# How to Handle US Stocks?



## Smoothie (Jul 11, 2011)

Hello all

Noob here, seeking your wisdom.

How do you handle US Stock purchases and factor in currency value changes? I've been buying them thru my brokerage account, in CAD.

I bought Microsoft at $18.75USD in Nov 2008, as one of my first stock purchases. Since then MSFT has gone up about 30%; now if I sell MSFT I make about $7USD/share.

Trouble is, the USD/CAD was around 1.27CAD when I bought and is now around par so i just break even.

My guess is that some people make lotsa money on currency movements. I paid lotsa money(on paper) to learn about the existence of this issue. 

Any advice? Stick with the true north? USD account? what do you guysngals do?


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## Betzy (Feb 7, 2011)

Here's a little help from a previous thread...
http://www.canadianmoneyforum.com/showthread.php?t=7979


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## m3s (Apr 3, 2010)

Questrade was the first to allow you to hold USD in RRSP (and RRSP is the best place for USD stocks) This way you can sell your MSFT, and buy another USD stock without any conversion besides the initial exchange. Banks will also charge 1.5%-2.5% on top of currency exchange whereas Questrade only charges 0.5% in RRSP. This saves a small fortune over time if you trade USD stocks. Of course currency exposure is always a risk but I wouldn't want to hold only CAD stocks myself.

If you're not with Questrade or RBC Direct where you can hold USD instead of forced currency exhange, then it behooves you to acquaint yourself with the art of wash trading and the infamous 'Norbit's Gambit'


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## atrp2biz (Sep 22, 2010)

I'm not sure if NG is relevant to the OP's inquiry. It is the risk of FX movements that affect the portfolio, not necessarily the cost of conversion.

We hedge our USD portfolio with OANDA. Only about 60% of our USD exposure is hedged--we're comfortable with the FX risk on the remainder. With current interest rates, long USD/CAD is a carry trade, so the position earns interest as well, in addition to interest earned on the deposited funds.

EDIT: not long USD/CAD--short USD/CAD is a carry


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## PMREdmonton (Apr 6, 2009)

You can consider your USD stocks as part of your economic diversification which can exist both in terms of where you choose to invest and in what currencies you choose to invest in. For example, you can invest your money in ETFs bought in Canada which hold US stocks which are hedged in Canadian dollars or you could convert currency into USD and then buy an ETF holding US stocks directly.

Now you unfortunately got caught in a situation when you bought a US equity when the Cdn dollar was weak. You will realize a loss on FX if you choose to take your money back to Canada now. There is now way of getting around this.

What I have been doing is buying USD when the CAD is strong. I don't necessarily trade with the USD but am just waiting for the right opportunity to buy US equities. I would consider the USD to be a buy anytime the CAD > 1.05 USD. 

Many people think the long-term value of CAD is about 0.85 to 0.90 USD. The history from 1975 to 2006 suggests that this POV has some merit. Whether this holds true in the future is up for debate. Some have speculated the CAD may be worth up to 1.15 to 1.20 USD in the next few years. I wouldn't be surprised if it did appreciate up to that value before eventually moving down to .90 USD.

Regardless, I do think there is some value in moving some of your money into other currencies as part of a diversification of your portfolio.


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## osc (Oct 17, 2009)

Hold US stocks until the US dollar raises again. If you don't believe that will ever happen, hedge with currency transactions or don't hold individual US stocks.


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