What is Norbert’s gambling?
Norbert Schlenker, president of Libra investment management, reportedly put forward the idea of Norbert nearly 40 years ago. This concept has become more common over the past 20 years.
Schlenker uses his own idea to convert currency between Canada and the US dollar using listed stocks. For example, some Canadian stocks listed on the Toronto Stock Exchange (TSX) are also listed in US dollars on the New York Stock Exchange (NYSE). This communication can allow investors to buy in one currency and sell in another, effectively converting the US dollar into the cost of trading commissions.
Norbert
On February 14, 2025, Royal Bank of Canada (RBC) shares closed at TSX’s CAD 168.67 per share. On the New York Stock Exchange, they closed at $119.04. The price difference represents the exchange rate between the two currencies. The Canadian dollar stock trades at about $1.417 as the dollar-dollar exchange rate closed at $1.418 on February 14, 2025 at $1.418.
As the currency moves, the stocks on both exchanges should be almost the same after taking into account the exchange rate at that time.
Investors may be able to buy Royal Bank shares at Canadian dollars on TSX and then “diary” the double-listed shares to Royal Bank shares on the New York Stock Exchange for sale in US dollars. “Diary” means transferring the same shares from one exchange to another.
Better Solution: DLR ETF Unit
One problem with buying listed common stocks is that the value of the stock may fluctuate.
Norbert’s Gambit can also be implemented using global X dollar currency ETFs such as Exchange Traded Funds (ETFs), which are traded on TSX in Canada and US dollars. The stock symbol is DLR (Canadian Dollar) or DLR.U (USD).
DLR/DLR.U ETF tracks the value of the dollar at the price of USD or Canadian dollars, so investors may reduce changes to the underlying stock price that may be volatile.
