May 26, 2015

Tuesday was a negative day in the markets with the S&P 500 down 1.0% and Toronto down 0.9%.

Melcor was one of the rare stocks on the rise and it was up 2.7% to $19.00.

Element Financial was up 4.7% on confirmation that it is in talks to buy “fleet assets” from General Electric.

Constellation Software was up 1.8% to $516.

The Canadian dollar was down eight tenths of a cents and now sits at about 80.5 cents. I would be very tempted to rebalance by moving some of U.S. dollar investments back to the Canadian side except for two reasons. First, I don’t have much cash in my American dollar accounts and I don’t particularly want to sell any of the American stocks I own (though I probably should for the sake of rebalancing.

Second, TD Direct (formerly called TD Waterhouse) will charge me a fee of about 1.65% to move cash from a U.S. account to a Canadian dollar account. And this applies even to moving funds between the U.S. dollar and the Canadian dollar portion of an RRSP. I consider this to be an outrageous fee and have complained about it.

Using a stock that trades in both Canada and the U.S. has been suggested as a way around it. I did that once and with a fee of I believe $80 to do a manual transfer it did not work out much cheaper at all when moving $10,000. It would have been cheaper though if moving more like $20,000.

The bottom line for me is that paying 1.65% to move money one way makes it very difficult or futile to try to get ahead by moving money between U.S. and Canadian dollars as the dollar moves around. For me, it seems that moving money to the U.S. account is something of a one-way trip. I move it there and then leave it and trade in U.S stocks.

This fee is no different than the standard 2.5% that most Canadian credit cards tack onto the U.S. exchange. They do it because they have a captive customer. And because customers don’t complain enough about it. I have no problem at all with a reasonable fee.

Toll Brothers is set to report earnings before the open on Wednesday. I am hoping for a good report with a good outlook. The earnings it reports will not be as important as its figures (number and average price) for contracts on new homes. Contracts take about a year to show up as revenue and earnings after the house is built and transferred to the buyer.