The dollar continues weakening … how to turn this into an advantage … how Louis Navellier and Matt McCall are preparing for 2021
Millions of Americans who are being fiscally-responsible — living under their means and squirreling away savings into the bank — are still losing wealth.
Here’s why …
What you’re looking at is the U.S. Dollar Index.
It’s a measure of the value of the U.S. dollar relative to the value of a basket of six major global currencies — the Euro, Swiss Franc, Japanese Yen, Canadian dollar, British pound, and Swedish Krona.
It’s now at levels not seen since early 2018, and is on pace for its worst 4th-quarter performance in 17 years.
***To be clear, this doesn’t mean the sky is falling, and this is not a gloom-and-doom Digest
Rather, a weakening dollar has its pros and cons, so an objective perspective is required.
For example, if you’ve been saving money in your bank account, planning on taking that European vacation once the world begins reopening in 2021, this weakening dollar is, in fact, bad news.
It means the exact same trip you began planning last spring is now going to be significantly more expensive — approaching 10% more expensive.
Below, you can see a chart of major currency returns against the dollar here in 2020. This is what a more expensive foreign vacation looks like.
On the other hand, a weakening dollar is great for hard assets — for example, real estate, gold, or bitcoin. That’s because more of these less-valuable dollars are needed to purchase the hard asset. This acts as a sort of “back door” bull market, driving up the dollar-denominated price of these other assets.
And in fact, home prices, gold, and bitcoin are all up sharply from spring levels.
So, a weakening dollar isn’t necessarily good or bad — but it’s significant.
And that means you need to be very deliberate about what you do with your money so that a weakening dollar helps you, rather than hurts you.
***The weakening U.S. Dollar was one of the 2021 storylines that investing legends Louis Navellier and Matt McCall addressed in their Early Warning Summit 2021 last week
For any readers unaware, last Thursday, Louis and Matt sat down together to discuss the key issues they see shaping the markets in 2021.
The evening turned into the biggest event in InvestorPlace history, with tens of thousands of investors tuning in. We’re thrilled that so many people benefited from this glimpse ahead at next year and learned about the Power Portfolio 2021 — the best-of-breed portfolio that Louis and Matt have engineered to outperform next year.
For newer Digest readers, the Power Portfolio 2020 just wrapped up, posting a return that was 6X the Dow’s performance. Louis and Matt are looking to best this return in their Power Portfolio 2021.
And same as last year, the Power Portfolio 2021 comes with a guarantee — if its return doesn’t 3X the return of the Dow Jones, then subscribers will get the following year’s Power Portfolio for free. I’m not aware of any other such promise in the entire investment newsletter industry.
Now, returning to the issue of the weakening dollar, let’s address it in more detail. As noted above, this will be a big headwind for many Americans, yet it a tailwind for investors who understand its impact on the investment markets.
***“Estimates say, in 2020 alone, the U.S. has created 22% of all the (U.S. dollars) issued since the birth of the nation.”
That startling quote comes from bitcoin.com.
Take a moment to let that truly sink in …
In this nation’s entire history of currency creation, our government has created almost a quarter of its dollars in this year alone.
The U.S. response to the coronavirus was at $4 trillion earlier this year. And this past Sunday, our politicians tacked on another $900 billion when they reached an agreement on the latest pandemic relief package.
To be clear, this is money that the United States does not have.
It is created from thin air … backed by nothing more than good faith in the federal government.
This mind-boggling currency creation is setting the stage for a significantly weaker dollar in the quarters and years to come.
From Bloomberg:
It may seem strange to be worried about inflation in the midst of a global recession, a pandemic and huge political ructions in the U.S., but I strongly suspect that it’s about to pick up both soon and sharply …
Prices are now rising strongly, in part because Asian growth is humming …
U.S. import prices, for example, are rising strongly. Durable goods prices are on a tear. There are signs that services inflation is also rising.
A lot of companies have already been put out of business and many more are likely to go to the wall. There has been, then, severe losses to economies’ supply potential.
All of which means that the path of least resistance when demand picks up is higher prices.
***So, how should an investor prepare for an inflationary environment in 2021?
For that, let’s turn to Louis.
In his Market 360 update from last week, he pointed toward for a specific asset class that a weaker dollar will help:
… if the current weak dollar environment persists, there’s no reason to worry, but it does have some specific implications and advantages to watch for.
A cheap dollar is a windfall for multinationals, as their products are cheaper overseas. Once the international currencies are converted back to dollars, it pads the multinationals’ sales.
You can see in the chart below how multinational stocks outperformed domestics when the dollar was down over four prior decades in this chart from Fortune …
Lately, multinational tech companies have been shining while the dollar has dropped.
As you can see in the chart below, shares in S&P 500 Information Technology sector stocks have soared 77% since the bottom on March 23.
Superior stocks with strong sales and earnings, like those Matt McCall and I hand-picked for the Power Portfolio 2020, did even better.
As an example, Louis points toward JD.com. It’s a Chinese e-commerce giant that was a top-performer in the Power Portfolio 2020.
Below you can see JD climbing 131% here in 2020, compared to the S&P’s 14% gain.
***A weak dollar is just one the market dynamics that Louis and Matt have factored into their 2021 Power Portfolio
Back to Louis:
The reality is the convergence of new technologies like artificial intelligence (AI), 5G, precision medicine, the Internet of Things (IoT), driverless cars, and the blockchain are re-creating the very framework of modern society.
Which is why we believe 2021 will be one of the greatest years in history to be an investor …
The early readings from my quant-based systems are off the charts.
As we wrap up, how will a weakening dollar impact your portfolio?
But that’s just the first of many questions you need to answer.
Do you feel that your stocks are well-positioned for a Biden presidency? What about the explosion of green energy? How are you playing the stay-at-home trend versus preparing for a post-vaccine economic re-opening?
If you’re not sure how to answer these questions, there’s still time to get in with Louis and Matt in their Power Portfolio 2021 (which, by the way, is already up 5% since last Thursday, with one holding already up double-digits).
You’ll be getting Louis’ and Matt’s top stocks for 2021 — an elite portfolio tailored to the trends that will shape the market next year.
On that note, I’ll let give Louis the final word:
This last week before the holidays is the perfect time to “lock and load” for the next year. If you’re not sure where to look, then I encourage you to check out our Power Portfolio 2021. Matt and I don’t want you to do “average” next year, we want you to bring in extraordinary returns.
So, the Power Portfolio 2021 is our exclusive guide for positioning your portfolio to take advantage of all next year will have to offer investors. We’ve honed in on 9 stocks we expect to crush the market and released all the names on Thursday.
If you’re interested in being a part of this exciting wealth-building journey, please click here. After you sign up, you’ll have full access to our full Power Portfolio 2021 Buy List, all of which are trekking higher already.
Have a good evening,
Jeff Remsburg
