"Ruud" wrote in message
om...
(Tom Seim) wrote in message
om...
(Mike Stringfellow) wrote in message
. com...
The US dollar is now valued close to 0.75 Euro, down from its peak of
1.25 a couple of years ago. Analysts say it may go even lower, with
some projecting exchange rates of 0.7 (1.4 dollar to the Euro).

This has pretty much put the kibosh on my goals of buying a new
European sailplane. A model at, say, Euro 85,000 cost around $70,000
a couple of years ago, is now around $110,000 and may soon be at
$120,000.

Economic models would suggest a strong incentive for sailplane
manufacture in North America, but I wonder if the numbers of potential
sales would justify this.

Any thoughts?

Yes, invest your money and wait. For instance, if you put your money
in a high quality mutual fund you will begin accumulating principal.
Take your $70,000 and put in a Morningstar 5-star fund (i.e. Fidelity
Contrafund). If you average 15% return the numbers a
Year Amount
0 $70000
1 80500
2 92575
3 106461
4 122430
5 140795
6 161914
etc.

At some point the price of the glider, converted from euros, is going
to be less than your investment. BUY THE GLIDER! This is, simply, the
power of compounded interest.

Don't agree with my numbers? Then put your damn money into a mattress
and see what happens!

The moral of the story is that patience is on the side of the buyer.

Interesting story.
The only trouble with it is that an average return of 15% on your
investment is not enough to keep up with the free fall of the US
dollar.

It's time to drag out the old quote spoken by JP Morgan, "The market will
fluctuate". That's true of exchange rates as well as stocks. Economic
forces are largely self correcting especially in the international economy -
although the time scale of the correction may be long. The US economy has a
lot of problems but then so does all other world economies.

The low value of the US Dollar is largely due to the US central banks
interest rate cuts post "Dot Bomb" and 9/11. US interest rates are now on
an upward trajectory and that will raise the value of the US Dollar over the
next few years. International money fund managers know this and will be
slowly moving money into the US economy which will amplify the effect.

The advice to sit tight and invest is a good one. Maybe buy an old glider
and enjoy flying it while the exchange rate corrects.

Bill Daniels