Redrick Terry:
4 Your Money time now. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. David, welcome back.

David Nelson:
Thanks, Redrick, appreciate it.

Redrick Terry:
Of course. So you’ve talked some on the show about investing in international stocks and bonds, but it sounds like there might be more than what meets the eye in that portion of it. Is that right?

David Nelson:
Yeah, there is. If we invest in the U.S., I mean, big picture concept, we open up an account. We put our money in there. That money is then translated and put into some stocks, as far as in the United States, what have you. When we start talking about going abroad and putting our money as far as in other markets. In other words, I may want to invest in Japan or, let’s say, Europe, what have you. What takes place is I deposit my money, but now that has to be swapped out from dollars to yen or to euro. That, again, depending on where the dollar goes, that could be a big, big, really important decision as far as that needs to be made.

David Nelson:
Then, again, once it’s purchased, now in order to redeem and get your money back, we have to unwind that particular situation, as well. So it’s much different. It’s important that people diversify, but, again, the dollar is such a really, really important point as far as making that decision, having it be a good one.

Redrick Terry:
Yeah, currency of big importance there. So is there a way that investors can actually visualize this impact?

David Nelson:
Yeah. The chart that I brought today, I think is just terrific as far as trying to illustrate this. And, again, we’ll just talk, start on the bottom here. As a general thumb, this is the dollar compared to other currencies, as far as yen, euro, etc. And we’ve had this really nice run over the last four, five, six years, and so that translates into, again, if I’m investing as far as abroad, not so good. The top is really what we want to drive home the point here. So we’ll start with the red. This is the world index, and this is in local currency, local currency meaning euro, yen, what have you.

David Nelson:
And if we look at it since 2014, and we bring this forward, we’ve had a really, really nice return here. Now, the only difference in the blue line, what we’re illustrating is this was… We’re a U.S. citizen. We’re converting it, put it into the other currencies, and you can see the drag that took place over this period of time. Most of this can be attributed to the dollar, as far as its strength during that window compared to the other currencies, as far as around the world.

Redrick Terry:
Yeah, and you mentioned there were a number of ways that currencies can kind of impact investors’ portfolios. So what other insights are there as far as that goes?

David Nelson:
Yeah. So we’re now… make the transition to, and I’ll grab John Deere in our backyard, as far as the number of sales that they have abroad. They’re a U.S. company, but they sell abroad. So the theory is, as far as with that, I can oftentimes kind of hedge the currency through buying a John Deere or a multinational-type company. Again, it’s really important. The currencies really affect it. They affect it as far as at the company level, but they also affect it as far as at the investment level. And, again, over a period of time, if you can get that call right, as far as the dollar going up or the dollar going down, that can really add to returns over a period of time.

Redrick Terry:
Well, certainly. David, thanks so much for the information. We appreciate it, as always.

David Nelson:
Thanks, Redrick.

Redrick Terry:
And if you missed any part of our discussion, we’ll put it on OurQuadCities.com.