American’s why don’t you buy Canadian stocks?
American’s why don’t you buy Canadian stocks now?
Canada is a fantastic place to live, but currently our dollar sucks! Yeah it really does….. It has bounced back a little bit but come on…. If I were to convert some Canadian dollars to Usd at the moment I would get 77 cents per dollar (minus currency exchange rates)
A 23% loss right off the bat….
But if you are a American that’s a 23% gain converting to Canadian dollars. That is pretty dam sweet.. It really wasn’t that long ago when the Canadian Dollar was actually worth more than the Usd. January 2013 to be precise..
I remember when our dollar was around par and so many people would go south of the border on shopping sprees. People here in Canada would complain that we still had the Canadian price for books even know our dollar was worth then the American’s. Yet prices on books are way cheaper in usd…
Back then I wasn’t into the stock market, but I’m sure a tonne of Canadian’s were loading up their rrsp’s with great US stocks, that would of been a fantastic time to top up some positions…. but yet right now I barely read any US bloggers buying Canadian stocks (or holding any for that matter)
I don’t get it… I know its personal finance and everyone’s way of doing things are different. Diversification is huge though, especially geographically. This would be the time, to diversify into the Canadian market and receive a 23% discount off stocks instantly.
Those price to earnings numbers would be drastically different if you factored in a 23% discount. Now I know you would need to get our dollars up to par again to realize that kind of gain.
According to ofx.com The average conversion rate between Canadian dollars and Us dollars over the last 28 years is 0.80884 cents… It doesn’t seem to far off currently but the averages include 5 years 1998 – 2002 that ranged between 63 cents and 67 cents. Which is way lower than the norm.
If we compare stock markets, its really not much of a competition the US market has dominated the Canadian Market. What Trump has been doing has benefited their companies a tonne. The tsx has went up but nothing extremely exciting. Well unless you got into the pot stocks. Then Canada seems to be the place to be.
In this long bull market, the Us market seems to have a lot more room to fall before hitting previous floors while Canada really doesn’t. This might be a little factor if you want to start making your portfolio a little more defensive, if your worried about a pullback.
The 2009 financial crisis really showed the strength of the Canadian Banks and they continued to pay out dividend’s. They might be a great start for diversification into the Canadian Market. Currently I think BNS is a steal, but maybe you might be more comfortable with TD as it is really making good progress in the US states.
As primarily a dividend investor, I can say Canadian Companies don’t have the dividend history of some of the great’s in the US. Our longest dividend aristocrats are Canadian Utilities and Fortis sitting around the 47 year mark of raising dividends, which is still a long track record! Although Bank of Montreal has paid dividends without interruption for 189 years. (I’m pretty sure that’s Canada’s longest paying dividend stock)
Canada has great Financial, Basic Materials, Utility and Energy stocks. I think we lack in solid healthcare, tech and consumer defensive stocks. By diversifying your portfolio between both Countries you can create a fantastic footing for a mammoth portfolio.
History shows the current Canadian dollar compared to the USD is lower than average and American’s (or other region’s for that matter) should take advantage of that.
As a Canadian would I buy US stocks currently? If the price of the stock I was interested in was right and it was in a sector I lacked maybe. If my tfsa was maxed I would most likely buy Canadian stocks in our RRSP’s and sell them when the currency evens out a bit, to buy certain Us stocks.
I’m curious what are your thoughts on this?
- Canadian’s are you buying US stocks at these dollar rates?
- American’s why aren’t you taking advantage of the dollar?
Hey I’m Rob, creator of Passive Canadian Income.
In 2011 me and my wife had almost $60,000 in debt and a negative $7,000 Net Worth. Through hard work and financial education we paid all that off. Now we are focusing on increasing our Passive Income Streams to make the money work for us. Feel Free to Follow along the Journey by clicking the Social Media links below or subscribing to get notified of new posts on the sidebar.