The Canadian Investor - 7 Stocks Moving The Market & Apple's First Major Product Since 2014

Episode Date: June 8, 2023

In this episode, Simon and Braden discuss Apple’s event and the launch of new products including the Apple Vision Pro. We also look at what has provided most of the returns so far this year for the S&P 500 and earnings from Lululemon. Symbols of stocks discussed: AAPL, LULU, ATZ.TO, FAF.TO Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  TCI meetup registration Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.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. 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 Bélanger. The Canadian Investor Podcast. Welcome to the show. Today is June 6th. My name is Brayden Dennis, as always, joined by the visionary himself, Simon Bélanger. Today, we're talking news, earnings, and we're going to go through Apple's big event that they had.

Simone, did you watch the event or listen to it so far? So I watched the highlights and then I watched kind of full 15-minute video about the virtual reality headset, the Vision Pro. Is that the name? That's right. Yeah. So I don't know know i have mixed feelings about it yeah we'll discuss that so i i watched it today uh the replay because yesterday right after they finished it i was driving home from the cottage and they upload it in podcast form

onto the podcast player. So I was like, oh, I'll just listen to it on my drive home. So then I'll be prepared for tomorrow. And they have two podcasts, okay? One is video and one is audio. And I click the video one and I get an email. It's like, by the way, you've used 20 gigabytes of data already this month you still have 20 days to go how about you chill out for a second and i realized that i just rinsed my entire data package in like an hour watching the apple event yeah i mean it's i can see why do you have a package

where it throttles then your data once uh like you don't have a cab but it's like a soft cap i would say yeah they they say it's a soft cap but it's really a hard cap because they're like oh yeah you got like 20 or however many it is gigabytes a month but it's unlimited after the 20 we're gonna slow you down but for anyone who has ever been in this situation if you're past the limit you can't even load a page like you can barely load google maps to begin with so it's like back to 3g way worse it's like dial up on your phone you go back to the dark ages uh simone let's kick it off before we get to the apple event on the S&P 7 versus the S&P 493. So this is year-to-date performance as of a couple of days ago, so current enough.

Meta, Amazon, Apple, Microsoft, Google, Tesla, and Nvidia have done 44% as a group. That is the S&P 7. Because they're so heavily market cap weighted, this pushes the S&P 500 up 10% year to date because the remaining 493 companies are flat year to date. So if you have been owning anything but the S&P 7 and you've owned any other constituents in the S&P 493, there's a very good chance that you're wondering what this bull market people are talking about is. Because there is a gigantic difference between these top seven companies in the market in the S&P 500 by market cap weighting versus the remaining 493 companies. So if you're sitting there and wondering, the market is dominating this year and I am flat or even down. That is why and it's astonishing to see the difference.

Yeah, I just actually pulled the data looking at the SPY, which is obviously the S&P 500 ETF, the most well-known one, and then comparing it with RSP year-to-date. So RSP is just the S&P 500, but the equal weight every name. So the SPY is up 13% and the RSP is up 2%. Jeez. Yeah. And it makes me think, right? So there are today, the regular indexes are always market cap weighted. So you're going to have Apple nearing its 3 trillion valuation in market cap today at the top, followed by the smallest weighting in the 500th constituent of the S&P 500.

Now, there are many instruments out there that do equal weighting, S&P 500, or even inverse weighting. And I think the inverse is a bit goofy, but I definitely understand the value of the equal weighting, especially at a time like today where this has happened because we have some massive spread on value stocks today. There are tons and tons of great deals on high quality companies today, even though the alleged market has ripped up over 10% year to date. That is highly misleading when that group of seven stocks in aggregate are up nearly 50% year to date. And it is only June 6th today. Yeah, and I'm sure there's some really good performers too in those 493 companies, but some of them may just be smaller.

And because it's market cap weighted, they just don't have a big impact on the index. And because it's market cap weighted, they just don't have a big impact on the index. So it doesn't mean that all the companies, all the 493 companies are performing poorly. It just means that, you know, they're not as impactful on the index as a whole. But clearly there are some that are not performing well. That's right. And if you're watching this on the join TCI.com Patreon, you'll see our two beautiful faces and the chart we just shared is on the screen for the video version of the show. That is a join TCI.com. All right, let's get into the Apple event, Simone.

I will take a lead here and then you'll comment where it's necessary. So first off, what did you think overall? I mean, this isn't the first time they've done the World Developer Conference for Apple. It's brilliant marketing. They get the whole world to talk about their products. And it's basically like watching a movie, this keynote speech, because the graphics are mesmerizing. The way they show the products is beautiful. The way they do the keynotes and the handoff between all the employees at Apple, it's all very well thought out. What did you think overall? Yeah, it's always a great event. I mean, now it used to be, I think, right, they only had

like one event. It was in the fall, but now I feel like it's pretty much a yearly thing right they kind of have these two events and they'll end up launching products at both events typically the iPhone is more on the September kind of fall event and then you had well obviously I we alluded to it and if you've been living under the rug the Apple Vision Pro which is their new virtual reality headset, which is retailing, I think for $3,500, if I remember correctly, US, right? $3,500 USD ski goggles. That is correct. Yeah. I mean- High tech ski goggles. Yeah. And they have that extra slim MacBook Air 2, the 15 inch that they announced,

extra slim MacBook Air 2, the 15-inch that they announced, which looks really cool. But for me, I guess the headline was definitely the virtual reality headset. And I have mixed feelings on it. I think there's a lot of really interesting applications. I think the video is pretty interesting. I would encourage people to watch it. But it still i don't know it still looks goofy i don't know what you think about it and if you know vr or the metaverse is gonna happen i think this will probably whether this is a hit or fail i think this will probably tell us what direction it's going in terms of are we going to be embarking on the metaverse or not? I will have a counter opinion. I think it's awesome and I want one. It's very expensive. I don't even know when they start shipping, but I want one because I think that they're amazing and I'm going to list all the reasons why. But before we get to that, you mentioned the 15-inch MacBook Air with the M2 chip.

I think this is going to crush it. The MacBook Air previous version with the M1 chip was the best-selling laptop of all time. And I think the 15-inch Air is going to even surpass that because, look, people want this high-performing, light, inexpensive laptop. Inexpensive, you know, relative for Apple. Yeah, yeah. But the 15-inch screen makes it so much better and effective for not only just the students, but also professionals and organizations who are ordering tons of laptops who might have opted for pros or a PC go for this 15-inch Air. I think it's going to crush it personally. Lots of new APIs. This is what this whole event is supposed to be about is the developers bolstering that ecosystem for the app store and developing on the Apple

Watch. All of the apps that people are building and the APIs that they allow people to tap into makes the ecosystem more innovative. They announced Apple Pay Later, which is in a joint partnership with Shopify's shop, which I think is quite interesting. This is a nice little lift for Shopify. And I'll touch on some new stuff because incremental improvements to FaceTime, I don't really care. Now, all of the Mac, including that 16-inch high-performance Pro, everything is now on Apple chips. Apple Silicon is what they call it. So no more Intel, even though they haven't been making that anymore.

They've now officially created every replacement product for Intel, which I think marks a giant milestone. We already knew this was coming because they weren't working on anything new. But now there is officially a replacement for every single product with Apple silicon. But now there is officially a replacement for every single product with Apple Silicon. Yeah, and I think it reinforces what predicament I would say Intel is in where you're seeing all these companies, you know, the big tech that are designing their own chips to make sure that they function on an optimal level for their devices, whatever they are, right? Facebook or Meta is doing the same thing, all the big companies. And I just don't know where Intel really fits in here. I do hope they do some product innovations and there's some uses for them. But aside from the PC world, maybe some kind of cost-effective servers,

world maybe some kind of cost effective servers and even that we're seeing you know bulk of the server demand going over to amd and nvidia i just i just don't know what direction or you know it seems like the writing is on the wall but intel is staying steadfast on what they think is the correct approach everyone wants to be their own designer. And Apple has gone that way and they're not turning back because they're having great success as a designer, from my perspective. Yeah, and what Apple announced too, one thing that was really interesting about the Vision Pro is that the game experience seems to be pretty cool too,

what you can do with the Vision Pro. And traditionally, you know, I've played computer games not as much in the past, like five years or so, but when I was younger, and I think it's still somewhat the case where Intel in terms of CPU was always, that was always its force, right? So for a long period of time, they had the overall best CPUs. But even in recent years, they were still performing really well when it came to games, which is fine.

I mean, but it's still a relatively niche market. But now if you're starting to see products like that, or whether it's meta, whether it's even AMD with some of their processors, I just don't know. You know, obviously, Intel is going to lose some market share for of their processors. I just don't know. Obviously, Intel's going to lose some market share for gaming as well. I agree. They unveiled a new line of Apple Silicon new chips. So they have the M series. They have a new R1 chip that is specifically made for the Vision Pro. 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, before we talk about Vision Pro, name drop is something that they threw in there. And if you were just skimming through the presentation, you wouldn't have noticed this. But if you are single, if you're out there, you're a single guy or single lady, this is the most important Apple feature ever released. So listen up. If you don't know each other and don't have your contacts,

you can put your phones together and instantly swap contact information, kind of like AirDrop. But all you got to do is put your phones on top of each other and it shares each other's contact information. Look, this is a game changer for people meeting each other this is uh this is good stuff right here maybe maybe not if you don't want to give your correct phone number now you're a little bit in the bind right yeah so you can't uh you have to say you don't have an iphone or you haven't updated to the usos or something that's right yeah sorry android guy can't help you uh yeah that's true they also

released all these like safety anti-stalker things like right after so maybe maybe that was to get out of it uh all right let's do it so they're they had their big one more thing you know the steve jobs moment where tim cook goes up there it's's one more thing. And this is the release of the Apple Vision Pro, $3,500 USD, goggles that you come on to challenge Meta's quest. Pretty slick demo. Apple is very good at showing product. It's just what they do. And Tim said, quote, the first Apple product you look through instead of look at. Now, the approach is mixed reality, which I like a lot more than full virtual reality. I haven't tried this yet, but full virtual reality to me every time when I get in it, I can't wait to get out of it because it's nauseating and you are fully

gone from the real world. Like you, you, you are now in a completely different place, which might be cool if you're like gaming, but if I'm doing productivity at home or something, I need to be able to interact with the physical world. And that's what the route that Apple has specifically gone here is with mixed reality. And this is key, right? Because you have these clear goggles that you can see the outside world with. You can see your home office. You can see the physical office if you're at work. And then now you have these three kind of virtual screens around you. So it just replaces like physical screens to this monitor that's kind of basically on your eyes. And I do think it's pretty cool. It's one of those things where, you know, if you had a bunch of people wearing this on the bus,

the bus, you would think this is too sci-fi for me, right? But look at what has happened just in a short period of time. The same thing people would have said if you get on the bus today and every single human being is staring at their phone screen the whole time and has headphones in. screen the whole time and has headphones in. This is not that hard to imagine the next iteration of this insane path that we are going down. It's really not, because if you told people that everyone on the bus would be staring at a screen and have their headphones in, you would have said you are nuts and i think that apple has a way of defining the way people interact with technology and i think that this will be a success yeah i mean i would be tempted to say it will be a success like i said if if apple it's not a success with apple um i think you know, like mixed reality, augmented reality, whatever you want to call it, or virtual reality headsets are probably not going to work out. So I

think, you know, Dave, you clearly can tell they've put the work into it. And I was amazed by the video. There's a lot of stuff where I'm like, okay, that's not for me. But there's definitely some things about half where I could see myself do uh the one that resonated probably the most was um being able to immerse yourself in a kind of relaxation meditation environment and the other one how you can basically block out everything if you're on an airplane and being like immersed yeah yeah immersed in a in a movie which takes you know it's kind of a full screen almost like it's hard to explain if you haven't seen the video um so those are the two that really you know caught my attention and for people who are kind

of wondering just go on youtube um the video i watched was about like 12 15 minutes and it's just on the vision pro so you'll'll get the full video and the extent of what it can actually accomplish. Yeah. Type in Vision Pro on YouTube. It'll be the first thing that comes up. They have like a commercial, but then they also have like the 12 minute version that they stripped out here from the keynote, which is quite brilliant. Now, some important partnerships. Disney Plus content will be available on Apple Vision Pro for watching movies. This is a nice little full circle Steve Jobs moment because both companies are... Steve Jobs is an integral part of both of them with Pixar and everything.

part of both of them with Pixar and everything. Now, the tech in here is nuts with spatial audio, 23 million pixels in the display, 12 cameras, five sensors, and six microphones, an M2 chip, and now this new R1 chip to work with the sensors and build a spatial awareness for the room that you're in so that this all works. You hear that and you're like, oh, that's why it's 3,500 USD. There is an obscene amount of tech here. They're calling it the Vision Pro, right? They're taking the Tesla approach to this market. Yeah, I was going to say that's exactly what I thought and I was going to add as a comment. Yeah.

It's the Tesla approach. Your first car is the most elite, high-end, high-performance to show people that it's possible with beautiful electric cars and now beautiful mixed reality. with beautiful electric cars and now beautiful mixed reality. Build the absolute high-end Ferrari of product and then deflationary, get costs down so that it's available more for wide adoption and build the SE version and the air version that are going to have less bells and whistles but have already proved the market and the tech that people are going to have less bells and whistles, but have already

proved the market and the tech that people are going to be comfortable with using. So I think this is a pretty smart move. Yeah, also allows them to build the scale, right? We're used to Apple having the scale to build, you know, iPhones and things like that. But I can just imagine just based on the technology and that, you know, they can't produce as high of a, you know, volume, obviously, than iPhones or things like that. So as they get that capacity and have more data on the actual demand for the product, like you just said, I think it's inevitable that we'll see some more cost effective options. I don't think we're going to see anything under $1,000 anytime soon, but probably something around the $2,000 range would be my guess if I had to guess in the next year or so, especially if there is a strong demand for it and you have developers jumping in and making applications just for the Vision headset, whether it's the Vision regular pro whatever you know other name they come with in the future another important partnership that they mentioned is that they're partnering with

gaming engine unity ticker you ticker you that is an important partnership for them to bring in all of the native mobile ios applications via video, because you need a gaming engine, for Vision Pro on launch day. So this is to basically say, hey, every single video game on the iOS app today is going to be ready for Vision Pro on day one. And they're working with Unity on this. Unity is the mobile app. It's the gaming engine that more than half of mobile apps on the App Store are created with. So this makes sense. Unity stock jumped 21% yesterday afternoon when this partnership was verbally announced on the keynote. So that just shows you Apple's pull here and people's excitement for the product. I think my final thoughts here, I think it's awesome. And I think that if this is going to work, there's no better company in the history to combine hardware and software together and bring it in a way that consumers love like no other. And you're right.

If they can't do it, then we can probably put this away. Yeah, yeah. I mean, there's a lot of it. I'm not as excited as you just as a consumer. I think I'm more, I'm always like that when there's new technology i take the wait and see approach so for me it's more of a wait and see approach see what happens see you know if i talk to people what their experience is uh but you know maybe a couple years down the line i'll buy the more cost-effective version that's right i I just think for watching a movie alone on an airplane,

if you have the money and you travel a lot, I feel like it's worth it right then and there. All right, let's move on to earnings. Enough of Apple. We got another famous consumer company here. Yeah, this one's Canadian, obviously. I think we do it most of it on every earnings release, especially now things are starting to it was a good one because when the earnings came out, the stock price was up double digits. Net revenue was up 24% to $2 billion, 17% for North America and 60% internationally, which is not a surprise. They've been focusing on that and especially their men's segment as well. Comparable sales increased 14%. Direct-to-consumer was up 16%. Direct-to-consumer as part of total revenue share was 42% versus 45% last year. So a little bit down, but considering how massively their sales were up, to me that's fine. Not an issue there.

Gross margins increased 360 basis point to 57.5%. It was up 240 compared to the previous quarter. And I wanted to mention that because there were definitely, you know, last year compared to last quarter. There were some differences and I think it's important to look at both here. Operating margins increased 400 basis point to 20.1%. It was up massively compared to Q4, but that's because of the mirror write down. If you remember that where they wrote down most of the mirror investment and inventory was up 9% versus December, but was still down from the peaks of last fall. And I think at this point, as a shareholder, and feel free to give me your opinion on that, I think I'll trust management on inventory levels here, they seem to have a good grasp on how much inventory they need. And seeing how sales are coming along and margins are doing, I think it's just hard to question them.

Obviously, I had some questions last year because I'm like, I was thinking, well, if sales don't go the direction that they think it's going, it could really have an impact on their margins because they'll have to discount things. So what are your thoughts there? I always find it funny when inventory up is a negative sign for a retailer because typically it is, but not when everything flies off the shelf. I, to me, honestly, don't care that this number ticks up 9%. If it's a company that has trouble getting inventory out the door, then yeah, sure, I'm concerned. But they get a pass. They do. They just do. And that's my stance here. Yeah, exactly. I think that's a good point. And they increased their guidance to 4-20-23, which I think was what got a lot of investors

excited. So they increased their sales guidance by 1.3% at the midpoint. So that would be an increase for the full year of 17% compared to last year. So now they expect revenues to be in the range of $9.44 billion and $9.51. And to what you were saying in terms of inventory, I think it's important to just talk a little bit about Aritzia here, because I know a lot of people try to compare them to Lululemon, because I think primarily because they're Canadian fashion plays. But I think, you know, we're seeing the difference here where Aritzia is still seeing some pretty, they're seeing some margin compressions, let's not be shy about it. And that was one of the big reasons why their last quarter, the stock was hit pretty strongly. And believe it or not, Lululemon is actually

growing faster than Aritzia and it's a larger company. And I own Lululemon, but to me at this point, I think I'm starting to see them in just another category. So there, I don't think there's much, you know, it's not a non-zero risk, but I think Lululemon in 10 years from now will still be here and it'll be thriving. They'll be a much larger company than they are right now. I think they're entering that kind of Nike type of category where you don't really have to worry about, you know, being a fad or anything like that because they've been such a big company for so long now. Obviously, they're growing pretty quickly. But if you look at Aritzia, I think there's a lot of questions around Aritzia.

I know they're growing pretty quickly still. I know they're very popular with women. I think various age groups, not just specific age group for women. groups, not just specific age group for women. But I think for me, if I had to put a probability, it's I don't know, it's maybe a 50 50 outcome for Ritzia a decade from now. I just don't know whether it becomes a fad and it just doesn't keep getting the same traction it is right now. But there's definitely I think you're starting to see people wondering in terms of Aritzia, what direction it's going to take. Clearly, even if I give 50-50, I mean, it could still be a much larger company a decade

from now. It's not a given, but there's a bigger risk, I think, for that. There's a bigger risk, but I will say that there is a much higher upside opportunity today in Aritzia stock than Lululemon stock. But you hinted at it. Yeah. There's a much larger risk as well. And so you have to be compensated for that risk. And today, it's trading at half the multiple that Lululemon is. It's a much smaller company. It only trades on the TSX. so there's a lot less eyeballs

looking at it. The future is less knowable for this business, and that's why it's not trading at the same premium Lululemon is. I think that both can probably do well from here. It's hard to say. I mean, Aritzia is on quite a large drawdown and the fundamentals are are very very strong uh i said ritzia right yeah it's on a almost 35 percent drawdown since november of last year the fundamentals have remained strong so i yeah that's that's my only thoughts here they're both you're right we should stop comparing them because they're not even similar businesses at this point other than they're both vancouver clothing stores one doesn't even sell men's clothing it's only women's high-end like you know business casual attire is like what

a lot of it is versus like athletic wear. Like athletic wear. They're actually so different other than they're both from Vancouver. And I'm trying to think, do you know of any women-specific, let's say mid to higher-end range that has, you know, done well over long periods of time? I'm trying to think about it.

Like they would definitely bug the trend if they were able to do it. On a long enough time horizon, they're all zeros. That's... You what it's just it's no I know and it's yeah it's not I mean it's extremely difficult I remember you know a decade ago or so where Under Armour was the most popular thing and they were you know the next Nike. And now, you know, they're still around, but they're a fraction of what they were even like five years ago.

So, I think it's just, yeah, I think Lululemon and like a Nike, they're more the exception to the rule than the other way around. The long enough time horizon, time infinity, entropy, heat, death of the universe, laws of competition, they're all zeros. Feel free to chop that up, put that into a quote. 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 talk about inflows from individuals. Retail investors have piled into the markets this year. Daily net inflows by individuals into US markets is at an all-time high here in 2023. We saw a gigantic run-up in 2020, to no one's surprise, and it kind of up and down from there, but stayed quite steady. So there's two interesting pieces of information here. One, we saw a lot of people join the markets in 2020. Okay. Everyone kind

of already knows that, but how resilient these inflows have been. It's not, hey, I started investing in 2020, but in 2021, when I had to go back to my job, I stopped putting money into the market. This seems to be very, very sticky. And now we have new record highs of inflows now in 2023, a lot of going into individual stocks, a lot of into passive products. And yeah, so what is this? 14 billion, 1.4 billion, 21-day moving average of net inflows from individuals. So I guess they aggregate that inflows from the brokerages. This is from Vanda Research and reported on by the Financial Times. Yeah, I guess so. I guess that's the moving average on a daily basis, right?

That would make sense. Yeah, daily net inflows. Okay. Daily net inflows, right. So is that one... I'm trying to read the scale. So that's 1.4 billion daily... Yeah, 1.4 billion. Daily net flows. Yeah yeah net inflows yeah i think i'd be interested in seeing because if people remember we talked about uh money market funds right you know maybe a few weeks ago and how especially americans are starting to shift their deposits to money-marking funds because they're offering higher yields. And some of them are backed by U.S. treasuries, for example. So they have that extra safety as well because they're technically, well, they are backed by the U.S.

government in one form or another, and they offer a higher yield. So I do wonder what portion of those inflows are going to money market funds. It's not just US treasuries, there's commercial papers from large businesses, but I do wonder what proportion, especially in the last three months, I would say. Yeah, I'd be interested to see where are they aggregating all those flows from? Yeah. I'd have to do some more data. NVIDIA and money market funds. Yeah, strictly into NVIDIA. That's the daily net inflows into NVIDIA in this chart.

Yeah, no, it's probably, they probably have a decent chunk, as weird as it sounds. chunk, as weird as it sounds. And now speaking of US banks, so news came out that Fairfax Financial, which is a Canadian company, I don't remember the ticker. Can you look that up for people? I think it's FFH. FFH, right? Yeah, I think so. FFH on the TSX run by the very famous Prem Watsa. That's correct. So they, essentiallyWest is another regional U.S. bank that has been under pressure and has been under a lot of pressure, especially since the regional banking crisis that started in early March. They had agreed to sell 74 real estate loans to Kennedy Wilson Holding, which is a property investment firm. It's also publicly listed in the U.S. And Fairfax has agreed to buy the majority

of those loans that were sold to Kennedy Wilson Holdings, 63 in total, for $2.1 billion. They'll also acquire $200 million worth of preferred equity in Kennedy Wilson as part of the deal and assume $1.7 billion in future funding for these loans. I think this is something that we'll see more and more in the US. You'll see regional banks trying to sell commercial real estate loans, especially, I think, office. They'll try to offload that at a discount. That's what we've been seeing. I've read an article from the Financial Time, and that's what they're starting to see is banks are kind of stuck with these, you know, this real estate, these loans that are just underwater. So they're forced to sell them at a discount to store their balance sheets. So it's something pretty, pretty interesting,

something I'm reading up on because I'll be recording with Dan from the Canadian Real Estate Investor Podcast. We'll do kind of a special two-parter on commercial real estate in Canada and the US. Some of the differences, what we think will be, you know, not necessarily what we think, but the probability and things, how things could pan out going forward. And that's something to keep an eye on because there's definitely, especially certain areas in the US where commercial real estate, but especially office real estate is really struggling. And you're seeing landlords walk away, especially if they have non-recourse debt for those buildings. They'll just walk away because it makes more sense for them.

And then the bank is on the hook, obviously. Yeah, those non-recourse i how long is a typical office lease do you know i'm not sure no i think it's in that three years yeah is that too much or is that too low i'm not sure yeah but that's something we'll uh it's a good point so something we can add for that episode i'm gonna do uh google typical office lease uh oh that's the number length typical office lease length five to ten years for uh for retail and one and ten for office that's not useful at all over the place what it's uh well i'll ask Dan about that because I'm so curious. I know there's a lot of current commercial real estate, particularly in office that is like, look, our occupancy rates

are 90, they're solid, right? It's like, yeah, but how many leases are ending in the next 12 months or 24 months? And what's it going to look like after that? That's the big question. So I'll be keen to learn more about that. Yeah. And I mean, I've seen some data too. And I think it's very similar in the US. I haven't seen the same kind of granular data. But what you're starting to see is, you know, companies wanting type A office real estate. So they want newer, like new office real estate with all sorts of amenities or older buildings that have been fully renovated. So there's these, you know, nice place for employees to go in. It's encouraging, you know, you want your employees to actually want to go to

the office. And the ones that are older, haven't been renovated, don't have the same level of amenities, they have a much higher vacancy rate. So you're starting to see really a big difference between the two. So I don't know whether that's going to continue, but that's an important kind of something people should keep an eye on just depending on the types of office real estate. But commercial real estate as a whole, I think it's also an interesting topic. And I think it's important for people to remember, there's all different types of commercial real estate. Some is actually doing quite well, and some other types like office is struggling more. That's right. You got to break it down further. All right. Last topic of the day. What do we got? Yes. I just wanted to double click here on, you know, I think it was one of my

predictions. I don't remember. Like I always forget our bold predictions. I have to go back and listen to the episode. But I just said there was a bankruptcy announced. I think it was yesterday. So Fire and Flower, which is a cannabis retail play, primarily was looking to raise capital to fund its operations for a few weeks now. But in a statement, they said that after reviewing all their strategic options, they have decided to file for creditor protection under the company's credit reserve arrangement act, CCAA, in Canada. So that honestly, to me, does not come as a surprise. We're starting to see what I was saying will be happening. So it's a combination now of,

you know, we're seeing a bankruptcy here. We also saw Tilray purchase Hexo a few months ago. So you're starting to see a mix of consolidation and just company going out of business, which I think is probably healthy for the space. Because, you know, the euphoria that happened in this space five, six years ago and, you know, has been going downhill for the last few years, it just was not sustainable. So now you're seeing, I guess that the normal market take its course and you know just the stronger players will survive and you know probably gobble up some of the weaker players like we're seeing too fire and flower they have uh they have an investment from kushtar right i think you might be right yeah fire and flower and Flower. Here's a press release from April 17th. Oh, a master licensing agreement.

Whatever that means. Yes, CouchTard boosts ownership in Fire and Flower to 35%. This was a year ago. And a year prior prior they had invested so i think that they have now participated in fire and flowers financing at least twice they acquired about 8.3 million shares in april of 2022 of uh of fire and flower very interesting. Yeah, not the best investment, I guess. But maybe, you know, maybe they get, I know it's equity. So usually, obviously, if there's a bankruptcy, you're at the bottom of the poll, if you'd like,

or bottom of the line in terms of creditors. So yeah, I'm just looking at their share price too. Since that's been announced, I mean, I guess the writing was on the wall that they were reviewing their options a couple of weeks ago. And the stock has just been completely shattered since. So I'm sure they have some creditors that may be able to recoup some money. But if you're an equity shareholder, you're not going to get much in return. Thanks for listening to today's episode of the podcast. We are here Mondays and Thursdays as per usual. We hit 100,000 users on the platforms, Simone. So I'm just making sure your investment in Stratosphere goes to the moon, buddy. Okay. At first, you didn't specify what. I'm like, what? Do we have 100,000 users on the podcast? No, but what is it on the pod? Like, uniques, like 80,000 a month?

Yeah, that's a good question. Oh, that's – yeah. Let's go last three months. Oh, no, no. Last month, we have 83,635 uniques who have listened to either the Canadian investor or the Canadian real estate investor in the past month. That's pretty good. Yeah, that's pretty good yeah a lot of people imagine imagine talking to

83 000 people in uh a stadium i think i would shit my pants i don't think there's any other way to say it yeah i mean it's uh yeah there's be some jitters but at the end of the day what's what's the difference right 580 000 whatever still still a lot of strangers just 502 roger centers full of people yeah it's basically the same thing but you can be uh have we sold out on the on the tickets yet i i think i don't think there's much left there might be a few tickets, but July 7th, so basically exactly one month from now, we're doing a meetup downtown Toronto.

I think there are like 10 tickets left. So they're going to sell out for sure because they've only been available for a week and a half and there's still a month left to go. So that is July 7th in the evening. It's a Friday evening. If you can come out, snag those last 10 tickets or so because they will be gone very soon.

So if you've been thinking about it, you've been on the fence, just come on out. Come meet the lads. Come meet the people of the listenings of the podcast. Simone, I think I'm going to institute a rule during the meetup. We're going to do a Q&A for like 45 minutes at the talking to us, you're not allowed to ask us about us. After that, it's only us getting to know you guys because you guys have listened to us talk for so long. We are there to learn about you, the listeners. So that's the rule I'm putting out for the meetup. Are you good with that?

Unless there's a really good question about us no there's no good good enough question yeah i have are we gonna record it maybe do like in a special episode of some sort for the q a part yeah the logistics i get uh bring a laptop and some mics yeah yeah we could i wonder how it would sound but we could uh let's let's let's give it a shot anyway so it doesn't sound good then we don't have to how it would sound, but we could. Let's give it a shot anyways. If it doesn't sound good, then we don't have to put it out, but we should give that a shot. But that's the rule I'd like to put forward because we want to learn about you guys, the listeners. I know for a fact there are some insanely interesting people who listen to this podcast

that are very good investors, are very successful entrepreneurs, and wonderful people just overall. So it's time we switch roles and that is on July 7th, downtown Toronto. See you in a few days. Take care. Bye-bye. 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.