Is there any point in buying US equities for Canadians?

Discussion in 'Trading' started by Sikhinvestor, Oct 29, 2007.

  1. Hi everyone,

    I am just wondering to all the Canadian traders out there, is there any point in having US denominated equities anymore, the US dollar has gone down approximately 22% this year.

    Have you switched off of USD equities?
  2. If you are buy & hold you would have lost some as the Canadian Dollar gets stronger.

    The US leading beta equities have the most volume and the best market sentiment.
  3. Any thoughts on this guys?

    Would like some advice.
  4. 9toros


    Hey there sikh guy I am from same place you are, Fraser area. I didn't switch yet but boy does it look bad or what. I can easily switch to euro etc so I am not woried just yet
  5. CD vs. USD dollar should be higher purchase power i.e. better value
  6. MGJ


    Businesses hedge their currency exposure; individuals can do so too. If you think US stock ABCDE is going to have the largest percentage move of any stock you know about, it is possible (easy) for you to do the following:
    1. Open a Forex trading account at Oanda or one of its bretheren
    2. Open a stock trading account that will allow you to buy US stocks from Canada
    3. Deposit CAD 20,000 in the stock account
    4. Convert the CAD into USD and, on the same day, buy as many shares of US stock ABCDE as this money allows
    5. The same day go short the USD/CAD forex pair in face amount equal to 20,000 CAD
    6. As the stock position's profits begin to mount (adding more USD to the stock account), short more USD/CAD in the forex account. Probably in reasonable increments like "every $2000 of profit" or so.
    7. When the day arrives to sell your stock in ABCDE, sell the stock AND exit the forex position.
    Now you've participated in the (let's say) 40% up-move in stock ABCDE, and gotten a 40% increase in your Canadian Dollars. What's the cost? (1) The time, energy, and annoyance of opening the forex account and continuously hedging your new profits; (2) The margin you must post in the forex account; typically small; (3) The risk of having either the stock broker or the forex broker "do a Refco" (go bankrupt), making your funds frozen or vanished or both.
  7. And BIDU is up xxx% this year. For a short term trader it doesn't matter. For longer term you would want to hedge, maybe with futures.
  8. You are buying US assets 50% cheaper than 3 years ago.

    You have to decide if that is a good deal.
  9. Bootsie


    Just switched one of my Canadian Dollar accounts entirely into US funds.

    Can't beat the exchange at this rate...

    The thinking is that I'll be buying US equities in the future... and I will at some time in that future take a hit on the exchange. This way, I get the best rate for all transactions in the future.

    This is assuming the USD doesn't got COMPLETELY into the toilet.