Norbert's gambit - Can$ to US$ or vice versa

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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by DmDave »

gsp_ wrote:
DmDave wrote:Has anyone tried doing Norbert's gambit with Horizon ETF? Specifically I'm looking at HXS and HXS.U.
See posts above.
Jeez, I should've read the above post before. Thanks for point it out for me GSP.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by marcharry »

Just to let people know. I found a broker at TDDI who would do it on the phone (at online rate). My conclusion is that it is a total mixed bag - some follow the policy and refuse, others are happy to do it.

I will still get the account short enabled to simplify things.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by larry81 »

marcharry wrote:Just to let people know. I found a broker at TDDI who would do it on the phone (at online rate). My conclusion is that it is a total mixed bag - some follow the policy and refuse, others are happy to do it.

I will still get the account short enabled to simplify things.
ask for their name and phone number, next time you need to perform a currency conversion, just call your buddy and avoid haggling with others rep :)
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SQRT »

Did a gambit today at TDDI non registered account. Used CM. For the first time I was able to do it without talking to a rep. The key(I think) was that I did the USD short sale first, and the US account needs to be short enabled, which it is. I still need to call them to journal the shares over. Finally, total success!!
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by ig17 »

SQRT wrote:Finally, total success!!
Not until you complete the journal. :wink:

The last time I did the gambit in a non registered account, TDDI back office lost or ignored my journalling request. I had to call them the second time to repeat the same request. Their system ended up charging me the margin interest in the short sub-account because the journal happened a few days after the settlement date. I had to call the third time to reverse the interest charge.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by adrian2 »

SQRT wrote:Did a gambit today at TDDI non registered account. Used CM. For the first time I was able to do it without talking to a rep. The key(I think) was that I did the USD short sale first, and the US account needs to be short enabled, which it is. I still need to call them to journal the shares over. Finally, total success!!
All of this is documented on finiki, and has been repeated many times in this thread. But congratulations!

Do not call to ask for a journal until Monday (3 business days). If you do call early, it will not expedite it at all, and it may increase the level of frustration on your side. Patience is a virtue!
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SQRT »

adrian2 wrote:
SQRT wrote:Did a gambit today at TDDI non registered account. Used CM. For the first time I was able to do it without talking to a rep. The key(I think) was that I did the USD short sale first, and the US account needs to be short enabled, which it is. I still need to call them to journal the shares over. Finally, total success!!
All of this is documented on finiki, and has been repeated many times in this thread. But congratulations!

Do not call to ask for a journal until Monday (3 business days). If you do call early, it will not expedite it at all, and it may increase the level of frustration on your side. Patience is a virtue!
I already called to journal. Now will have to cross my fingers. Not sure why it didn't work this well before, but happy it works now.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by ClosetIndexer »

SQRT wrote:
adrian2 wrote:
SQRT wrote:Did a gambit today at TDDI non registered account. Used CM. For the first time I was able to do it without talking to a rep. The key(I think) was that I did the USD short sale first, and the US account needs to be short enabled, which it is. I still need to call them to journal the shares over. Finally, total success!!
All of this is documented on finiki, and has been repeated many times in this thread. But congratulations!

Do not call to ask for a journal until Monday (3 business days). If you do call early, it will not expedite it at all, and it may increase the level of frustration on your side. Patience is a virtue!
I already called to journal. Now will have to cross my fingers. Not sure why it didn't work this well before, but happy it works now.
You're lucky you didn't get hassled. Many reps (at least as of a few months ago) will freak out when they see that you're long and short the same stock, not realizing that this is fine as long as the short came first. Once I even had one tell me that he was going to cancel one of the positions, leaving me with huge market exposure. Unsurprisingly that didn't actually happen, but still, it's easiest to just call them on settlement day and have them do the journal immediately.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SQRT »

ClosetIndexer wrote:
You're lucky you didn't get hassled. Many reps (at least as of a few months ago) will freak out when they see that you're long and short the same stock, not realizing that this is fine as long as the short came first. Once I even had one tell me that he was going to cancel one of the positions, leaving me with huge market exposure. Unsurprisingly that didn't actually happen, but still, it's easiest to just call them on settlement day and have them do the journal immediately.
Thanks for the advice. No hassle when I called yesterday. Got a reference number for the journal transfer so I'm fairly confident it will happen. Will report back once it is done.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SQRT »

Everything worked as planned. Shares journaled as instructed, money received as expected. Yay!!!
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by Rysto »

ClosetIndexer wrote:You're lucky you didn't get hassled. Many reps (at least as of a few months ago) will freak out when they see that you're long and short the same stock, not realizing that this is fine as long as the short came first. Once I even had one tell me that he was going to cancel one of the positions, leaving me with huge market exposure. Unsurprisingly that didn't actually happen, but still, it's easiest to just call them on settlement day and have them do the journal immediately.
Shorting a stock that you're long on is perfectly fine in Canada. In fact, it's perfectly fine in the US too; you just don't get the benefit of the long-term capital gains rate when you sell.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by Bylo Selhi »

Rysto wrote:you just don't get the benefit of the long-term capital gains rate when you sell.
How is that relevant to an NG, whether going short or long the US asset? ;)
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by Rysto »

Bylo Selhi wrote:
Rysto wrote:you just don't get the benefit of the long-term capital gains rate when you sell.
How is that relevant to an NG, whether going short or long the US asset? ;)
It's not. My point is, the only "problem" with shorting a stock that you are long in is that the IRS deems this "shorting against the box", and when you do it, you are deemed to have sold the stock that you are long in for tax purposes. "Shorting against the box" used to be a tactic to avoid US short-term capital gains taxes.

For some reason some brokers have gotten the idea that shorting against the box is the worst investment sin imaginable, leading some to, for example, threaten to cancel a long or short position to prevent it
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by zinfit »

Action Direct is simple.Buy on Toronto and sell on New York and click USA dollars on the sell. Not a complicated process.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by larry81 »

Hello gambiters,

I performed another large gambit at TDDI today. I used TD stock (as always) with market price for both the buy (CA) and sell (US) operation, here are the results:

XE.COM SPOT: 1.09753
Norbert's gambit Result: 1.09806

The difference represent just about 2 x 9.99$ :)

The operation took less than 2min with about 10 second between the buy and the sell.

protip: if you find a gambit friendly rep, get their name+extension and call them back :)
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by Rooster »

I've performed norbert's gambit numerous times with tdw, but always within a registered account (rrsp).

Will be looking to perform shortly with an unregistered account. Are the operations the same? Anything to take into account?

Thanks!
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by ClosetIndexer »

Rooster wrote:I've performed norbert's gambit numerous times with tdw, but always within a registered account (rrsp).

Will be looking to perform shortly with an unregistered account. Are the operations the same? Anything to take into account?

Thanks!
Unfortunately the process is not as smooth at TD in a non-registered account. The most foolproof way is to get your account set up for short selling. That way you can short on one side, then sell on the other, wait three days, and then call them to journal the shares over and flatten the position.

Otherwise you'll have to call up a rep to journal the shares before you can sell, which can result in a delay with market exposure. (Personally if I didn't have the ability to short, I'd just use DLR and DLR.U, even though you give up a bit compared to using a small spread stock like TD.)
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by Spidey »

Unless there are some costs that I am unaware of, exchanging money at a reasonable rate seems to be a lost business opportunity. Can it really cost that much to exchange currency in these days of lightening fast computer transactions? I can't figure out why there is no discount broker out there, particularly one of the smaller ones trying to grab business, that doesn't implement exchange fees that would be competitive to the gambit. Or possible even waive exchange fees for purchases and sales of US equities. I guess there must be a reason.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by Bylo Selhi »

Why should they? It's a very lucrative business to charge 1% to 2% to convert dollars. (Like MF fees the percentage is small enough that most people won't notice it and even if they do it's not enough to get them to choose lower cost securities like ETFs.) Over millions of transactions this has to be a big money spinner for the brokers.

Consider a similar situation, the 2.5% vig that credit card companies charge on FX transactions. That has the same characteristics as brokerage FX vig, generates even more easy revenue and presumably should attract even more competition. And yet there's only one card company, Chase, that waives this fee and only on a few specialty cards. If the general public was generally aware of and truly incensed by this fee why haven't they abandoned main stream cards en masse for the likes of amazon.ca Visa?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by Rooster »

ClosetIndexer wrote:
Rooster wrote:I've performed norbert's gambit numerous times with tdw, but always within a registered account (rrsp).

Will be looking to perform shortly with an unregistered account. Are the operations the same? Anything to take into account?

Thanks!
Unfortunately the process is not as smooth at TD in a non-registered account. The most foolproof way is to get your account set up for short selling. That way you can short on one side, then sell on the other, wait three days, and then call them to journal the shares over and flatten the position.

Otherwise you'll have to call up a rep to journal the shares before you can sell, which can result in a delay with market exposure. (Personally if I didn't have the ability to short, I'd just use DLR and DLR.U, even though you give up a bit compared to using a small spread stock like TD.)
Thank you. How long does it typically take to get the shares journaled and resellable on the US side?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by larry81 »

Anyone have any notes on how to keep track of gambit transactions for accounting ?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SQRT »

larry81 wrote:Anyone have any notes on how to keep track of gambit transactions for accounting ?
I don't keep track of it at all. There really shouldn't be a taxable gain if you use the right FX rate. I guess if you delayed for a day or two you would have a gain or loss. Anybody else report any taxable event for a gambit?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by adrian2 »

SQRT wrote:
larry81 wrote:Anyone have any notes on how to keep track of gambit transactions for accounting ?
I don't keep track of it at all. There really shouldn't be a taxable gain if you use the right FX rate. I guess if you delayed for a day or two you would have a gain or loss. Anybody else report any taxable event for a gambit?
I'm using calendar year forex rates, so yes, in my case a gambit results in a capital gain or loss.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SQRT »

adrian2 wrote:
SQRT wrote:
larry81 wrote:Anyone have any notes on how to keep track of gambit transactions for accounting ?
I don't keep track of it at all. There really shouldn't be a taxable gain if you use the right FX rate. I guess if you delayed for a day or two you would have a gain or loss. Anybody else report any taxable event for a gambit?
I'm using calendar year forex rates, so yes, in my case a gambit results in a capital gain or loss.
That seems counter intuitive to me. Clearly, you did not actually have a gain or loss if you do the gambit right?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by adrian2 »

SQRT wrote:
adrian2 wrote:I'm using calendar year forex rates, so yes, in my case a gambit results in a capital gain or loss.
That seems counter intuitive to me. Clearly, you did not actually have a gain or loss if you do the gambit right?
Say you buy today 100 shares of CM for USD10k, and you sell them for CAD10.8k. Since the forex used for the USD transaction is determined at year end, it may result in a capital gain or loss.
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