The Canadian Investor - 2022 Bold Predictions and Bitcoin Basics

Episode Date: January 3, 2022

In this release of the Canadian Investor Podcast, we start by giving our 2022 bold predictions. Simon finishes the episode by discussing the basics of Bitcoin with Courtney Stephens. Tickers of stock discussed: LSPD.TO, AMZN, XEG.TO, ARKG, HUT.TO https://thecanadianinvestorpodcast.com/ Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Courtney’s twitter: @TheCStephen First interview with Courtney: https://thecanadianinvestorpodcast.com/episode/life-after-pro-sports-defi-nfts-and-bitcoin-with-courtney-stephen Stratosphere 🚀 https://www.stratosphereinvesting.com/See omnystudio.com/listener for privacy information.

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My name is Brayden Dennis, as always joined by Simon Belanger. We made it. We made it, Simon. Give yourself a pat on the back. This is our 2022 bold predictions for the year. And Simon, you texted me and you're like, I have to go more bold. And I agree because you somehow keep coming out with these outlandish claims and they're coming true. Is there some sort of crystal ball or future telling technique that you'd like to share with the listeners no i just kind of i tried to just go really bold and a lot

of them like last year tesla reaching one trillion i didn't really believe it would and obviously it did so i think i went even bolder this year so you'll see we're texting about it. And I went, one of them went very specific. So it's going to be, I'm going to look like a genius. And if not, it was just a bold prediction. That's right. Like you can't look bad because it's like, I don't believe this is going to happen anyways. But if it does happen, then, you know, timestamp it, blast it everywhere. And then you're famous.

I like the technique. All right, let then you're famous. I like the technique. All right, let's get into our bold predictions for the year. I don't think my first one's that overly bold, but I think it's an important step here in Canada, and I do think that it's going to happen, and I'm interested in your take. But before we do that, I just remembered, before we do that, Spotify listeners,

do us a huge favor. Five stars on the podcast. Go ahead and smash that. It is a new feature for Spotify. And we want to be at the forefront of it on that ratings mechanism because it's going to be important for people finding our podcast organically. And if you're not on Spotify, you're on one of the other players, go ahead and leave a review five stars. We appreciate you very much. It helps other people find the podcast in a way more than you could ever understand. So we really appreciate you. Okay, so my first one is that I believe most, if not all brokerages next year are going to move to $0 commissions. I think that it's going to happen, whether it happens.

I guess what I think is boldly going to happen is that they all happen at once. We already saw it with National, and I think, I'm curious on your take, is that we're going to see what happened in the U.S. Where it was like they all domino effect went to zero dollar commissions. Because they're realizing that they can still be pretty decent business even at free trades. Yeah, no, I think it's actually a fairly bold prediction. Just because a national bank, I think, when was it? In the summer that they went zero commission?

And I would have thought by now that there'd be at least a few other brokerages that would have followed suit. So that's why I'm like, I don't know anymore if they're going to follow suit or not. But I think it's a pretty bold prediction. And let's keep in mind, too, they still make money with options trading. So that's how they do make quite a bit of money there. So, yeah, I think I think it's fairly bold. Yeah. OK, fair enough, because you and I you and I use Questrade.

I've been with them for quite a few years and so have you. I do enjoy the platform compared to many of the other ones and especially compared to the many of the free ones and um you know the the fact of the matter is is that it's not the only thing that that you need to consider when picking a brokerage it's not like i'm going with zero fees because there are so many limitations in the free ones what's's Questrade? What, $4.95 for a standard trade? Unless you're buying penny stocks, it's more because you can do like tons of shares. And ETFs are free to buy. They sponsor this podcast, full disclosure, but we've been using it for a long time. So I do think still though broadly that that is an important step and will

happen. And I think the dominoes are all going to collapse at once. Yeah, no, I think that's a good bold prediction. I think it also has a decent probability of happening as well. My first bold prediction, I do not think there's a high probability of happening. So full disclosure, but I'm going to go super bold on this one. Toast will acquire Lightspeed Commerce and become a force in the point of self-software toast is focused almost solely on the restaurant industry as far as i can see

and lightspeed is just entering that market lightspeed on on their end would allow toast to get into the retail and hospitality markets toast is also pretty much exclusively in the US. They have like just a small, small percentage elsewhere and that would allow them to expand elsewhere, including Canada. Just to put a few numbers here so people get a perspective. These are all USD numbers because Lightspeed reports in USD. They're also traded in Canada and the US or the dual listed. So Lightspeed currently has a market cap of around $6 billion, $6.2 billion last I checked. And Toast has a market cap of $19 billion. Lightspeed is looking at revenues for the full year around $525 million. All of this again is in USD.

Toast on the other hand had revenues of $486 million just for the last quarter alone. So clearly Toast, much higher sales than Lightspeed. And I think I took these two names just because it feels like they would complement each other quite well in terms of what they're focusing on. But I also did that because Lightspeed market cap has, I i think gone down by about what like 60 70 since the peak so it's huge drawdown yeah i wouldn't be surprised if they would there would be some interest in acquiring them it might not be toast specifically and of course there's dax de silva owns about 10 i think in terms of the shares so he probably would not be thrilled to get acquired. But again, if you have enough shareholders that like the offer, it could always happen.

I like it because it's extremely bold. The thing is DAX, right? Like I just don't see, I think DAX has his eyes on a very big price. eyes on a very big price. And so, you know, looking at these numbers, Lightspeed has seen a huge drawdown, like how much in this podcast did we talk about it before? And it was like closer to eyeing 20 billion market cap than it was 10. And now it's, you know, USD listing of six and a bit in market cap, six and a bit billion in market cap so i this brings me to another point which i think that it's oversold for sure given their growth rates we do have their our hesitancies about and we've been very vocal about our hesitancies

that being said 6.2 billion in market cap on usd for light speed looks pretty cheap um just as a just as a surface level thing here you know why why not a company coming in and just make a like give a huge premium because they see like hey we'll buy it for 10 we'll buy it for 12 yeah or give uh you know that's why i'm saying like they obviously they would have to be blown out of the water for the offer. But, you know, we'll see. Maybe, like I said, it's very bold. If I'm wrong, it's all good. And if I'm right, I'll look like a genius.

You can't lose here. That's very smart. All right. My bold prediction, although the writing seems to be on the freaking wall, so I don't know how bold it is, but it is realistically very bold because the probability of it actually happening is very low. I think ARK Genomics Revolution ETF, ARKG, can blow up in 2022. I think that it can legitimately blow up and they can't run the ETF operationally. They're going to be, I actually already know they're having problems running the fund operationally. Not that I have experience running an ETF. However, I know how illiquid

the stocks they own are. Now I pulled this from the Bear Cave newsletter. It's done by a guy named Edwin. He has a sub stack and he's pretty smart for a young guy. He likes exposing frauds and stuff. And so he has a post here on ARK's holdings. And I'm going to go through a couple of them and explain why this is problematic. Okay, so those who are not familiar with ARK Genomics Revolution ETF, ARKG, it's run by ARK, the company, and headed up by Kathy Woods. Now, Kathy has a number of ETFs, and she's very, very smart. This is not a knock on her investing style, her ETFs, or anything. It's more so that they had so much fund flows last year, and now it's in this gigantic drawdown

that when you hold very, very illiquid small cap genomic stock and you have to sell them, who's buying them? Who's the buyer of these illiquid stocks? If I look at it, these are old numbers from earlier in 2021 from the Bear Cave newsletter, but here's just an idea. Compugen, ticker Cgen, they had 21.3% ownership of the company. Here's a list on our doc here, Simon, of 14 companies earlier in the year that they had more than 10% ownership of inside the ETF. And no wonder, I mean, if we look at Cirrus here, or these companies I've never heard of, it's like 300 million in market cap, yet you have this gigantic behemoth ETF that has a really powerful marketing engine and people continuing to buy this ETF. It's really hard to run this fund. So they have this wildly illiquid speculative biotech

companies inside. Now, some of them are just a few hundred million in market cap. So like pretty small companies for public markets, pretty small. And the ETF is down a lot off the highs. And this creates some interesting feedback loops, as I was speaking to you before, on drawdowns when you're holding highly liquid funds. Now, I'm hoping I'm not right, okay? Because I'm not hoping for destruction of retail investors, because I believe that is who is primarily buying these funds. But they did nothing but go up in 2020. And like they have had some clever headline making type marketing without landish claims. Now, Cathie Wood is coming out and saying that they expect a 40% compounded annual growth rate on their flagship ARK Innovation Fund fund over the next five years. I refuse, I'm sorry, but I refuse to trust anyone at all who

is guiding for 40% compound annual growth CAGR on their investment performance. It's highly irresponsible. And this fuels my thesis that they seriously need fund flows. They're trying desperately to get fund flows because the drawdowns on this fund is extremely hard to manage operationally. Like I said, I've never run this fund, but I know how illiquid these names are, and they hold a big percentage of ownership.

And so they've had all these nothing but up and positive fund flows, and now it looks like stuff's hitting the fan. And promising 40% CAGR is really reckless. And that doesn't sit well with me at all. Yeah, I mean, it's definitely a bold prediction. It'll be interesting if it happens. And yeah, there's always a risk when you own such a big portion of a company, because even if the company is fairly liquid, while you're such a large owner that if company because even if the company is fairly liquid while you're such a large owner that if you want to start on loaded you have to do it very gradually and you'll

probably even by doing so gradually you'll still put some price pressure downwards right so it's kind of a self-fulfilling thing so that's always something to be careful. As a retail investor, it's not as problematic, but there are some very illiquid stocks as well that you could just be a retail investor in. But no, that's definitely a good one. It'll be interesting. talk but i don't you know sometimes i do agree with her but sometimes i find there's some real flaws in what she says and definitely that 40 percent is uh is a bit questionable let's just just put it that way i think it's irresponsible personally um but that's just my opinion and this goes this just goes to show that a fund of that size shouldn't be running such a small cap strategy. It just doesn't work. It doesn't make sense. And this is exactly why large fund managers have always said,

I would kill to just be managing $ 10 million in assets. I would kill for that because I'd be completely unconstrained. And so I think that's important. 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. All right, let's move on. Yeah. So my next one, this one's also, I think, very bold. The CPP Investment Board will invest $2.5 billion in bitcoin as institutional investment in bitcoin accelerate in 2022 so my thesis is that we will continue to see institution investing in bitcoin in 2022 and cpp

investment board will make headlines by investing 2.5 billion cpp investment board obviously are the ones that do the investment for the canada plan. It might sound like a lot, but as of May 20th, 2021, the investment board had 497 billion of assets under management or AUM. An investment of 2.5 billion Bitcoin represents about 0.5% of their AUM. And that's why I chose that $2.5 billion. The latest data I could find is that institutions own about 8% of the total current supply of Bitcoin which represents about $75 to $80 billion that's USD based on the current market cap of $930 billion of Bitcoin as like as we can see the vast majority is still not owned by institution and major in any major investment by a pension fund as large as cpp because cpp is a major pension plan in the in the world would be an extremely bullish sign for bitcoin and if we do see

something like that i'll make another mini bold prediction within it. We'll see 150k Bitcoin price USD in 2022. You heard it here first. I have no comment to add there. You heard it here first. All right. My last one here on the slate, third and last one, is that I think Amazon is going to be the best performing mega tech of 2022. And the reason for that, the reason that I think that is the fact that, look, Amazon stock has done nothing this year. It has basically been a sine wave and returned to what it started at. And there's lots of negative sentiment right now. Investors are memeing them going, oh, it must be day two now because Jeff Bezos isn't there anymore.

We've seen tons of outages on Amazon Web Services, which is obviously not ideal. And when it was with Jeff Bezos, it was day one. That was his thing. He says it's always day one. And so that was kind of their innovation mindset. Now people are saying it's day two. Doubting Amazon is a stupid idea. They are building out the infrastructure that is going to give them supreme competitive advantages moving forward. And I think that it actually is quite cheap there on a sum of parts analysis. And I think that it actually is quite cheap there on a sum of parts analysis. And I think that it's going to lap Megatech next year. Although I'm a very large shareholder in Google, in terms of my weighting of my portfolio,

I think it's the best company on the planet. I do think Amazon set up for a really nice 2022. I do think Amazon set up for a really nice 2022. No, that's a good breakdown. And your timing was perfect because my dog just started barking. And then as soon as you were done, the dog was done barking. So no, I do agree with you. I think Amazon has not performed well, but I think I'll be a happy shareholder if they do perform well, because it's been pretty much zero returns for me since I've owned it. When did you buy Amazon shares? Earlier this year. Okay. Yeah. So that

kind of gives you an idea. Yeah. Yeah. No, it's done. It's done basically nothing. And then there's not there's lots of negative sentiment on it right now across the board that I'm seeing anyways, especially with AWS being down like three times in the past month. Now, don't get me wrong. That's not a good look. I'm not saying that that's bullish for AWS and it's bad for AWS. That being said, they're still going to post

ridiculous growth numbers, I think. Yeah, I think so too. I think it's just that bump, a blip on the radar, and I think it's a great company to own for a long period of time. And that hasn't changed my mind. That's why I still own it. So now my final bold prediction, the S&P TSX will outperform the S&P 500 by more than 10% with oil and gas leading the way. So we all know that the oil and gas sector rebounded

nicely this year compared to the lows that we saw in 2020 for obvious reasons. In 2020, there was a huge reduction in demand. And I think that positive sentiment, but also good results will continue in 2022 for the oil and gas industry. For context, the ETF XEG that's traded on the TSX is the iShares and PTSX Cap Energy Index ETF has returned more than 70% this year versus 25% for the S&P 500 and 20% for the S&P TSX. So I think oil and gas will continue to outperform in 2022 with economies continuing to reopen and COVID-19 restrictions are lifted sooner than expected, therefore increasing demand for oil and gas. The outperformance of the S&P TSX won't be solely because of oil and gas. It will be because the mega cap tech stocks will not perform

as well, which we've talked about a lot before. The S&P 500 is market cap weighted. So if they do not perform well, it will lead the S&P 500's return downwards. So that's my thesis. That's my bold prediction. For those reasons, I think i think the snptsx will do something it rarely does and outperform the snp 500 by at least 10 it's bold um and the the last part of it you said for those reasons and i feel like uh i'm on tv when i say and for those reasons i'm out because i think big tech every time you think every time you think big tech isn't gonna beat the index it's like oh nope they did it again oh they did it again and then it's like oh wait they are the index thank god they're the index or else the rest would be in a huge drawdown so now that's why it's bold buddy yeah that's why it's bold um and you know

what i back it because you really we're running some real only upside predictions here because yeah and keep in mind if this comes true it's not great for my portfolio. So let's just keep that in mind because I don't basically don't own any oil and gas. You're hedging your own financial well-being for the fact that, you know, you were right on the podcast. And that's just smart. That's just smart management right there. Okay, guys. Okay, guys. So for the second part of this episode, we have Simon interviewing Courtney from, can I call him like from the Tiger Cats? Yeah.

How do I say that? So Courtney works for the Tiger Cats right now. He's a former CFL player. Now he works in, I would say, as a community, I think, relationship. Yeah, community relationship manager manager if I remember correctly and Courtney my apologies if I I butchered your title here but yeah it was a great interview with Courtney and I've had a lot of questions from people just to wanting to get started in Bitcoin and we essentially we talked about that to help people getting started just the basics

and it was a really fun discussion that i had in uh early december with courtney just before the great cup and unfortunately the tiger cats did not win i'm not a big cfl fan in general so because i know courtney i was cheering for the tiger cats um but unfortunately they did not win in heartbreaking fashion, especially. That was a good game, though. I like, you know, I'm an NFL fan and that was a good game. I'm not a huge fan of three down football personally. But hey, you know what?

The CFL put on a good show and it was it was a good game. Yeah, yeah, exactly. So I hope you guys enjoy the discussion that's coming up with Courtney. And the best wishes for the new year, because this episode will be released just at the beginning of 2022. So for anyone wanting to get started on Bitcoin, then just listen to the great discussion I had with Courtney. All right. Take it away, guys. Welcome back to the Canadian Investor Podcast podcast I'm here with Courtney Stephen our guest that we had a few months ago had a great interview with Courtney and I do invite you to listen to that recording that podcast if you haven't had the chance to Courtney how's it

going it's been a little bit I know there's been a lot of stuff going on in your world man it's been a busy time but but super glad to be here. Appreciate you having me back. Yeah, exactly. I'm glad to have you back. And we'll focus a little bit more on Bitcoin than we did last time. I know we probably wish we had, what, half an hour, an hour more than we did just to continue talking about Bitcoin. And if people want to know a bit more about you before we get started, where can they follow you? I know you're pretty active on Twitter. Yeah, I'd say social media, specifically Twitter is the best place and it could branch out from there. My handle is The C. Stephen,

S-T-E-P-H-E-N. But yeah, man, just a guy. I used to play pro football and now I work in pro sports, but I always had a passion for finance. So glad to be here. Get to talk about my passion. And people want to know more and more. They ask me, Simon, how can I get started and invest in Bitcoin? So do you want to just kind of just the basics and just let people know some easy ways to get started? Just making sense of it. I know it can be really overwhelming for people. Just at first glance is very different than a traditional investing account. So I'll kind of let you just walk people through, just make them a bit more comfortable on getting started in Bitcoin specifically. Yeah. And I mean, that's a great question because so many people hear the headlines and they see things that are going on in the news. And really with Bitcoin, it's one of those things where if your head isn't fully wrapped around what it is, then you can get shaken off the bandwagon pretty quickly with

the volatility, the ups and the downs of the price action. So one of the first things I suggest people do aside from actually buying Bitcoin is to do some research on not just surface level things like, you know, what is Bitcoin, but more so why is Bitcoin, I think is a great question and understanding the purpose that it serves, especially in a world where the Web3 or the cryptocurrency world and the decentralized world is a lot of buzzwords going around. There's so many different tokens. There's so many different things, NFTs, DeFi, a bunch of phrases and verbiage for people to try and digest. I think it's important to go back to the grandfather of it all and understand why was Bitcoin first invented? And then you can understand why Bitcoin is different than every other asset

that is in the digital space. That's one of the main things you should do in the beginning before you ever stack your first sats. And now when I say stack your first sats you might be thinking i thought we were talking about bitcoin but if you're on this learning journey the first thing that you'll know is bitcoin just like a dollar is divisible into a hundred cents one bitcoin is divisible into 100 million satoshis the smallest unit of a Bitcoin is called a Satoshi. And you don't have to buy a whole Bitcoin. I think that's one of the things that deters many people from buying into this asset class is that they feel they've already missed the boat and they feel that it's already way too expensive, but you don't have to buy a

whole Bitcoin. And getting past that hurdle and understanding what a Satoshi is, is one of the first things that I suggest everybody try to dive into and learn. the difference between price and market capitalization, because there's a phenomenon called unit bias is something that tricks a lot of new investors into thinking they're getting a deal when actually they're maybe investing into something that has a little bit more risk involved in it than they anticipated simply because the price looks more attractive. And so the difference between the price of an asset and the market capitalization is the price looks more attractive. And so the difference between the price of an asset and the market capitalization is the price is how much each unit of that asset costs. So whether we're talking about shares of Apple, say they're somewhere around $150 US, I'm not sure exactly. I didn't look at it today. Probably around there, I would say,

Avin. I used to be more ADD on that, but I'm so busy now. I don't check the price. It's either because you're busy or because you're becoming a better long-term investor. That's what I like to think. But the price is the cost of an individual unit. So one share, or you could call it one Bitcoin or one Ether, one unit of cryptocurrency. The price is how much it costs to get one whole unit. Okay. The market capitalization is the total value of all units that are in the market. So of all of the Bitcoin that is out there in the world that anybody has or could buy, the total market capitalization is somewhere just north of $1 trillion. Okay. So when we're measuring how expensive or how cheap an asset is, we need to be looking at

the market capitalization. So if you're comparing Apple to a stock that just debuted on the stock exchange, or maybe it's on the TSX Venture Exchange where we have very small companies, the prices may only be $100 difference or $50 difference, but the market capitalization would be billions of dollars, if not trillions of dollars difference because Apple has a market capitalization north of $2 trillion. So Bitcoin, it's got a market cap of 1 point something trillion. Ethereum is about half a trillion. Some of these other cryptocurrencies, they may have a price that's in the cents, but for them to get to one cent, the market capitalization would have to become something outrageous

like $10 trillion. So we have to understand what are we actually looking at to determine the value of this asset we're buying those are kind of the basics that i would suggest people look into when they're starting to understand bitcoin um yeah i love that you mentioned that because uh i keep seeing if you just you know type in on twitter hashtag shiba or whatever it is. I'm sure you're aware of Shiba Inu, that shit coin. The doggy coin. Yeah, the doggy coin. And I'll see people constantly saying, well, it only needs to get to a dollar and I'll be super rich.

But then they failed to check that there is what one quadrillion, if I remember correctly, in circulation. So some simple math you know doesn't quite line up if it reaches a dollar I think it's pretty unlikely that I actually I would say it's almost impossible that it will ever reach that point and I like that you touched on that because people don't take the time to look at the market cap just to make sense whether it's worth it or not and then they look at the price of a single Bitcoin and they get discouraged. I think that was a great point. Do you have certain exchanges that you would recommend for people if they want to buy Bitcoin to get started?

Well, I definitely would suggest going with one that is, you know, FinTrack certified. That's the agency that makes sure people are laundering money through the accounts that they have. And so you want to go with a bigger brand name broker because they're going to have more credibility. Also, you're going to want to look for how do they secure the assets. So Coinbase, Gemini, these are American companies, but they do business internationally. And the reason why they're able to have such a large footprint is because they secure and custody those assets in a way that is very professional. And it's in cold storage somewhere. So your account is not really readily accessible for somebody to come in and snatch up

your crypto or your Bitcoin. In Canada here, we have some popular ones like ShakePay, Coinberry, Coinsquare. There's a number of them, but I would just suggest whatever you do, try to stick with the ones that seem to have quick help when you call for support. I like to use ShakePay personally. They only have Bitcoin and Ethereum. And for what I'm trying to do, it's more than enough. And also there's a great gamification that they have there. And it helps people kind of break into the Bitcoin spaces. Every day you can open the app and you literally shake it a little bit and they give you a few Satoshis. You might get a hundred Satoshis or 150 Satoshis, which might only be worth about 10 cents

or 20 cents. But then having that little amount of Bitcoin in your wallet there, your digital wallet, that little amount of Bitcoin in your wallet there, your digital wallet, it brings your attention to the price action of Bitcoin and it piques your curiosity and it makes you a little bit more curious because now you have skin in the game. And so it takes down some of those barriers to entry where people feel like they need to have $10,000 in order to be involved in this next generation of this new monetary wave that we're really in the middle of, believe it or not. Yeah, no, definitely. Actually, I learned something. I didn't know you could shake it. That's why they call it shaking. Okay, that's good to know. I mean, I've been using it for years too. I never knew that. I mainly used it because I thought it was great that they had

Interac-E transfers as an option. so that's the main reason i i got started with them never had any issues but you did mention cold storage i know what it is but i know a lot of our listeners or might not be familiar so on that's a good segue to um just i'd like you to talk about the do's and don'ts in terms of keeping your crypto safe should people keep it on exchange should they use cold storage? Should they use multi-sig? Like, do you have a preference of all these three? So there's definitely a learning curve with Bitcoin security.

And I would suggest that while you're still learning, the best thing to do is to keep it on an exchange because you can call tech support. And one thing with, I think it's a gift and a curse in a decentralized world where you truly have, you know, final, you can control final settlement of an asset with no intermediary as something we've never been able to do before cryptocurrency. And that's what Bitcoin allows you to do. I can send value to you without anyone in between. You truly have it in your possession and

in your control and no one else can confiscate it. But before you get to that level, you have to realize that that type of ownership comes with a different type of accountability because if you lose the means to access those funds, you can't call on anybody to help you. So while you're still warming up and you're still learning all about wallet security, how to do a transaction properly, and if you had a chance to do it a few times to get familiar and comfortable with it, I would keep my Bitcoin on the exchange because that way, if you do have some kind of mishap, you can call somebody to get help and support. If you do have some kind of mishap, you can call somebody to get help and support.

So at first I would buy and I would keep it on, you know, ShakePay. I would keep it on Coinbase. Eventually, though, best practice is to take it out and have it in your own custody because there's a number of reasons. Maybe one day the exchange could get shut down in your jurisdiction. And that's something we saw here in Ontario where I'm at. Binance, a very popular exchange internationally, was decommissioned in Ontario during the summer of 2021. They obviously gave people a little bit of runway to settle out their trades, divest, send things to other accounts. But you're still at the mercy of a central party if you're using what they call a centralized

exchange. So you want to take your assets into your own custody once you have the know-how and the capacity to do so. And then the second thing is there's different wallets that you can have. You can have a wallet that's on your computer or on your phone, and they call that a hot wallet because it's connected to the internet. It's considered hot or a software wallet. And those ones are great because it's in your custody. But because it's 24-7 plugged into the internet, it's a little bit more vulnerable. The ideal place to keep your Bitcoin is on something called a cold wallet. And as you could imagine, that's a wallet that is not connected to the internet.

And it's generally a physical device. It comes in many different shapes and sizes. But the popular ones, the Treasure and the Ledger, they look somewhat like a USB device. And you can hold it in your hand. You can plug it into your computer. And you can do transactions from your laptop or from your phone if you're using the Ledger. And then you can unplug it and you have your crypto keys safe and sound in your hand yeah no that's well put i think from

a personal perspective i would recommend and i don't know if you agree with that or not but anyone who keeps money or crypto on an exchange definitely make sure you have two-factor authentication but not with your phone number, with an actual like it could be a Google kind of, you know, key that creates that second factor, the issue right with the whole SIM swap issue that can happen. So people can pretend to be you call your ISP or your phone provider and then essentially get your phone number on to essentially access to their phone and then be able to access your crypto eventually from there. And there was some, I guess, exploits that happened similar to that on Coinbase earlier

in 2021, where I think there was about 5,000 or 6,000 users whose two-factor authentication was compromised for that reason. People were able to hack their email account. And if the two-factor authentication was set up via email, they were able to, you know, recover the, forget, I forgot my password and then recover the password, get through the two-factor authentication with the information they gathered from there and then withdraw funds. So luckily that was a centralized exchange. They were able to make those people whole, but that's not really a problem you have to think about when you're dealing with self-custody. And so those are the number of reasons why you might want to keep crypto on

yourself, keep the Bitcoin in cold storage. But I'll say one thing. When you take on the ownership of your own asset, you're going to want to know what is the seed phrase for this wallet that I have. And so you might be thinking, what is a seed phrase? The cool thing about Bitcoin and almost every cryptocurrency wallet, I'm pretty sure they use something that is called a mnemonic device. And what that does is it turns all these bits of data, a whole bunch of ones and zeros into human readable words that you can string together to recreate the serial number that represents your wallet on the blockchain. So if you were to ever lose your physical device, instead of having to remember a series of 2048 ones and zeros, you could remember a set of words that represent those ones and zeros. It might be house, boy,

bottle, bubble, chicken, ruby. There might be a list of 12 or 24 words and you put those words together in sequence and it will repopulate that wallet for you. It's pretty cool. And it sounds like at first glance, you know, that doesn't sound too secure if I can just have a list of 12 or 24 words to repopulate my wallet. But the amount of difficulty it would take for somebody to randomly generate the same exact seed phrase from one wallet to the next with 24 different words. Each word in this list, the first four letters of every single word that is in the list is called BIP39. You can look it up, BIP as in Bitcoin Improvement Proposal 39. Every word in the list of BIP39 seed phrase words, the first four letters are

different. So the order of the words has to also be the same. If you were to pick the exact same list of 24 words as I did, that is similar to the probability of both of us reaching into the planet and grabbing the exact same atom. That's pretty unlikely. Exactly. So it's one of the most secure ways to actually hold an asset because if I lose my device, I can keep 24 words in my head. I can migrate over borders. I can go behind enemy lines. I can go anywhere. My house could be taken away from me. I could leave it in a car. My car could get towed away and I can get a new wallet. I can enter that seed phrase, regenerate the keys to access all of my assets on the blockchain. Well put, Dan. I think that helps a lot of people because that's one of the biggest things, right? People are not sure either how to get started, but what are the

best ways to store their Bitcoin. And I think that was a great overview. 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. That is questtrade.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 at airbnb.ca forward slash host. That is airbnb.ca forward slash host. Now I want to move on and talk a little bit about your views on Bitcoin. Are you more bullish than you were when we last talked? Or there are some specific events that made you even more bullish than, for example, inflation data coming out recently. We're seeing CPI figures in the US and Canada and actually around the world going way, way up. Or even the hash rates kind of coming back, the global hash rates coming back to their pre-China mining ban levels. Or am I missing something that's making you bullish aside from those two big events?

Man, I think the thing that makes me very excited about Bitcoin is the fact that there's empirical data to support the growth and strength of the network. There's more nodes coming online. A node is a simple computer that runs a little piece of software called Bitcoin Core. And that little piece of software holds a replica of all the data back to the initial transaction on Bitcoin. I have one running at my house. There is over 13,000 Bitcoin nodes running at this time right now. So in order to shut down the network, you would have to get rid of all 13,000 nodes at the same time. Otherwise, somebody who is still running a node can keep that ledger, that distributed ledger of all transactions up and running. So the growth of that network is increasing. The growth of the lightning network running between those nodes is increasing. The

lightning network is a instant settlement layer on top of Bitcoin that allows for a very small fraction of a dollar transactions to happen for almost free. So that network is growing and we have data to support that. There has been a wider adoption of publicly people coming out and not necessarily everyday people like us, but large, you know, whether it be hedge funds, whether it be our friends to the south in El Salvador who are buying Bitcoin, whether it be firefighter pension, the teachers of I think it's the Ontario Teachers Pension Plan. They invest in some Bitcoin related companies. related companies. There's a lot of investment, broad investment in the industry as a whole, not just specifically in the asset, but in miners, in asset managers, in exchanges, just the whole infrastructure is continuing to grow. And I think that there's still people who

are such heavy detractors of Bitcoin that it's apparent to me it's not widely understood yet. So as we can see the network growing at a very exponential rate, and in contrast to that, there's still some very savvy finance people who just don't get it. To me, it means that this is still a very asymmetric bet that you can make, just meaning a small investment still has the potential to yield an oversized return without risking a large amount of capital. And that's why I feel like for me going through the summer of watching, uh, you know, darn near 40%, 50% decline from 60,000 down to 29,000 USD, and then back up through 60 to a new high of 69. I think going through that cycle

has just reassured me that this is something that's here to stay. And no matter what kind of turbulence happens, whether there's all the miners get shut down, there will be new miners who come online, whether it's legislation comes out to make it tough to, you know, acquire Bitcoin in certain countries, well, there'll be other countries that are more open to it. And I think Bitcoiners and I think the crypto economy in general, it's a very creative group of people. And they know how to rally together when it's time to innovate. And I think that the best years are really they're still ahead of us. No, and that's great that's great and i think too like you touched on

it right it's the growing network of the bitcoin networks that's growing growing and i think with each day that passes it becomes stronger and stronger but you know for some people it's still you know they'll be listening to this and i think they'll still be either reluctant or might be afraid because it's still very different from what they know they've grown up with. If someone wants to invest in Bitcoin without actually buying Bitcoin, do you have some suggestions to get out like exposure? I'm thinking here, whether it's public company, we have some exchange traded funds in Canada as well. Or are there other ways that you can get exposure to Bitcoin that maybe I'm not even aware of? Well, in Canada, we have one of those benefits that they don't have

to the south, which is a spot Bitcoin ETF. I think there was a lot of news and a lot of hype around this futures ETF that was released in the US. And I think that was a top signal in November when we went up to, I think, 69,000 USD. That was around the launch of, I believe there were two or three different futures-based ETFs. Now, a futures contract is a derivative contract. And that means you are buying the right to get an asset at a certain price at a future date. So they traditionally use futures for commodities such as oil. If you believe the price of oil is going to be going up a lot, well, you will buy it for a little bit more expensive right now and you can claim it in a month instead of buying it for way more expensive when that month actually comes. So that's what a

futures contract is. A futures contract is a cool way to get exposure, but I don't think it's an ideal way for people to get exposure. If it's all you have access to, maybe, but I would prefer people buy just actual Bitcoin compared to futures. Some other things that are more suitable that we have access to here in Canada, and I think some other places would be a spot Bitcoin ETF and spot just means that the fund that is running that ETF, they actually have to go out and purchase Bitcoin for all of the units of that ETF that are sold in the open market. And so you have a much more direct correlation to actual price action of the underlying asset. So you can buy actual price action of the underlying asset. So you can buy an ETF inside of a registered account. And that way you don't have to deal

with some of the headaches of the accounting and the taxes dealing with buys and sells of an asset that fluctuates in price 24 hours a day. So buying inside of a registered account ETFs are a great way to go. And there was also a ETF launch this week, which is we're recording early December. There's the purpose Bitcoin yield ETF, which is the ticker symbol BTCY on the TSX. And what that is, is a Bitcoin exposure ETF that runs a covered call strategy. exposure ETF that runs a covered call strategy. And so for newer investors who aren't, they don't know too much about option strategies. A covered call strategy is if I own shares of, you know, a stock, or if I own Bitcoin, I'm basically selling the right to somebody else so that they can buy this at a particular price.

So a covered call strategy might be, I bought Bitcoin at $50,000 and I'm going to sell call options at $75,000. So somebody will pay a little bit of a premium thinking that Bitcoin is going to go way past 75 so that they have the right to buy it at 75 when the price later down the road might be 100. So that's all covered calls are. But the people running this option strategy are counting on the fact that Bitcoin won't go past the strike prices that they are selling those options at. That way they can collect that premium and they can give it back to investors as a yield on that investment while they still have exposure to Bitcoin. Again, this is cool.

It's not the ideal way to get exposure because you'd rather have spot Bitcoin in that case. Two other things that you can invest in. My personal favorite way to get leveraged exposure to Bitcoin is through investing in public miners. So there is a number of miners and minor ETFs available on both the Canadian and the US exchanges. A company that I'm personally invested in is called Hut8, and their ticker symbol is H-U-T. Of course, this is not financial advice, but I'm just disclosing what my personal portfolio looks like so everybody's aware. just disclosing disclosing what my personal portfolio looks like so everybody's aware i'm not pumping my bags no i actually reviewed them i think it was last week i'm trying to i don't know everything just blurs together but i was i hadn't i hadn't like uh looked at them before

and i was honestly uh pretty impressed uh jamie liverton or living am i sorry if i'm butchering her last name but i was you know what's funny i felt like her name was french and i thought that you would have just nailed it off the bat i don't i know her first name is jamie i don't remember her last name but i was really impressed with her i listened to a couple conference calls and she was really great at explaining she was also very honest and saying you know you had analysts and it was actually funny. I found analysts, the knowledge about Bitcoin was kind of all over the place. So she actually had to explain sometimes to the analysts how it worked. But she was also straightforward when they asked her about

certain things, especially what she could and couldn't control. You know, she straight up said, you know, there are certain things we just can't control. You're asking me this question, and there's way too many variables involved. So I came out doing that dive into Hut 8 pretty impressed. I'll be honest, but I haven't looked at the others in this space. So maybe I reserve judgment based on that. Right. Well, I'd say personally, I like Hut 8 for a number of reasons, one of which is that they're Canadian. And whenever you can invest in a solid Canadian company, I take it equity as capital to do certain things. So whether it's the executives getting paid out in options or whether they raise capital because their equity

value has increased so much, you're helping contribute to the growth of that company if you believe in what they're doing and you want to support them. I guess that's a tangent. But one of the reasons I really like investing in mining is because the accounting models that the investing world uses, they don't fit on Bitcoin miners right now. And so I think you guys were talking about this. Oh, yeah. And I know Bredo Capital is always about the cash flows. You have to think of them as a Bitcoin mining company is like a new type of asset manager without the front facing customer service that you would have at a Galaxy Digital. But a Bitcoin mining company would work with an asset manager and give them the assets

that they can then make a yield on by loaning out to other people. So this is the ways that Hut 8 makes money. They raise money with equity. They also loan out their BTC and they get a yield on it. And then they also harvest other different types. They mine other different types of cryptocurrency and they get a BTC rewards back from their mining pool that they're a part of. And so I think down the road, when the price of this appreciates, they will be able to start selling some of that Bitcoin because the price of the Bitcoin will have appreciated

versus the debts that they have and the cash flows that they need to operate the business to a substantial amount. And they won't have to peel off a large amount of their stack that they've saved up to keep the business operating. One of the last types of businesses that I really like, of course, there's exchanges. And the first thing that might come to mind is Coinbase, which is ticker symbol C-O-I-N, coin. But another one other than exchanges is the asset managers. And when you think of Galaxy Digital, all of these companies together, they all have an asset on their balance sheet, which is Bitcoin. OK, so the balance sheet is going to become more valuable. The assets that they have are going to become more valuable.

So in valuing that whole company, you're going to have to look at what do they have to do to grow that balance sheet. And I think that's the new way that the investors are going to have to look at these companies. Galaxy Digital, they do all kinds of financial services for institutions. They provide capital to high frequency traders. They provide capital to Bitcoin miners who are trying to get up off the ground and they need a loan, they have a trading desk. They provide services for OTC payments and transactions. So they do a lot of things that people like us may not interact with, but for an industry to grow and thrive, all of those different functions need to be alive and well. So you can look at the whole stack from the spot Bitcoin

itself, where that's being mined, where that Bitcoin then goes into some type of custodian, where it's being distributed and sold and used by institutions, down to being at the exchange level, investing in Coinbase and where it's going to retail. There's all different levels of the stack and you can invest pretty much all the way along that stack. No, no, that's great. And yeah, I saw that Bitcoin ETF, the yield ETF. And I'll just caution people if you invest in an ETF, whether it's a Bitcoin ETF that has a covered call strategy or, you know, a covered call ETF with stocks, you're essentially limiting your upside right on by doing that because then the ETF is forced to

sell if the price increases beyond the price of the covered call so keep that in mind having the yield probably protects you a bit against the downside clearly but we did some episodes on that and clearly ETFs that have a covered call strategy don't perform as well as those that don't that's something I wanted to mention. But before we wrapped up, there was actually some big news today and yesterday. And I'm just going to put you on the spot a little bit, but I'm sure you've read about this. So we saw Jack Dorsey saying

that he was resigning from Twitter yesterday. And Brayden and I were actually talking about that on the podcast. And I said, look, the way I see it and all the signs were pointing, I'm pretty sure Jack wants to focus on Square and Bitcoin more specifically. And then the news came out today that they're going to be changing the corporate name to Block. They'll still keep the Square app and the TBD.

And I think, sorry, I'm missing the other one. Yeah, title. There you go. But so I just wanted you to, you know, what do you think about the announcement and just your general thoughts about Jack Dorsey before we wrap this up? I think Jack Dorsey is one of those founders where he's made so much money that right now he can truly follow his passion. And I think the average person might say, well, anybody who's made hundreds of millions of dollars can obviously follow their passion. But I haven't been in those shoes to be able to speak to what is enough. And I think... Oh, really? I thought you were. You'd made hundreds of millions. Imagine. We'd be recording this on a private jet. But I like the idea of Jack really

going 100% all in on something that he's passionate about and something that he thinks is going to make a meaningful change in the world that we live in. Because if you look at, I don't know if it was necessarily the official tagline, but something that they were saying on the block, I think it's block.xyz. I'm not sure what the website was, but if you look at it, they're saying that they want to increase the access to financial services all across the world. And whether that's through Square making it cheaper for people to get banking services, because now they do have a banking license, whether it be reducing the transaction fees that merchants have to pay because they're only running a small

business. And if your margins are 5% to begin with at a restaurant, you're paying 2% to Visa, that's really cutting into what you can make or whether they're creating a decentralized exchange so that people in places where it's very tough to get access to something like Bitcoin, they can now go somewhere online and be paired up with a pair or a peer to trade with in a decentralized fashion. That's what TBD is working on. Or whether it be Tidal trying to get financing for artists or allowing artists to find ways to do better record deals so that the creatives in this world keep more of the economics of the products they produce. I think it's cool to see somebody really doubling down on their passion. And I think because of that, he's going to be able to take these companies a lot higher. And Square dumped 6% on the news.

So it might be an opportunity to add to your position if you have one. I won't tell you that my average cost. It's just been one of my better investments. I'll say that. Yeah. Got it about, I think, four or five years ago. So that can give you a good idea. Yeah.

Nice. I love it. Yeah. But no, this, you know, it's been great. It's always been a, it's always a pleasure to have you on Courtney. Hopefully we'll be able to do that again. I know you just mentioned, uh, when people will hear this, it'll be passed, but, um, you've got something big coming on next week. Uh, do you want to tell people what it is? I mean, it'll be in the past at that point, but still. Yeah. Do you want to tell people what it is? I mean, it'll be in the past at that point, but still, yeah.

Yeah, so in my past life, I played pro football, like I said, but now I work in pro sports, and my team, the Hamilton Tiger Cats, we're hosting the Grey Cup game. So it's a little bit busy in the town of Hamilton, Ontario. If you guys happen to hear this after the game, hopefully you were cheering for the right squad um and we'll see how it goes man but it should be a lot of fun it's something that doesn't happen all the time i'm looking forward to it well you know best of luck to you and your team again if people want

to follow you on twitter can you remind them what your your handle is on there i am the c steven s-t-e-p-h-N. If you add me, I will reply. I appreciate you guys. Thank you so much. Well, it was great having you. Thanks again. And I'm sure we'll be doing this soon enough. The Canadian Investor Podcast should not be taken as investment or financial advice.

Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.