What A Strong US Dollar Means To You
When the dollar is strong two things are going to happen. The first one is the price of US exports become more expensive. As result companies that have a lot of their revenue coming from abroad have to lower their earnings. On the other side is our dollar can now go further for companies that import large amounts of raw material from abroad. You will also pay less for foreign goods.
Learn about the effects on the strong dollar and how to invest.
The strong dollar will shave about a half a percentage point from GDP growth — all things considered. It also removes some of the edge from U.S. inflation as import prices decline, reducing the urgency for the Federal Reserve to raise interest rate hikes. We still see the Fed raising rates, but not until midsummer or so.
If you are looking to buy a stock that will benefit from the strong dollar you want a company that imports a lot of raw materials like Alcoa. You may also considering buying a foreign company that exports to the US. Siemens or L’Oreal could be a great buy because the state of the European economy has made these stocks cheaper. If you have thought about backpacking across Europe this could be the time to go because your dollar is going to take you further.
Read about who benefits from the strong dollar.
About Shaun Archer Tatum Shaun works in corporate finance in New York City. He has done financial consulting for several start-ups and has worked at several Fortune 500 companies. He has contributed several finance/investing articles on Seeking Alpha which have been published on Yahoo! Finance.