Wednesday, February 7, 2007
US Dollar - MMM & GE
Some concerns have been raised about buying MMM or GE because of the potential of a rollover in the US economy and a depreciation of the dollar. Although I’m also a little concerned about the US economy and the dollar I am comfortable holding MMM in a downturn because 60% of their revenues now come from outside the US. In my opinion this acts as a natural hedge against a depreciation in the US dollar ie- US dollar goes down, but because they report in US dollars 60% of their revenues have to be converted back into US dollars which would inflate their earning, which will hopefully offset all (or some) of the losses you would incur from a depreciating US dollar.