Do I invest with Europac? Yes, a fraction of my overall portfolio.
Has it paid off? Well, yes and no, but to be fair I’ve only been with them for less than a year. As another poster said, their focus is high yielding foreign stocks. I have received great dividend yields, amplified by the decline of the dollar. That has paid off, and frankly, that’s what investing used to mean (receiving a revenue stream more so than hoping for magical appreciation). However, the value of the portfolio is off some, although less than the S&P. I think that is mostly because of short term shocks to all stock markets from the US faltering, so although it makes me squirm, I’m pretty confident for the long term. So far, my experience with Europac has been pleasant, but they are very specialized to just focus on foreign stocks. We didn’t do much work on overall portfolio allocation. It looks like Rich’s firm Pacific Capital has similar strategies and looks at more of the big picture, but I have not worked with them so I can not vouch for them.
What do I think of his investment strategies, and the future of the dollar? I think they are good strategies because I agree the dollar has further south to go, but I personally feel more confident in useful commodities than foreign currencies or gold. I don’t really trust any central banks. Other banks in the world may debase their own currencies to try to prop up the dollar, in which case the exchange rate gain on foreign stocks may not be the best play. In that case useful things like food and industrial metals, things with intrinsic value, will have to rise further to reflect the loss in purchase power of paper money. Gold will likely go up too, but it strikes me as being almost as arbitrary as paper money. It is valuable because people declare it so. It’s really anyone’s guess what will happen there, where the biggest winners will be.
I think my answer “further south” to your viewpoints on the dollar question warrants a “yeah, back that up”. Bernanke has the federal funds rate at 2%. Last month the CPI rose by more than 1% in the single month. If that pace continues anualized we’re in double digit inflation, putting the real interest rate on federal funds at about -10% or lower. Basically he is paying banks to expand the money supply. The bailout of Fannie Mae and Freddie Mac will also require expanding the money supply. All in all, more dollars in circulation means they have weaker purchase power. Weaker purchase power means a decline in any measure of its value, whether other currencies, gold, or raw materials. That’s my take on it.
