The Canadian Investor - 10 Investing Mistakes That Can Wreck Your Portfolio

Episode Date: August 24, 2026

In this episode of The Canadian Investor Podcast, we break down 10 common mistakes that investors make and how they can hurt long-term returns. We discuss the danger of overconcentration, why chasing the hottest trade can derail a sound strategy, and how investors can get lured in by massive revenue growth while ignoring risks hiding on the balance sheet. We also cover emotional mistakes like fear of missing out, fear of losses, overconfidence, confirmation bias, anchoring to your cost basis, and the sunk cost fallacy. Along the way, we share examples from our own investing experience, including lessons learned from crypto, growth stocks, Telus, Shopify, Allied Properties REIT, and other situations where process mattered more than short-term results. Whether you invest in individual stocks, ETFs, dividend stocks, or a mix of everything, this episode is a reminder that avoiding big mistakes can be just as important as finding big winners. Tickers discussed: CRWV, SMH, XEQT.TO, ZEQT.TO, QQQ, T.TO, SHOP.TO, AP.UN.TO, BCE.TO, AQN.TO, SU.TO Subscribe to our Our New Youtube Channel! Check out our portfolio by going to Jointci.com Our Website Our New Youtube Channel! Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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there's going to be some great opportunities for investors this has to be one of the biggest quarters I've seen from this company in quite some time welcome Welcome back to the Canadian investor podcast. I'm Simo Barrage. I'm back with Dan Kent. We have a fun episode right here. We did do one a bit similar to this a really long time ago, but it was different mistakes. So we'll look at 10 mistakes that investors make. I got the inspiration because I was looking at one of the articles from the Globe and Mail Financial Advisor Confidentials. So the big money mistakes you should learn from. And there was one that was inspired from there. The rest are more. rich people kind of problems. So I... Like tax stuff and... Yeah, pack stuff for owning a cottage in Muscoca and then fighting over the inheritance and stuff like that.

So I just, I took mostly the inspiration from the actual article from the title and then we'll go over some of the mistakes that are really important mistake. Of course, there are some other ones. We probably could have done a list of 20, 25 mistakes easily. but and we could have gone specific accounts like TFSA, R-S-P, R-E-S-P, F-H-SA, like we could even do in part two eventually if people really appreciate that or enjoy it. So the first one here, I've got six, you've got four, I'll get started. First one, over-concentration.

So this one, it can be a bit controversial because I think there's a couple different school of thoughts here. So there's more the risk management approach where you really want to be careful. having too much of an allocation in a single company or just kind of one asset class, like for example, gold or Bitcoin, whatever it is. And there's also another school of thought where it says, you know, you're a self-directed investor. You're not a fund manager. You're not tied to having maximum allocations or following an index.

So you can be more on the side of letting your winners run. And I know Braden, when we used to do the podcast regularly together, for him, he was a big believer in letting your winners run. But for me, I would say I'm more of a nuanced approach and making sure that I'm not over-concentrated because I did, unfortunately, learn from that the hard way in 2022 when I had close to 40% decline in my portfolio. And a big part of that issue was because first I had quite a few growth stock. on the one hand, so companies like Teledoc, PayPal, that got hit hard after 2021 into 2022, I had some pretty big positions in those. And then I also had, I think around 50%, if I remember correctly, between Bitcoin and Ethereum.

And if you know a little bit about what happened in 2022, you'll know that it was not a good year for Bitcoin and Ethereum, which ended up, I guess, climaxing for the lack of better words in terms of the bottom with the FTX bankruptcy and Sam Bankman-Fried eventually going to jail for for that. But I think it's really important because there are no 100% safe stocks or safe asset. Like you show me one asset. Like cash is not 100% safe. You'll get eroded through time. You won't need inflation. Government bonds are not 100% safe. Sure, you can look at U.S. government and bonds and thing that they'll never default. And you're probably right.

They'll never default, but they'll just devalue the currency, the value the value of those bonds, and you won't actually mean inflation. I don't care which company that you point at to me that is 100% safe. There are still things that could happen. Even a Berkshire Hathaway. What if there's an unforeseen event and insurance claims just go through the roof, like beyond the point zero zero zero one probability that catastrophe could happen. Like there's, and I think that's really important because a lot of people tend to forget about

that. They'll just look at a company and have 20, 25, 30, 40 percent of their money in that single stock. And they'll be like, well, I mean, it's a blue chip stock. Like, it's not going anywhere and nothing can happen. And one of the other mistakes I think you can see. and this is something that I've seen a few times in Canada is like literally people will be invested in the big six Canadian banks.

And I'll be like, well, I'm diversified. I have the six big banks. And I'm sorry, but if something goes wrong for the banking sector, they're all going to go down at once. Sure, some may go down more than more, more than the other ones, and vice versa. But the reality is you're extremely correlated and that concentration risk is really high. And I think it's easy to forget. And if we go back to my example of 2022, where I lost 40%, that really heard because maybe I could have reduced my risk, less concentration, more diversification, sold that Bitcoin allocation.

Maybe I could have gone to 50% to close to 25%, which would have been still high. And then I could have been sitting on losses of maybe 20% for the year, 25%. And instead, I lost 40%. And in order to make that backup, you need 67% returns. And it's the one that we often quote is, if you have a 50% drawdown, you need to double from that point on to actually get back to even. So you have to, it's really important to, yes, you don't want to overdo it. But at the same time, just remembering that big losses get even harder to make up. And I think that's where diversification, not being too concentrated, becomes really important.

Yeah, and there's actually a lot of conflicting statements, I guess, from even a guy like Buffett on this. I think, like, optimal to reduce unsystematic risk, which would be kind of company-specific risk that you can actually diversify from. is like if you're speaking in just stocks, it would be 20 to 25, I believe, well diversified stocks that are not like heavily correlated with each other would almost reduce your unsystematic risk completely, obviously not entirely. But then you have a guy like Buffett who is still quoted to this day saying that diversification is effectively just protection against your own ignorance. But that was from like, uh, I think.

it was from like an early 90s Berkshire Hathaway annual meeting. Like his, his tone has changed on that substantially, especially with index funds coming out, stuff like that. So,

I think he's even said that like, oh, sometimes like a lot of people should just put their money in the SMP 500, right? Like, I think you've said that

since multiple times. Yeah. And he also had mentioned, I'm almost positive. This was Buffett. But he said, you never get rich on your sixth best idea.

which is a kind of a case to people thinking like, why should I have a diverse portfolio when somebody, you know, one of the richest men in the world is saying that you should be, you know, heavily concentrated if you know what you're doing. I would argue that, like in the grand scheme of,

I would argue that most people are not Warren Buffett. Yeah, most people don't know what they're doing. Exactly. So they should be well diversified either through a broad basket of stocks or an index fund. So that quote, yeah,

it's 30 plus years old, but it seems like what everybody brings up when this question is brought in. But yeah, it's overconcentration is definitely a real issue. Yeah, and you see it constantly on Fintwit, right? You don't have to look very far if you see some influencers, they'll pose their portfolio and they'll have like 30, 35, 40%. And I mean, it's easy to feel on top of the world when, you know, especially this year, if you've been in the trade, you're probably looking at like 50% plus returns if you're heavily concentrated into that. So it's very easy to get overconfident and feeling like you're invincible when the market just or that

part of the market is just feeling like it just constantly goes up and cannot go down. So I would say just be careful. I'm not saying to sell all your winners, but just have a plan in place. Maybe one, like you have a rule where once a holding reaches 15% of your portfolio, you trim it back down to 10% or once it reaches 10% you trim it back down to 7 or 6% whatever it is something you're comfortable with something that you can look at the company and say okay i have x some x% of my portfolio in this company what if it dropped 50% tomorrow how would i react would i be okay would it just completely crush my plans that i have for my money whether it's retirement or something else i think that is the question to ask

Again, I think your rule of thumb of like 20, 25 holdings that are not too correlated to one another is not a bad idea. Index ETFs or low cost ETFs are good, like are not a bad idea either. But I think it's going to be personal, but just realize that yes, you may increase your upside if you have like an oversized position, but you massively increase your downside to no matter how good you think the company is. Yeah. I mean, protecting your, protecting your portfolio to the down.

downside is arguably more important than maximizing the upside because again, like you had mentioned, you get that 50% drop, you need 100% to get back to where you're at. So yeah, but not a lot of people pay attention to that. But it's not sexy, but let's move on to your first one, the second on the list. Having cash on hand is essential for any business. Traditional business accounts hit you with high fees while paying little to no interest on the cash you need for day-to-day That was our experience too, until we switched to the new EQBank business account. Now, every dollar earns high interest with no monthly fees and no minimum balance. You also get free everyday transactions like EFTs, bill payments, mobile check deposits,

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And while we're away doing that, our home in Ottawa would just be sitting empty. Summer is a great time for people to visit the city. Ottawa gets a reputation for being a little boring, but between the hot air balloon festival, patios in neighborhoods like the Glebe or Wesborough, family-friendly museums, and the nature to explore just across the river in Gatno Park, there's a lot more going on than people might think.

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Ready to invest, head over to Questrade.com, open and fund your account with code TCI and receive $50. Conditions apply. So I went being lured in by growth. And I think this one is more relevant today than it has ever been with the whole AI trade. And I've had a lot of chatter of CoreWeave. We went over it on the news and earnings episode. So among my premium members of just email comments in general.

And I think CoreWeave is a prime situation of being lured in by growth and ignoring all other elements. In this instance, the balance sheet would be one that is being ignored. and I do think this is arguably the most important financial statement out of all of them. The income statement will kind of show you all the big numbers that they're putting in the headlines. Coreweaves, you know, 125% revenue growth and the backlog. And well, I guess the income statement won't show the backlog. But that'll be one of the kind of the headlines, whereas, you know, the balance sheet is going to show you where that growth is, how that growth is being generated. Definitely matters.

It is probably the most boring of the three states. so nobody really likes to look at it. And out of the probably three dozen questions I've gotten about Corwee over the last month, especially after their recent earnings, I haven't had a single person mention the debt load. Like not one. It's always, you know, how are they, you know, they're growing 120 some percent a year. They're growing 25 percent over the last quarter.

Like, should I buy this stock? The demand is huge. All that type of stuff. And I won't go into CoreWeave too much. You can listen to the news and earnings because we do kind of an overview on that. But outside of the fact that it's virtually all of its growth is coming through debt finance, heavily depreciated assets. So you're generating small amounts of profits right now for monumental amounts of debt.

And the important thing here is debt is not really a dial. You can just decide to turn down like something like capital expenditures where you can probably just scale it back. Staff could be laid off. Operations can be modified, whatever it may be. The debt is still there. It's still gathering interest. it's needing to be paid off.

It's never going away without capital to pay it back. Unless in the event that the company goes completely belly up, then you would probably get the relief on that debt. But a great business with little debt can withstand some operational hardships. But a great business with a terrible balance sheet facing operational hardships could go bankrupt. So a lot of people would argue that you couldn't get a good business with a terrible balance sheet. I could say you could get a good business. business with a mismanaged balance sheet.

Plenty of good businesses. I've gotten themselves into trouble, but again, it's very difficult for investors to ignore massive triple digit revenue growth. It's kind of the like it's the steak on your plate, whereas, you know, the balance sheet is kind of like the veggies that you, you, you kind of eat last, you know what I mean? You never really pay too much attention to it, but it's very important. I'm not saying companies like CoreWea cannot become successful, but I think just the risk needs to be taken into account and judging, you know what I mean?

from the questions that I've got, a lot of the stuff online, a lot of the stuff on numerous investing platforms. I don't think anybody is really paying attention to the debt because it does not look good to talk about this company growing at 125%. You'll get more clicks, more views, more interaction when you're talking about the 125% revenue growth versus the 35 plus billion in debt they've taken on this year. So just as soon as you see these companies growing at these absurd rates, just ask yourself how it's happening. And more importantly, you know, how it's being financed, if it's sustainable, things like that.

So yeah, that's the first one I had because we're seeing it a lot in regards to AI. Yeah. The second one for me, so for the ones I did, I tended to look at a bit more emotional mistakes, but I think yours is a good balance there. So the next one, FOMO, so the fear of missing out or giving up on a sound strategy because you're seeing your neighbor just crushing it. You're talking to your neighbor who doesn't really know about investing. You probably put more time and effort into it than him or her.

And he's saying, you know what? I had heard about this ETF, SMH semiconductor. I put my money at the beginning of the year. And you know what? I'm up 52%. And you're holding something like XEQT or ZETQT, which got a measly 14% roughly if we round up and down for the year. And then you might say, you know what? My neighbor is just crushing it. I'm here with my sound strategy of a well-diversified global equity ETF. Just that one simple click. I've been dollar cost averaging. Everything's been going fine, but I could have put my money at an SMH or you name your favorite AI stock and I could have crushed it this year. Why am I doing this approach? And then you just did.

decide, you know what, I want to get in on it, and then you essentially diverge from your sound strategy that has years and decades of data that will likely work out, sure. It's more like the turtle winning the race versus the rabbit just going all out and not making it. But we saw this kind of behavior, and it's great that you mentioned Corweave and the kind of questions that you're actually getting, because I think this is really reminiscent. of 2021. Like a lot of the behaviors that we see right now and the way people are acting, just disregarding, like just fundamental stuff, like not looking at the balance sheet when the

debt is as just what like quintuple, like I had it on for a view where it was. It was only a billion in debt and now there's $35 billion. No, actually it's 52. I think now total debt. Yeah. Is it? Yeah. Yeah.

So, um, wild. Yeah. which is absolutely while and then if you start asking questions about okay like what happens if something goes wrong not as planned like sure they can serve as the debt which just means they can pay the interest for now but at some point that debt comes due and if it comes due are they able to refinance it or are they able to refinance it at a proper rate if they do refinance it are they just going to get 15% interest and they'll just it's just a debt sentence anyways so you get all these questions but people are just disregarding them

and they just see number to go up. They just see new to all-time highs reached by the QQQ so the NASDAQ, the power shares. And unfortunately, it's very reminiscent of, yeah, 2021 and the late 1990s where you just see the euphoria and people just see the upside

and they talk to their neighbor who has been benefiting for it And they just look at the recent paths. They're like, you know what? I'm tired of it. This has to continue. And I think this is something that you should really be careful, especially if you have a strategy that's sound that's based in historical data.

That's worked for a very long time. Before you do anything, before you start hopping on the bandwagon, just take a moment back, look at it, look at the data. If anything, sell a little bit and then buy those AI stocks, but still keep your main strategy intact. Yeah, so I had one of my members over at Premium back in 2022 during the bare market sold off all of their stocks and they lived in the GTA and they put all that money into real estate. I mean, pretty much the exact situation is this. That is absolutely it. Like, you know, the stock market had a rough eight months or so.

Real estate was going through the roof there. So kind of the flip flop. I mean, the definition of buying, buying high, selling low and vice versa. So, yeah, this kind of stuff happens all the time. And I guess I had another one, but I'll actually flip this one and do my next one first because it correlates with this very well. And that is that the other mistake I see is that thinking a good result means a good process is probably the next mistake that a lot of people make. Something that, like I've made some poker analogies quite a bit, but. this is one you see all the time at poker. Someone will have a good night playing poker and not being

critical about their own play, not realizing that the probability of them actually having a good night was below 5%. They just happened to hit that below 5% thing. But yeah, results oriented. You see that a whole lot playing poker. Yeah, I had this. I was actually going to add some cards stuff into here, but I knew that you would talk about it. So I kind of left it out. No, I knew that you would talk about it. didn't even bother doing it. But yeah, this is a lot of things in life, really, but investing is very important. Stock prices over the short term are unpredictable. There's actually a lot of studies that show they are completely random over like a one month time frame, absolutely zero correlation whatsoever, past returns to future returns. So an absolutely awful strategy can

result in huge profits while a well thought out investment plan can yield pretty much no results. So you end up seeing a lot of investors lean more towards short-term results rather than developing a good process. I would go back to that, you know, sell stocks during the bear and buy real estate and, you know, probably, I guess this is of course in hindsight, but the biggest real estate bubble in that area that we've seen in quite some time that's still currently deflating. You know, every investor grades themselves over periods of time that are fairly irrelevant in terms of being able to gauge actual performance. So they'll underperform the market for a year and reconstruct their entire strategy because the results weren't good. You'll see a lot of this

during frothy markets. They'll chase whatever is hot because their portfolio, sometimes a very well constructed one, like an all in one ETF. Like over the long run, you know, you can't beat that. It's performed very well for a very long time, but they want the returns now. So they'll sell it off and go somewhere else. And I think, huge bull markets is kind of where this mistake is made the most, believing that, you know, automatically that a good result means a good process. It really doesn't at all.

And like a real world example, this one's pretty extreme, but a perfect real world example would, let's just say you canceled your auto insurance for 10 years to save money. And you managed to squeak by those 10 years without getting pulled over and getting into an accident. It's a good result, but a absolutely horrible process.

Like if you, you know, the flip side of the situation is you know you're hit with a liability bill for a million dollars or you hurt somebody or you can't you know you don't have coverage so yeah good result horrible process very similar situation when we're kind of speaking about new investors getting rewarded for a bad process i would argue is worse than getting punished for it it might seem crazy because you'll be up money rather than down but newer investors don't really know any better they'll kind of file it into the into the skill box rather than the luck

box. The more experience you are, the more you can kind of distinguish what goes in that, you know, I got lucky here versus that was actually a good situation. Example for me, canopy growth in 2017 was without question, something that I just put in the luck box, extreme luck box. I think I made 600 plus percent on it in a little over the year. If I was newer to investing, I could have easily thought that, you know, this was a good process when in reality, yeah, I just got ridiculously lucky. I knew it was when I bought that company, I knew it was just kind of straight up speculative gambling. You know, if I would have done that when I was newer, I probably would have taken a different approach. But the other side of the coin is probably just as dangerous,

good process, but bad result. This is going to occur all the time when you look to short-term results, which are random. This is where you'll see people throw out perfectly fine investment strategies out the window to chase short-term results. You'll see somebody, again, you'll see somebody, Again, owning an all in one ETF this year that is sucked relative to the NASDAQ or double leverage NASDAQ ETFs, chip ETFs, whatever it may be. So they chucked that out the window and they try to buy something that'll get them more in the future. So, yeah, I mean, a year or even a couple years in the market can make some of the smartest investors look like idiots and the worst investors look like absolute geniuses. Just judge your portfolio by the process, not the outcome.

And eventually, you know, you'll be rewarded. We've seen, I mean, we saw this in 2021 with a lot of very popular YouTubers, I would argue, as well. Like some of these guys' accounts during 2022 were 50, 60% down, like almost triple the index. Maybe like 2.5x the index. Meanwhile, in 2021, they're like doubling their portfolios every single year. You know what I mean? So, yeah, long-term process. Having cash on hand is essential for any business.

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We use it for our own business, and it's the first account that actually helps our money work harder while keeping operations simple. Check it out today at eCubank.ca slash business. We've been talking about doing a trip to Halifax, and honestly, it feels like the perfect kind of Canadian summer getaway, walks along the waterfront, taking our daughter to the public gardens, finding a few good local spots to eat, and maybe making our way out to Peggy's Cove for one of those classic East Coast days. And while we're away doing that, our home in Ottawa would just be sitting empty. Summer is a great time for people to visit the city.

Ottawa gets a reputation for being a little boring, but between the hot air balloon festival, patios in neighborhoods like the Glebe or Wesborough, family-friendly museums, and the nature to explore just across a river in Gatno Park, there's a lot more going on than people might think. Listing our home on Airbnb could let another family experience our beautiful city while we're away and bring in some extra income to put towards our own trip. Your home might be worth more than you think.

Find out how much at Airbnb.ca.com. There is an old saying in investing. It's not about timing the market, but time in the market. The most successful investors aren't usually the ones trying to catch every top and bottom. They're the ones who spend the most time in the market. I've been a quest trade user for over five years, and the reason I stick with them is that they remove the friction of regular investing. With no commissions on stock and ETF trades, you don't have to wait until you have thousands

of dollars saved up to make a move. You can contribute small amounts regularly and keep your portfolio growing consistently, removing the stress of trying to time the market. And they keep making it easier to build a well-rounded portfolio. Soon, you'll be able to trade precious metals through Questrade, giving you even more ways to diversify. Questrade makes the whole process seamless, allow you to focus on what really matters your investment strategy, not trying to avoid.

fees. Ready to invest, head over to questray.com, open and fund your account with code TCI and receive $50. Conditions apply. Okay, so the next one on the list for me, fear of loss. So again, kind of on the emotional side. So definitely the opposite of the fear of missing out. And you'll typically see this when markets are correcting. So it's kind of the opposite of when markets are going well, well, you're seeing the opposite when the markets are correcting. So you saw that a whole lot in 2022, where the market started going down. And a lot of people,

I saw some stuff online too, that people were just selling their whole portfolio and then waiting for the market to go down some more. And the problem with that, you better have a very good, a very solid plan if you're going to do that. And even if you do, you may still miss the boat.

It really comes down. Okay. So you're selling. and when do you start buying again? That's a question. Okay, so you're selling now the market goes down 5, 10%, at what point do you start buying? Maybe you tell yourself, okay, I'll buy every time it drops 5%,

I'll buy 10% back. That's fine, but maybe it only drops 20% and you're only 40% back into the market and then you miss out on a massive amount of gain with that other 60% of your portfolio. So I think it's really important to just follow trust the process like you said and not let your emotions on either side of the spectrum, whether things are, you know, you're, you're fearing that you'll miss out, the FOMO aspect of it, when things are going really well in the markets in general. And then the opposite side of the pendulum when the markets are not going well. And then you just want to save money and you're just afraid of investing.

you have to really fight those emotions. If anything, you know, probably going a bit more on the opposite emotion when you're able to identify that will serve you better. But it also doesn't mean if you really are nervous about the markets, it doesn't mean that you can't maybe sell 5, 10, 15%, keep that in cash and have available to deploy as dry powder. Like, it doesn't have to be an all or nothing. And that's oftentimes a much more prudent approach by just. just being a bit more conservative in the approach.

Maybe like I said, you just sell a portion, leaving in cash in case the market goes down further, and then you can pull the trigger. And it may not be optimal, but at least it won't hurt you as much than if you did the opposite, and then you just miss out on a massive amount of gains. Yeah, I think, especially during drawdowns,

like selling and trying to buy back when it's lower, almost never works out. because I think they did those studies that showed like what happens if you miss the best days of the market in terms of your total returns. And the difficulty is, is I think a lot of the best days come during those types of markets. And usually like if you're somebody who's sold and you're going to buy when it comes back up, you're probably buying after one of these big days. Yeah. Because you're not going to buy when it keeps dipping. You're going to buy when you think it's going to turn around.

It's just it's a very difficult game to play. It's one that's proven that is almost impossible. I kind of say you're either wrong or you get lucky. Like if you're wrong, you're wrong. And if you end up making money, you kind of got lucky because that's how hard it is to predict. It's better to be right. It's better to be lucky than right. So yeah, that's how they say.

So what's your next one here? Anchoring to cost basis. So this is another one I kind of get all the time. People want to know like what my cost basis, like my adjusted cost basis is on a, on a company. And I will say like, I never. look at this. I don't know. I don't know if you look at your ACBs on companies. I barely ever do. No. No, I just, usually I'll look at how much like it's returned as a percentage, but not the average cost base. Yeah. So I think if somebody asked me what the cost basis was on pretty much

any one of my holdings, I would be able to come up with an approximate guess, but I doubt any of them would be super, super accurate because I mean, in my eyes, we're buying businesses. The market does not care what you paid. What you paid is absolutely no reflection of the, the current state of the business. So your future returns have nothing to do with it either. So focusing on your, your cost basis can, in my opinion, outside of like tax situations, obviously, because your cost basis is what leads to capital losses, capital gains or whatever can only lead to bad decisions. I don't know really a single good decision that can come from it. So an example would be you buy a stock at 15.

it falls to 10. You know, the thesis is broken. The company is struggling. And if you look solely at the operating results of the company, you know deep down you would sell that thing.

Like you want to get rid of it. But, you know, you're looking at your adjusted cost basis and you think, okay, I'll sell when I'm in the green or I'll sell when I'm not so deep in the red. And then,

you know, on the flip side, we have a situation that actually ends up costing you more, like statistically. And that's pretty much selling or refusing to buy more of your winners. So you kind of anchor yourself to your adjusted cost basis of your green holdings and you don't want to add any more to them because they've run up. So you're kind of already making a fundamental mistake of just not focusing on the business and not caring what your cost basis was.

And it is actually a well documented habit in finance called the disposition effect. So we cut winners too early. We hold losers far too long. So the study looked at 10,000 brokerage accounts. It found that investors sell winners. way quicker than losers and not only this, the winners they ended up sold selling outperformed the losers they were trying to get to the green on. So not every winner will continue to be a winner and not every loser will always lose, but just make decisions on the business, not your P&L. I have cut plenty of garbage stocks in my lifetime. I don't really care what I paid. I don't care how much in the green, how much in the red I am. I just focus on where the money is best invested moving forward. I mean, a prime case. would have been Telos. I made kind of a, well, I own Telas for quite a while, but I made like a bigger play on the company when it was $19. And I just ended up selling it because Shopify kind of went

through a big drawdown. I felt there was a better opportunity there. I didn't care that I was 20, 30% in the red, whatever it may be with Telas. I just sold it, bought Shopify and I mean, we're sitting there three, four months after and I've recouped every dollar that I lost in Telis over the years in four months with Shopify. obviously that's unrecorded profits so things could change quickly but it just goes to show you I could have been like oh I don't want to sell tell us until I'm in the green no I just I cut it I like Shopify more and moved on yeah I mean it's always the question to ask is always pretty simple right if the price is it is what it is that investment is worth what it is right now yeah where is that money best

invested, keeping it there in that company, or are there more attractive investments elsewhere where you think you'll get better returns? If the answer is the second one, then sell. Doesn't matter that you lost half or 80 or whatever the percentage that you lost. The market does not care. It matters where you go from now. So I think that's the way to bypass that one. So for me, the next one is overconfidence and confirmation bias. So I decided to just add them together. So overconfidence. I mean, I think you see that a lot with people that have less experience investing in terms

of like the amount of time in the markets. So they've started investing, let's say midway through 2022. So when the market's kind of bought them and they've had great returns since and they think that yeah, they're just overconfident because look at my results. I've been crushing it over four years. But if you start listening to anyone that's been investing for at least a decade or more, they'll usually have some humbling experiences and they will say that, look, I was maybe at a time, I was overconfident and then, you know, the market really slapped my face. Pretty silly. And I learned from that experience that, you know, nothing ever goes.

goes in a straight line up. And if you try to get too fancy, there's no free lunch and investing sooner or later, you, yeah, you'll feel it. So I think that is the one thing I'm noticing more and more being on Twitter is you got a lot of people that are just overconfident, just showing their returns over the last year, six months, two years. But they've not really gone through any material bear market. And they just think they know. everything. So I think it's just really important to remember that and not not apply that to your own investments because overconfidence can be really dangerous. And then confirmation biases, it kind of goes well with it just because that's the other thing you see a lot online is

people will be bullish on a specific company or type of stocks or asset, whatever it is, whether it's, you know, tech stocks, whether it's Bitcoin, whatever it is. And then they get into an eco chamber, like a bubble of like-minded people that essentially just reinforces their conviction in whatever they're investing in. But they're not seeking anything else in terms of opposite opinion. And I think that's really important. You can still love a company seek opposite opinions and be like, okay, like my thesis still holds, but I'm happy that I actually saw that other opinion on my investment because now I'm actually aware of a risk that I was not aware and I'm not going to sell or anything my position but maybe instead of being 15, 20% of my portfolio,

now realizing that there's a risk I wasn't fully baking in, I'll make that 10%. So it'll still be a large position but not as massive. So just being able to seek other ideas that are different than yours, I think it's it's really important, but it's much easier to just, I think for your own ego, right? I think it's for an ego reason that people just, it's easier to just, you know, let the love come and people who agree with you versus trying to seek out like almost conflict versus your own thesis. Well, it's also, I would argue, like algorithm driven by a lot of social media.

Yeah. So, I mean, not even in just investing in politics and whatever it may be. like if you're engaging with stuff that well the more you're engaging with the more they're going to serve you that so if you're if you're a bull on a particular stock on x and you see more bullish posts that's all you're going to see because that's all they're going to feed you because it's all you're going to engage with so i think it's more so an issue when it comes to social media as well and just the algorithms in general just serving you nonstop what you want to see but that just breeds confirmation bias for sure because i knew a few tickers that you could throw tweets out on X solely for engagement that would just go through the roof because they're very popular. They're talked about all the time. And a lot of people on there just do it to kind of get clicks and stuff too. So yeah.

Well, I mean, one good way, one good use of AI, right? Like if you're really bullish on a company but you're not, you know, seeking other opinions, just take the company or the investment, plug it into chat GPT or cloud or whatever and just say, what are some of the risk of this company? And I'm not saying take everything that AI is telling you for like verbatim that is 100% accurate, but it will probably highlight some risk that you didn't think about. And then that's your job of like taking that and researching and making sure that the AI didn't hallucinate or anything like that. But at least it will bring up some risk that you might have missed and that algorithm driven confirmation bias.

world that we live in online. So that is a way you could actually leverage AI and say, you know what? I'm really bullish on this, but I want to make sure I understand all the risk. Can you tell me poke hole in my thesis or give me risk or major risk for this company and the probabilities that you would assign to it? At least it will give you that counterbalance a little bit. Yeah, it's a very good sidekick, I guess you would say, for kind of, you know, putting stuff like that into play. My final one would be ignoring survivorship bias, which is, I mean,

it's ingrained into pretty much every investment strategy and mentality. Yeah. Yeah, it's, some people might not even know what it is. Everybody has it. Like, absolutely everybody at some point has a bias towards this. So if we think of survivorship bias, like the easiest way, we just take a million people, they're giving a coin. and they have to flip it 20 times. Statistically, one person out of that million is going to hit heads 20 times in a row. So a lot of people will focus. No?

No, once. Just one? Really? Yeah, it's like 0.86 people out of a million will flip heads 20x in a row or tails. Like either way, you know, one or the other. Okay. So the one thing I can, like, just off the top of my head, you want the biggest survivorship bias, would be lottery commercials.

Oh, yeah. They're just highlighting the people that have won the lottery, but don't talk about the monumental amount of people that commit their whole life to it and never even get a sniff. So I find where this is most relevant when it comes to investing is trading.

So people see if trading doesn't work, why is investor ABC and XYZ is so rich? I mean, that's survivorship bias at its absolute peak. Like there is millions of investors in the day trading graveyard, but most focus on, you know, kind of the few that defied the odds.

And that would kind of come back to those coin flippers mentioned that I mentioned above. Like 95% of traders will lose money. The remainder will break even and the small shred like the coin flippers will profit. And there was a study done back in 2020 that showed that only around 1% of day traders earn over minimum wage. So, yeah, very few make money. money doing it. So when we flip this from trading to investing. You forgot the last cohort that will go hide in the Amazon without internet and never be heard of again after. Yeah, I forgot about those people. I didn't do enough research on those types of people, but

they're there and they're there. If you go through the Amazon and you survive, you'll find a few. When we flip this from trading to investing lots of situations where this comes into play, The one I can think of right off my head is the blue chips always rebound type situation. The kind of this company is not going anywhere thesis because it happened with blue chips in the past. It's it's likely to happen in the future. We don't really spend time analyzing what's going on with the business. We just hold good companies, good companies, because good companies always recover, which is, you know, it's not as extreme survivorship bias as the coin flipping situation, but it exists.

good companies are never guaranteed to recover. And the other one which might make some people angry, the kind of survivorship bias using dividend aristocrats or dividend kings to screen stocks. So you kind of take a, oh, look at all these rock solid companies on this list, dividend growth must be an indicator of quality. And the funny thing is, is I did this with an account on X. This would have been a few years ago. It's a big dividend growth account.

and he made this post he's like look at these dividend kings and look at their returns like look at how good the dividend growth strategy is and i took that list and i compared it to the s m500 and something like 85% of the list that underperform the s&p so i responded to him i'm like well is this really all that good like 85% of these companies have underperformed the last 510 years and you didn't respond he just blocked me but that's yeah that's just it it's it's kind of survivorship bias to a certain degree because with a little bit of confirmation bias sprinkled in but blocking you because you didn't confirm his bias yeah yeah it didn't like uncutely like yeah it took me two minutes to kind of look up that the vast majority of those

stocks and really i don't want to say they did bad but they didn't do as good as buying you know just a broad-based index fund that didn't focus on income so the thing with these lists is you know the ones who had a 40-year dividend growth streak that just cut, they're just proven from the list. You never see them. So you got the 3Ms, the AT&Ts, the BCEs, the TELUS, the Algonquin powers, the SunCores. So you're looking at an aristocrat list that has kind of become some undeniable wall of safety. You just kind of, you got to remember that that wall of safety included all of the companies that axed the dividend 10 years ago. So next year's list doesn't really show any holes in the wall. it just kind of removed them.

Like a lot of the, a lot of the lists will say, okay, these are the ones that were removed, but it definitely won't, you know, take any sort of precedence over the ones that still say there.

So I asked, I did not have enough time because I was doing my notes very late this morning before we recorded, but I asked chat GPT what the rollover in the aristocrats list

has been since the great financial crisis and it said about 50%. So the list is, yeah, it's far from guaranteed. I do know one particular X account he blocked me as well, who won't tell us in BCE. I won't get on the full story on BCE, but you know the story about the leverage and all that type of stuff.

But he constantly talked about growing income stream and how the dividends are the way to steady cash in retirement. I have never seen them once tweet about BC or tell us his dividend cuts despite, you know, that hitting their income. So as with anything, an investment strategy, particular sector of stocks, etc., look to, I don't want to necessarily say the graveyard, you know, in terms of the trading like I had mentioned it before, but just look to the contrary before you make any decisions. Speaking of dividend cut, so my next one involves an example from me that I saved myself more money. I did lose some money, but I sell myself more money by cutting earlier and just looking at the data and realizing that there was a high probability that this was not going anywhere

or soon, anywhere good anytime soon. So that is the sunk cost fallacy. And this one can be really hard to overcome because you might have spent a lot of time researching a company. You may have had a really sound investment thesis in the company or the investment and that you did a whole lot of work and you've held this company for, you know, multiple years. So you've put some time and effort. And unfortunately, it's just not.

The stock is just not doing what you thought it was going to do. And the sunk cost fallacy is just that you say, okay, well, I spent so much time researching that. I've held it for so long. I have to give it more time. Like, I shouldn't cut bait right now. And I mean, this is also something that people can also apply to their personal life, right? Like, you see this constantly where you might see couples where you're like, wow, like, why are they still together after like five, 10 years or whatever it is. And oftentimes it's that idea is that, well, we've been together for so

long. We went through so much. There's that sunk cost fallacy. So it is not just in investing. It's also, you know, in your real life as well. You see it in poker as well, where people may have started the hand with $1,000 and they put $700 in and then they have $300 left when it's clear that their hand is no good and they shouldn't save the $300. But they've all right. already spent 700. So what's an extra three? Exactly. What's an extra $300?

They are pot committed. But the example I'm thinking about here, if you've been listening to the podcast for a little bit, you might remember this one. So I bought Allied property reits, which is an office reeds, so real estate investment trust. One of the, if not the highest quality office reed in Canada, so they had some of the best properties. So type A properties, either older buildings that were renovated,

brand new ones like amenities like really what you'd want to rent if you have if you're running a company and you want your employees to have like really nice space good amenities and then of course it got hit pretty hard with COVID with all the working from home and in late 22 22 23 I figured you know what it feels like the market is just like not to focus on the past and not seeing that more and more companies will actually like encourage or even force employees to return to the office and demand will start increasing for their properties and some of the metrics that they weren't like down in the drain completely but they were not doing that well and way worse than pre-pandemic my thesis was that you know what it's going to start turning over and through 23 and

2024 early 24 i started seeing like the metrics getting worse and management kind of saying oh it's coming next quarter it's coming next quarter and always like saying, oh, things will get better in X court and it would never get better. And at that point, I was down about 25% if I include the distributions that I receive. And I ended up selling at 1715 per share. And if you're familiar with Allied Property Reets, it's trading a little bit less than that. A little bit less than 17. Yeah, exactly. So I ended up selling. And honestly, like, I probably could have timed it a bit better. So I'm trying to pull it on here for those are watching. 928.

Yeah. So I'm trying to pull it. So just so I can show the graphic for people on YouTube. So there you go here. So you'll be able to see. Just pull it up. And there you go. So I have.

There you go. So I got it. Do you see it then? Yeah. Yeah. Okay. It's there. So yeah, you see.

All right property. read so you can see essentially when I bought it and I sold so what ended up happening is in late 2025 they announced that they would be cutting the dividends so you saw a big drop right around here so the stock tank and then you also saw another drop in the stock price early this year when they said they would be issuing units or shares at a price of $10 per share to shore up the balance sheet if I remember correctly. And these were all the things that I kind of started seeing. Of course, I probably could have sold probably closer to like $21 a share if I waited at the right time in 2025. But the reality is, is the distribution or the dividend was getting more and more at risk just based on the metrics that

I was seeing. And for me, even though I had spent a whole lot of time researching the company, I was listening to every single conference call from start to finish, put it. a lot of probably tens of hours, if not like 15, 20, if not more than that in that single stock. I just decided, you know what, it's not trending the right way. I learned a lot about the office real estate business as I did that. So at least it's not completely a sunk cost. And I just decided to sell at a 25% loss. And honestly, I'm pretty happy that I did, even though my timing, I could have maybe

been closer to break even, but that's okay. It's just to show that if I had waited longer, because of that sunk cost fallacy, I would have lost another, what, like 40% on my investment, 50% if not more. So it just goes to show that sometimes it's just better off cutting bait and just forgetting that sun cost fallacy. It gets even worse with this if people have sunk costs and then they keep buying more, which is another thing as well. Like if it's down, they keep buying more to get their cost basis down so that when it does turn it around, it's not as long. of a path to green. But yeah, it's sunk cost is a big issue.

I think Allied, didn't they, they sold off a bunch of data centers, too, I think. Yeah, that I was okay with it because they said they were selling the data centers to shore up the balance sheet and really focus on their core business, which was not. I think it was in 2023, mid. I think it was in a summer of 2023, if I remember correctly. And I didn't mind that per se. I thought it was like relatively prudent and they'd short up the balance sheet. but then the balance sheet kept getting worse and worse as the quarters went through.

And that's why, yeah, I think it was March or April of 2024. I just said, you know what? This is not going the right direction. Management has been saying this would be turning around now for like six or seven quarters. I'm just cutting bait. Yeah. As soon as I started talking about the amount of people they had walking through. Yeah, the visits.

The visits were through the route. Yeah. Yeah. The showings were through the route. If that was a metric that the stock, a KPI, then the company, this stock would be worth $100 if it was just based on showings. Yeah, based on tire kickers. Yeah, exactly.

But unfortunately, showings does not pay the bills. So it's actually probably just cost for them because they have to pay someone to show it. So, but that's it for the episode. I think it was a fun one. And hopefully, like, you find value into that. We can probably make another mistake episode that people are doing and probably some mistakes that we've done ourselves. And I think that's, I think this is a good one because we sprinkled in some of our own

mistakes into there. So I think that's good. Just to show that, yes, we, we do make good moves. We don't only have mistakes. We do make some good moves from time to time. But yeah, so that's it for the episode. Hopefully you liked it for people watching it on YouTube. We will be back for our news and earnings episode that you can listen on your favorite

podcast player. It's available for our Patreon subscribers at joincci.com as well. So thanks for listening and we'll be back with our regular episode on Thursday. The Canadian Investor podcast should not be construed as investment or financial advice. The host and guest featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.