It makes sense if you're looking at it from the perspective of a European investor. e.g. You start with 1000 EUR, convert and buy into an S&P500 fund, wait a year, sell and convert back to EUR.
Celsius and Fahrenheit doesn't work as an analogy because the rate does not change over time as it does with currencies.
I think it depends on whether you're planning on holding it in currency or using the currency to buy other things. Does the cost of material goods and services mostly stay the same in EUR, or does it somewhat follow the S&P? If more the latter, then converting to EUR is just a very temporary exchange and its nominal amount doesn't exactly matter.
> Does the cost of material goods and services mostly stay the same in EUR, or does it somewhat follow the S&P?
I don't understand this question, are you asking if material goods and services in Europe, which uses EUR, "somewhat" follows the S&P, a US stock market index?
If you have to hold USD to buy and sell USD products (as a European) it doesn't make sense to compare your SPY position vs EURUSD because you have to use those USD to buy something or pay some debt.
> If you have to hold USD to buy and sell USD products (as a European)
Approximately no individual does this. Some companies may hold some foreign currency reserves, but even there it is not _particularly_ common in most cases.
As a European, I have never, in 40 years, had any USD, except a small amount of paper currency. If I'm buying something made in the US, I'm probably buying from a local vendor, or else will convert on the fly. If I'm visiting the US, I'll convert on the fly (this is even cheap, now, thanks to neo-banks). I own a bunch of US equity, but indirectly via a euro-denominated global market index fund. This is fairly standard. In general it's only common for individuals to hold foreign currency where the local currency is particularly unstable.
> If you have to hold USD to buy and sell USD products (as a European)
Do people do this? Up until some months ago, I was heavily invested in some US companies, and I never actually held USD in my accounts at any point. I used EUR to buy those stocks, the conversion happening together with the purchase, and same thing when I sold them, I received EUR ultimately.
I know I could have another account in my bank with USD set to the currency, I just don't know why'd anyone would want to, when you can convert at the point of sale/purchase. Of course, if you're doing forex trading or whatever, that might make sense, but I don't think generally people hold USD to buy/sell US stocks, because you don't have to.
I mean, for retail investors outside the US, the question you're asking boils down to „does purchasing power parity follow popular US domestic market indices?“, to which the answer is a resounding no.
There may be some offset for goods imported from the US, but that's a minority of consumer goods globally, and even then, the purchase currency will usually still be the local fiat, and then the attractiveness of the US index fund still has to be weighed against the performance of non-US-based indices in that same local currency as opportunity cost.
> Does the cost of material goods and services mostly stay the same in EUR, or does it somewhat follow the S&P?
... Wait, why would you expect the price of goods to follow the valuation of, well, any market index, never mind one specific foreign market index? Like, I don't understand why you think that would happen. If anything, you'd expect a minor inverse relationship, at least on a global scale; rapid growth of cost of goods indicates inflation, which implies central bank tightening, which tends to depress stock values a bit.
Also an American investor, really; an American investor who'd pulled out of S&P and moved to Eurostoxx at the time would have made something like 40% in their local currency (about half of it due to the decline of the dollar).
Celsius and Fahrenheit doesn't work as an analogy because the rate does not change over time as it does with currencies.