Shouldn’t stock price correct itself to account for weak dollar?
Say dollar looses 50% of it’s value, does this mean international company like Apple or Google is suddenly worth 50% less?
Also, do you guys know if companies like MSFT that have tens of billions “in cash” — do they actually keep all of it in USD on the bank accounts?
Yes and no. Stock price is derived from earnings and so it depends on the currency of the earnings. Apple earns lots of money offshore so as the dollar weakens that cash flow becomes more valuable.
However, whether the stock price falls is almost irrelevant as the dollar share price is now worth less to you in terms of pounds.
The cash won’t be held in cash but cash equivalents and it is spread out in terms of currencies but, just like currency reserves in general, it is mostly in US T-bills.
However, whether the stock price falls is almost irrelevant as the dollar share price is now worth less to you in terms of pounds.
What I mean is that the company is then becoming relatively cheap to any new non-us investor so people should be seeking to buy it and thus drive the price up and balance the dollar move (in theory)
Yes and no. Globally, retail investors do not drive pricing in highly liquid stocks like Apple.
It would still mainly depend on the reasons behind the dollars decline. Normally a falling US dollar is associated with higher rates of growth outside the US which would likely see large amounts of institutional money flow out of US stocks rather than into them.