Is the Dollar dropping a good thing or a bad thing for the stock market ?

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) November 23, 2010 -- In the face of all of the bad news we keep hearing about the demise of the dollar, we keep getting the question of whether the dollar dropping is good or bad for the stock market.

The two charts I have attached will allow you to answer your own question. Pictures are the easiest way to teach (to see charts, please visit www.p3moneymanagement.blogspot.com).

The ramifications of macroeconomic moves are impossible to predict because sometimes the moves that were once thought to be negative may now actually be considered positive. The world's economic landscape is ever changing and "Impossible to predict"

Everyone has an opinion and that opinion is entitled to change at any time without any notice. Many of yesterday's gurus are not even mentioned today. Most if not all economists are lucky if they are 50% right. Most analysts are telling investors to get out when they should be getting in and getting in when they should be getting out (and I have 100's of examples of this).

Prognostication is fun and I have been right much more than wrong but it is a fools game. And you can still be right and lose money without the correct investment discipline to guide you.

All of the news in late 2008 and early 2009 was not only negative but boarding on catastrophic...but the market started rallying in March 2009 right when the needs was the absolute worst and has not looked back...up more than 50% since that point. Many investors are still watching and wondering when it will be safe to get in.
What I find fascinating is that many of the exact same headlines you read in 2008 you could find in the late 1970's and early 1980's. If I were to remove the date you would not know you were reading a headline from 30 years earlier.

The key is to not rely on the news or the economic forecasters or the doom and gloomers (that is what sells papers) to make your investment decisions. YOU FOLLOW THE MONEY...the flow of funds in the stock market. When the big institutions are getting in, you want to be getting in, regardless of the news. And when they start selling, you want to also be getting out. They control the market....you are just along for the ride.

The only reason the dollar weakness could be negative long term is because it creates inflation. Most commodities are priced in dollars and when it drops the commodity prices rally. This creates inflation and pricing pressures for most companies. With pricing pressures comes lower profits and a general slowdown in the economy. It is crazy how everything is linked.

In the short term, you can see from my charts that a lower dollar is actually good for the profitability of any company that does international business and that is why the market has been rallying over the last 2 years when the dollar drops.
The dollar dropping somewhat without inflation showing up is actually a good thing.

You should not waste your time worrying about the dollar or the economy or the government or anything we can't control. We can control which stocks to buy, when to buy them and when to get out.
Let someone else worry about all of the thousands of unknowns.

Invest Safely...P3

www.p3moneymanagement.com
www.p3moneymanagement.blogspot.com
www.joshweis.com

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