This past weekend Canadians celebrated their Thanksgiving day weekend. The holiday is basically the same as the American version, just a little earlier in the year. There are many similarities that Canadians have with their American cousins and this includes stocks. In Canada the main index is the TSX, it is where are all the major companies are listed and is considered Canada's financial HQ. While this index is a great place to find basically any Canadian equity, it is however mainly comprised of the 3 main sectors. Those sectors are: financials, energy and materials. These are the three sectors that make up the majority of weighting in the index and basically limit Canadian investor's ability to diversify their portfolio.
So what is the alternative?
This is where a Canadian investor/trader needs to look south of the border and think about opening up a U.S. dollar denominated trading account. How does one go about doing so? This is a very easy process as basically all Canadian brokers have this option available to them. Whether it's through one of the big banks or some boutique brokerage firm, you will be able to open this type of account. By opening a USD trading account, an investor will be able to buy and sell any equity that trades publicly on the U.S. exchanges such as the NYSE and Nasdaq. While this information is nothing groundbreaking or new, it is meant to help inform that person who is not aware of this type of option.
Going forward I would like to bring you more information about Canadian equities along with my Canadian colleague: Evan Poechman. We will bring you information about dual listed stocks and how the currency exchange can help or hurt your portfolio and much more. If you would like trading the markets through a Canadian perspective, then we are your go to people for all your questions as we would like to bring you this feature every week.
Parm Mann
Elite Round Table
Follow me on twitter: @ParmMannTrader
