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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Boca_PETE who wrote (14560)	6/19/2000 3:01:00 PM
From: w0z	Respond to of 15132

Pete, regarding currency risk, if you want to bet on the dollar weakening, that's what currency futures are for, which is a pure play on currency. All the major multinationals I know of use currency hedging to remove currency risk from both their income statements (risks due to timing changes between when orders are booked and when they are billed) and balance sheets (assets in foreign currency go up or down when translated into dollars...gains or losses must then be recognized on income statements). This costs them a little in terms of insurance but removes the bulk of currency risk from both their income statements and balance sheets. Yes, every once in awhile you see a company that doesn't understand this and takes a hit, but they quickly learn that this can be easily avoided by hedging properly. And BTW, I forgot another big issue which is the degree to which foreign markets can be infiltrated with corruption, politics, graft, etc. to influence their markets. Even though we occasionally have the mob involved in penny stocks, US markets are immaculate compared to many foreign markets...especially in underdeveloped countries (Russia to name one!)