Question: What is good about the falling dollar? Everyone is talking about how bad it is. There must be another side to the picture.

Brenda T.

Answer:

Dear Brenda,

Such an interesting (and good) question. You're quite right -- everyone discusses the negatives surrounding the weak dollar -- but rightly so. It's generally not a good thing for Americans.

However, there are a handful of positives. Some of them might trigger ideas about related investment strategies.

1) The weak dollar makes American-made goods cheaper overseas. This obviously gives a big boost to companies who export their products. These companies are generally referred to as multinationals. There are specific publicly traded multinationals and a number of specialized mutual funds that could see a positive impact from this situation.

2) The boost in U.S. exports has offset some of the negative economic impact resulting from the turbulence in the housing and mortgage markets.

3) The strong export situation has mitigated to some extent the U.S. trade deficit, putting it more in balance. In fact, it appears as though 2007 will wind up with a smaller trade deficit than 2006, although that's not a given and we won't know until the end of December.

4) The weak dollar is a positive for many businesses involved in tourism. Europeans (and others) are finding vacations and business trips to the U.S. a real bargain. Even more and more Canadians, whose dollar is now stronger than ours, are taking U.S. vacations.

And, whether coming for work or pleasure, Europeans, Canadians, Asians and others spend a lot of money while they are here. Key tourist spots as well as major business and convention cities are seeing this reflected in higher room occupancy, greater call for tourist services, longer lines at theme parks and tourist sites plus increased sales at many retail stores, boutiques and restaurants.

5) Some foreigners, when they find properties they consider a good value or a bargain, are investing in U.S. real estate. Given the increase in housing foreclosures, this could be positive for the sagging subprime mortgage market, although it certainly will not fully solve the situation.

Good luck!