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 Peculiar_Investor »

Wallace wrote:Excellent PI. I used the site today.
One small point. Can you make it clear on the site that both DLR and DLR.U are listed in the CANADIAN market
You welcome, but I cannot address your point, I have no involvement whatsoever with the site, it was another CMF member that developed it. I just found it and reported it back here (and to Norbert).
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by Norbert Schlenker »

For the record, the norbertsgambit.com site is not mine, nor am I happy about some of its recommendations (using DLR/DLR.U exclusively), limitations (not describing or even hinting at the problems that can be experienced at the wrong broker), or the writeup (no citations to original source material). Nevertheless, anything that makes the technique more available to the masses isn't a bad thing.
Nothing can protect people who want to buy the Brooklyn Bridge.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by gobsmack »

eulogy wrote:Grrr. It's officially the fourth trading day since the gambit and things haven't cleaned up. I guess I'll have to give BMO a call.
How did it go? I am considering moving from TDDI to BMO.

FYI: This guy reports that BMO may end up charging you interest by mistake if you exchange a large amount using NG : http://www.michaeljamesonmoney.com/2014 ... t-bmo.html
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by eulogy »

gobsmack wrote:
eulogy wrote:Grrr. It's officially the fourth trading day since the gambit and things haven't cleaned up. I guess I'll have to give BMO a call.
How did it go? I am considering moving from TDDI to BMO.

FYI: This guy reports that BMO may end up charging you interest by mistake if you exchange a large amount using NG : http://www.michaeljamesonmoney.com/2014 ... t-bmo.html
Actually I just came back to report that everything fixed itself before I had a chance to call in (5th trading day). I never had a gambit take so long to settle out everything, but I could tell they manipulated something after the first day. I bought RY on TSX and sold RY on NYSE. But after that first day the information they had listed in my account changed for the RY. Both lines showed the same price, the same value, the same loss, etc.

So in conclusion: it seems to take a little longer than other brokerages to settle... at least this trade did.

As for Michael James claim on the interest, I heard it's built right into the infrastructure of their software. But I believe you only end up with the interest charge if it is more than $5 when your account shows the short for the few trading days until things fix itself. This is why only some people report seeing this interest charge. Though I hear they will always refund it because they don't have the intention of charging for such things, just that it's a limitation on their software.

I guess I'll find out in a months time if I accrued interest.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SQRT »

Just did probably my biggest gambit ever. Everything looks good. Effective rate .7008. Ouch! Used my short enabled US non registered margin account at TDDI but this time I waited to make sure the short sale was completed before I did the purchase in CDN account. Short sales take a few minutes as they are reviewed (by an actual person?) before they are completed. Used CM as always. Didn't have to speak to anyone.
I now have enough US funds to get me through until the fall. Hopefully FX rate better by then.
Last edited by SQRT on 14 Jan 2016 10:52, edited 1 time in total.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by eulogy »

Yeah, it seems quite strange to be doing Gambits at these rates. When just a few years ago, it was entirely more satisfying. :rofl:

I have some of my largest gambits to do as well. I decided I was going to convert my entire equity positions to VT, so ... 2 more rather large ones to go.
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Re: Norbert's gambit - Can$ to US$ or vice versa

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SQRT wrote:Just did probably my biggest gambit ever. Everything looks good. Effective rate .7008. Ouch! Used my short enabled US non registered margin account at TDDI but this time I waited to make sure the short sale was completed before I did the purchase in CDN account. Short sales take a few minutes as they are reviewed (by an actual person?) before they are completed. Used CM as always. Didn't have to speak to anyone.
I now have enough US funds to get me through until the fall. Hopefully FX rate better by then.
Only had to speak to a person to journal the shares. Everything worked perfectly. This time I waited for TDDI to sweep the US cash from my short enabled account to the regular USD account. Once this was done (next day), I was able to transfer the funds to my bank account.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by eulogy »

Just had an interest charge at BMO IL for a rather large gambit. My short position with RY sat in the account for 7 trading days before they disappeared. No wonder interest charges show up with the time it takes for everything to wrap up.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by Norbert Schlenker »

Call BMOIL and complain. They are supposed to be set up to auto-journal those positions, and only once has the journal not happened on T+3 (and it was T+4).
Nothing can protect people who want to buy the Brooklyn Bridge.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by gobsmack »

Yes, from what I have heard they will reverse the charge if you call and complain. It is a bit annoying having to deal with the spurious interest charges though. Does anyone know if RBC DI is a better platform for norbert gambits?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SQRT »

gobsmack wrote:Yes, from what I have heard they will reverse the charge if you call and complain. It is a bit annoying having to deal with the spurious interest charges though. Does anyone know if RBC DI is a better platform for norbert gambits?
Not sure about RBC but TDDI works very well for me.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by eulogy »

I called up about it. I'm supposed to get a call back about it. The most awkward conversation. I don't know if she fully grasped what I was saying. She couldn't conceive why there was interest and wasn't able to explain where the interest came from. Somewhat annoying and it's annoying that the shorted position sits on my account for so long. I did the gambit on Jan 14th (Thurs) and everything didn't get kosher until Jan 23rd (Sat).
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by brucecohen »

In TDDI RRSP: Say you buy DLR and then sell as DLR.U. Does TDDI automatically put the US$ proceeds into the US$ RRSP sub-account or do they leave the proceeds in the C$ account and convert the US$ to C$?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SkaSka »

I post this so anyone who comes along and gets the same "brilliant" idea can learn vicariously from my error :oops:

So back in July, I was going to conduct a NG with a RY/RY trade on RBC DI in a TFSA. However, the genius in me thought "why arbitrage right away when I can wait a couple of weeks and get out after the ex-dividend date and collect a nice little dividend?"

I bought around $77 per share and haven't seen that price since. Oh, and the continuing divergence between the Canadian dollar and US dollar since July has widened further, meaning that even if RY on the TSE were to hit $77 tomorrow, I would be getting a few hundred dollars less in USD as opposed to if I had just done it immediately and properly back in July.

I got greedy and reached and got burned. It's an ok consolation prize that I don't mind holding a position in RY for the long term!
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by AltaRed »

Indeed, good lesson. A proper gambit forces one into staying neutral rather than making a stop at the roulette wheel.

It also means use a stock (that you don't already have) but are willing to live with....if you cannot stop yourself from making a stop at the roulette wheel.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SQRT »

SkaSka wrote:I post this so anyone who comes along and gets the same "brilliant" idea can learn vicariously from my error :oops:

So back in July, I was going to conduct a NG with a RY/RY trade on RBC DI in a TFSA. However, the genius in me thought "why arbitrage right away when I can wait a couple of weeks and get out after the ex-dividend date and collect a nice little dividend?"

I bought around $77 per share and haven't seen that price since. Oh, and the continuing divergence between the Canadian dollar and US dollar since July has widened further, meaning that even if RY on the TSE were to hit $77 tomorrow, I would be getting a few hundred dollars less in USD as opposed to if I had just done it immediately and properly back in July.

I got greedy and reached and got burned. It's an ok consolation prize that I don't mind holding a position in RY for the long term!
Thanks for sharing this. Most here would be reluctant to do so. I am always very careful to do both sides almost simultaneously, but it could be a lot worse than having a position in RY I guess. How did you get the USD you wanted?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SkaSka »

SQRT wrote:Thanks for sharing this. Most here would be reluctant to do so. I am always very careful to do both sides almost simultaneously, but it could be a lot worse than having a position in RY I guess. How did you get the USD you wanted?
Oh, I never did. It was USD earmarked for purchase of US stocks but since all RY did was go down from my cost basis, I've held RY in CAD as opposed to the US stocks I was going to purchase.

Eventually, when the market price reaches or surpasses my cost basis, I will finalize the gambit (perhaps one of the longest NG in history? :lol: )
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by DenisD »

brucecohen wrote:In TDDI RRSP: Say you buy DLR and then sell as DLR.U. Does TDDI automatically put the US$ proceeds into the US$ RRSP sub-account or do they leave the proceeds in the C$ account and convert the US$ to C$?
My understanding is you have to call and ask them to journal the shares to the US subaccount after the trade settles. Once they are in the US subaccount, you sell DLR.U on the TSX. Otherwise, they will leave the proceeds in the Canadian subaccount and convert the USD to CAD. But I could be wrong ...
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Re: Norbert's gambit - Can$ to US$ or vice versa

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SkaSka wrote:However, the genius in me thought "why arbitrage right away when I can wait a couple of weeks and get out after the ex-dividend date and collect a nice little dividend?"
Yeah there's also the fact that, if the market has confidence a company will pay its dividend, then the market has already priced the "nice little dividend" into its current quote. All other things being equal (and they never are), the stock price would drop by approximately the amount of the dividend on its ex-date.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by SkaSka »

queerasmoi wrote:
SkaSka wrote:However, the genius in me thought "why arbitrage right away when I can wait a couple of weeks and get out after the ex-dividend date and collect a nice little dividend?"
Yeah there's also the fact that, if the market has confidence a company will pay its dividend, then the market has already priced the "nice little dividend" into its current quote. All other things being equal (and they never are), the stock price would drop by approximately the amount of the dividend on its ex-date.
Not always. But like AltaRed said, I took a spin at the roulette wheel and sort-of-ish lost. Learned my lesson and will not repeat again.

I try to learn as much as I can vicariously but sometimes, you just have to go pull a boner personally to really learn a lesson :lol:
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by AltaRed »

SkaSka wrote:I try to learn as much as I can vicariously but sometimes, you just have to go pull a boner personally to really learn a lesson :lol:
The small mistakes that do not materially affect one's portfolio are really just good learning lessons. Nothing to knock one's head on one's desk over.
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by zeno »

Has RBCDI's exchange rate changed for the better lately?

I have some new money due to arrive in one of my accounts so I was preparing to Gambit it over to my USD account to buy VTI.

Just as an experiment, I went to the Stock Order Entry screen at RBCDI to see what rate it was converting my existing available balance at. It converted at a rate of .7193. That's actually a better rate than shown on Google finance .7180 or Oanda .718262. This is for a very small amount (sub $1000) so no bulk discount.

Have I missed anything? Used the wrong currency rate for comparison? Is the Available Balance on the stock order screen misleading me? Are actual purchases done at a less favorable rate? Or is NG no longer necessary at RBCDI?
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by larry81 »

Last week i performed a very large USD->CAD gambit as part of my portfolio consolidation, i am talking about a low 7 figures gambit here.

I have a few good reasons to move my holding from USD to CAD:

1. I am approaching US Estate tax territory
2. I had a large chunk of tax loss harvest opportunities
3. I found that regular gambit are stressful and make frequent portfolio rebalancing more complex
4. There are now Canadian domicilied ETF comparable to what is offered on the US side (VTI->VUN, VXUS->VIU/VEE)
5. My USD appreciated quite a bit, in fact i converted large chunk at near parity

The operation was very stressful, none of my usual gambit buddy were available to take my call. I found a non-foreign speaking TDDI rep and asked her if she was familiar with NG operation and if she had actual experience with them. After two confirmation i went ahead. After about 30 min of various delay and "validations" she was about to place a buy limit order (her recommendation to go with limit) for TD. With all the delay the market has moved and the order would never have fulfilled, In fact she was using the ASK from 20 mins ago…! That’s when she told me that she never performed any NG and that it was all new to her. Here I am trying to execute a 7 figures gambit with a newbie !!! I promptly hung up and tried another rep.

The new rep assured me that she is familiar and that there will be few seconds between the buy/sell order. I place a market order and it was promptly filled with a 1c spread (TD is a very liquid stock). Surprise, the rep doesn’t have authorization to place such a large sell order so she must validate with the highers up. Here I am in limbo listening to TDDI hotline music, actually holding a 7 figures position while the market is fluctuating and my hearth is racing. We finally sold after 10min with a 1900$ capital gain…

The NG with two 9.99$ commission practically gave me spot.

So far so good but I almost had a heart attack. No more gambit for me!
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Re: Norbert's gambit - Can$ to US$ or vice versa

Post by NorthernRaven »

TDDI (née Waterhouse) seems to quote around 30 basis points for over $100K from their online calculator. I wouldn't be surprised if an existing customer with 7 figures couldn't get that reduced further and done as a concessionary FX trade, especially if it were hinted that it was time for a periodic review of whether to stay with TDDI... :)

I remember someone who got Knightsbridge FX to go 5 basis points on a $500K lump. A few extra basis points over gambit may be very cheap peace of mind insurance!
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Re: Norbert's gambit - Can$ to US$ or vice versa

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NorthernRaven wrote:TDDI (née Waterhouse) seems to quote around 30 basis points for over $100K from their online calculator. I wouldn't be surprised if an existing customer with 7 figures couldn't get that reduced further and done as a concessionary FX trade, especially if it were hinted that it was time for a periodic review of whether to stay with TDDI... :)

I remember someone who got Knightsbridge FX to go 5 basis points on a $500K lump. A few extra basis points over gambit may be very cheap peace of mind insurance!
I actually tried and they did not bulge. I was informed by the FX desk that it is 30 bps for everything over 75k. You can read my mind that i was not very enthusiasm at the idea performing a 7 figures NG !
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