Since our report just four weeks ago advocating buy the dip, the SP500 is up almost 9%, hitting a record on Friday, and up a modest 4.5% for the year. Many people have noted however that their Australian dollar superfund balances however have barely moved this year. How does this make sense?
Here are the SP500 index and the AUD / USD charts for 2026 year to date.
Do you see it?
The AUS has surged this year by over 7%, in effect devaluing the balance of funds heavily exposed to US equities, as most Australians are. This does not mean you’ve lost money, but it does mean it’s a bad time to drawdown from US stocks. Correspondingly, it’s a good time to BUY US stocks, and especially those that are under-valued.
It is not the intent of this site to make suggestions about what stocks meet that criteria.
So, if one must draw down, does one liquidate European stocks?
Er, that’s a negative too. The AUD is also up against the Euro! The strenghtening AUD is attributed mainly to interest rates having increased by half a point this year, as well as increased commodity prices (iron ore, coal, minerals). The EUR to USD is almost flat, as is the USD to other developed markets such Japan, Great Britain, Canada. So commentary that the ‘USD is down’ are not correct. The AUD is unambiguously up against all those currencies.
So, you need to draw down from your Australian Superfund right now. What do you do?
Two options – draw cash, or sell Australian equities. And that’s a lesson in structuring your portfolio with some international diversity to accommodate times like this. BHP for example, which has been up and down, most down for a long long time is up 22% this year, reaching an all time high on 2 March of $59.39, but still around $56. This is the type of opportunity you’d have to not lose 7% of your money in the currency conversion affecting your super, selling USD back to AUD.