| Raising money for emerging growth companies is not | | | | the United States. What comparison am I talking |
| as easy as it sounds. Believe me. I spent a significant | | | | about? Global currencies. |
| portion of my career running around the globe | | | | For the last seven years the value of the US Dollar |
| meeting with entrepreneurs and introducing investors. | | | | has been falling. Now, you probably don't think much |
| For a time I was based in London. That experience | | | | about currencies but you should. The problem, or |
| gave me a unique insight into the European continent. | | | | opportunity (depending on how you look at it), lies in |
| While in London I learned a great deal about Indian | | | | the fact that as the value of the dollar falls, the cost |
| food and fine French wines (among many other | | | | of other products become more expensive. A |
| things). . . but that's a story for another time. | | | | declining US Dollar can lead to inflation and economic |
| More importantly I spent my time in London learning | | | | turmoil. |
| how institutional investors thought and what they | | | | This is a nasty situation that could have a major long |
| focused on. I noticed one important constant. Every | | | | term impact on the US economy. But it's also a trend |
| businessman and investor I met kept one eye on the | | | | that we can make money from. |
| US markets. It didn't matter what their product was | | | | Shifting a portion of your portfolio into international |
| or what they were investing in - they all knew what | | | | currency is a great way to hedge your US Dollar |
| was going on in the US. | | | | exposure. Investing directly in foreign currencies is |
| Clearly the US economy has a big impact the world | | | | easy. There are a number of currency ETFs that can |
| over. . . sometimes in ways we least expect it. | | | | easily be bought and sold right in your own trading |
| The Europeans I met with thought in very global | | | | account. |
| terms. Let me give you an example. A few years | | | | Specifically, look at the CurrencyShares ETFs. They |
| ago I traveled with the management team of a | | | | created a number of different trusts each using US |
| leading alternative energy company raising money. | | | | Dollars to buy a large amount of a specific foreign |
| Without exception every institutional investor inquired | | | | currency. When you buy the ETF you buy a portion |
| about corporate valuations. | | | | of that trust. |
| Now, this is a very important question when raising | | | | The exposure you gain to these foreign currencies |
| money. If your valuation is too low you won't raise | | | | can be quite profitable. CurrencyShares offers several |
| enough. If it's too high you might scare away all of | | | | ETFs on various foreign currencies including Japanese |
| the investors and not raise any. | | | | Yen, EuroZone Euro, Swiss Franc, Canadian Dollars, |
| Every European investor had extensive knowledge | | | | British Pounds, and even the Australian Dollar. |
| about valuations not only in their own markets but on | | | | All you need to do is anticipate which currencies will |
| a global level as well. In contrast, most US investors | | | | move higher against the US Dollar. Remember |
| only focus on the US markets. | | | | valuation is relative and some currencies move more |
| Like all things value is in the eye of the beholder | | | | than others. It's important to understand not only |
| Relative valuations are important to understand. | | | | relative values, but potential impacts from interest |
| Today there is a major valuation trend occurring . . . | | | | rate changes, economic data, and market |
| and it directly impacts everyone living and working in | | | | performance. |