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US Stock Holders - Party Time!

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  • Dec 22nd, 2015 10:55 pm
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Deal Expert
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Dec 11, 2005
20134 posts
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US Stock Holders - Party Time!

Wondering how many others are holding significant amounts of US denominated stock in their RSP and/or TFSA. I did the math and i have made more money based on exchange rate collapse over the past 2 years, than I did on any actual stock movement!

Anyone thinking of taking this opportunity to cash out and buy relatively cheap Canadian stock? I sure am.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
18 replies
Deal Fanatic
Jun 27, 2007
5507 posts
1956 upvotes
and what canadian companies would you consider?

banks with high RE?
telcos?
energy?

I would keep US, gives you exposure to the largest economy and possibly the world.
Deal Addict
Sep 20, 2014
1201 posts
435 upvotes
Calgary, AB
Indeed, am employing a similar strategy here as well but not really big on ditching great holdings in either market.

I start growing concerned however, when I see the stock market galloping the real economy. We have seen some unwarranted boost in stock prices down south, I don't really consider that to be a good sign.
Deal Fanatic
May 22, 2003
9325 posts
6385 upvotes
Vancouver
Yeah, about half my RRSP is in US stocks. V, AAPL, MCD, PM, PG. I was wondering why despite losing big on BTE and POT why my portfolio is up so much this year.
Banned
Jul 23, 2011
498 posts
75 upvotes
Lindsay
I would be selling soon...Dow is getting pretty high
Member
Oct 11, 2015
302 posts
24 upvotes
Cheap canadians stock LFMO ...

Use your brain and buy the US version of your canadian stock.
Deal Expert
User avatar
Dec 11, 2005
20134 posts
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dlhunter wrote: and what canadian companies would you consider?

banks with high RE?
telcos?
energy?
Looking at the banks right now. I think they are cheap.

Telcos are not a good place to put money right now IMO. Wireless growth is slowing and it is unclear what the next major driver of telco revenue will be.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
Deal Fanatic
Jun 27, 2007
5507 posts
1956 upvotes
brunes wrote: Looking at the banks right now. I think they are cheap.

Telcos are not a good place to put money right now IMO. Wireless growth is slowing and it is unclear what the next major driver of telco revenue will be.
do not want to argue, but banks are not cheap. yeah, their earnings are solid and "projected" to grow in 2016. but consumers are in record debts.
as rates rise, demand for money will decrease. yield curve will help, but loan write down will increase to balance things out.
reminder, banks extended quite some cash to energy sector. that sector is imploding with some companies not surviving 2016.
oil and gas at record lows... and "projected" to stay here for some time (me thinks until sector rights itself through BKs)

telecoms can raise fees, yet again. but, in my opinion, their power to do so will diminish with weak economy. it was easy to sell share everything plans and bump their prices across the board by as much as 40%, but now it's going to be very hard. look at US...
Sr. Member
May 5, 2010
971 posts
119 upvotes
Not cashed out but I did withdraw all the USD/US stocks to increase the TSFA contribution space on a dollar to dollar basis.
Deal Fanatic
Jun 3, 2009
5735 posts
1585 upvotes
Montreal
bluejazzy wrote: Not cashed out but I did withdraw all the USD/US stocks to increase the TSFA contribution space on a dollar to dollar basis.
Hmm that seems pretty smart...
Deal Expert
User avatar
Feb 11, 2009
20055 posts
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Toronto
About 80-90% of my portfolio was always USD....

Really loving the drop in dollar for that reason only haha.

Been cashing out little by little since we hit $0.75.
Realtor (Investment Properties) - CPA, CA
Member
Jun 10, 2010
336 posts
111 upvotes
bluejazzy wrote: Not cashed out but I did withdraw all the USD/US stocks to increase the TSFA contribution space on a dollar to dollar basis.
If the dollar drops further and you plan on investing in USD denominated stocks in there in the future you're losing space.
Deal Expert
Mar 25, 2005
22705 posts
3696 upvotes
CM52 wrote: If the dollar drops further and you plan on investing in USD denominated stocks in there in the future you're losing space.
You're not loosing space, its still wroth $1CAD.
Member
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Sep 25, 2015
222 posts
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Newcastle, ON
bluejazzy wrote: Not cashed out but I did withdraw all the USD/US stocks to increase the TSFA contribution space on a dollar to dollar basis.
How does that do anything other than nothing at all? haha.
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Sr. Member
May 5, 2010
971 posts
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gwcphoto wrote: How does that do anything other than nothing at all? haha.
When the USD and CAD were par, every 1 US dollar was equivalent to 1 CAD dollar of TFSA contribution.

When I took out the USD dollar, the withdrawal is based on the CAD equivalent exposure. Every 1 USD dollar take out is equivalent to approximately 1.25 Canadian dollar. You are allow to contribute what you took out the next year plus 5500. If I top up my TFSA with Canadian dollars next year and leave USD in a regular account till the currency improves, I would have effectively increase my contribution limit by amount of USD taken out x 25%. It only doesn't make sense if you take out USD and put back USD.
Member
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Sep 25, 2015
222 posts
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Newcastle, ON
bluejazzy wrote: When the USD and CAD were par, every 1 US dollar was equivalent to 1 CAD dollar of TFSA contribution.

When I took out the USD dollar, the withdrawal is based on the CAD equivalent exposure. Every 1 USD dollar take out is equivalent to approximately 1.25 Canadian dollar. You are allow to contribute what you took out the next year plus 5500. If I top up my TFSA with Canadian dollars next year and leave USD in a regular account till the currency improves, I would have effectively increase my contribution limit by amount of USD taken out x 25%. It only doesn't make sense if you take out USD and put back USD.
It makes zero sense if you plan on putting the same value of CAD back into the TFSA in the beginning of the new year. You're just taking money out in one form, and putting it back in another, at the exact same value. You're not getting something for nothing; there's no arbitrage of contribution room.. Unless you were planning on waiting for the CAD to gain value, in which case you're just timing forex, which you can do in or out of the TFSA.

And 'leaving the USD in a regular account till the currency improves' also makes little sense, since you're holding USD while waiting for the CAD to improve (and USD to fall).

I'm not so sure you've thought this through.
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Deal Expert
Mar 25, 2005
22705 posts
3696 upvotes
bluejazzy wrote: When the USD and CAD were par, every 1 US dollar was equivalent to 1 CAD dollar of TFSA contribution.

When I took out the USD dollar, the withdrawal is based on the CAD equivalent exposure. Every 1 USD dollar take out is equivalent to approximately 1.25 Canadian dollar. You are allow to contribute what you took out the next year plus 5500. If I top up my TFSA with Canadian dollars next year and leave USD in a regular account till the currency improves, I would have effectively increase my contribution limit by amount of USD taken out x 25%. It only doesn't make sense if you take out USD and put back USD.
This makes no sense. Yes you gain an absolute TFSA $ increase, however those $s are less valuable. Looking at purchasing power you are in the same place as you started.
Sr. Member
May 5, 2010
971 posts
119 upvotes
The whole point of this is not to make money. I know the total value of my portfolio has not changed when the money is switched and when 2 currencies fluctuate, and that ther is no change to purchasing power.

US dividends in a non-registered account is taxed like regular income at your marginal tax rate as is regular Canadian dividends on a dollar to dollar basis. Only now I have more dollars in the TSFA that will not be taxable.
Member
Jun 10, 2010
336 posts
111 upvotes
bluejazzy wrote: The whole point of this is not to make money. I know the total value of my portfolio has not changed when the money is switched and when 2 currencies fluctuate, and that ther is no change to purchasing power.

US dividends in a non-registered account is taxed like regular income at your marginal tax rate as is regular Canadian dividends on a dollar to dollar basis. Only now I have more dollars in the TSFA that will not be taxable.
If this was your goal why didn't you just sell them, convert to CAD, and buy Canadian stocks inside the TFSA without making any withdrawals? Better yet, why did you not have a tax efficient allocation from the start?

You had capital gains inside your TFSA. This is a great outcome, but it doesn't matter whether it came from equity appreciation or forex gain. Any shuffling you are doing to feel better about it is simply a lateral move.

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