What is 'Dollar Bear'

A dollar bear is a term for an investor or speculator who is negative on the outlook for the U.S. dollar against other currencies. A dollar bear expects the U.S. dollar to decline against major currencies over time and will take this factor into consideration when positioning investment portfolios. Typically, a dollar bear will take action to protect themselves against what they see as inevitable decline in the U.S. dollar through moves such as liquidating their assets.

The term dollar bear comes in reference to a bear market, which occurs over a time period, such as months of years, when the U.S. securities prices fall consistently. A bear market is the opposite of a bull market, in which asset prices are up. Investors who believe in the value of the dollar, then, are often called bull investors. A bull investor will often take the opposite actions of a bear investor and invest in securities as a long-term financial strategy.

Although bull and bear investors are seen as opposites with bulls seen as optimistic and bears as pessimistic, they are simply investing strategies and someone might flip-flop their position at any time based on how they perceive the market. A dollar bear could very well become a bull investor and a bull investor could easily become a bear investor.

BREAKING DOWN 'Dollar Bear'

Dollar bears generally possess a gloomy outlook on the long-term prospects for the U.S. economy. They will bet against the dollar in general or specifically in relation to another currency. For example, they could go along the EUR/USD pair because as the pair increases it signifies that the USD is worth less. Since the U.S. dollar has a strong negative correlation with precious metals and commodities, a dollar bear may overweight investment portfolios in assets such as gold and base metals as a hedge against a continued decline in the greenback.

Example of a dollar bear

There have been many dollar bears throughout history as well as modern times. For example, in 2005, Forbes named Warren Buffet as one of the most well-known dollar bears. He was notoriously negative about the dollar during that time frame, as the value of the dollar to the euro dropped by 33 percent from 2002 to 2005. Current dollar bear David Tice said in February of 2018 that he believes the stock market will drop by 20 to 25 percent by the end of the year.  

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