By Guest Blogger Doug Rowat
I’ve spent the majority of my 20 years on Bay Street researching the stock market. My time as a financial advisor has been comparatively short. So, when I started as an advisor I naively thought that the most frequent questions from clients would be related to market outlook. Wrong. The most common questions I receive relate to taxes, but a very close second are questions related to currency direction, particularly the short-term outlook. As it turns out, retail investors like to vacation in the US—a lot.
As it also turns out, forecasting currency direction is tough. For most, impossible. A great deal of academic research supports this.
The main problem, of course, is that, long term, the value of the loonie relative to the US dollar actually goes nowhere. This is one reason why our current exchange rate is identical to what it was in the late 1980s. Equity markets meanwhile are much more forgiving. You may time an equity-market entry point incorrectly, but if you wait a year or two, you’ll likely be back on track. Equity markets generally trend higher. Not so with our CADUSD exchange rate. The Canadian dollar tends to move in giant W or M patterns, so in order to consistently profit, traders have to correctly time the peaks and valleys. Eventually, they’ll be wrong.
And poor timing can be consequential. For example, the loonie had considerable downward momentum throughout the 1990s and it seemed virtually certain that it would dive below the 60 cent level in the early 2000s. However, it didn’t, and investors who bought US dollars in 2002 are still—roughly 16 years later—waiting for their trade to be in the money. And, of course, you don’t get paid to wait while holding US dollars. No dividends for currency traders. The cumulative ‘appreciation’ of the loonie over the past 30 years has been just 2%. The S&P/TSX Composite, by comparison, has appreciated 648% including dividends.
30-year ‘appreciation’ of Canadian dollar vs US dollar: 2.0%
30-year appreciation of S&P/TSX Composite: 312% (648% including dividends)
To further illustrate the difficulty of predicting the loonie’s direction, examine its relationship to the oil price. Historically, the CADUSD exchange rate has maintained a fairly tight correlation with oil. Get the oil price right and you should be able to quite easily anticipate the loonie’s next move. There are two problems with this assumption: 1) forecasting the oil price is itself no easy task. It’s a notoriously volatile commodity and it’s moved by forces that require detailed industry knowledge. And 2) the relationship periodically completely breaks down. For example, as 2018 began, traders no doubt thought that they had the oil price/currency relationship all figured out, but then along came Donald Trump and his unexpected attacks on Canada.
The below chart illustrates the complete disconnect this year between the oil price and CADUSD—the overhang of the NAFTA re-negotiations and trade-war threats has completely overshadowed the influence of the oil price. The oil price has rallied 20% y-t-d. You’d think this would be positive for our dollar. Not a chance.
CADUSA exchange rate (white line) had a tight correlation to WTI oil (orange line) – then came Donald Trump
For us, US dollar exposure is a diversifier. Assuming portfolio performance is calculated in Canadian dollars, US dollar exposure will benefit you in years when the loonie is weak (and likely when the oil price is lower), such as 2015, but then hurt you in years when our dollar rallies, such as 2017.
In the end, it’s a wash.
So, if you’re travelling to the US this year and happen to time your purchase of US dollars correctly, don’t pat yourself too hard on the back. When you purchase your US dollars for next year’s vacation, there’s a good chance you’ll time it incorrectly.
Such is life. Focus instead on simply enjoying the vacation.
Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.
79 comments ↓
Kavanaugh confirmed 50-48. Metoo movement shot in the head.
It’s not rocket science. 4 hour renko, buy or sell the bricks then catch a runner. No need to even listen to news
In other news. The globalist agenda died today.
Soros lost, he can still destroy Canada
No matter the out comes of any election in the USA. The constitution will over ride the up coming generations.
Congrats Kav. Happy Columbus Day.
Really liking the looks of the US Sin Stocks here –putting on bullish L.T. option plays:
Budweiser
Molson’s
Altria (Big Mo – hikes divvy again)
Canadian housing bubble pops and BoC slashes the overnight rate to try and stop the collapse and torpedos the dollar.
Never bet on the Polos Peso. Using the last 30 years of currency data means nothing while we were on a huge debt binge.
Nit Pic is from european vacation.
All this is true but you’re leaving out one thing. What hedging an etf actually cost in the real world? In a higher interest rate environment? I see it as borrowing cash on one side of the border and collecting interest on the other side. What is the spread then? What is the cost over a lifetime investing?
I am forced to make fx trades regularly, as all of my income is in USD and I live in Canada. In the medium term, it’s helpful to remember that the purchasing power of a single in the US is about 20% higher than that of a looney in Canada. So if the USD is below a buck twenty CAD, CAD is overpriced, and if it’s above a buck twenty CAD is on sale.
#7 Newcomer on 10.06.18 at 5:39 pm
I am forced to make fx trades regularly, as all of my income is in USD and I live in Canada. In the medium term, it’s helpful to rem8wember that the purchasing power of a single in the US is about 20% higher than that of a looney in Canada. So if the USD is below a buck twenty CAD, CAD is overpriced, and if it’s above a buck twenty CAD is on sale.
………
Welcome newbee
Banks rip you off huge.
Use these guys
https://www.knightsbridgefx.com/
There are several reasons to hold ETFs and equities in USD that you missed. It is a hedge against a lower CAD which most people get paid in. If the CAD goes down (your income and purchasing power goes down) at least your portfolio goes up in CAD terms. You can still take the trip to Hawaii and be ahead if the CAD tanks. If the CAD goes up you lose money on paper but your purchasing power just went up and the trip to Hawaii is cheaper.
The second reason to hold ETFs and equities in USD is it gives some protection in a major market correction. The CAD will tank compared to the USD during and after a market crash. Your portfolio will go down less if in USD. Compare a USD portfolio to a CAD portfolio in 2008.
Third if you hold USD you can buy US equities. I like to hold a blend of ETFs and equities. USD ETFs also have more choice and lower MER and in an RRSP you don’t have to worry about paying any US withholding tax for USD funds.
Three good reasons to hold 50% of your portfolio in USD.
USD and CAD is easy to play
When C$ > $0.85 US$ buy US$
Simple
Just like it was 10 yrs ago. Slam dunk easy
#8 smoking man on 10.06.18 at 5:58 pm
—–
I learned about bank rates quite a while ago. They just make up spreads and gouge people for five or ten percent. I used a place like Knightsbridge (gone now) used the BoC rate and charged 1%. Now I use the VanCity business exchange service. They charge 0.5%. Does Knightsbridge do better than that? (I know I guy who gets 0.25% from his broker.)
The Canadian dollar was set at 80% of the US dollar all the way back when they still made dollars out of silver. The Canadian silver dollar (circulating, not the current mint collectibles) had 8/10 of an ounce of silver compared to the US coins which had once full ounce. Strangely, the ration has more or less held since 1968 when they stopped circulating silver coins in both countries and switched to nickle, copper and paper.
So, trading the CAD/USD is easy. If the CAD is below $0.80 USD buy CAD. If it is above $0.80 USD buy USD. But realize that currency markets move very slowly so this isn’t a money making strategy, more of an allocation exercise.
Why the Bank of Canada wants to have an eighty cent dollar I’m not sure. Currency valuations work themselves out in prices so any advantage gained by weakening your currency is short lived. All that happens is the devaluing country experiences inflation. Sure, it’s supposed to increase trade, and it may for a time because it puts the labor of the country “on sale”, but eventually market forces eliminate the advantage.
So that’s why when you look at say the price of a car in Canada to that same car in the US, the difference in price is usually pretty close to the exchange rate. All devaluing the loonie would do is raise the price of cars in Canadian dollars. It doesn’t encourage car manufacturers to move production to Canada unless they can be sure that wages in Canadian dollars won’t go up and take away the advantage. But there is already a free market in labor so if wages were to fall long term in Canada the driver would have to be oversupply of the labor market, not currency manipulation.
This is why car manufacturing has been migrating to Mexico and strange places like Tennessee. Cheap labor. It’s not a factor of the Mexican Peso being so low. The other inputs are all still priced in USD, the 2 biggest being steel and energy.
#5 Phylis on 10.06.18 at 5:06 pm
Nit Pic is from european vacation.
—
Flight attendant: Can I get you anything to drink?
Clark: I’ll have a Coke.
Flight attendant: Do you want that in the can?
Clark: No, I’ll have it right here.
All classics in their own way.
–Doug
Did someone say vacation…
M44BC
“Visualizing Where Tourists Spend the Most Money.
Mark Twain once quipped, “Travel is fatal to prejudice, bigotry, and narrow-mindedness.”
But what if people are by and large only traveling to the same places? Our newest map highlights the countries with thriving international tourism industries, and it suggests a dramatic disparity between the places where tourists spend big bucks and the places where they hardly spend anything at all.
We got the data for our visualization through the World Tourism Organization, an agency in the UN. First, we color-coded each country based on the continent. Then we adjusted the size to correspond to the annual amount tourists spend in each destination in 2017 (US$ B). The WTO defines an expenditure as any amount spent by an international inbound tourist, including things like transportation, goods, and services. In other words, our figures exclude domestic tourism, giving you an accurate snapshot of which countries depend the most (and least) on the international tourism market.
Top 10 Countries with the Highest International Tourism Receipts in 2017
1. USA: $211B
2. Spain: $68B
3. France: $61B
4. Thailand: $57B
5. United Kingdom: $51B
6. Italy: $44B
7. Australia: $42B
8. Germany: $40B
9. Macao (China): $36B
10. Japan: $34B
There are several significant insights about the worldwide tourism industry in our visualization. The most obvious conclusion one can immediately draw is which countries see the most (and least) tourism dollars, looking both at continents and individual countries. Take Africa and the Middle East, for example. Only a handful of countries have tourism industries large enough to appear on our visual. Compare that to the size of the US, which is more than double the combined size of both areas. The US alone actually accounts for 16% of the entire world’s tourist expenditures ($211B), and the combined value of the top ten countries on our list make up an amazing 49% ($643B).
This means that the tourism sector is top heavy and concentrated in a few key places. In fact, the places attracting the most money tend to be Western countries, plus a few East Asian hotspots like Japan, Thailand and Macao (which is an independent territory controlled by China; more on Macao in one second). Comparatively little expenditures take place in the global south, including South America. The notable exceptions are Australia ($42B) and New Zealand ($10B), but both of those are developed English-speaking countries.
This raises interesting questions about the global travel industry. Airlines fly all over the world, and yet the tourism industry is bifurcated and unequal. How can unknown places attract visitors who spend money?
Macao offers an instructive example. It’s an obvious standout on the map at $36B. And that’s because it’s the largest gambling hub in the world. Typhoon Mangkhut recently forced all of Macao’s casinos to close, and in just 33 hours, the entire industry saw a combined loss of revenue of an astonishing $186 million. That comes out to $5.6 million in lost revenue per hour, every hour. Gambling might not be the ideal way for every country to develop a robust tourism industry, but the money sure speaks for itself.”
https://howmuch.net/articles/how-much-tourist-spend-around-the-world
@#14 Flop
Interesting stats.
I read an article about travelling few months back in the Economist that the average person has about 9 places they visit regularly.
In the city they live, the country they live and other places.
About 9 total places.
Less as they get older.
If they find new places they like …they tend to drop one of the old places.
Vancouver Home Sales DROP 44%! Hong Kong Real Estate FALLS for the First Time Since 2016!
http://www.investmentwatchblog.com/vancouver-home-sales-drop-44-hong-kong-real-estate-falls-for-the-first-time-since-2016/
Have cash, no bills and lots of time to see the world.
Time to blow this pop stand.
Enjoy your 4 walls on a piece of dirt and keep paying your bills sheeple, some of us have a full life of fun and happiness to live.
Ha Ha the joke has been on you all along.
Get rich though real estate – Ya Right!
In a past life I was hiring a transition manager to move $75 million from an international portfolio to a Canadian domiciled pooled fund. 3 of 4 firms wouldn’t even tell me what spread they’d charge to swap currencies. Shortly thereafter some of the major custodians got sued over their rates.
Shows you how the game is rigged.
Always Thankful for the Saturday posts! Interesting as always Doug.
Do Canadian dollar / oil divergences generally lead to declines in both?
Which is why a currency is only as strong as its underlying economy.
Ask Venezuela.
Their next scam is to create a new digital currency (Petro) supposedly based on oil. But venezuelas economy is in the tank and a digital currency is not worth more if its underlying economy is crap.
Which is why ‘investing’ in Bitcoin is such a joke.
Bitcoin has no underlying economic support.
It has a cool technology, but nothing to support it or give it credence.
You might as well just invest in the ‘Petro’ as Bitcoin. (BitCon?)
Both are cryptocurrencies.
Both have underlying cool tech.
And both are backed by nothing and as such both are worthless.
or you can simply move to america and never have to worry about exchange rates again, since all your investments will be in us dollars, you would not even care about Canada, oil companies up here or relationships of the two.
you simply would become american and not care about anything other than it, since you will be part of it.
Lower taxes, well retail investors like everyone i guess, love retail inveestors, since i assume most of your clients are old, and have investments then why dont you tell them that div and cg are free as married couple up to 77,500 usd. and you guys fret over 50K canadian in income from your ccpc.
what a joke, but at least you have thanksgiving this weekend. poor weather, but hey its Canada, you get what you get.
#2 Smoking Man on 10.06.18 at 4:20 pm
“It’s not rocket science. 4 hour renko, buy or sell the bricks then catch a runner. No need to even listen to news.[…]”
Doug, I can’t remember if it’s you or Ryan who uses technical analysis. Do you use Renko charts? What do you think of Smokey’s blather? :)
Holding some US and international ETFs un-hedged can prove profitable over time for the purpose of rebalancing.
One never knows.
Timely post for snowbirds we know. Great movie. Dont forget National Lampoons Christmas Vacation. Funny bc it’s how some (many) feel about some (most) family holidays. PS almost that wonderful time of year again. Shhh…
https://youtu.be/bzTA36-aw3I
Yes retail investors like to travel a lot to the US…..for retail.
75% of outbound travel to US is same day car trips.
Crowdie
@#14 Flop
Interesting stats.
I read an article about travelling few months back in the Economist that the average person has about 9 places they visit regularly.
In the city they live, the country they live and other places.
About 9 total places.
Less as they get older.
If they find new places they like …they tend to drop one of the old places.
//////////////////////////
Hey Crowdie,
After living in Europe for a few years and then taking my wife back to some of my favourite places and exploring new ones for the next 5 or so years each Spring, I have changed travel tactics the last decade or so.
I’ve been exclusively concentrating on Canada and the U.S for roughly the last decade just in case I decide to go back and live in Australia or New Zealand.
I bought a campervan which I have toured up and down the west from the Yukon to Yosemite in the summer and try and fit a trip to a southern state for Xmas and Spring break via plane.
Had a lot of surgeries the last 5 or 6 years and so spending a lot of time on a plane in cattle class has something to do with the decision as well.
Nothing exotic recently just doing the San Diego/Phoenix sort of thing.
I did enjoy my trip to Monterey a while back when you suggested I visit Clint Eastwood’s old haunt after Turner Travel Agency planted a seed in my head.
My wife doesn’t swim and so we don’t really do the beachy thing because she is brown already and doesn’t need to top up her suntan.
I like to go to places like Savannah , Charleston and Santa Fe, to look at the architecture and in that vein we decided to book a trip to New Orleans for the first time around Xmas this year.
The backpack that I visited about 30 countries with just sits there collecting dust, I had to switch over to a roller suitcase after getting a couple of hernias at work.
Getting old sucks.
I can still lift a beer, so not all is lost…
M44BC
Kavanaugh’s in, and the “me too” movement dies on the vote of a female senator, for the history books.
31 male democrat senators voted against this guy.
The vote of one female senator decided this contest, Susan Collins of Maine.
Ladies, you have done this to yourselves. Trashed your own movement.
“Me too” is officially dead.
And as usual the left continues to be WRONG WRONG WRONG. What a glorious day.
Next? ANTI TRUST TRIALS for the communists trying to pretend they are Social Media companies.
I can’t wait.
@#21 Boxster
“Ask Venezuela.
Their next scam is to create a new digital currency (Petro) supposedly based on oil. ”
++++
While I agree with your comment about digital currency’s being a scam
Venezuela initiated the “petro” months ago.
Its an abject failure…..like their economy…
https://en.wikipedia.org/wiki/Petro_(cryptocurrency)
One wonders when the Venezuelans will finally have had enough and erupt in civil war.
Starvation doesnt seem to have worked but perhaps their neighbouring countries closing their borders to the millions of refugees……just might.
https://www.washingtonpost.com/world/2018/08/23/venezuelas-refugee-exodus-is-biggest-crisis-hemisphere/
All while their “esteemed Leader” (a former bus driver) drones on and on and on in daily television propaganda as to why they are living the “utopian dream”.
https://www.youtube.com/watch?v=JBlC784YZN0
I wonder if ginsburg will get an invite to the first kegger..clarence will be first in line.
#22 crossbordershopper on 10.06.18 at 6:48 pm
or you can simply move to america and never have to worry about exchange rates again…i assume most of your clients are old…
—
The point of my blog was not to worry about exchange rates regardless of where you live. No need to become American. And the average age of our clients is 50, which I would submit is not old at all.
–Doug
You can only fool the ones who don’t listen and think with their eyes open.
How can we expect anyone to respect our currency when even the media refer to it as a loonie. Oh…then the 2 is a toonie. How intriguing.
#24 espressobob on 10.06.18 at 7:18 pm
Holding some US and international ETFs un-hedged can prove profitable over time for the purpose of rebalancing.
One never knows.
//////////////////////////////////////////////////////////////////
Exactly, do not, EVER, hedge on Poloz peso!
To further illustrate the difficulty of predicting the loonie’s direction, examine its relationship to the oil price. Historically, the CADUSD exchange rate has maintained a fairly tight correlation with oil. Get the oil price right and you should be able to quite easily anticipate the loonie’s next move. There are two problems with this assumption: 1) forecasting the oil price is itself no easy task. It’s a notoriously volatile commodity and it’s moved by forces that require detailed industry knowledge. And 2) the relationship periodically completely breaks down. For example, as 2018 began, traders no doubt thought that they had the oil price/currency relationship all figured out, but then along came Donald Trump and his unexpected attacks on Canada.
The below chart illustrates the complete disconnect this year between the oil price and CADUSD—the overhang of the NAFTA re-negotiations and trade-war threats has completely overshadowed the influence of the oil price. The oil price has rallied 20% y-t-d. You’d think this would be positive for our dollar. Not a chance.
……………………………………..
The Canadian dollar is correlated to oil prices. The oil majors have left Canada. That hurts our dollar. Lack of pipeline capacity and access to tide water, unfriendly governments and regulations, royalties and carbon taxes, the huge WCS discount, and the impotence of the federal government makes profitability and growth difficult and maybe impossible. The oil majors have moved on to friendlier places.
#27 For those about to flop… on 10.06.18 at 7:33 pm
Hey Flop,
Have you been to San Antonio? Some interesting architecture and the river walk is not to be missed…
Good post, from personal experience I have made about double on currency trades vs. my eta/stock portfolio over the last 5 years. My strategy has been, buy the US or CDN or BPD or EUD on multi year lows. When you see a Bloomberg article saying British pound at 30 yr low, buy buy buy. When you see US dollar at 12 year low, buy buy buy. It has never failed me. Not a matter of if you’re gonna make money, its how much.
Now that beer was mentioned, Thanksgiving dinner came bit early for my family.
https://imgur.com/a/6p5RMzF
#23 Gravy Train on 10.06.18 at 6:59 pm
#2 Smoking Man on 10.06.18 at 4:20 pm
“It’s not rocket science. 4 hour renko, buy or sell the bricks then catch a runner. No need to even listen to news.[…]”
Doug, I can’t remember if it’s you or Ryan who uses technical analysis. Do you use Renko charts? What do you think of Smokey’s blather? :)
……
Ah right, lets seak the opinion of a suit who has great decorum puts together safety portfolios. Market for it.
Is a hard core balding toothless drunk not good enough for you.
So tempted to send you my resume. You would think it’s fiction. But it’s not. Garth and the boys know. That’s why they let me play here.
Don’t let your schooling get in the way of good research.
Google renko woman.
#37 Remembrancer on 10.06.18 at 8:53 pm
#27 For those about to flop… on 10.06.18 at 7:33 pm
Hey Flop,
Have you been to San Antonio? Some interesting architecture and the river walk is not to be missed…
///////////////////////////
Hey Remy,yeah I was there in 2010/2011
Spending a New Years Eve partying on the Riverwalk was a memorable experience that I could recommend.
Decent Mexican restaurants as well,which we always try at least one per trip when down that way.
———————————
Hey NoName,the bird and the brew looked good,not a fan of the green bush.
Too healthy.
Growing up in Australia, we didn’t celebrate Thanksgiving and Halloween.
I try to mix and match some of the old and new culinary experiences.
Turkey smothered in Vegemite has yet to take off.
It is an acquired taste…
M44BC
I’ve been researching the stock market since 1974. The last honest year in America I saw was 1992.
No, seriously, the Trump administration is building a wall
https://www.vox.com/policy-and-politics/2018/3/13/17107034/trump-border-wall-mexico
There is a case for forecasting a strong loonie within say two or three years, going forward.
LNG Canada is likely the first of several multi-billion-dollar projects that will be built along the BC Coast. If that should becomes a reality, the investment capitals flowing into Canada may exceed $100 billion. By the time a second major Canadian LNG project is announced, professional currency traders will be “front-running” the participating (international) energy corporations, and scoop up plenty of loonies. The loonie can easily be on par with the US dollar.
We will have a partial replay of the surging Australian dollar leading to its peak in 2011.
We don’t have to wait very long to see if this becomes a reality.
Alternate title – Why you should never buy “currency hedged” versions of ETFs
Legendary picture! Well done, and thank you…this blog is is sanity and informative…very grateful!!
signed: Renter with disposable income and so much free time via portfolio income I couldn’t imagine..
Life changing for us! Thank you Thank you Thank you
#36 FOUR FINGERS WATSON on 10.06.18
The below chart illustrates the complete disconnect this year between the oil price and CADUSD—the overhang of the NAFTA re-negotiations and trade-war threats has completely overshadowed the influence of the oil price. The oil price has rallied 20% y-t-d. You’d think this would be positive for our dollar. Not a chance.
……………………………………..
The Canadian dollar is correlated to oil prices. The oil majors have left Canada. That hurts our dollar. Lack of pipeline capacity and access to tide water, unfriendly governments and regulations, royalties and carbon taxes, the huge WCS discount, and the impotence of the federal government makes profitability and growth difficult and maybe impossible. The oil majors have moved on to friendlier places.
—-
Even more reason to not trust the correlation.
—Doug
If you want to continue to visit the USA the most prescient advice has already been published. Quit any association with marijuana. If you work for LCBO etc, any hovt or private business that’s even remotely related to cannabis, get out. So say the authorities. Don’t own pot stocks or like investments, cause the US Border Agency says they’re waiting for you. Life time bans are being handed out now, so don’t think Trudeau is going to leap out of the bushes to save you, he has other intentions, obviously. So don’t be stupid. You can have all the US money, property and family visits a Canadian could want, all vanish in a puff of Trudeaus farty discharge. Folks, this is a Trudeau initiative. When has he ever done anything right? Are you willing to risk your American vacation future on Trudeaus word? If you’re a rich civil servant with property in Arizona or Florida, imagine not being allowed to cross the border to clean out your possessions after you’re banned. The daughters new baby forever gone. Trudeau didn’t think this through except for the stoner vote, he doesn’t care.
Happy Thanksgiving weekend. I just want to say that I love you all. I am enjoying this vacation quite a lot.
To #96 antisocial social club guy inquiring about Lisbon and Porto several posts ago. (since we are on the topic of vacation and currency).
You gotta get out more. As I type this I am drinking CDN$1.80 glass Rakia and waiting on $10 dinner of fried feta with olives, tomatoes, herbs starter followed by meatballs, tomato and local mushrooms here in BEAUTIFUL old village Veliko Tarnovo.
Portugal is fabulous, too and as I walk these streets I am reminded of much of Portugal but dude… Expand your horizons. Many places around the world offer beauty and value. That statement does not apply to most of Canada.
It’s a real pet peeve of mine how in Canada the media quote CADUSD when the market convention in the world of FX is USDCAD…just saying
FX pet peeve?
#51 Cdn Expat on 10.07.18 at 2:58 am
It’s a real pet peeve of mine how in Canada the media quote CADUSD when the market convention in the world of FX is USDCAD…just saying
**************************
I’d be more concerned about the ambiguity of either of those. How does the uninitiated read USDCAD? It looks like USD per CAD but it is the total opposite! Why not use the more universal rules pf math and say CAD/USD is $1.30? Put in the “per” so there is no ambiguity.
It’s been a momentous week…
– US 30Y yield just broke above its decades long downtrend line… nothing but air above. Rates are going way the eff up
– Judge K got confirmed
We are entering a new era.
https://www.youtube.com/watch?v=wDYNVH0U3cs
No self-respecting Canadian should even consider vacationing in Trumplandia, boycott the US, there’re many cheaper/safer destinations in the Caribbean or other countries in the Americas!
@ #17:
“Can’t we have both?”
https://www.youtube.com/watch?v=6Y5LiT2D2nE
Back in October of 2010, the US dollar and Canadian dollar were at very close to par.
I bought $100K of US dollars at just about 1 to 1 and stuck it in a $US account.
That’s been my US vacation kitty since then.
$0.65 loonie? No worries!
A buck is a buck. Until that 100 grand runs out.
Now, I’m just waiting for that serendipitous situation to come around once again.
Hi Doug, Always enjoy your poats. Not really related but what would you say to those of us who have an unbalanced portfolio due to the recent lower values of bond ETFs like VAB, etc.. upcoming rate increases are a well known thing so that is already built into the price per share…. right? efficient market theory? how do you see it?
#48 Grandma Moses I’ve been saying this for year. The goal of our elites is banning our personal travel and herding us into cities. The code words are Sustainable Cities, Densification and so forth.
You gave one example, here’s more. Recall, overnight we were blocked from world travel allegedly due to (remember these?):
– Carry-on liquid scare and ban
– “Volcanic ash” over Europe
– September 11th
No discussion, no vote, no debate by elected leaders. No you woke up one morning and travel was over. Shades of the Berlin Wall. (So that was what we fought for.) Our elites love real or virtual walls.
Very quickly they could invoke a pandemic or flu or ebola scare then shut down or inhibit all travel.
We have 150 years of electric car travel and technology under our belts..yet their range is but 500km? Really?
Trapped in cities , no charging stations in the rural areas, with your new “People’s Car” (everything old is new again) with its only 500km range. Where you gonna go?? Stuck in the cities aka the kill zones. What I mean there, most large US cities have many no-go zones. Safer in a 3rd world country these days.
Adding, I believe Carbon taxes [sic.] Will serve in making travel even more unaffordable. Technology is being rationed. We’re moving backwards.
A used big Tesla on Auto Trader is $100,000.
Where do you get parts and cannot work on it yourself. The People’s Car indeed…but for the rich.
What we need is an populice sitting at home totally addicted with electronic technology, sports and entertainment food and drugs.
Spark er up boys.
I’ve had people literally screaming at me that I simply must watch or binge watch this show on Netflix.
Like I’m totally missing out on their religion or something. Steve Jobs is a saint. Apple release events are manna from heven.
@#28 Ace
“The vote of one female senator decided this contest, Susan Collins of Maine.”
+++++
One can only imagine the back room dealing that got a female senator from poor, backwater, little old Maine to vote for such an inflammatory choice for the Supreme Court.
I expect some major federal spending to go Maine’s way in the not too distant future.
Horse Trading 21st century style.
She wouldnt have jumped on a sword for nothing.
However, that senator might have cooked her own goose in the next elections.
Speaking of Elections.
Lets see what happens in about 30 days in the US mid term elections. Lots of angry ladies out there ready to show Trump how pi$$ed they are.
#metoo dead?
Not by a long shot.
They’re just getting organized.
In order to buy many Canadian ETF’s, often the only option is to buy an ETF that uses currency hedging to manage currency fluctuations. Sometimes there is a non-hedged version but not all the time.
From what I have seen, hedged funds seem to perform less well than their non-hedged counterparts, that have identical underlying holdings.
I suspect that the effort that it takes to hedge these funds costs far more than the actual benefit received through the hedging, since once again, predicting currency movements is kind of like playing the craps tables.
Unfortunately, for many Canadian funds, the option for buying certain funds does not include non-hedged versions.
If there is a choice, I would always buy the non hedged fund.
For fun, take a look at the holdings for a hedged fund that holds securities from around the world.
Part of the holdings for that fund will be foreign cash or derivatives needed to hedge the fund.
See, for example, the holdings of a global equity fund like Ishares XMY.
In order to hedge, this fund holds a small amount of multiple currencies from around the world, in order to hedge the Canadian dollar to all of these foreign valued securities.
There must be a huge effort involved to hedge these ETFs , with questionable results.
Seems to cost you more for their efforts, though.
@#27 Flopster
Road trips!
Absolutely.
I enjoy those far more than flying.
Cant stand the security crap, the cattle car airplanes where everything comes with a “fee”. The snarky airplane stewards/esses who , if someone complains about anything, immediately threaten people with banishment (Ive seen it happen several times).
Put me in a truck/car anyday.
If you see something thats interesting you can stop and check it out.
I’ve driven to the Top of the World Highway in the Yukon, The Dempster in the North West Territories up to Inuvik, All through BC/ Alberta.
Across Canada 3 times coast to coast over 35+ years.
Been down to Wash, Oregon, Cali a few times. Nice people and the scenery is spectacular.
Although the currency exchange WAS painful ( thats my obligatory shout out to Doug for his article).
Yep, as National Lampoon goes….. so do I…….
“Road Triiiiip”
#50 Wallflower on 10.07.18 at 2:30 am
I bet it is a beautiful sunny day in the paradise on earth, where you are.
Go for grape or apricot brandy, puts whisky to shame.
Try the goat cheese.
Latest polling numbers from The 538 project in the US.
An organization that has been uncannily accurate in their predictions over the past several US elections
https://projects.fivethirtyeight.com/2018-midterm-election-forecast/house/
One should also realize that this mid term has been dubbed, “The Year of the Woman” for the record amount of women who decided to organize and run after Clinton lost to Trump.
US mid terms typically get very low voter turnout but with Trump endlessly spewing his usual vitriol about everything…..who knows what will happen….
538 Project predicts a Democrat majority which will render Trump a “Lame Duck” over the next two years….unable to pass anything .
Lets see how a pig handles being hogtied.
#57 att0m on 10.07.18 at 10:09 am
Hi Doug, Always enjoy your poats. Not really related but what would you say to those of us who have an unbalanced portfolio due to the recent lower values of bond ETFs like VAB, etc.. upcoming rate increases are a well known thing so that is already built into the price per share…. right?
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A balanced portfolio means something different for everyone, but whatever your asset mix it should be a disciplined portfolio. Set ranges around your asset weightings and rebalance when they move out of these ranges. Make it automatic and don’t worry about what’s already ‘priced in’.
–Doug
#54 David Hawke ….. I’m in the US now RVing around the country . The people are unfailingly polite and eager to chat or assist however they can. I’ve got a very long history of travelling here . I know small town America well . I won’t hold a buffoon president against them . The people are good , the politics , not so much…..
#64 crowdedelevatorfartz on 10.07.18 at 11:17 am
Latest polling numbers from The 538 project in the US.
An organization that has been uncannily accurate in their predictions over the past several US elections
..
Excuse moi, but they were TOTALLY WRONG about my victory……… missed it by a deplorable mile.
#28 Ace Goodheart on 10.06.18 at 7:35 pm
“Kavanaugh’s in, and the ‘me too’ movement dies on the vote of a female senator, for the history books.[…]
“The vote of one female senator decided this contest, Susan Collins of Maine.”
This is inaccurate. Senator Steve Daines, the Republican from Montana, was absent from the vote so as to attend his daughter’s wedding; he’d have voted yes. Senator Lisa Murkowski, a Republican from Alaska, would have voted no, but abstained instead as a courtesy to Daines. Senator Joe Manchin, the Democrat from West Virginia, voted yes.
https://www.nytimes.com/interactive/2018/10/06/us/politics/kavanaugh-live-vote-senate-confirmation.html
Now, here’s the kicker: Even if Senator Susan Collins had voted no—making the vote a tie at 49-49—Vice-President Mike Pence would have cast the tie-breaking vote and voted yes. It was a fait accompli.
Wanna see inflation? Price out any Caribbean vacation you have had, for the same date this winter.
Last four years, 10% increase every year.
One pending trip we bought in April is already up 25%. The other is up 20%. Some year so far!
Last minute deals are fine if you like generic and you don’t want to go to the places that sell out for the winter by December because far better than most.
@#14 For those about to flop
Mark Twain once quipped, “Travel is fatal to prejudice, bigotry, and narrow-mindedness.”
It’s interesting to relate the above quote to the experiences my family has been having as we tour through Rajasthan, India. We have been staying in a variety of accommodations, including B&B type arrangements, backpacker guest houses, and more conventional 3 star hotels. We have had many interactions with the locals, including staying in the simple home of a Muslim family. I hope that our relatively extensive travels over the past three to four decades have had the effect of eliminating some prejudices, but there is always more to learn. As a free thinker, there is a tendency to be critical of the views of those locked into the various forms of religious dogma. India is steeped in religion, primarily Hinduism and Islam. Encounters with practitioners of these religions reveal that these are all just people like ourselves, and the kindness that has been shown to us is having the effect of making me more accepting of diverse views.
#60 crowdedelevatorfartz:
“#metoo dead?
Not by a long shot
They’re just getting organized
I hope so.
I support what They’re doing but am saddened by their sloppy methods.
Now that they are being vigorously attacked by the Trumpster and his buddies they need to tighten up on their facts and evidence.
Op ed pieces as to how hard it is to come up with credible evidence as to the veracity of decades old sex abuse allegations are not going to work.
They need the evidence.
If they had done a better job with their evidence collection they could have taken down this Kavanaugh guy effortlessly. Instead they complain that the FBI did not do their job for them.
Evidence, folks. The world revolves on it. Make sure you have it BEFORE you attack someone.
A little planning and preparation goes a long way.
#61 AB Boxster on 10.07.18 at 10:56 am
From what I have seen, hedged funds seem to perform less well than their non-hedged counterparts, that have identical underlying holdings.
—-
Correct. Hedging is not free and hedged ETFs will always underperform non-hedged ETFs over the long term. However, hedging costs are usually minimal.
—Doug
Doug – The uncertainty around Nafta is surely the more important variable than Trump. Granted, Trump created much of that uncertainty but it was the proximity of the event and its relationship with Trump that likely fuelled this disconnect. So too did the TM pipeline miss. Canadian crude currently at all time discount to WTI. Correlation is not causation.
DELETED
Tourism and travel in Canada is only for rich and rich foreigners, canadians need not to try.
Canada has no capacity to house all potential domestic tourists, which is sad in my opinion, tourism is neglected and “under developed”, all this space and its struggle to find serviced camp site during 9wks of summer.
According to google canada has “only” 440k hotel rooms, iven with 4person occupancy at peak that is only enough to accommodate a only 1.6m travelers. Every year canada is visited by 15-18m people most of them with more money than domestic traveling working stiff. Other week wife wanted to go falls for weekend and i was sweating bullits for paying 600+ a night for room and another 50 for parking. Prices are cheaper for comparable hotels on a weekend in business district in lower manhattan are comparable, plus you get to see stuff. (ofcourse we didn’t went hunting lodge in quebec for moose 1 week with tags less money than that) and you have enough meat for whole year or more.
Las Vegas, Orlando and NYC alone have same amount of rooms a hole Canada, and you get to fly for 1/2 of the price across states.
And those people that complains about exchange rate try booking vacation in canada peak season, and you’ll see what expensive is. We regularly drive down south because flying 4 from YYZ eats all travel budget… Sucks to be working stiff who wants to travel in canada, and we are doing relatively good…
anyways rant off
NoNational NoLampoon’s Rad Trip
For some navigating through all the options provided by an ETF supplier, can be quite daunting.
Who said DIY investing is easy?
https://www.vanguardcanada.ca/individual/indv/en/product.html
#50 Wall, what are the apartment tents for 90++ day stays? Etc etc etc?
grandma moses… I am paying $32 CDN per nite in lovely old city centres (cobblestone streets). Have not investigated monthlies. Newly reno’d bathrooms… Right now I also have a kitchenette. All new.
FX pet peeve?
#51 Cdn Expat on 10.07.18 at 2:58 am
It’s a real pet peeve of mine how in Canada the media quote CADUSD when the market convention in the world of FX is USDCAD…just saying
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I’d be more concerned about the ambiguity of either of those. How does the uninitiated read USDCAD? It looks like USD per CAD but it is the total opposite! Why not use the more universal rules pf math and say CAD/USD is $1.30? Put in the “per” so there is no ambiguity.
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Because in the world of FX, USDCAD at 1.30 means 1 USD gets you 1.30 CAD. USD is the base currency, CAD is the counter-currency. That’s just how it is.