Currencies

[Koikaze]

Good Morning, Stack

I have a kindergarten question. It's a kindergarten question because I've studiously avoided learning to think like an accountant (to my detriment, of course). Thus, I'm ill-equipped to think in international terms.

If, on January 2nd:
1) I lived in Belgium, where my native currency was the Euro
2) the Euro/USDollar exchange rate were 1:1
3) I bought 100 shares of JUNK (a U.S. conglomerate with great prospects, trading on NASDAQ) at $20.00/share.

I would pay 2,000 Euros for my JUNK holding

If, on July 2nd:
1) I still lived in Belgium, using Euros
2) The Euro/USDollar exchange rate were .9 Euros to the dollar
3) JUNK had appreciated to $21.00/share

Wouldn't the value of my investment have fallen to 1,890 Euros. Wouldn't my "profit" of 100 dollars actually be a loss of 110 Euros?

If this is true, why would a Belgian invest in a stock in the U. S. market? Is it some kind of play on the idea that, if the U. S. dollar is weak European industry is going to suffer?

I guess, if you are sharp enough to buy U. S. securities when the dollar is weak you have the possibility of a great return, IF the company you invest in does well AND the dollar appreciates. Sounds like one of those circus feats, where someone rides two horses with one foot on each.

Whew. Tough.

Fred