Comments on Triaging My Way To Financial Success: Canadian Currency Hedge Strategy

@BIGINTOBONDAGE: Sorry, I'm sure you have lots...

2009-06-17T13:34:13.197-04:00

@BIGINTOBONDAGE: Sorry, I'm sure you have lots of good stuff to say on your blog, but I have a bit of a problem clicking on some random link called BIGINTOBONDAGE at work... Do you have specific blog posts you'd recommend to me?

Locke - The hedge worked out exactly as it was int...

2009-05-25T16:35:25.715-04:00

Locke - The hedge worked out exactly as it was intended regardless of the knocks against any double lever'd ETF strategy. The fact I chose a double leveraged ETF was to reduce my risk (exposure to capital) in return for recognizing the tracking error of the product. It didn't hinder any performance vs. taking a larger position in a straight hedge.

Sami - please read the post. I'm contributing CDN$'s to my RSP and buying USD assets (equities). The hedge is intended to maintain my purchasing power when I contribute to my RSP regardless of where the valuation of the currency goes. I am neither bearish nor bullish on the movement of any foreign currency; simply limiting my exposure to risk.

if you live in canada why hedge the Canadian dolla...

2009-05-25T15:53:51.604-04:00

if you live in canada why hedge the Canadian dollar? you costs will be in canadian dollars. I can understand if you want to hedge foreign content of your portfolio but local currency is not typical.

If you are bearish on the dollar why not short the dollar?

Also the double ETFs are only good for day training and long term results will disappoint you due to compounding of the daily % moves.

The selection of the oil short etf is an ingenius ...

2009-05-18T10:23:00.000-04:00

The selection of the oil short etf is an ingenius concept for cdn hedging but the choice of the double short is bit questionable. If held for would get eroded by volatility as double etfs aren't designed as long holds. If you want to minimize capital, options can be used on currency/oil ETF's.

The constant leverage trap of double ETF's will more than likely outweigh the hedge itself.

BigintoBondage: Shoot me an email if you have a mo...

2009-05-12T21:50:00.000-04:00

BigintoBondage: Shoot me an email if you have a moment, I'd like to discuss a few fixed income indeas with you.

I have a similar investment strategy. Although, I ...

2009-05-11T19:36:00.000-04:00

I have a similar investment strategy. Although, I am long the Canadian dollar and believe it will trade between 0.90-1 $US in the next few years. I agree that we have a petro-dollar and thus invested in HOU.TO to hedge my currency exposure.

Patrick: I have a different philosophy and invest...

2009-05-11T15:33:00.000-04:00

Patrick: I have a different philosophy and investment strategy than the majority of DIY Canadian investors. Please, read my blog as i try to point out the attractive yields offered in the investment-grade corporate bond market (i didn't say 100% fixed-income). For the young investor, starting out with a broad knowledge of bonds is essential (IMO) for building and preserving wealth.
knowledge of bonds and a well-constructed portfolio offers an alternative to the typical risk/return model and volatility of the traditional asset allocation ratios.

BITB: Thanks for the compliment. I have a positio...

2009-05-11T15:00:00.000-04:00

BITB: Thanks for the compliment. I have a position in ALA.UN and HSE for O&G exposure as well as preferred shares in ENB.

Patrick: No idea what you're talking to exactly, but in my RSP I have a mix of fixed income and equities; I don't advocate that a young investor stick solely to fixed income.

Why would a young investor stick to fixed income? ...

2009-05-11T13:52:00.000-04:00

Why would a young investor stick to fixed income? That seems totally bass-ackward. Young investors who don't need the money for decades should be, logically speaking, the most risk-tolerant group of investors, shouldn't they?

i was ready to rant and rave about how a young inv...

2009-05-11T11:47:00.000-04:00

i was ready to rant and rave about how a young investor can stick to the canadian fixed income market, and blue chip canadian equities as a way to completely avoid the currency issue you have spent clear effort analyzing.

i was really surprised and pleased with your hedging strategy. While i personally think that the accumulation phase of portfolio management requires an extremely conservative exposure to equities, the logic- and your results- are sound.

congrats on a smart play and best of luck in the future.
i would only suggest that you always keep at least a small position in some sort of oil/natural gas play to continually provide a balancing of your portfolio net worth, and not just currency volatility, over time.