The Canadian Investor - 2021 Investing Year in Review

Episode Date: December 30, 2021

In this release of the Canadian Investor Podcast, we discuss the following topics: Withdrawing RRSP before retirement A look back at the major investing stories of 2021 A look back at our 2021 bold predictions to see if they came true   Tickers of stock discussed: GME, AMC, DAWC, VAB.TO, VCN.TO, VTI, BND, GFL.TO, TFII.TO, TSLA, Episode 55: https://thecanadianinvestorpodcast.com/episode/year-in-review-and-2021-bold-predictions https://thecanadianinvestorpodcast.com/ Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Stratosphere 🚀 https://www.stratosphereinvesting.com/See omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian Investor Podcast, made possible by our friends and show sponsor, EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. Live from the great white north, this is the Canadian investor where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Belanger. The Canadian Investor Podcast. How we doing?

We made it to the end of the year episode. I'm Brayden Dennis, joined as always by Simon Belanger and Simon. Today, we're going through the bold predictions from last year. Some of them are pretty damn good. I'm not going to lie. Somehow you always really kill this segment. You got the crystal ball thing going on. But we have lots to talk about on that front.

What was your general feel for the stock market, your portfolio, investing? I mean, it's kind of hard to put some words to it, but how did you feel this year shook out so far? Well, I mean, we have how many trading days left? Probably, you know, maybe 10 left, but yeah. For me, basically, you know, buckle up and enjoy the ride. I think that sums it up pretty well for the year. Yeah, like there's some weird volatility like there's this like distribution of a lot of companies that

like had a lot of volatility and then like the big ones kept getting bigger you know it's like what they say in business you know never waste a good crisis and the good businesses and the big businesses continue to get better in the COVID environment and then into 2022. And so I'm just really looking forward to not hearing about just such negative news all the time, man. We need some positivity and that's what this show is about. Some positivity. All right, Simon, I wanted to give a quick segment before we get into these bold predictions about my RRSP and what I'm doing in my situation. I want to share this with listeners and kind of into exactly what I'm thinking and what I'm doing to be completely transparent, not only because it's entertaining content, I, for the podcast, but I also believe that these actual

nitty-gritty details with managing your own money, you know, operationally is really important. Yeah, it's not as sexy as talking about stock picks and bold predictions, which we're going to get to in this show, but let's go over my situation. So I just kind of want to candidly talk about what my situation is. I quit my job in May. My last day was May 10th or maybe it was May 7th. I'm forgetting now. Doesn't matter. I worked as an engineer making good money. I'll get to that in a second.

But now when I went off into the land of startups and doing the podcast and building Stratosphere, which is a technology company, and we're trying to build the platform for self-directed investors, but that's another conversation. I'm not paying myself. My employees make money. I'm looking to bring on new employees. I have guys that get paid in stock, and then they're going to be hopefully on salary next year. So I'm looking to bring on new employees. I have guys that get paid in stock and then they're going to be hopefully on salary next year. So I'm building this business. And I wanted to talk about my RRSP here because I'm hoping to have high income even after my working years because I'm building this business. So aggressive RRSP contributions out of the gate make very little sense. And there's, especially in this case, you know, when I'm not even paying myself, so obviously I'm not going to be contributing to an RRSP. That is just tax disadvantageous.

So right now I'm keeping the payments to myself to the minimum. Now I could pay myself, but I'd rather have the money in my corporations to keep compounding the two corporations that I'm a director in both and not withdraw on that because it's tax disadvantageous to do so. So where I'm going with this is I am currently, and I did today as of recording, withdraw on my RRSP. Now this is a bizarre scenario, right? But it makes sense for me to do so. Since I was working as an engineer before and I had Stratosphere as just a side hustle, I was doing over six figures in income in last year, for instance. So it made a lot of sense for me to do RRSP contributions at the time.

And that's where I've held a lot of my US stock holdings. Now, just a year later, and again, more so next year in 2022, withdrawing on my RRSP makes complete sense for my life and tax efficiency as I throw myself into the startup world, this podcast, which does generate revenue, and just eating dirt and ramen to get by in the short term. But I just wanted to speak on how there are nuanced situations where in my case, withdrawing on my RRSP is exactly what I think I should be doing. And that's that is what I'm doing right now. Yeah, no, that's and that's a good thing that

people don't realize is when they have years of low income, it's oftentimes just a good, good time to start withdrawing on your RSPs because you're benefiting of that low tax bracket. And you have that certainty. And we've talked about that before. And I know it rubs some people the wrong way, but there is value in certainty and being able to withdraw your RRSP or some of it now, it actually makes a lot of sense because you're benefiting from that lower tax bracket when you contributed potentially, I'm assuming at a higher tax bracket, right? That's right, exactly. And so now, like I said, I haven't worked as an employee since May. So it makes sense given my situation. Now, what I also did want to just. Like my TFSA is max. I'm going to contribute to that regardless. I'm going to hit that 6,000 a year. I hope to every day, you know, in forever, right? I don't have a timeline where I stop contributing my max TFSA contribution every

year. I think that that is a guaranteed lock. And I am investing in my situation at high returns in my businesses that I have control on. I like doing it. It gives me a lot of job and career satisfaction by building my own company. So this is just my situation. There are these nuanced types of things that come up where it's like yeah i'm a young guy but withdrawing my rsp is exactly what i should be doing versus um versus other versus paying myself from strass here for instance it just makes no sense for me to do so from a tax perspective. This is the way for me. All right, Simon, let's talk about 2022. Well, let's talk about 2021 first and then maybe mention 2022.

I just said that. I'm like, we're not talking about 22 today. We're talking about a year in review and the the first one that comes to mind right away is this year in the springtime and in fact what was it february yeah it started meme stocks yeah it started uh late january i think when the craziness kind of started yeah the wall street bets stuff. Okay, yeah. So that was like quarter one. All you could hear about in financial media, even in really casual conversations, was the year of the memes. the memes i mean if you we just look back we can think about names like amc gme dwac which is the trump backspack dodge a dogecoin shiba inu i think there's safe moon when you get into all the cryptocurrencies as well so we don't need to relive this too much but it did happen this year and just for context gme is still trading at 160 plus dollars per share well that was last weekend when I did these notes it's possible it changed a little bit but for context it started the year under 20 dollars per share it hit a high of 483 this year it's just a reminder

that we invest and we don't gamble I know I'm speaking for you here, Brayden, but I know your stance on that. Yes, the allure of quick gains can be really tempting. I think it's just human nature. But you know, it is gambling, you really don't know where it's going to go. And for the most part of these stocks, you're basically just trying to bank on someone will be willing to pay a higher price than you and just sell it off to the next person some of these mean plays obviously have underlying businesses i'm thinking here amc gme for example but the stock is up so much that the upside is really questionable even as a turnaround play yeah well put it's like well i'm investing this turnaround play, but it's priced like it's already turned around. Where's the IRR in that for me? And I don't see it. You mentioned there GameStop, GameStonk hit $483 and started the year under $20 and trades today for $ you know, a buck 60 or something like 160.

What a ridiculous amount of volatility. And this just goes to the fact that a lot of folks, a probably I don't even want to know the percentage, it's it's impossible to really quantify it. But a large percentage of people who are coming in, they're making discount brokerage accounts. They have extra money. Say they had a bunch of money from government checks that were given to them. And they're like, hey, I want to invest. But what they're actually doing is just buying tickers. This is what I mean by buying a ticker versus buying a business. When you buy AMC or GameStop during that time, you are buying a stock chart. You're hoping that it goes up on purely nothing speculator speculators are going to pay for that's not real investing

the underlying business is completely detached from reality from the stock price and so uh that was that was all you could hear about i mean gamestop was a phenomenon a real culture oh yeah with wall street bats i think they even went uh the guy the cat guy i don't remember went in front of congress remember yeah yeah the um deep effing value yeah that's it that's it exactly yeah um that's amazing and a fun fact believe it or not i actually purchased something from gamestop while i was in the states because all the best Buys are closed in Syracuse and we wanted to get a Nintendo Switch. There was a GameStop in the mall and they still had a few Nintendo Switches with Mario Kart, which is the game I wanted to get as well. So my wife and I

will play together over the holidays. Do you ever play the game where you got to finish your drink by the end of the Mario Kart race? No, but I've heard of it. It sounds like a good holiday game. Oh man, you got to mix that in. It's dangerous. You can really pile on the drinks, but that is really good fun. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free, all North American ETFs, not just a few select ones, all commission-free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award

winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Here on the show, we talk about companies

with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win

since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host. All right, moving on. Let's talk about China. Chinese stocks this year got there. Oh my God. What's BABA? BABA has been the falling knife. I mean, you and I both own Tencent and it has not been a good year for the stock. I think it's, I don't know. I'm not going to comment on that, but look at Alibaba for instance. I mean, this thing, as soon as you think it can't be any cheaper or this can't go into deeper, deeper value. And you get guys like Charlie Munger buy the stock in size, like some super investors buying Baba like 50% ago, like 40. What's the's the draw i'm gonna look it up right now

what's baba stock uh it's 125 per share the market cap's 340 and it's down very sharply in the past year let's just say that i mean it's down 45 year to date which is crazy for a mark you, it's down 45% year to date, which is crazy for a market. You know, it's it trades at 340 billion in market cap today. So think of the absolute wealth destruction. We're talking about hundreds of billions of market cap erased from this business just this year alone. This has been a big story this year. Yeah, I mean, China has been a big story as a whole, right? Even on the political front. Now we're seeing it. I think it's on the news every single

day with what's going to happen. Is there going to be a diplomatic boycott of the Olympic Games this winter? But obviously, we're focusing on the investing part here. First name that comes to mind for me is Evergrande. So we've had some recent news about them. They're trying to restructure their debt, but it's still very opaque in terms of what's really happening with them in terms of... Do you say Evergrande like a Starbucks drink? Yeah. I mean, I don't know. It's a Chinese company, so I really don't know how it's pronounced. I've heard so many differences. I've never heard that. I've heard Evergrande. But you know what? I like Evergrande better because that means it's like a big real estate company. Yeah, yeah, exactly. But we don't

really know what's happening. Are they defaulting or not? I've seen some various articles on it. I guess, you know, it's just a good reminder of the risks of investing in China. And people know we own Tencent. I own an ETF, K-Web, that owns a lot of the major tech companies as well. But, you know, when China decides to take a unilateral decision on certain companies they don't mess around so that we clearly saw this year we saw that china also instituted a bitcoin mining ban in may and essentially all the miners fled china to neighboring countries or north america as well they've had unilateral action against chinese based company you talked about alibaba we also had the whole where's jack ma after that controversial speech that he did in late 2020 he finally resurfaced in january of 2021

in a video again it's always uh what you want to make of that video whether it's legitimate or not that's a discussion for another day uh tencent also saw some increased regulation aimed at gaming. And then we saw also the whole Didi fiasco where China warned them not to IPO in the U.S. And Didi went ahead and did not listen. A few days later after the IPO, China said it had banned the Didi app from the App Store in China due to privacy laws and cybersecurity risk. My view on this is, look, I think everyone's different with their risk tolerance, whether they want to invest in China or not. You know, it's entirely up to you. If you do want to invest in China, just be aware of the risk.

Yes, there can be a lot of value you mentioned with Alibaba but will there forever be a discount on Chinese company because of that risk I don't know that's a good question will there be a multiple expansion I don't know that's also a very good question so it's something to keep an eye on. But with the tensions we're seeing right now with the West, I think it may be a reoccurring team for 2022 as well. You bring up an important point where I go, Tencent, way too cheap. Alibaba, way too cheap, given the assets they own and just the growth profile and their monopolistic ways on their assets in China are incredible. And then you look at it and you're like, in what world do you see a factor shift where all of a sudden there's multiple expansion? Like, I can't see it right now.

sudden there's multiple expansion. Like I can't see it right now. So if you are looking to buy Baba or Tencent and thinking these things are way too cheap, I agree with you. But your thesis based on multiple expansion is probably going to be a dud. And I'm one that like I am looking at Tencent. I'm going, oh, it's probably too cheap. Like, I'm gonna get some multiple expansion. Then I remind myself, like, in what world do investors start looking at these companies and saying, Oh, that's not a risk anymore. Like, I don't see a regime shift, or environment shift where these things actually have multiple expansion. I don't see a, I don't see a world where that happens in the next five years, to be honest. Yeah. Yeah. I mean, I don't know either. And that's a risk you have to be willing to live with if you invest in China. It's plain and simple. There's no way around it. But now we'll move on to the next headline. So it's been a roller coaster ride for high growth stocks and Canada was not spared here. So I have a few numbers and I know you updated one of them because of some information that came in today.

First one is Shopify. They're up 30% for the year, but at some point it was up more than 50%. So there's been a little bit of a drawdown since then. Lightspeed, they're down 30% for the year, but Lightspeed was up more than 80% in September before the pullback and the short report that we remember that came out in late September. Obviously, if you've owned Lightspeed for more than a year, you're doing very well and good for you. The Chibo, which is up 3% for the year, it was up as much as 46% in September before the pullback. Nueve up 64% for the year when I pulled this information last weekend, but it's way less now. I don't know if

they're even up for the year. However, it was more up more than 140% in September before the pullback. Do you want to elaborate a little bit on that short report from Nueve? pullback uh do you want to elaborate a little bit on that short report from neuve the spruce point yeah they're the same people who put out the short report on light speed and they've had a mixed bag of results when it comes to calling out some sketchy activity. For instance, their GFL short report was a bust. GFL's been a, I'm going to talk about that later, it's been a good stock this year. It was a good stock since their IPO. But they do have these hit list pieces that they publish.

They initiate a short position. They initiate a short position in in nuve dropped the report the stock was the stock opened down 50 this morning simon um i i don't own it well enough or i don't own it or know it well enough to comment on this short report but my my question to investors is if one bearish report that is not built on solidified proof, but mostly an opinion piece, although they have evidence to back their claims as they should, if that is going to, the business is going to lose 50% of its value in one trading day from a short report. It makes me question about who the investor base is. Like who has these paper hands, man? Like imagine you own a company and you don't own it well enough that you haven't even read a report and you're selling it immediately because

it's down, right? It's like, I have so many questions there. I don't know where to start, but we've, we've talked about short reports in the past back to what we were talking about with, with growth stocks. If we look at what the big winners were in 2020, a lot of them have had a very different year in 2021, a very different year. Like I can,

I can pick on the obvious, like stay at home COVID winners, like Peloton, you know, the at-home workout business or Zoom Video, just like the obvious COVID winners have had a really, really tough 2021. And the reason for that is their expectations got probably stretched. Their stock prices traded at prices that probably didn't make a whole lot of sense. And comps are really, really hard. You know, when you grow revenue at 300% year over year, and then the next year it's like,

oh, we only grew revenue at 25% compared to last year. That, on the surface, that 25% comp year over year growth rate on the back of 2020, that might be an exceptional number. But when it's compared to 300% revenue growth, like, in what world were they going to grow revenue at 300% per year, right? So investors, they get a little ahead of themselves, it gets peeled back. These are the natural ebb and flows of volatility and high growth stocks. And if you own them, flows of volatility and high growth stocks. And if you own them, I own a few of them. You gotta hang on. I had a really interesting conversation with a podcast listener this morning. And he's like, in my lifetime, I really want to have a hundred bagger. And I was like, man, me too.

The problem is, is you don't know many people that have ever accomplished in a hundred bagger because every single hundred bagger has the exact same story. You have crazy years of performance backed by massive drawdowns. Like if you, if you look at Amazon's period of time, like they had this rise to this, this heavily infl dot-com era stock price, and it lost 90% of its value. And that would hurt a lot. So you have these very classic hunter-bagger stories where high-growth businesses,

the stock price can move around a lot based on expectations. So just be aware of that if you own high-flying growth tech stocks. Yeah, exactly. I mean, Teladoc's one that I own that's seen a big haircut this year. And what I've noticed too a lot of the times is the market or analysts will make kind of predictions with revenues, earnings, and so on for the stock, even though management is guiding for less than that. I've seen that a few times. And then when management doesn't like they

meet the expectation they've set for themselves, but they don't exceed them, then you see a big pullback. I've seen that on a few growth stocks this year where, you know, analysts were predicting more than management was forecasting and that management doesn't exceed their expectation. They just meet them, and then the stock just takes a big haircut. So that's been something pretty interesting. That's definitely been a theme for the year, no doubt. Let's look at what we said our bold predictions were for the year. This is the exciting part of the show

last year if you go way back and you and you see that we had some bold predictions for the year some of them are absolutely crystal ball vibes and some of them are a mixed bag of results i'm just looking here anyways let's go through them simon let's let's kick it off with your uh your first bold prediction from last year and then discuss. Yeah, exactly. As a reminder, this was episode 55. I will put a link in the show notes if people want to go back. We're not making this up. I took that straight from the episode. My first one was bond markets will trail the returns from the stock market by more than 20%. And I was saying that on the heels of high valuations. And I still thought there was either room to grow for stock.

But also I was very bearish on bonds altogether. So let's have a little look at what the returns were. In Canada, I took the Canada Aggregate Bond Index. So the ticker is VAB it's a Vanguard fund that's down about five percent for the year I then took the Canada all-cap index ETF the FTSE and the ticker VCN it's up close to 20 percent so I would say obviously I reached out in Canada yeah and then the second one in the U.S, ding, ding. Ding, ding, ding. That's a winner. Yeah.

And then the second one in the US, just to compare it. So the US total stock market ETF, ticker VTI, it's up more than 20% for the year. Then the Vanguard total bond market ETF, ticker BND, that's down slightly for the year. So in both cases, I met my bold prediction. down slightly for the year. So in both cases, I met my bold prediction. It may not look that bold in hindsight, but I was also looking at the fact that the valuations were quite high back then and the fact that I didn't see much return for bonds. I guess I was correct in my bold prediction. And it's weird because you said more than 20% and it was like just barely above 20%. What do you know that we don't know, Simon? Because we're catching a bit of a trend here now.

This is the, what is this, their second or I guess this would be the second time we do the review of our bold predictions. And you nailed it last year. All right, my first one was that my bold prediction was Canada's, sorry, Canadian industrials. The sector will be Canada's best performing in the year of 2021. Now it's not over yet. Stop some more time. But it was about middle of the pack. That index returned 18%, 17.96% as of today, to be exact.

Call it 18%. That's pretty good. That's very good. The worst performing one was healthcare at 15.59%. Although, be careful, because healthcare includes a lot of the weed stocks. Oh, really? Yeah, yeah. I don't know if that's a really good depiction. Although, be careful because healthcare includes a lot of the weed stocks. Oh, really? Yeah, yeah.

I don't know if that's a really good depiction. But the number one was energy given off such depressed levels last year. Now, I should have been more clear, Simon. I'm going to give myself some allowance for next year. I'll give you a half win. A half win here. I looked at what this sector is made up of and market cap weighted. WSP, the engineering firm, up 50%. GFL, Green for Life Environmental, the garbage business, up 36%. TFI International, ticker TFII, up 111% on the year.

I own all three of these stocks, Simon. My Canadian stock portfolio is up 46% on the year. I should have been more clear. Let me cherry pick the industrials I think are going to make up the best performing sectors in 2022. I think, are going to make up the best performing sectors in 2022. But this is, I'll give myself a six, am I allowed a six and a half out of ten on this projection? I'll give you a six.

That's fair? Six. Not even the six and a half? Okay, a six. All right, fine. Okay, this next one, this next one, this next one's fun. Yeah, so the next one I did, this one I didn't really believe in, but it happened.

So I said Tesla would hit $1 trillion in market cap in 2021, and it did. I didn't really... Oh, man, people got to listen back on the show because you really said Tesla's going to hit $1 trillion in market cap a year ago. Yeah, yeah, and it hit $1 trillion pretty not too long ago was this fall that it hit it.

I mean, EV in general have performed quite well, but they've been pretty volatile. So if you look at the car ZTF KARS, which invests in EV company, it has a mix of pure EV plays and car manufacturers that are investing a lot in EV. It's performed in line with the S&P 500 this year, but since March 15, 2020, so when we had the big correction, it's actually up 161% versus 70% for the S&P 500. So for people who've been in those names, they've performed quite well over the past two years or so. It's been up and down though for the years. We've seen a lot of IPOs. We've seen the Nikola thing completely implode because obviously it was a fraud. In hindsight,

I mean, obviously I did not invest in them. I know you didn't either because they had zero revenue and just billions in valuation. But they're still getting investor excited. And I think it's probably going to continue for the foreseeable future. Yeah, like Rivian going public at some bonkers valuation just kind of proves that point. This ties in really well, which was, it's funny because we can both be correct. I said that EV valuations, when I say EV, electric vehicle stocks, I said that they would implode in 2021

because there's just so much ridiculousness out there. Now, this is true. This is a mix because the EV stonks are still mostly ridiculous. I mean that people are just trading tickers. They're not actually trading the business. So let's go into some facts here. Nikola, that was a complete joke. It imploded. It's down close to 90% from the peak of the insanity. Lordstown Motors was a SPAC, an EV SPAC. That was a joke. That's down 85%. You got Plug Power and Blink. These were stupid prices. Actually, I think they have a good product from working with some of the EV charging companies. Some of these companies have good product. However, the stocks were trading at

stupid prices. Those are down more than 40% from the high. The best way, you know, the best is when they say, hey, look, you see some article online and there's some EV stock. And how often do you see this? They go, Simon, this could be the next Tesla. Look how well Tesla's done. This could be the next Tesla stock. You don't want to miss out. It's like, dude, what? No, that is such simple analysis and so damn clickbait.

Tesla is an anomaly, like an absolute anomaly. It is up more than 40% year to date, yet saw a 30% drawdown. So that's the kind of volatility you should expect. Now, Tesla, I do still believe, I'm going to say this probably till I, this is why you don't short stocks, right? I would have shorted this thing and lost a lot of money. I still do believe the valuation makes very little sense. However, I will give them their credit. Their market share is very real. Their execution has been fantastic.

Elon has continued to get it done. They have certainly carved themselves out as the very, very clear leader in the space. That being said, auto is a very difficult sector and execution and building out this production and all they had, everything they had to do with the battery capabilities. It's extremely difficult. So I will give them the nod of approval. Their execution has been unreal. I've been wrong about their abilities. However, with EV stocks, most of them, like Rivian, for instance, they're very unproven gambles. And people coming out with an investment thesis saying, look, Tesla did it. Tesla's an anomaly. Not every company in auto is going to be able to have the execution that they had how many elon's very upfront about this in interviews like they were two weeks from being

bankrupt like four times since they've been a public company yeah it's happened it is a complete anomaly yeah they had some big uh big debt payments payments and they were pretty close to not being able to fulfill them. It's a complete anomaly. So just be careful when you see clickbait articles saying that this is going to be the next Tesla or this new IPO that is nothing more than a few PowerPoint drawings, a few renderings on a PowerPoint presentation. Be cautious of that because auto is hard. I worked in auto for a bit. It's a hard business and making a comparison that, hey, look, Tesla is a trillion dollar company now. This could be the next one. That's really an oversimplification of the difficulty and the execution that is required to actually gain market share in automotive.

Yeah. And I think for the last thing I'll mention on Tesla, and I think a lot of people invest in Tesla because it's led by Elon. I think it's as simple as that too, right? So I think that it probably explains a lot of the crazy valuation over the years. If Elon were to pass away tomorrow, I would not be surprised to see Tesla take a huge hit in valuation because people believe in him so much. That's right. I could definitely see that. As do it yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense.

And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com.

Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host.

That is airbnb.ca forward slash host. Moving on to my next prediction, I said that Bitcoin would hit $100,000 in 2021. I can't remember if I specified usd or cad but i'll say usd because that's usually how i view bitcoin i you i look at it from a us dollar standpoint so it did not hit a hundred thousand dollars uh this year but you know it had some good returns and there's still time we're recording this there's still some more time yeah there's about three weeks left of the year when we're recording this. So according to CoinGecko, Bitcoin hit an all-time high of $69,044.77 on November 10, 2021. Now it's standing about at $50,000 USD. As of this recording, it's about up 70% for the year.

It's really not too shabby in terms of returns, considering how good of a year it had last year. And that's compared to 25% for the S&P 500 and 21% for the Nasdaq on the year. There was a lot of good news on the Bitcoin from this year, including El Salvador adopting it as legal tender, along with the US dollar that they have. So they have both as legal tender over there. There were also some very prominent investors that say they're investing in Bitcoin. Amongst them, there's Ray Dalio, Kevin O'Leary, Paul Tudor Jones, and Mark Cuban that embraced the cryptocurrency.

Paul Tudor Jones and Mark Cuban that embraced the cryptocurrency. Cuban has been on the cryptocurrency train for a little bit and he's not just into Bitcoin. So he's a lot into alternate or shit coins as well and DeFi. And there's also been celebrities like Tom Brady and Snoop Dogg that have embraced the space this year. But there was also some major headwinds for Bitcoin during the year, which probably affected some of this. Well, I'm sure it did affect some of the price action that we saw with Bitcoin. First of all, I mentioned it before, the China mining ban. Second, there's prominent figures in the finance world coming out against it.

Thinking Charlie Munger here, Jamie Dimon, Christine Lagarde, the head of the European Central Bank. And I'm missing a lot of them, obviously, but these are just some of the names that criticized Bitcoin throughout the year and in previous years. Elon Musk. Yes, Elon did some flip flopping on the Bitcoin front. First, he put Bitcoin on his balance sheet and then saying that Tesla would accept it as a form of payment, then reverted back on that because of environmental concerns. A lot of people speculating that he had some government, US government programs that were dependent or potentially some pressure from BlackRock, some big funds that own a lot of Tesla stock. Having said that, Tesla still had $1.26 billion worth of Bitcoin on its balance sheet

as of September 30th, 2021. So that goes to show you something. And I have a hard time thinking that Elon did not know about the energy consumption of Bitcoin before he put it on the balance sheet. To sum it up, everyone knows I'm bullish on Bitcoin and I'll continue being bullish on Bitcoin. We might not be seeing 100K this year, but I think it's just a matter of time until we do.

There's no way he didn't know about the energy but the energy draw it's not like he bought it and he's like oh i just found out that this uses a ton of electricity to operate this decentralized protocol um yeah that's that's a bit of a stretch i I'm sure. However, I think that that's an important thing to discuss is, you know, I haven't seen any really good answers for why we think that it's a good solution when it uses that much electricity. But perhaps that's another conversation for another time. Tom Brady, I like that because... The goat!

I liked that because this, this, this was, this was, I'm assuming you're referring to when he threw his, was it like 5,000 touch pass? He threw his like, Oh yeah. The laser eyes on Twitter, but he threw like 5,000 touchdown pass. I think that's what the stat was. And, um, which is just ridiculous, by the way, is it, how many did he throw? Anyways, I'll look this up, but what happened was he threw it to Mike Evans, one of their receivers. And then Mike Evans threw the ball up into this, into the stands.

And because the guy gave the ball back, cause they're like, Tom really wants the ball. Um, Tom gave him a bitcoin oh really tom gave him a bitcoin in return for like because i guess the guy could have just been like no like yeah i'm gonna sell this ball for five hundred thousand dollars on ebay but i thought he gave him like a bunch of other stuff too i didn't see the bitcoin yeah but he got other stuff but he got other stuff but but brady was being very vocal about uh about giving him the bitcoin and i thought that that was pretty funny well he put the laser eyes on too right so that was what i was referring to i know what you're talking about i didn't know he ended up giving him a bitcoin but i just realized it was a six i don't know what when i said 5 000 i meant 500 it was for his but it was actually for his 600

nfl touch no one has thrown 5 000 i'm a football fan yeah i was gonna say you're the football guy here but that was just a complete blunder i meant 500 but it is actually 600. All right. As for the last one here, I had the bullet prediction that FanMag Megatech, which is, you know, Facebook, Amazon, Netflix, Microsoft, Apple, Google. I'm surprised I got all those right. I said that they will be looked at as value stocks in 2021. Now, this is hard to quantify, Simon. This is really hard to quantify, but I back it. And the reason why is Google trades at 28 times free cash flow

and low 20s times free cash flow on next year estimates. You know, this is really reasonable price for a company growing as fast as it is and as high quality it is. I don't know if you can call them value stocks, but it has certainly been the place in 2021 where investors are seeking safety, quality, and some growth. I think that that is a statement that can be said with complete confidence confidence what do you think about that yeah i know that's definitely fair i'm surprised don't call him first like fan ma because it's alphabet right not google that's right and and well it's also not facebook it's meta meta man ma magma well yeah oh my godman, because we also have Netflix in there. Yeah, but I digress.

I mean, no, I would tend to agree with that. I think the one asterisk I would put on that is Google and all the big tech stock tend to get a lot of money infused into them just through index funds. index funds, right? We've talked about the S&P 500 being market cap weighted before and how like the top, you know, the top 10, for example, represents such a big portion of that whole index. So I think, yes, people are viewing them as a bit value stocks or safe plays as you're seeing. But I think there's also the whole index fund portion of it where they automatically get money into those stocks because obviously they're the biggest holdings of the index. So that props up their price a little bit too. So I think for me, it's kind of, I see both sides. Yeah, that's an interesting point with the ETFs. You get that

fund flow dynamic from these passive investing strategies. And I guess index investors have luckily been market cap weighted because those have been the businesses that have been winning as of late as these large mega tech companies. I do believe looking forward that they are going to trade at very fair multiples given trade at very fair multiples given their runway still. And it's like, how can they be so big and have such long runways? And I'm going to continue to scratch my head on how this some of these numbers they pull off are possible. But value stocks is what I said. That's a bit of a stretch. However, what I will say is they are perfectly fitting into that growth at a reasonable price, that GARP people talk about growth at a reasonable price. I think that that is a very fair characterization of what these companies represent in the market

today. No, they're not mature value stocks that trade at nine times earnings or, you know, they're banks that trade at 10 times earnings and, you know, they're banks that trade at 10 times earnings and grow a little bit over time. However, they do trade at reasonable prices. And I expect that to be the case moving forward as well. I don't I'm not underwriting multiple expansion on Google. I can't underwrite that in my IRR assumption, because it's, it's kind of goofy to do so. However, they don't even need multiple expansion to actually see some really, really good high double-digit IRRs even at these prices. And that's why I continue to own them and buy them.

Yeah, no, that's a good point. And everyone will have to tune in a bit later on. We're looking to release our bold predictions of 2022 on january 3rd so we'll have to keep you hanging for that but tune in for that monday we'll have our bold prediction for next year and i'll make sure to find some good one that are really crazy so i don't need too many of them next year yeah Yeah, you got to increase the difficulty here because you keep seeing me to win. You got to say something.

I mean, I thought they were pretty crazy. I mean, to begin with. Some of them are pretty, the Tesla hitting one trillion market cap. I didn't believe it would. Yeah, exactly. I think we both said that it would see like a 50% drawdown

and just like triple in the same year and it's pretty much what happened no it'll be fine it'll be fun we'll get some good one for for you guys for 2022 so you can really tell us we're crazy with our bold predictions thanks so much for listening guys that does it for looking back at our bold predictions for the year and what was happening in my RRSP. If you haven't checked out Stratosphere, go ahead and check out stratosphereinvesting.com. We are building the absolutely best place for do-it-yourself, self-directed investors

like the people who listen to this podcast. Shout out goes to all our sponsors. If you're listening in Canada, you do get sponsorships to support the show. Shout out to our sponsors and shout out to listening and helping support the show financially from that perspective. That is a huge help and it is the reason we can continue to do the podcast. So we appreciate that very much. We'll see you in a few days. Take care. Bye-bye.