Ask The Compound

The Stock Market Rallied. Now What?

6 snips
Apr 30, 2025
The hosts dive into the fluctuating strength of the U.S. dollar and its impact on investments. They explore the nuances of investing in bonds versus high-yield savings accounts, alongside strategies for managing debt and liquidity during tough times. A heartwarming mission to educate high school students about personal finance is also highlighted. Plus, they discuss the importance of effective financial habits, the advantages of credit cards, and innovative ways to teach young people about the power of compounding wealth.
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INSIGHT

Long-Term Dollar Stability

  • The U.S. dollar index has hovered around the same long-term level since the 1970s, showing no clear trend up or down over decades.
  • A strong dollar tends to weigh on international sales while a weak dollar boosts the performance of international stocks when converted to dollars.
INSIGHT

Dollar Strength and Asset Performance

  • Strong dollar periods often coincide with U.S. stock outperformance, while weak dollar periods favor international and emerging market stocks.
  • Gold and foreign stocks do better when the dollar is down, showing currency impacts on asset returns.
ADVICE

Use Market Volatility to Rebalance

  • Reassess your risk exposure especially if you've been tempted to sell due to market drops.
  • Use market dips and rallies as an opportunity to rebalance rather than trying to time big moves.
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