May 14, 2026
The US dollar accounts for 58% of foreign currency reserves today, down from 70% two decades ago. The US government's freezing of roughly $300 billion of Russian central bank reserves turned the dollar into a political weapon and undermined the comfort countries (even adversaries) had in it. Central banks are now accumulating gold as if preparing for an Indian wedding.
The Iran war, an unraveling of post-WWII alliances, and a US borrowing 6% more than it earns are all reacting to the same underlying shift: the assumptions behind US exceptionalism are quietly being rewritten.
I walk through what that means for portfolios, and why our exceptionality was not a gift from the economic gods but partly gifted to us by Lady Luck. I work through how to think about the dollar's slow decline (not binary, but billions of incremental decisions, like Vietnam and Brazil settling trade outside it, or India buying Middle East oil in local currency). I discuss why we added to gold despite my hating the position. I explain our exposure to oil and natural gas through a Canadian, a Swedish, and a Norwegian producer, and why management matters more than geography in a cyclical industry where eternal optimists tend to buy at the top and dilute at the bottom.
I also answer the crypto question. Bitcoin may have been a lottery ticket a decade ago. Today it is hardly one.
The
full letter, with the client questions that prompted it, is at
investor.fm.
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🔗 LINKS MENTIONED:
Trump’s call for a bitcoin strategic reserve is a very bad
idea
https://investor.fm/trumps-call-for-a-bitcoin-strategic-reserve-is-a-very-bad-idea/
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WHO AM I: Vitaliy Katsenelson is the CEO of Investment Management
Associates (IMA) and an award-winning writer. Forbes Magazine
called him "The New Benjamin Graham." His work has appeared in the
Financial Times, The Wall Street Journal, Barron's, Fortune,
Institutional Investor, and Foreign Policy. He is the author of
three books, including Soul in the Game: The Art of a Meaningful
Life. _________________________________________________________
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