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The exchange rate can make you money if you live in any 2 countries and you are smart!

November 28, 2015

A few years ago my friend Peter and his professor wife, lived in San Francisco and taught at Berkeley University while owning an old house near the BC legislature in Victoria, BC. One day, near retirement time, they made a decision to sell their second home in Victoria because of financial reasons. They sold the small house in my town and moved to San Francisco (I miss them). They call me from San Francisco and said, “Elior, we finally sold the cute house. We now have half a million dollars in our saving account at Van City credit union. You are an investor, what would you do with the money in such a situation?  I  thought for a minute and said, “I would spend a few hours on Google, study the exchange graph between Canada and the US for the last 10 years, do my calculations, find the pattern and project the period I could get at least $1.02 US for every $1.00 Canadian in the Exchange market. (don’t forget to ask the clerk to call headquarters to get a favorable exchange rate for amounts greater than 25 grand). They got $510,000.00 US for their $500,000.00 CAN. They called and thanked me. They are still my close friends, now retired. Let’s say they miss Victoria in 2015 want to buy a nice apartment in Victoria. They said many times in the last 6 years that they would like to live in both countries and they love Victoria for its friendly people and beauty. If they took out their money from the San Francisco credit Union and wrote a check for their account at  Van City, they would get today $663,000.00 CAN, not bad for making $163,000.00 CAN for moving around!

But, there is a catch. You don’t need a PhD to learn how to make money living in any 2 countries. What you need is more love of making money than fear of trying. I can give you the basic rule but I can’t erase your fear/love ratio if it’s bad.  Even worse if you have a belief that playing the exchange rate risk or a gamble. It isn’t either, it’s a challenge to a smart person! Here is what I told Peter  (rule as applied to US/Canada), “If a Canadian government is a confident, assertive right-wing conservative entity  that likes to invest and do business with the US and others, wait for the exchange rate to start climbing in the direction of $.98 CAN = $1.02 US. If  a Canadian government is an insecure, lazy left-wing liberal entity that likes to save for a rainy day and make its money by selling Canada’s natural resources, wait for the exchange rate to start moving in the direction of $1.o2 CAN = $.98 US. (do a similar analysis for an US government!).

Both Harper and Trudeau are lazy dudes. In the last few years Canada sold mostly oil to the US and earned very little industrial income money. This trend will intensify with Trudeau’s liberals. $1.02 CAN = $.98 US has already kicked in big into $1.33=$.77, in fact today’s $25,000.00 US will get you almost $34,000.00 CAN at Van City. American tourists love Victoria praying that Trudeau stays and even get reelected!

Life is good if you read my blog! You sure know stuff, my friend!


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