Since Abby Joseph Cohen is a permabull, I rarely agree with her. If I happen to be bullish when I listen to her appearances or read some of her stuff, I still rarely agree with the degree of her bullishness. And yet, she is where she is and I am sitting here writing this stupid blog. Obviously, she is brilliant so on this one occasion when I felt great about myself for entirely agreeing with her on something, I decided to memorialize it with this post.

Abby was just on CNBC and addressed the concept that investors should move towards multinationals to profit from the weak dollar argument. Her point was that it would have been a smart move years ago before the dollar fell and less smart now if the dollar stabilizes or heads higher.

I’ve discussed that repeatedly in previous posts and here is a sample from mid-June:

Other strategists have suggested that the low US dollar will benefit Large Cap stocks who have a higher percentage of overseas operations and therefore, get a bump in earnings due to currency issues. I laugh at that one too. Just pull up the USD index for the past 7 years and you’ll see that the Small Caps have outperformed regardless of the dollar being strong or weak and whether it was strengthening or weakening. And if the dollar finally starts to rise off the recent low levels, how will that work with their argument?

Loving the weak dollar so it can juice earnings is all the rage these days. If you can find a strategist who said you should buy multinationals before the dollar weakened, give them a pat on the back. Unfortunately, there are a ton of people who were hyping the great large cap outperformance that didn’t happen for years. The weakening dollar argument was more valid years ago but stock prices didn’t care. There were other reasons why the large caps did not do so well. Now that some of the large caps are finally doing better, many investors and strategists (other than Abby) are crediting the weak dollar. Investors often fall for what I call “opportunistic logic” - the things that make sense when they prove your case. Don’t listen to me on this weak dollar argument - listen to someone with real credibility - Abby, especially since I agree with her for once.