The Canadian Investor - 8 Popular Investing Sayings That Could Be Costing You Money

Episode Date: June 2, 2025

In this episode, we break down some of the most common investing phrases that sound wise on the surface but are often misunderstood or misapplied. Simon and Dan take a closer look at each saying—highlighting how it can offer valuable insight, but also the pitfalls that come with taking it at face value. Get your TSX Meetup tickets here! Get your Calgary Meetup Tickets here! 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 Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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Just my reminder to people who own safe Google's, don't be surprised when there's a cycle. If there's uncertainty in the markets, there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time. Welcome back to the Canadian Investor Podcast. I'm back with Dan Kent. We are here for a regular episode. We have a fun episode lined up for you. We'll break down some common investing sayings that investors often take the wrong way. I think a lot of them are actually like, there's a lot of truth to some of them, but sometimes if you take them just literally, you can get into trouble.

I think that's where most of them actually come from, right? Yeah, and I think that's why it's such a good episode is, you know, a lot of these you should kind of adopt, but you also shouldn't take them just straight up at face value. I mean, sometimes they can tend to lead people astray when they do that. And yeah, it should be pretty informative website or episode, not website. Yeah, episode. Yeah. Well, I mean, it's like a lot of things in life, right? Like a lot of things, I think people like it when it's black and white, but the reality in life and investing and a lot of things and poker, we're talking about poker too,

like to play both of us. A lot of the time, like it's not black and white, it's actually nuance. And if you apply things black and white, it for a while but you can also get into trouble and some unintended consequences. Yeah absolutely. And before we get started just a reminder here for our two upcoming meetups so we have the first one that'll be in July 8th in Calgary. Again it's in the show notes. So if you're interested it is $40 per ticket I think by the time this airs the early bird will likely be over with but you know, there's gonna be some food included I don't believe we have drinks for that one, but that remains to be determined But there will be the ability to buy some so that's on July 8 during the stampede

Brayden and I will be there you'll be there So that's on July 8 during the stampede. Brayden and I will be there, you'll be there. Dan and Nick from the Real Estate Podcast will be there as well, so it should be a fun one. Didn't realize how busy it would be, but I guess it makes sense for booking, but we did book our Airbnb, Brayden and I, so we're all set to go, just need to book the flight.

And then the Toronto Meetup, which will be the closing bell at the TSX, so don't miss that one if you're in the GTA area or if you're willing to travel for that. That's great as well. That's on July 24th. Like Braden mentioned the previous episode, make sure you get there if you book the tickets around by 3pm I think is recommended because there is a time constraint obviously when you're closing the bell.

So just a reminder for that when you're closing the bell. So just a reminder for that. We'll keep reminding people. Should be fun. You'll be there at the Toronto event as well. Just need to book your flights and the hotel, right? Or Airbnb. Yeah. Yeah. And that one's a bit more limited, isn't it? For the people that could come. I think it's a bit more... Yeah, exactly. It's definitely just we're keeping it for the podcast people. So really specific to that. The other one, there's gonna be more people in Calgary. So by all means, if you love the podcast,

you'd wanna bring someone that might like to meet up. I mean, it's gonna be a social event. So clearly you'll get to talk to us, everyone there, but get to meet other people that are into investing as well so yeah by all means if you want to invite people they'll still need a ticket but you can definitely invite them. Now we'll get to the episode so I'll let you start because I'll sip on my coffee while you start this one so do you want to start with the first common investment saying that investor do get wrong at times? Yeah, so this would be the buy low, sell high kind of mentality. And I mean, in theory,

this should work out wonderfully. However, you know, there's a few reasons, you know, investors might take this the wrong way. And I'd say the first major one would be kind of the accumulation of poor companies over time, due to the tendency to always be looking for bargains, always be looking to buy at lows. Like I don't believe in like a perfectly efficient market, but I do believe that the market is generally quite efficient in pricing equities. So, I mean, constantly sifting through a bit of a bargain bin mentality can end up putting you in a bit of a tough spot because, I mean, most stocks that are low are kind of low for a reason. I mean, whether it be declining earnings, management issues, et cetera, which doesn't necessarily make them bad buys.

I mean, with proper analysis, one could might come to the conclusion that a stock that's you know, currently in the penalty box a bit could be an outstanding buy. However, you know, I think a lot of people get caught up in the low price and kind of tend to ignore the the forward thesis. And especially when they you start looking at like deep value stuff, I feel like that's where you can get in a lot of trouble There could still be some really good plays don't get me wrong but oftentimes like the deeper the value the more you should like The more research you should be doing and the more stones you should be leaving on turn

Like you should be turning pretty much every single stone to make sure that your thesis makes sense. Yeah. I mean, if you think the deep value is so attractive just because of, you know, you think of the likes of Buffett who have always, well, not necessarily anymore, but was at one point, you know, a deep value investor. So a lot of people try to kind of emulate that mentality, obviously, because he's probably one of the best investors of all time. But these days he's more of a growth at a reasonable price type investor rather than that deep value investor. And the second difficulty here is that buying low and selling high

requires you to avoid equities when they're expensive and buy them when they're cheap, which again in practice is what you should be doing. However, it really isn't that easy. I mean, over the duration of my career, I've heard that stocks have been expensive a ridiculous amount of times. I've rarely ever heard of people who talk about how cheap they are. And what this kind of does is it causes people to hoard a lot of cash, kind of trying to time the market. So I mean, stocks, they were expensive in 2012, 2013, 2015, pretty much every single year you can think of is, at some point somebody was saying how expensive stocks were. And I mean, anyone who just kind of bought strong companies or bought the index held it over the long term over that from post-financial

crisis is on, has kind of realized one of the best runs in equities in history despite many warnings of potential catastrophe over the years. So I mean, I've bought, I would actually say that the vast majority of the biggest winners in my portfolio, I've just continued to buy them at all time highs because I mean, good companies, they tend to do well. They tend to not get down to 52 week lows, go on multi-year drawdowns to kind of make them seemingly look like bargains. The market is pretty efficient at timing or sorry, pricing quality. So I think, you know, instead of a buy low sell high, just kind of take the mentality, just buy strong companies, hold them over the long term and you'll you're probably going to do all right. Yeah, I do like Buffett, you know, you buy great companies at a fair price. So I think that's something he got from like you were referring to them from Charlie Munger,

where he used to be more I think the same was there taking, you know, a cigar and there might be a few puffs left in that cigar. And he's trying to get those few puffs left because they're they're companies that might be going under but there's still some value to extract where now I guess using the cigar analogy, you wanna get it while the cigar is good quality and has a long road to burn and it's selling for a reasonable price. I think that's the analogy, even though I probably butchered it a little bit.

That's okay. I guess the other, the final thing I'll say here is it kind of goes by the old saying of you know you shouldn't be cutting your flowers and watering your weeds. So I mean you know the the buy low sell high you know a lot of people will trim positions of great companies and accumulate positions of maybe not so great companies. So you want maybe not so great companies. So you want to be watering your flowers and trimming your weeds, not the complete opposite. And I think, you know, that's something that a lot of people kind of a lot of, you know,

it's a mistake that's quite frequent when, you know, they hear buy low sell high all the time. Yeah. Yeah. And in that same vein, so the one that's been popular over, I would say, the last 15 years, but even more so over the last six, seven years, buying the dip, buy the dip. It's hard to argue at this point that it's worked out really well. If you bought the dip over the last, pretty much after the great financial crisis, I mean, you've done pretty well, but buying the dip on individual stocks might be worth doing if there are no issues with a company's business and the fundamentals and the valuation look attractive but I think for some investor it comes down to looking at just a graph right I think a lot of people that start investing especially during the pandemic unfortunately like I see it with some

of the commentary I see on X and people buying I just I do wonder if they actually do much more than just looking at the graph and Looking seeing a dip and then clicking the buy button You can really get yourself in trouble buying the dip blindly and I think that's what's important is Because you could be overlooking something important that is causing the company to go down in price or even the broader market right and it's important to remember here that a dip does not mean that a stock or the stock market in general is on sale because that is something and it's not the the saying but a lot of people will say like you know you you get like a correction they'll say well oh I love

when the stock market goes on sale well Well, the problem is, is I'll give this example. If something is 50% overpriced, but it goes down five or 10% in price, is it still on sale? No, it's still overpriced. And I think it's just something you see a lot of it. You see it on Twitter, on X, a whole lot on social media as people say, like, oh, you know, people are panicking, but you know, stocks are on sale. Well, it doesn't mean if there's a dip or correction,

it doesn't necessarily mean that it's on sale. Sure. It's worked well over the last 15 years, but I can show you sometimes. I mean, if you go back to 2000, when the.com bubble actually started bursting, you can look at how the, if you zoom in, look at how that worked out. If you're just looking at the broader markets, there's a lot of dips that ended up dipping

even further after that. So you have to be a bit careful. I think for me, sure, buying the dip can make sense. If I'm looking at individual companies, just has to make sure that the valuation actually looks attractive. And like you mentioned your previous example or your previous saying, sometimes, you know, it may not even be a dip and the valuation will look attractive.

So you have to keep in mind and keep that in mind to look at the fundamentals. Yeah. The, the post.com bubble, uh, you would have been buying the dip for a very, very long time. A lot of dips to buy. And I mean, ultimately, I guess in the end, you still probably would have come out all right, but it took a very long time to do so. And then, I mean, even after that, you were quickly faced with, you know, the markets

finally hit back to those, you know, dot com bubble and then the financial crisis hits and we have another, well it was probably only three or four years then of flat returns. But yeah, they've done a lot of- You would have been alright if you continue holding for a long period of time. So yes, you would have been alright if you did not sell and you were young enough to continue holding for a long period of time. So yes, again mean, there's again

there's still some nuance to that. Yeah, I think a lot of people, you know, have no problem buying the dip when it when it recovers in, you know, a month or two, but buying the dip over a over an eight year period, I would imagine a lot of people kind of shifted their strategy there. But yeah, I mean, they've done a lot of studies on, you know, a simple dollar cost averaging strategy versus buying the dip. And I believe it, I can't even remember what the numbers were. It was like in excess of 75%, somebody who just simply bought and held over trying to time the prices actually ended up coming out ahead.

And that was actually a study that factored in the idea that the person buying the dip caught the bottom on almost every dip. I believe if they did it, there was a bit of variance. Like they, you know, they might have caught, you know, 10% early or 10% late. Then it improved to like 90 some percent. So this is a strategy that, you know, historically really hasn't worked out all that well. Yeah, no, exactly. That's a good point. 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 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,

EQBank's GICs are a great option. The best thing about EQBank is that it is so easy to use. You can open an account and buy 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. As an investor, I'm always looking to reduce my fees, which is why I'm excited that Questrade now offers

zero dollar commissions on stocks and ETFs. But Questrade isn't just about commission free trading. You can also get USD accounts, so I avoid forced currency conversion fees when trading US stocks. Plus, get access to their advanced edge trading platform available on desktop, web, and mobile. I've been using Questrade for many years and so has Simon.

And their platform makes trading seamless, whether you're managing a long-term portfolio or making active trades. Don't miss out. Start trading commission free stocks and ETFs today. Visit questrade.com to learn more. Between meetings in Toronto and conferences in Vancouver, I'm not home as much as I'd like. So I've been thinking, while I'm off enjoying someone else's Airbnb, why have I not put my own place up on Airbnb to earn a little extra income and help me pay for the trip. With Airbnb's local co-host network I can find someone to handle everything. Bookings, guest support, even the cleaning. It's a simple way to make extra money while I'm traveling without the hassle of hosting it all myself. If your place

often sits empty while you travel it might be time to let it work for you. Find a co-host at airbnb.ca forward slash host. Now we'll move on to the next one because we have quite a few to go over. So the next one here invest in what you know. Yeah. So this was a popular saying by Peter Lynch. I mean, he's arguably one of the top investors of all time, but this one tends to trip a lot of people up here.

I mean, the theory is to stay inside your circle of competence. I'm not picking on any company individually here by any stretch, but let's just say, I mean, you on the Canadian side of things, you frequent Canadian Tiger a lot because you find yourself in a store all the time, something like that, so you buy the stock. Or you have, you know, BCE is your cell phone provider, your internet provider, so you buy the stocks.

And there are plenty of businesses that you use every day that do make for outstanding investments. I mean, we can look to, you know, Apple, for instance. I imagine almost everybody utilizes Amazon. However, there's also plenty of businesses that you'll use in your, in your everyday life that are, that are really not that good of investments. And in addition to this narrowing your field of vision to, you know,

investing in what you know, and what you utilize kind of limits your selection field dramatically. I mean, for example, a prime example would be somebody who games all the time, let's say, and may have found value in Nvidia years ago, you know, seeing the demand, the quality of the cards, or something like that. However, somebody who doesn't really use them at all, might have missed out on it. And, you know, in addition to this, we have high quality compounders here in Canada, like, let's say Constellation Software, which I would almost guarantee aren't involved in people's everyday lives, maybe their work environment or something, if they, you know, utilize a,

a platform they own, but still, I think people get a bit too anecdotal when it comes to things like this. And, you know, we have to try to remain objective when we make our decisions. I mean, one popular one I've heard over the last few years is how people were buying Nike because, you know, they, they went by the store in the mall and there was hundreds of people in the store. So they kind of thought the demand was there, things like that. And obviously if we look to the struggles Nike has had over the years, that didn't really check out, at least thus far.

And in addition to this, I mean, we can get into a bit of trouble actually overpaying for popular stocks with this type of mentality, especially in bubble type markets. Yeah, and I mean, the other final thing I'll say, I guess, is that the demand is really trouble actually overpaying for popular stocks with this type of mentality, especially in bubble type markets. Yeah, and I mean, the other final thing I'll say, I guess, is it leads to not always, but it can lead to a pretty poorly diversified portfolio. I mean, obviously as consumers, we probably spend a lot of time at consumer staples, consumer discretionary companies. So if

you're only buying what you know and what you utilize, it can end up causing a bit of allocation issues. Yeah and I think for me the way I've seen that saying and obviously you have to not take it again black and white. So I see a little bit of gray or so the way I see it is I will definitely look at companies consider investing in companies that I can understand well but I also know what I don't understand all that well and one of the the positions I started this month is Berkshire so I did not own Berkshire and the reason why I decided to own Berkshire is because I want some exposure to the insurance business

and obviously it's not their whole, you know, they have more than just the business. I totally get that. Exactly. And I know the basics of insurance businesses, but again, they can get very complex and I'd rather invest in a company that has shown its track record to manage that well. And Ajit, which is the head of the insurance business, has been there for a long time and clearly knows what he's doing, has all the trust of Warren Buffett for the insurance business.

So that's an example. Or if I want to exposure to a sector that's more complex, like pharmaceuticals or biotech, for example, something I'll look at is just looking at potentially an ETF, right? The ETF route where I don't have to worry so much about knowing how they work very specifically or in detail. I'm just buying a basket and rolling with that. So that's the way I approach it because look, I just don't have the time, a lot the time, or even sometimes like the willingness. I'm not that interested in learning the ins and out

of biotech business, for example. Like it's not something that excites me, for example. Yeah, and I mean, like you said, in terms of an ETF, I mean, if you don't understand the market, or the company, I guess, the industry, instead of just kind of not owning it you can you know grab an ETF and then That kind of prevents you from picking the wrong horse per se kind of in the race and being wrong in that regard on us Individual equity and instead buying a basket which is you know, a bit more diversification. Yeah, exactly

So the next one here let your winners run run. So I'm gonna have some, feel free to, you know, to chime in. I am definitely, this is one that I have to hard because I think, and this is, it's something that Braden and I have talked about countless times since we started the podcast, close to six years ago. And I guess another way would be to let your flowers bloom or water your flowers like you were saying. I think the general idea behind it, don't get me wrong, makes a whole lot of sense because typically a great company that has done well,

it's because it's a great business. And in a lot of cases, the prospects look very good. But the problem with that is when investors just start looking at the returns, and there's a couple of issues with that. The first one is concentration risk. So no matter how good a company has been and how promising the future might be, if the company becomes an extremely large portion of your portfolio, it increases your risk significantly with all other things being equal. I don't care how good that

business is. This is something that people that investors need to get into their head. It does not matter how good and how stable how blue chip the business is. The larger it becomes, the riskier it gets because then even if the probability is very low of something adverse happening that really puts a wrench into the business, the higher the concentration the more you're at risk. So I think that's really important. The second risk is really overlooking what the future might hold for the business because it has been such a good winner or big winner for you. And I think that the easiest example and you you see notes, but I think you

can probably agree with this is that is Apple. Yeah. So the easiest example with this is Apple, because if you look at the last 15 years, you've crushed it. I mean, if you've had Apple since 2010, may have 2020, 10 until now, your total returns, I mean, you're sitting on 2,500 plus percent in total return. So this is a multi-bagger and Apple was still like, was already an established company in 2010. I mean, they already had launched the first iPhone back then. So it's not like it was a small business. It was already a relatively mature business at that point

and still had plenty of growth And if you're sitting on 2500 and you've never trimmed it it could be like 25 30 percent. I've heard a lot People who have owned like Apple for a long time some of the big tech for a long time they are seeing like 25 30 percent of their portfolio in that one company. And that's where the danger kind of comes in, because then if you start looking at Apple, I mean, look at the revenues for Apple over the last four or five years,

like it's pretty much flat. Yeah. Exactly. And that was before all the tariff stuff started coming up and they were obviously these iPhone sales have been slowing down. So now you have the added impact of tariffs that could create an issue here. Also the fact that Apple has not really innovated on anything since the iPhone.

Like yeah, they came out with the Vision Pro, but I mean, I think they're already talking about not continuing that so a lot of the new products like they really haven't come with a lot of new products that are really that exciting so I think that's where this issue can come into is it can really create some complacency and investors because you know if you've owned it for ten years you're sitting on massive gains but you're kind of overlooking that the business is stalling a little bit. And don't get me wrong, Apple still has like, it's still generating tons of cash and even

despite tariffs it will still continue to do that but will it, you know, will it really grow all that much in the next 10 years? I'm sure there are some scenarios which it does, but that would not be my kind of base case for Apple. Yeah, I think it's, I mean, if you think about the companies that can benefit from, you know, AI infrastructure moving forward, I think Apple is the one that's that's probably in the in the weaker position. So I mean, it's gonna be interesting from that regard. And I think, yeah, like you said, you know, letting your winners run if they're still winning.

You know what I mean? Like, and like Apple is not, I don't think it's a bad company whatsoever. I think it's, well, we've said it quite a bit before. I think it's fairly expensive. But yeah, it leads to really bad portfolio allocations, I could guess. You'll be overweight on a lot of, you know, different companies. I mean, you can think of a lot of different companies that have had gigantic run-ups but have just, you know, fallen off a cliff over the last while. I mean, just off the top

of my head, I can think of a company like 3M, which post financial crisis was, I mean, I believe it returned 600 plus percent coming out of the, out of the financial crisis up until, you know, the business started deteriorating a bit, uh, went on a huge slide. Um, Walgreens is another one. They went, you know, G was an example about like 10 years ago, roughly a decade ago. BC would be one, you know, like post financial crisis, very low interest rates, you know, expanded at a very cheap price and then got hit pretty heavily by, by rising interest rates.

You know, I mean, those have been winners, but the fundamentals have changed and you know, they ended up going on, on quite a bit of slide. And then, you know, if you're, if you've owned those companies for that long and you're continuing to accumulate I mean you might have heavy positions in those and then ultimately that tends to hurt your portfolio overall So I think with this, you know, let your winners run within your realm of of Allocation that you're comfortable with yeah Allocation but also like don't overlook also the prospects the valuation and the last thing about Apple is the valuation was so high Considering their the lack of growth and at the end of the day, I think it all comes down with a bit of a nuanced approach

I've said it time and time again Doesn't have to be an all-or-nothing Maybe you still like the company but it's 15, 20% of your portfolio and you're like, you know what? This is just too high for me. I'd like to get it down to 10%. That's fine. Trim it.

You don't have to like, it's not an all or nothing. And I think a lot of investors, like I've seen it time and time again, they just end up like thinking black and white, right? It's either I keep holding it or I completely sell it. Well, maybe it's just saying in between as you trim a little bit, you trim those flowers, right? You don't want them to be taking over everything. Your old garden, you trim them a little bit

so they're still prominent, but they're not taking over the rest. So that's the way I like to see that. Anything else before we go on to the next one? Nope. 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 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, EQBank's GICs are a great option. The best thing about EQBank is that it is so easy to use. You can open an account and buy 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. As an investor, I'm always looking to reduce my fees, which is why I'm excited that Questrade now offers zero dollar commissions on stocks and ETFs.

But Questrade isn't just about commission free trading. You can also get USD accounts, so I avoid forced currency conversion fees when trading US stocks. Plus, get access to their advanced edge trading platform available on desktop, web, and mobile. I've been using Questrade for many years and so has Simon. And their platform makes trading seamless, whether you're managing a long-term portfolio or making active trades.

Don't miss out. Start trading commission-free stocks and ETFs today. Visit questrade.com to learn more. Between meetings in Toronto and conferences in Vancouver, I'm not home as much as I'd like. So I've been thinking, while I'm off enjoying someone else's Airbnb, why have I not put my own place up on Airbnb to earn a little extra income and help me pay for the trip.

With Airbnb's local co-host network, I can find someone to handle everything. Bookings, guest support, even the cleaning. It's a simple way to make extra money while I'm traveling without the hassle of hosting it all myself. If your place often sits empty while you travel, it might be time to let it work for you. Find a co-host at airbnb.ca forward slash host.

Yeah, the stock market always goes up in the long run. Yeah. You go for it. So this is one that I've seen pop up a lot recently, but it's been said for a very long time. But I think a lot of people, especially those who've maybe started post 2020, we've had a couple of severe drawdowns that have recovered quite quickly. So I can get how one would believe the market always goes up over the long run, especially because we've had 100 years of history that kind of states it does, but this would be on an indexing level.

So there's a lot of people who buy individual equities. They have a portfolio of 15, 20 stocks with the mentality that the market always goes up. And it's important to remember in this situation that you don't own the market. You own a very small portion of the market. I mean, when you're buying individual equities, there is no guarantee that the investment you made will yield strong returns. And there's actually no guarantee that it won't lead to a complete disaster. I mean, we can look at a company, a prime example would be like United Health, which two months ago was trading at all time highs.

And now, you know, a mega cap US stock 50% lower over a very short span of time. So you know, we can get to the point on an indexing level where we have to be careful using the word always as well. And we kind of talk about, we spoke about this previously with, you know, the kind of dead decades that we've had. Financial crisis wasn't really a decade. Dotcom was nearly a decade. So yes, US equities have typically reported strong returns over a decade or longer period. However, there's numerous instances in history where US equities have provided next to no real returns for a very long time. And

real returns just being adjusted for inflation. A few examples, Great Depression was a 20-year period of flat returns. Stagflation in the 60s to 80s, that was flat returns for 16 years. Dotcom bubble had zero returns over the course of 13 years. And the most important thing to take from this, in my opinion, is yes, the stock market does go up in the long run, but I would refrain from using the phrase always. And I, you know, because that sets a certain level of expectations, likely ones that are short term, you know, and, you know, if you don't realize that that rebound over the short term, you're probably going to start modifying your strategy and probably making some subpar returns. And again, you can take this mentality from an indexing level if you're thinking long-term, but if you're buying individual stocks with the mentality that the market always goes back up, again, you don't own the market.

In theory, a well-diversified basket of stocks could still benefit from this mentality, but I mean, it's not guaranteed whatsoever. And it's, yeah, that's pretty much it. I mean, if you're buying individual stocks and your mentality is, well, they're going to go back up, they always do in the long run, it's just not correct. Yeah. And even, you know, the markets too, right? You have to be careful because yes, very long-term and like you said, if you have like 15, 20,

30 years, sure, but I think especially since again, the great financial crisis, I think a lot of people have gotten complaints and including people that are just on the verge of retirement and needing the money. Yeah. I was listening to another podcast last week and they were saying a story about like someone who literally like needed to start drawing from there in the US the equivalent of there are speed they needed to Start drawing on it when they were 72 similar to Canada and the year in which it turned 71 you have to convert it and then the following years start drawing on it and this person like Nvidia was one of the biggest holding in their portfolio and literally

like they were starting to draw as Nvidia was entering some massive drawdowns because of all the tariff talks and the soon or guess the retiree was surprised that their portfolio value went down significantly because of that, but they were overweight equities, right? So that's another example. Yeah. It's pretty easy to get complacent with, you know, this type of saying, which again, at, you know, if you dig deeper again on an indexing level, it tends to be true. But if you're close to retirement and you own a concentrated portfolio of equities, I mean, there's, there's no guarantee over the shirt.

Yeah. Yeah. So it's, I mean, again, it's like, if you're, it's a good mentality to have, if you're just, you know, you have a long time horizon, you're, you're buying the index or you're buying individual companies. I mean, this is definitely going to encourage you to make better decisions, but it can also, you know, kind of cause a little bit of issues if, you know, depending on your situation. Yeah, exactly.

So I think it's just important, like you said, to keep that in mind. And I think the last thing I'll say is just like you mentioned, there are some periods where the US, Canada, take whichever stock market worldwide. There's been like decades of essentially like sideways trading, right? Like a prolonged bear market. And, you know, investors right now, I think a lot of investors just like disregard that possibility.

And you have to keep in mind that yes, markets may go up in the long run, but what does long run mean for you? Is it like, if it takes, are you okay if it takes 15, 20 years and not five to 10 years? Like you have to keep those things in mind. Yeah. It's, it's fairly easy to adopt this mentality, especially from, you know, like 2010 and on, it's just been a constant soaring of equities. But I mean, it's never guaranteed and it's not meant to like scare anybody that we're going to have a dead decade or whatever it may be but it is a possibility.

Like there's... Exactly. It's always a possibility. So the next one, cash is trash. So generally I agree that cash is not a great asset. It's kind of funny coming from a guy who has about 30% in cash right now. Though it has been going down, I've been making some purchases, but also the rest of my portfolio is going up, so it's making that cash value going down a little bit.

But over long periods of time, cash loses its value and cash is just not a great asset, and there's really no way around that. Politicians are incentivized to spend to get reelected and there's no incentive to cut spending in order to control the deficit. Exebade in the US, right, Doge was supposed to cut like 2 trillion, now they're like 150 billion and Trump is on track, I think, to spend like to have as large a deficit that Biden did, if not greater. So I mean, politicians will be politician. What inevitably happens is

that central banks end up having to monetize that deficit and over time it makes the currency lose its purchasing power. And doesn't mean that over a shorter period of time that cash is actually a very valuable asset. And again, I'm not saying to have 100% of your investment in cash or even 30% like I have or I think Buffett has or Berkshire is around 30% as well. But having a bit more allocated to cash to be able to pounce on opportunity can be really valuable. And again, Buffett has made that essentially a career rate is in his most recent annual meeting he said, look, at the end of the day they have probably like a bit of more of a hand like a

Handful if not like around seven ten investments that I've been responsible for a bulk of their returns over his career and that one of their big assets was that they were able to pounce on investment because they had cash on hand and Of course, it's not easy to do to kind of get because there will be some timing involved here. You have to make a decision on when to deploy the cash. And sometimes what people end up, they end up being paralyzed, right?

They have the cash, but then they never pulled the trigger and then it ends up costing them huge in the long term. But my whole point is that cash is not always trash, right? No, and I think where people, you know, if you take this a little too literally, I mean, they remain 100% allocated at all times and ignore, you know, things like potential short term expenses, things like that. I mean, you mean, people don't like, I don't really hold that much cash in terms of an emergency fund or anything.

Like I have, I do have some, but there's some people who, again, it's pretty easy to adopt this mentality when stocks have done nothing but go up for 15 plus years, but they just allocate 100% of their money to equities. And then in the situation where you need cash, which like cash is arguably the most, like you're the most flexible in that regard. It's absolute flexibility.

If you have cash on hand, it can end up helping you out in a bit. Whether it be, if you have something happen where you need to fund some sort of expense or make an investment maybe outside of equities. Whereas if you stay 100% allocated at all times, you might have to sell stocks at inopportune times, things like that.

I mean, I typically remain 100% allocated almost at all times. I mean, now that I've been self-employed for a few years, I tend to carry a little more cash than when I had my job, which was relatively stable. So I'm a bit more cautious in that regard now. But yeah, it's definitely not trash. It serves a purpose depending on what that purpose is for you.

Yeah. And for me, I think I would probably, it's very high right now and I've talked about it for obvious reasons because I transferred my pension funds and I just could not do an in-kind transfer because there are institutional grade and for self-directed investors, you can't buy those funds even though they're identical to XAW, the one I had. But then again, I don't think I would ever go below 5% in cash just for having that dry powder. Just because yeah, it just gives me that flexibility. 5% would probably be me being pretty much fully invested at that point. So that's how I would approach it.

Well, and it's pretty, you can actually get money off of it now. Like before you'd never be like, you can still earn four and a half percent on on t-bills I think right now. In the U.S. you won't get that in Canada but even like EQ Bank, I mean you if you set up direct deposit or whatever they'll give you, I mean at this time I think they give you three three percent on your deposit so it's not like it was you know previously when you earned. It could be less don't quote then he's not looking at the rate right now So I know friends at EQ bank they they are amongst they provide the high Yeah, some of the highest rates in the banking industry

I can't remember what it is, but I think it's around two and a half three I know the notice the 30-day notice savings account right now is three percent So I mean you're not like there you're not earning nothing on that money And I mean there there's no guarantee moving forward that equities return 3% a year, you know what I mean? So yeah, having a little bit of cash recorded on May 29th, timestamp. Yeah, exactly. Okay. No, that's good. The next one here, you haven't lost money until you sell. Yeah, so this was a phrase that a lot of people say, like they say that Buffett said this, he never, he's never said this.

He's actually never said this. I mean, what he does say is the number one rule in investing is to not lose money. So many tend to- Very different. Yeah. Many tend to believe that, you know, in some way unrealized losses, you aren't losing money. And which from an accounting perspective, I guess, if you haven't actually booked that loss,

you technically haven't lost money. But what Buffett has said is when the investment thesis changes, it's time to sell. He doesn't cloud his judgment by not wanting to take realized losses because he knows that, you know, at its core an unrealized loss where the thesis has changed is a loss because in reality the best plan for your money is deciding where its best place moving forward. So again, yeah, on an actual accounting sense, if you bought a stock for $100 and it falls to $50, if you don't realize that loss I mean, there's always a chance it could come back. But if you bought a hundred dollar stock and it fell to $50

I mean your your $50 poor at this point in time. Yeah, it's kind of just you know There is some benefits to a mentality like this though. It does stop, you know short-term panic It stops people from selling stocks. They probably shouldn't when there's down but there's also you know the flip side is pretty bad as well it forces people to hold on to poor businesses because you know they don't feel like they've lost anything until they actually realize that loss which you know it there's situations where i mean i think even deep down people know that they're probably never going to get their money back but they don't want to take that mental hit of selling in the red. Well, at the end of the day,

you can talk about it the other way around, right? And you can say, well, you haven't made money until you've booked a profit. Exactly, so I think you have to keep that in mind. There's two sides to that coin. I guess the last one here, I think it's very relevant right now, and especially over the last five years.

So high risk, high reward. This in my opinion and what like I think it's one of the most dangerous saying for novice or beginning investors because they I think they think they have to take these massive risks and hit these home runs with like a big chunk of their portfolio to make some good returns. And I think the problem here is that people tend to forget about the high risk. They just focus on the high reward. So they kind of forget the first part of the saying and then they focus on the right reward.

And I think the right way to approach it when you look at investment, I'm not saying like don't invest in riskier investment It's your money you do what you want but I think it's really important to think about probabilities and The outcomes the potential outcome so the way I like to do it for any investment is thinking in big buckets of probabilities Because there could be pretty much infinite Possibilities for a given investment, right? Like the worst case scenario, of course, it goes to zero,

you lose all your money, but there could be variety of different possibility in between, you know, 100X and losing all your money. So you have to keep that in mind. But for me, I like to assigning say like four big scenarios. So for example, what's the probability that the investment is a big winner? And then you can bucket that.

So whether it's, you know, two, three X plus, whatever that is, what's the probability that the investment does well, but is pretty close to market returns, whether it's a bit behind, a bit in front of the market. What's the probability that the investment doesn't do all that great, but it's also not a zero? So maybe you end up losing let's say

30 40 percent of your investment, but it's not like an absolute disaster I would say and what's the probability that the investment is a disaster? So let's say you lose anywhere from a 50% to 100% of your your investment and then you assign some Probabilities to each of those big buckets. And after doing that, you can get a better sense as to whether that risk reward potential is worth it as an investment. But the last issue with high risk, high reward

is that it can lead to really outside risk for the allure of the big payout, like these big bets, right? Like if you go at the casino, that person who was playing roulette and putting everything on that one number versus the person who was placing maybe, you know, a smaller bet on four or five different numbers that yes, that could pay out, but it's not a huge chunk of the money that they brought to the casino. And of course, investing is different than casino, but if you're really

thinking about high risk, high reward stuff, I hate to to break it to you but a lot of it is similar to casino. Well yeah that's what I was going to say like there's I've noticed a lot of people's portfolios primarily through like being able to view them on Blossom like the platform because they have the portfolios and you'll see a lot of these people they'll be like oh I'm a growth investor. In reality, they're just a speculator. It's just pure speculation, which in a way is equivalent to the casino in reality, especially when you start getting in, a lot of people start getting into derivatives, like options and stuff like this, higher risk, higher reward, things like

that. This is one that definitely does trip up newer investors, especially like, you know, a lot of these people taking like heavy, heavy concentrated risks in a select few options and then obviously it's worked out over the last while but there's no guarantee it's gonna work out in the future. Yeah, and a lot of the time people also won't be honest on what hasn't worked out. They'll share what has worked out. And I think for me the way to do it, look, if you want to take risks, that's fine. Again, it's your money. But the way I like to approach things is with allocation.

There's a big difference between taking a shot at an investment, whether it's a company, whether it's something else that say is 1 to 2% of your portfolio. The worst case that happens is you lose it all and it doesn't impact your portfolio all that much because it's 1 or 2%. Yes, it's not great, but again, it's not. You mitigate the risk by doing that versus going 20, 30, 40, 50% of your portfolio. That's extremely risky. Like I said a bit earlier and we talked about look

Yes, you may have a blue chip company that you think is the best company in the world and it's 50% of your portfolio And I said look, you know if it's 50% of portfolio, that's pretty risky No matter how good the company is well Can you imagine if you're on top of it investing it in a highly speculative company and you have a big chunk of your portfolio. I think that's where a lot of investors and more newer investors can get in trouble is just thinking that to make money, they just need to take these massive speculative bets

and basically go big or go broke. That's pretty much it, right? Yeah. And I think it's even more relevant to people who maybe don't have, you know, the highest rate of savings, so they try to kind of amplify their returns to kind of try and get ahead when in reality, I mean, for the most part, you're just going to be better buying a well-diversified basket. I mean, I've bought a lot of speculative stocks before.

I mean, I have too in the past. Yeah, like half a percent of my portfolio, something where if something goes south, like it doesn't really impact me at all. But there's also a lot of people who tend to go, I mean, they treated like a casino in reality. And, you know, a lot of the times during, you know, bull markets where, you know, things are ripping, they, you know, it tends to work out. But, you know, typically you're always going to eventually know, it tends to work out. But, you know, typically, you're always going to eventually kind of get caught with your pants down here, especially if you're taking, you're taking big risks. Yeah, exactly. And I mean, look, at the end of the day, for me, that's always the approach I've said, like, you know, I'm big believer in Bitcoin,

I've owned it for a long period of time, but it's not only for Bitcoin, but for speculative stuff in general is like, you know, if you want to put some money in Bitcoin and you're like, oh, you know what? Like it's just very risky. It's volatile. You know, I'm not sure. Well, what I usually tell people is like, just put a percentage if you're willing to put the work and learn about it, put a percentage that you're okay if it goes to zero. Again, I don't think it will go to zero, but it's not the end of the world if it does go to zero. That way

you're not going to be hurt too badly and that could apply for any kind of speculative investment. Put money in there that if it does go to zero, it is not the end of the world. So allocate accordingly and if you do that you should you should protect yourself against Too many big swings or you know too many big hits in your portfolio Yeah, that's kind of like if you're going like especially like very very speculative I mean if you wouldn't take that amount of money to the casino you it's probably not Fitting inside your mold of money you'd be comfortable losing but yeah, it's probably not fitting inside your mold of money you'd be comfortable losing, but yeah. Yeah, and well, a good example too that comes to mind is,

I can't remember what the percentage was, but it was very, very small. Is remember teachers that invested in FTX? Oh yeah, yeah. Yeah, like I don't know what the investment was, but it was in the millions, but it was a tiny portion of What the asset under management for the teachers pension fund is and I think they got a lot of flag

But at the end of the day look, I agree. They should have done some better due diligence there I think it was not very smart of an investment They weren't the only investor that lost some money there But it just goes to show that at the end of the day, it probably had not a material impact on the results because it was such a small portion. Yeah, so they have at the end of last year, they had assets of $267 billion and they invested $75 million. So I mean that's yeah. So it's peanuts. Very minimal. Yeah. Exactly. So you're thinking about what like 0.010%? Like in that range roughly? Yeah, it's very tiny.

Yeah, yeah. So it just goes like, yes, the number might sound big on an absolute basis because it's such a large pension fund. But again, they took a speculative bet, but it was a very small portion of their portfolio. I'm not defending the bet in itself. I'm just saying that if you're going to do a speculative bet, do it with a small portion of your portfolio.

Yep, definitely. Okay. Now, this was a really fun episode. I think people will enjoy it. If there's other sayings that you hear that you think are misinterpreted, let us know. I mean, there is probably another 10 or 15 that we could have gone over, but these were the ones that I think resonated the most with us and trying to keep the episode, you know, under the hour mark was also the goal, so I think it was fun to talk about.

Anything else you want to mention before we sign off here? No, that's it. Okay, well as a, in the show notes, you'll have the link for the two events that we have coming up, Toronto and Calgary. Dan and I will both be there, so if you can make it, that would be great. Excited for both events, ringing the bell,

the closing bell, but also obviously going to the Stampede. I'm sure Calgary residents that have been there for a long time hate it because the city gets crazy, but I've not been before, and I'm sure Calgary residents that have been there for a long time hate it because the city gets crazy, but I've not been before and I'm excited to be there during that time. Yeah, you got to experience it a few times. Yeah, exactly. Okay, well, thanks everyone for listening and we'll see you again next Thursday. The Canadian Investor podcast should not be construed as investment or financial advice. The host and guest featured

may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.