Currency Exchange Rates

The Dividend Post research is carried out in Canada with the current focus on US equities. Currency exchange rates can affect your returns over time. Our Canadian research section will be published soon. Canadian investors buying US equities must be mindful of the value of the US dollar, while US investors buying Canadian equities must be mindful of the value of the Canadian dollar.

Right now, the long term trends appear to favor an appreciation of the Canadian dollar. Even Warren Buffett is bullish on the Canadian dollar, and who are we to argue with him. As such, Canadian investors reviewing our data on US stocks must take into consideration the distinct possibility that these equities will be worth less over time when converted back to Canadian funds. Conversely, US investors would be wise to consider Canadian stocks as these will have a currency “kicker” built in when converted back into US funds.

In the time period spanning 2002-2007, the U.S dollar has lost half of its value against the Brazilian Real. Berkshire Hathaway raked in $100 million during 2007 with its holding of the Real since the value of it rose 26% during the past 12 months. Warren Buffett is bullish on the Canadian dollar over the next decade, and we are not going to argue with arguably the greatest living legend of investing.

As a result, US investors would be wise to consider currency for future investments into Canada as the Canadian dollar has very significant potential over the coming decade.

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