The Highly Effective Investor (HEI) and the Weakening Looney

The personal asset allocation of the HEI core portfolio is between a US market index exchange traded fund (ETF) tracking the S&P 500 and US cash. The best three exchange ETF’s to track the S&P 500 are the S&P 500 ETF (symbol SPY), Vanguard S&P 500 (symbol VOO) and the iShares S&P 500 (symbol IVV). Each is an excellent approximation of the U.S. economy, the strongest economy in history.

How has that worked out so far, this year? Here are some recent headlines about the looney.

  • Our poor loonie — ‘There’s not a whole lot to love about the currency right now’
  • Canadian dollar dips below 77 cents US on trade worries
  • Trade fears and dovish central bank limit Canadian dollar’s upside
  • The Canadian dollar traded close to an eight-month low

The Canadian dollar has dropped 5 cents against the US dollar (from 0.7492 to 0.7017) so far this year. That means that the HEI core portfolio, being held in US dollars is up five cents for each dollar held or, C$50,000 per million on its cash holdings alone.

For 2018, expressed in percentage terms:

Bottom Line

History shows that over the course of time, the US market has performed better than the Canadian market. It also shows that the US dollar has been stronger most of the time.

Based on Mark Twain’s statement that history does not repeat itself but it rhymes, HEI’s assume that the US market and currency will outperform their Canadian counterparts in the future. In saving and investing, as in most things in life, HEI’s always try to put the odds in their favor.

Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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