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The information below seems to show that those who are invested in international markets will benefit from the devaluation of the dollar as they have this year. The reason is as the value of international currencies increase relative to the US dollar investments in international holdings increase in value even without future earnings from their sales.
https://www.morningstar.com/markets/will-dollar-keep-falling?utm_source=eloqua&utm_medium=email&utm_campaign=MorningDigest&utm_content=None_68062&utm_id=35352
In the first half of 2025, the US dollar saw its steepest decline in over five decades. The DXY index—which tracks the dollar against major trading partners—fell about 11% from January to June. In our view, the US dollar remains overvalued, and its underlying fundamentals are beginning to weaken.
In our view, the “free lunch” period for the dollar may be ending, with depreciation likely in the years ahead as US economic exceptionalism fades.
Morgan Stanley Research estimates the U.S. currency could lose another 10% by the end of 2026.
A Blackrock article from July reports U.S. equity markets were trounced by their international counterparts in one
Here is the rest of the sentence, sorry for the omission of below
of the largest performance gaps in decades.
Very interesting observation, David. Dollar depreciation really highlights the currency translation effect many overlook—international holdings can deliver gains even before fundamentals kick in. That said, it’s also a reminder that currency exposure cuts both ways; periods of USD strength can quickly reverse those tailwinds. For long-term investors, strategic international diversification (ideally with some hedging considerations) seems increasingly important, especially if the structural dollar decline narrative plays out.
This year was the first in many that I was happy to be an International investor.
This website usually argues against market timing. The premise of this article is market timing.
It’s also a case of, here’s more information, let’s react.
Somebody already posted a link to an article about international index stock investing, which is the solution to the problem. What is your allocation in foreign stocks? Do you want to increase it?
The premise of the article was for people to consider international stocks as part of a diversified portfolio. That is not necessarily market timing, but diversifying.
As for my equity allocation it is 30% domestic/15 international about the allocation of world index fund/ETF ie 2/3 US/1/3 international. The balance of my portfolio at 68 years old is 45% bonds about evenly split between a total bond ETF, short term, and short term TIPS ETF and 10% cash..
Our default position is a Vanguard global index. For context, we are in Australia. We feel like this provides us with exposure to US equities, but avoids concentration risk and the volatility that can come with one particular market.
Same here. For Jonathan’s take on it:
https://humbledollar.com/2024/11/stuck-at-home/
The post ends quite abruptly.
Sorry Randy the end of the post has been corrected
So will the United States’ economic dominance, if things keep going they way they’re going
I feel there’s a push to have the dollar dethroned as the world currency for the benefit of those who are at the top of the power stack.
It will all blow over in approximately 3 years.
Hi Mark, We will see…
https://www.npr.org/2025/08/10/g-s1-69741/changing-world-order-series
Yes, we do have international. It is part of being diversified. Thanks for the article link, David. Chris
Yes, I hold VTIAX – Vanguard Total International Stock Index Admiral – in both my IRA and taxable. I have held it for years. I see that it is below my target percentage and will add to it when I take my RMD this month. I will add to it in taxable to capture the foreign tax credit.
In reading other postings you have made on Humble Dollar I think your filing status for US federal taxes is single and as such if your foreign taxes withheld exceed $300/year then you could be subject to the foreign tax credit(FTC) limitations that are calculated annually on form 1116 when a single filer’s FTC exceeds the $300 threshold.
If your re-balancing causes your foreign tax withheld to exceed $300/year then you will create the need to file the form 1116 and possibility actually reduce your available FTC to a lessor amount (below $300) and cause your current year unused FTC to become a tax carry forward for both regular and alternative minimum tax(AMT) purposes and not necessarily the same amount for regular and AMT purposes.
If you are a DIY 1040 preparer be aware the software default that pulls foreign income into 1116 typically is 100% of the 1099 dividend source which should be limited to just the foreign dividend/qualified dividends/long term capital gain income. Such an error is not limited to DIYers as I have seen such errors initially made by inexperienced staff before being (hopefully) caught in review.
Thank you for the warning. My foreign tax isn’t close to the limit but I will bear it in mind.
I’m thinking of rebalancing, as the recent strong equity gains have put my asset allocation out of line. Because of this, I was looking at my Vanguard account this morning. I happened to notice my two UK-focused funds have outperformed my developed world equity index fund over the last year:
Global equity: 16.5%
UK equity: 18.75%
UK equity income: 23.5%
So maybe if you’re invested in the UK market, it just happens to be strong at the moment.