This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Three Ways to Play a Falling Dollar

NEW YORK ( TheStreet.com) -- The fundamentals of the dollar remain weak, and the currency continues to lose ground against its counterpart currencies as the U.S. government continues to borrow money and drive up the deficit. Although this is discouraging news, investors can capitalize on the dollar's weakness in three ways.

First, one can utilize a declining dollar by investing in companies that make goods domestically and sell them abroad. It is fairly self-explanatory that a weaker dollar attracts foreigners who want to purchase cheaper goods and, in a larger sense, cheaper assets.

When it comes to assets, foreigners are looking at buying up cheap U.S. real estate in particular. According to a survey conducted by the Association of Foreign Investors in Real Estate, foreign lenders are planning to increase their lending by 58% in the U.S., and equity investors are expected to increase their investment activity by 73%.

Investors can benefit from this by taking a look at the iShares Dow Jones US Real Estate (IYR). The ETF is up 88% from its March low of $22.21 to close at $41.66 on Tuesday.

Another good play on companies that have heavy exposure overseas is through technology. A diversified play on technology is the Vanguard Information Technology ETF (VGT), which is heavily concentrated in large-cap stocks. The ETF is up 69% from a March low of $29.36 to close at $49.74 on Tuesday.

Lastly, a weak dollar makes commodities more attractive to foreign investors. Just yesterday, gold hit a yearly high as the dollar continued its decline. A good way to grab broad exposure to commodities is through the PowerShares DB Base Metals (DBB) which gives exposure to aluminum, copper and zinc, which will all see an increase in demand as the once almighty greenback falls. To add icing to the cake, DBB will also benefit as emerging and frontier markets continue to grow and prosper. DBB closed at $17.93 on Tuesday, up 64% from a February low of $10.95.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
IYR $77.92 -0.03%
DBB $15.99 0.69%
VGT $110.12 0.04%
AAPL $130.39 -1.70%
FB $80.74 -1.40%

Markets

DOW 18,110.14 +72.17 0.40%
S&P 500 2,114.76 +5.84 0.28%
NASDAQ 5,055.4220 -4.8240 -0.10%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs