Canadian investors getting smarter
More and more, Canadian investors are going the do-it-yourself route. More and more, they’re not using an adviser. They may subscribe to an advisory newsletter or two, or maybe they read a page such as this one, which I’ve been increasingly dedicating to the DIY audience. But in the end, they’re making their own decisions.
It’s a lot to take on, doing their regular day job and being an investing expert at the same time. But I’m willing to help in any way that I can, including offering a round of applause when they do something right.
Case in point: On April 6, 2010, at 6:48 a.m. Eastern time, the Canadian dollar reached par with the U.S. dollar. Collectively, Canadian investors couldn’t have cared less.
Sure, they took note of it. And then they moved on, as if nothing important had happened. Good for them.
Our loonie actually went on to trade at a premium of US$1.001, before falling back to US$0.999 as I wrote this. And nobody cared. That’s a good thing.
Why? To answer that, let me illustrate what happened the last time our dollar hit par with the U.S. which occurred on September 20, 2007 at 10:58 EST. At the time, Canadians didn’t have a lot of experience with the situation: it was the first time in 31 years that our currency was worth the same as theirs.
And how did Canadians respond? They went a little crazy. All of a sudden there were bus trips being organized, sending hordes of shoppers to border cities like Buffalo, Detroit and Seattle to take advantage of this new-found purchasing power.
Avid readers were suddenly demanding to know why books had two prices on the back cover: a higher one for Canadians and a lower one for U.S. purchasers.
People demanded to know why government regulations didn’t allow us to go down to the States, buy a car and bring it back here.
Vacation bookings to Florida and other American destinations skyrocketed.
It was all a bit silly, and here’s why. At one time our buck traded at a lowly price of US$0.63. Over a long period of years, it rose from US$0.63 all the way to US$0.99 without anybody getting excited.
Then it went from US$0.99 to US$0.995, and there was barely a peep out of anyone. It was only when our loonie rose a tiny bit more to hit par that all heck seemed to break loose. Silly.
This time around, I only had one person ask me how to capitalize on the fact that our dollar was now at par. (When I told him I had no idea, he looked at me with great pity, apparently for being someone who holds himself up as knowing about investing, but can’t answer such a simple question.)
Folks, when a financial asset changes in value by less than half a percent, it’s usually not a reason to uproot your life. Par is no more a special or magic number than is US$0.995 or US$1.005. In taking a collective yawn, Canadian investors seem to have learned that this time around. I applaud that.
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