Currencies Impact Stock Market Profits
2015 started with an eventful January. The continued decline of the Euro versus the US Dollar had a major impact on the stock markets around the world.
During January, the German DAX gained 9.1% and the S&P 500 lost 3.1%.
However, this is before taking into account the impact of currency price developments.
Measured in Euros, the German DAX gained 9.1% during January. However, measured in US Dollars the DAX only gained 1.7% during January.
Measured in US Dollars the S&P 500 lost 3.1% during the month. However, measured in Euros, the S&P 500 gained 3.9%.
Stock Market Profits in Dollars and Euros
European investors gained during January, regardless if they invested at home or in the US markets.
US investors had a more difficult month. They could have gained some profits from investing in the German DAX. But that would have required to short-term time the currency and stock market perfectly.
At Stock Trend Investing we do not pretend we are that skilled. We just follow the long-term trends and are happy with the January gains for the DAX.
Note that the S&P 500 is up 11.9% for the last 12 months, even after the 3.1% decline during January.
These developments show the benefits of having a global allocation of your investment portfolio.
Read here more about investing internationally and drop us an email when you have any questions on this.