Dow 10,000? Try Dow 6,700.

Dow 10,000? Try Dow 6,700. That’s the level of the Industrial Average if you look at in euro terms. 6,727 to be exact.

And the following chart shows the not-so-fun ride foreign investors have taken in Dow stocks over the last decade.

A European investor who bought the 30 Dow stocks 10 years ago in October 1999 when the Dow was almost exactly 10,000 is nowhere near breaking even though the Dow – as we look at it — just broke through 10,000. That red line tells the whole story, and that decline is because of the dollar’s steady decline over much of the decade.

A foreign investor converting euros into dollars to buy U.S. stocks loses money when the dollar declines, as it has for much of the last decade. This year the Dow is up about 14% (not including dividends) but in euro terms the gain is about half that – about 7%.

Think of it this way, those investors made 14% on their U.S. dollar-based investment. When they convert back to euros, the gain gets cut more than 50%.

In real money, if a European started with 1,000 euros at the beginning of the year and converted to dollars, that person would have received $1,395 of our American dollars to plunk into Dow stocks. (It took 0.71 Euros to buy a buck back then when the euro was worth $1.39.) Those stocks would now be worth $1,590 – 14% more dollars. Trouble is, you need $1.49 US dollars to buy a euro now (it takes just 0.67 Euros to buy a buck today), so the conversion back leaves you with just 1,066 Euros, a crummy 6.6% return, not including dividends.

But the bigger point: Don’t confuse rising stocks (or gold, or oil, or even vintage Cadillacs) with a falling dollar. One reason the Dow’s performance looks so good (in dollars) this year is because the greenback is weakening.

Just like oil going up as the dollar falls, the stocks of truly global companies, like Microsoft, do the same. The stocks of those companies are global assets quoted in dollars. So when other currencies gain, the value of these companies also gets a lift. Evidence that the stock market gains we’ve seen Stateside this year are influenced not just by fundamental improvements but pure currency fluctuations.