What does 3,500+/- U.S. stocks all have in common? According to #Market Watch, the Canadian #dollar has appreciated by 15.80% over the last 12 months which means buying U.S. stocks today is 15.80% less expensive for Canadian investors. In my opinion, this is an opportunity worth considering and could be a limited time offer.

To put this in context, the Canadian dollar has been trading above 83 cents in recent days, its highest level since 2015. Over the last 12 months, the Canadian dollar has appreciated not just because of surging oil prices but also on the commodities side, where raw materials and base metals have been doing much of the heavy lifting. There seems to be a correlation between rising copper prices and the Canadian dollar so again, it is certainly not just an oil story taking place.

From an investing perspective, Canadian investors face a challenge when it comes to building wealth. First, investing in Canada typically means investors will be exposed mostly to #Oil & #Gas, #Financials and #Materials. In other words, not a diversified selection of investments or incentive to invest heavily in our beautiful country. The other obstacle is managing #currency risk. It is no secret that our Canadian dollar has been weak comparative to the U.S. dollar and since investing outside of the country is often attractive, staying on top of currency risks is an important piece to prudent risk management.

What does 3,500+/- U.S. stocks all have in common? According to Market Watch, the Canadian dollar has appreciated by 15.80% over the last 12 months which means buying U.S. stocks today is 15.80% less expensive for Canadian investors. In my opinion, this is an opportunity worth considering and could be a limited time offer.

Could the U.S. dollar regain its strength relative to the Canadian dollar?

Yes, I believe so. We are starting to see future #contracts on a variety of different #commodities priced much lower than today’s pricing which could mean the markets have already priced in relief of #supply chain concerns. This could also mean that if our supply capacity reaches our demand or needs, we should see prices fall back to pre-pandemic levels.

What is this week’s takeaway?

Investing is not just about the selection of stocks or bonds but rather a combination of other risk factors including currency risk. Each investment plan regardless of age or how much money is invested requires a personalized approached. Why? Simply put, clients needs and financial circumstances are unique. Furthermore, not all clients view risk or volatility the same which is also a main factor when building a personalized investment strategy.

This week I wanted to bring awareness to our Canadian currency surge and the opportunity forming in the background. With stock prices down and the Canadian dollar up, the timing to consider rebalancing or adding funds to your portfolio may be ideal.

Have a great long weekend!

Talk soon,

Michael Zagari