buy worthless EUR & kill their currency, nobody is that stupid. The peg has been there as a gesture of support because EUR-dependent economies will affect Swiss economy as well but in case EUR becomes worthless due to lack of faith & demand then Swiss aren't going to follow it down the hole, in fact, it's sort of an improbably task in itself to "peg" it at the time because Swiss might have to issue enormous sums of CHF & practically flood the market with CHF like a brainless maniac in order to do that, & again, nobody is that stupid. Once the collapse comes, Swiss will leave EUR on its own.
So in case of a collapse of the EUR, the peg between EUR-CHF isn't going to matter much but there will be other factors -
1) Fall of EUR causes a distrust about the European market & European currencies - this could have a negative effect on CHF as there might be a huge sell-off in CHF but the effects might be temporary.
2) Fall of EUR causes many Europeans to go for CHF as the next best paper-currency option, especially since it has been known for its solidity - this will have a positive effect on CHF (unless Swiss devalue & dilute the effect pretty quickly) as it would cause an increase in demand for CHF, which may cause even non-Europeans to jump in on the ride & increase CHF's value further.
Which way things go depends on how the two sentiments interact, if 1) is dominant market-sentiment then it could see a (theoretically) temporary negative impact on CHF while if 2) is the dominant market-sentiment then CHF might see a temporary rise.
Who knows what other factors will be there, markets are very complicated phenomena, they are a hodge-podge of all the market-participants' thoughts & actions put together & of course, all people are different in what they think - that's why government central-planning fails.......that's why 90-95% traders lose......& so on.
Nonetheless, it would be too risky to rely too heavily on ANY toilet-paper currency, be it CHF, USD or whatever, as I've said, it's ok to have some of them to hedge oneself against the possibility of pullback in real assets during the upcoming (likely global) depression but eventually, markets will reject the toilet-paper as money, they always have, just look at history of paper-currencies, & when that happens, it's the people holding precious metals, commodities & TANGIBLE assets will be the real winners.
“Paper money eventually returns to its intrinsic value ---- zero.”
-Voltaire
