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mgsloan t1_j2v0ne9 wrote

Reply to comment by Gaoez01 in 2022 Asset Return [OC] by rosetechnology

Yup, it makes no sense to include it on this graph. Text at the bottom says it is the DXY index. So, it is being measured against a mixture of foreign currencies.

One way to make it almost kinda make sense would be to flip it upside-down and label it "foreign currency"

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DragonBank t1_j2varsm wrote

But even then the others aren't labeled with exchange rates in mind so it makes no sense. If I take a dollar and put it in equities I lose 25 pct. If I take a dollar and put it in dollars I have the same investment I started with. If I take a foreign currency and invest in a dollar I may make a gain, but if I take a foreign currency and invest it in us bonds or us assets I lose an amount that isn't the number pictured here.

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mgsloan t1_j2vex3s wrote

Yup, but we can reasonably assume the others are based on USD valuations.

I did realize I got the "flip upside down" wrong, it would be the reciprocal instead, which for low percentages is nearly identical (1 / 1.1 = 0.909) whereas flip vertically gives (1 - (1.1 - 1) = 0.9)

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NaturalProof4359 t1_j2vmxcv wrote

That’s a solid point.

I’d also love to see the dollar in purchasing power, as well (which should be -5 to -10% dependent on time period).

DXY just shows how well it was doing vs the basket of common global trade based currencies.

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