Personal Wealth Hedging

[themack89]

I'm curious if anyone takes steps to hedge their wealth across different currencies either directly or indirectly.

For example, dumping half of your Canadian income into USD or Euro based assets or cash. This doesn't necessarily restrict how much you can invest or what you can purchase (although it might just at the time of transaction), but it could certainly help guard against slower long term trends that people tend to ignore.

Share your strategies if you have them, I am listening.

[ExtraSlow]

I've considered some degree of this, and depending on the year, I may have some of my assets invested in the USA or overseas, but I don't consider currency hedging to be a key item for me.

I don't feel I've got any particular insight into the currency market that would allow me to intelligently hedge in a meaningful way.

I'm also interested in what others have to say on this topic.

[ercchry]

i'll get back to you when im worth $100mm

[themack89]

Originally posted by ercchry
i'll get back to you when im worth $100mm

You laugh. But you forget that in our lifetime (I think we're close to the same age) the Canadian dollar was worth $0.65 USD. The point is simply to avoid windfall movements like that, whether you perceive them to be in your favor or not.

[flipstah]

Sounds like a pain since now you have to pay attention to two economies.

[ercchry]

Originally posted by themack89


You laugh. But you forget that in our lifetime (I think we're close to the same age) the Canadian dollar was worth $0.65 USD. The point is simply to avoid windfall movements like that, whether you perceive them to be in your favor or not.

yeah, but a normal person will never have enough cash to be able to have just stagnate assets sitting in foreign countries. i envision this as either a bank account or property... i guess you could have a few trading accounts in foreign markets.. but again so much more to manage for a regular person who is just struggling to be a retail investor in our "regular" markets

[max_boost]

Originally posted by ExtraSlow


I'm also interested in what others have to say on this topic.

I don't think most ppl are baller enough on Beyond to worry about stuff like this lol and if they are I'm sure they have a group of other ballers and representatives they can discuss at length (rage2/benyl/89coupe/kenny/E36M3 secret meetups). With that said though, I do know a family friend of ours was adamant that the USD would appreciate so when at par the CAD they went out and bought $380K worth of USD. Now I don't know exactly how they did it lol do you just have two accounts and make a transfer or what? haha

Seemed like a smart move now lol 10% just like that.

[max_boost]

Originally posted by flipstah
Sounds like a pain since now you have to pay attention to two economies.

real ballers pay attention to the global economy! c'mon mr economist! use that degree! haha

[flipstah]

Originally posted by max_boost
real ballers pay attention to the global economy! c'mon mr economist! use that degree! haha

If I was going to do it, I'd put it in a developing economy that has big potential (one of the Tiger Cubs in Asia like Malaysia or Philippines). EU isn't really doing much except Germany holding them intact.

But then I have to worry about it every single day...

Pfft. I'd rather travel and gamble craps in Singapore than gamble in the stock market. One of them is more fun.

[Strider]

Originally posted by ercchry


yeah, but a normal person will never have enough cash to be able to have just stagnate assets sitting in foreign countries. i envision this as either a bank account or property... i guess you could have a few trading accounts in foreign markets.. but again so much more to manage for a regular person who is just struggling to be a retail investor in our "regular" markets

Could be as simple as buying US denominated stock - easy enough to buy NYSE/NASDAQ listed stocks in a USD account at most (if not all) Canadian brokerages - not sure how hard it is to do with Asian or European equities/currency. You could probably open accounts at Canadian branches of foreign banks like HSBC to get exposure, but that sounds like a lot of administration.

Originally posted by max_boost


I don't think most ppl are baller enough on Beyond to worry about stuff like this lol and if they are I'm sure they have a group of other ballers and representatives they can discuss at length (rage2/benyl/89coupe/kenny/E36M3 secret meetups). With that said though, I do know a family friend of ours was adamant that the USD would appreciate so when at par the CAD they went out and bought $380K worth of USD. Now I don't know exactly how they did it lol do you just have two accounts and make a transfer or what? haha

Seemed like a smart move now lol 10% just like that.

You can open a USD bank account at most Canadian financial institutions... Even better, I converted a chunk of my investments to USD and bought US dividend paying stocks when the dollar was at par. Now I'm getting a 10% bonus on my dividends.

[ercchry]

Originally posted by Strider


Could be as simple as buying US denominated stock - easy enough to buy NYSE/NASDAQ listed stocks in a USD account at most (if not all) Canadian brokerages... not sure how hard it is to do with Asian or European equities/currency.

yeah with my TFSA i have a bit of US in there, but the free cash just does what it wants. i'd rather time my entry based on what has the best upside than try and time it with the currency movements, that 10% is easy to make up with the right timing. but again, if i have better opportunities with something trading in canada... well it is what it is. either way i grouped that in with "regular markets"

but for now the USD is still the benchmark so its still only a single currency pair you are screwing with.

[flipstah]

How does taxation play into this?

Random but you want an economy that'll boom in the future? Myanmar.

Everyone is hitting that place left and right, trying to industrialize and make it big while there's little to no competition.

http://blogs.wsj.com/privateequity/2...faint-hearted/

North Korea is the biggest flower waiting to bloom but IMO, they have to do it within our lifetime or else the sociological/technological gap will be too big to do anything.

[Toma]

Trying to catch small trends is useless. Take advantage of disaster. Us dollar only really 'fell' to par once it was clear their economy was about to shit the bed.

But are you gonna try and play 20% once every 10+ years, and lose 6% to exchange fees?

The disaster in the US saw real estate fall 85% in some areas. Much more was to be made there.... Par currency AND leverage AND real estate for almost free. Doesn't happen often, maybe once or twice in a life time. But it has and it will. Be prepared by being debt free and sitting on piles of cash.

I once bought monthly Euros, Swiss francs, and Chinese Yuan. But the only winners here are the exchangers since they take such a massive cut both ways, especially in small amounts.

[Feruk]

I just hold a large chunk of my portfolio in VTI, a USD ETF that represents the whole US market (something like 5000 stocks). Risk pretty much equal to market risk, but I am diversified in USD without having to trade currency. It was nice especially last year when I got a free 10% bump.

[ZenOps]

If you have a hundred million or so: Convert to SDR (not USD) and buy German bonds with coupon at -0.1 percent?

Then, two or ten years from now you will have preserved your purchasing power.

Make sure your coupon pays in SDR and not USD.

Will SDR replace USD? Maybe, they seem to have changed the name to XDR nowadays too.

http://www.bloomberg.com/news/2014-1...ing-right.html

If they don't lie about the 0.05% floor, then its definitely worth looking at instead of USD.

[broken_legs]

Im in 6 different countries, 4 different currencies. Im not super baller or anything, but im spread out.

Every chance I get i a new country, I open a bank account. Its surprisingly easy. If Canada decides to do a Bail In similar to Cyprus (Flaherty wrote this into law check it out) ill be just fine. If all 6 countries do the same ill still be fine because ive also spread some wealth into hard assets.

Of course im a conspiracy theorist, and non-resident. Your situation may vary.

[oz388]

Buy gold and hold until currencies become worthless?

[e36bmw///]

nm

[broken_legs]

Originally posted by e36bmw///





Interesting. Any international banks offer free banking?

If you carry a minimum balance things are usually quite affordable.

[ZenOps]

Originally posted by oz388
Buy gold and hold until currencies become worthless?

Worried about a black swan/black marble event?



Probably fairly self explainatory if you simply start the video at 11 minutes.

Personally: I think nickel, silver, and platinum are better right now. Its also fairly easy to calculate ratios of value: Platinum is roughly 80x more than silver, silver is roughly 80x more than nickel, and nickel is roughly 240x more valueable than iron (at current spot price)

Copper is overpriced, and gold really only does well in a black swan/marble event of 100% loss. If the black marble is only a 50 to 90% loss, then gold is not as good.

If the Swiss decide to back their Franc at a 1:5 ratio to physical gold, then in an event where there is a currency collapse and the country "does the right thing" - there is a chance you will only incur an 80% loss in wealth.

Since the US dollar is cupronickel (more copper) in the event of a US dollar black swan event, if they do not spread out the 8,133 tons of gold they have (because the US people do not really own it as its was demonitized under Nixon shock law) then its basically a 99.8% loss for anyone holding digital or paper US dollars.

Japan? Aluminum based. 99.9998% loss per yen.