Thoughts on boycotts.

[eallen]

I'm skeptical that product boycotts in response to the 2004 election make much sense. The red and blue states are all shades of purple. Companies cross state lines as well as political boundaries. It's not always easy to tell the companies that benefit from a specific product purchase, and in any case, it takes a lot of work to track this for every purchase. Even the notion that you can tell a company's color by looking at its political donations is suspect. Those donations might be to a specific candidate or might be motivated by a specific issue related to the company's business, rather than indicating its management's overall political stance. Yes, I'm still boycotting Dominos Pizza. But trying to guide all one's purchases in this fashion is difficult, and its effect is dubious.

What makes more sense to me is to do something on the investment side, that both expresses a loss of confidence in US fiscal policy, and protects oneself from the effects of this. In other words, shift your investments, both retirement and savings, to reflect political reality. Those moves might include:

* Avoid fixed-rate US bonds, especially those with longer duration.

* Move your cash out of the dollar and into other currencies, such as the Euro, looney, and yen.

* Move equity investments from the US to global stocks.

Most of these moves are easily accomplished by moving from on mutual fund to another. Unlike a retail purchase, which is a one-time event, investment assets that are shifted stay shifted until investors see a changed environment and shift them again. Most of my dollars aren't coming home until this nation gets its economic act better together. The 90s were the decade to buy American. The next decade looks to me just the opposite.

Caveat: Like all investment advice, mine sometimes is dead wrong. The Bush economy might surprise me, and rebound strongly, carrying the dollar with it. If you shift out of the dollar and take a bath, I'll cry with you, having taken the same bath, but you're ultimately responsible for your own investment decisions. My sole argument is that if you have a view similar to mine on Bush's economy, and want to signal this with your money, as well as to protect yourself, this seems to me the way to do it. If you decide similarly, you must investigate for yourself the specific investments you want to make.

Just my two cents.

[politicaholic]

1. Beware of two things:

When it comes to currency you may find yourself being taxed twice if you're importing money. This can be costly.

Taking money out of your own economy only hampers it's growth. Try investing in specific funds that bolster small business. Instead of moving your money out, do some research and invest in your local community.

I understand your suggestions and yes the economy sucks, but loss of hope in the U.S. is the greatest tool conservatives can use against us liberals.

[eallen]

2. Interesting points...

(1) There are several ways to keep your savings outside the dollar, without importing currency. There are mutual funds that are essentially money market funds in a chosen currency. Some US banks also offer CDs denominated in other currencies. These have the advantage over actual currency that they pay interest.

(2) I don't view this as a loss of hope in the US, but as a loss of confidence in its current leadership and their policies. I have no doubt that the US will rebound strongly when those change. By preserving my capital outside the US until then, I will be better positioned to reinvest it in the US when that once again makes sense. In the meantime, I don't see much point in trying to use my meagre savings to prop up the dollar against Bush's deficit. I don't think the entire economic might of the US is adequate to that purpose.