advice appreciated

[cautious]

Hello,

First thanks all for this website and forum that have consistently brought needed realism in these crazy times.

I would appreciate some advice.

I am in my late 40's, rent my primary residence, own a home in the country, have no debt and have limited earning capability due to health reasons (details of which are totally irrelevant). I live in Europe and my spending is thus in euros, my life style is tranquil, that is to say my expenditures are based on needs or obligations not on wants.

The bulk of my investments are in the US, distributed among 14 stocks and 13 funds (3 of which are international funds). I am dependent on the income from those assets, income which is of course in dollars though my expenditures are in euros. You see the main concern.

Generally speaking, the investments have been doing well. The stocks were purchased a long time ago and therefore any arbitration generates hefty capital gains. This can be rather problematic.

I have no particular desire to sell off all or most of these assets and bring them over to Europe. Aside from the forex and CG issues, it would generate an assortment of other headaches.

Given the worrisome (understatement) international economic situation, I of course starting asking myself can I afford to loose half the value of the assets and thus the income that goes with them? No, of course. Can I sustain the continued drop in the value of the dollar and how low can it go? Of course not.

I hold small positions in gold, silver and copper and plan to add to them little bit by little bit when I can. Aside from that, I am at a loss as to how to protect myself against the coming onslaught...

Any advice you all could provide would be much appreciated.

Thanks in advance.

Cautious

[jk]

you can hedge your stocks by buying long dated puts. that will cut into your income but help your sleep. alternatively you can hedge them by buying puts or selling short OTHER stocks. if the ones you hold are paying dividends they are likely to hold up better than the market in general.

you can hedge your currency exposure to the dollar with futures, which allow for high leverage. alternatively you could put some money into rywbx which is twice the inverse of the dollar index. the dollar index is 57% euros.

if you want to liquidate some of your stocks you could short against the box, or you could do a synthetic short by buying a put and selling a call at the same strike price. i'm not sure if there are tax consequences if you do that in this country, but given the fact that you are in europe, you do it through a separate european account.

[Jim Nickerson]

Americans want everything, but we cannot always have that.

I would sell my house in the country, and I am believing that is in Europa. Take the Euros and move back to the US and tough it out. Your long captial gains taxes might be less than you lose if your stocks and funds end up worth much less.

Jim

[cautious]

jk -- thanks for your suggestions. I am looking into rywbx and shall see about calls + puts; i've never used options so I'll tread gently.

jim - your advice is based on two initial assumptions, both of which are wrong, so i'll pass on that strategy but am open to hearing other suggestions!

cautious