The Canadian Investor - A basket of 15 stocks to get started with

Episode Date: November 30, 2020

In this episode, we provide 15 stocks that we think will perform well over the long term and are a great starting point for a new self-directed investor. These stocks are all businesses that we love and that we think will be thriving for years to come! Tickers of stocks discussed TCEHY, PYPL, SQ, ADSK, BAM-A.TO, CSU.TO, MA, GOOG, V, BIP-UN.TO, HD, DLR, EQIX, CNR.TO, CP.TO Anchor voice message: https://anchor.fm/the-canadian-investor/message Twitter: @cdn_investing Getstockmarket.com --- Send in a voice message: https://anchor.fm/the-canadian-investor/messageSee 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

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Today is American Thanksgiving. The U.S. markets are closed today, but the good old TSX is open. So you're still able to make some TSX trades today. Simon, how are you doing? Football is on today. Tell me you're watching a little bit of football. I know it was during the workday, but, you know, come on.

No, I did not watch any football. I'm probably the – I'm not a big football fan, I'll be honest. I just find it really boring. So it's just me. Maybe I should start gambling on a few games. It'll kind of pick my interest level up. But I did not. Well, DraftKings?

Yeah, maybe DraftKings or I don't know. I feel like you can bet pretty much anywhere on football. So maybe one day. One day. Okay. Well, yeah, you guys know I like football. So today we're doing something really interesting. So I want this to be really authentic, kind of live.

And that's because it totally is. I mean, we have some names in mind here, but Simon have not conversed on what we're going to talk about, why we're going to talk about it. But what we wanted to do is kind of make a live portfolio build. For new investors, experienced investors, it doesn't really matter because this is looking at what we think are some of the smartest ideas. If we were starting completely from scratch, we're building a completely entirely new portfolio. And we're going for

a little bit of what's called the coffee can approach, which was popularized in the book, a hundred baggers. And it's the same, it's the 10 year mindset. It's the old Buffett quote that you won't hold a stock for 10 years. If you like, don't hold a stock for 10 years, don't even think about holding it for 10 minutes. So it forces you to think long term, buy quality, and know what you own. So it's kind of a mix of all those approaches. So Simon, when you're building a new portfolio, And when you're building a new portfolio, it looks like based on these names we're looking at, we have stability, long term mindset and secular trends behind all of these names. And I'm looking at them and right out of the gate, digital payments comes to mind. So what are you looking at in that area? Yeah, so digital payments are two. Well, the first name for me is PayPal. I've mentioned it before,

I really like PayPal, what they're doing, they're pumping a lot of cash flow. The COVID-19 situation has been a huge, huge tailwind for them. If I remember correctly, the amounts of gross payment transaction went up like 30, 35 percent since the last quarter. So it's just been a tremendous year. But it's been year after year. So it's just not just a pandemic. They've just been kind of crushing it since ever. They spun off from eBay quite a few years ago. So, yeah, for me, PayPal is just, it'll just keep going forward.

Obviously, I don't think we should expect these pandemic level kind of returns from PayPal, but just a company you can't go wrong owning for 10, 15, 20 years. Yeah, totally. They have a good grip on e-commerce, person-to-person payments. So I'm looking at this

and we're holding these for 10 years. Does it make sense for us to just say PayPal slash Square and own both of them? Because to me, that seems like kind of a no brainer. I know we don't want to, we want to keep this to, you know, 10, 12 names, but almost in a synonymous play between both of them. If one takes more market share than the other, you know, you kind of own both of them and feel good about it. Just like a MasterCard Visa type of play. Yeah, yeah, I don't think you can go wrong with that. And you know, from based on what we talked last episode,

but the fact that I like PayPal and Square compared to Visa and MasterCard is that you do get that kind of crypto exposure, but I own all four of them. So I mean, I obviously like all four. Yeah, you could just own all four of those and be sleeping just fine at night. Okay, so we're going to go out, we're going to capture that digital payments area without getting too many names in their PayPal square. We're covering that ground. We want to be a part of that for the next 10 years. Okay. So we'll put that away. I am going to throw in one of the cards, one of the card companies, MasterCard. They're going a little bit faster, a little bit higher value than Visa. If I could only own one, it would be

MasterCard by like a percentile, just because I think they are poised for some stronger growth internationally. But like, when I say that, it's like slash Visa, like I own both of these equally weighted in my own portfolio. So. We could be cheating a little bit here. It's like four names in one. Just own this basket of digital payments, PayPal, Square, MasterCard, Visa. But if I had to take one, gun to my head, I am taking MasterCard, but it's really close. So, okay, so we have three picks already. We have digital payments kind of covered.

We want to be a part of that over the next 10 years. Let's move on to more tech names, and those are tech names, but we're really looking at that secular trend of digital payments and not like pure play tech. So do you have a name for me? Potentially, we're completely aligned on this name. I'm just going to say it's Tencent. So you're going to own Tencent in this basket?

Yeah, yeah, definitely. Like I think we've talked about it a couple episodes back uh for all the the reasons you mentioned just uh the exposure it's almost like a mini uh kind of not a mini but it's like almost a berkshire hathaway of tech in china or asia so it's uh it's almost a fund that owns all these different tech plays and has its hands in everything so if you had to own only one as stock in the tech sector, Tencent would probably be it. Yeah, I mean, they have unbelievable network effects and a strong moat in China. And then that investment wing and their holding co is, yeah, instant diversification.

is yeah instant diversification i mean we were talking the other day about how powerful gaming engines have become and and all their different applications and the unreal engine for people who watch disney's mandalorian all of that is shot with a 360 led in the background not a green screen that is all made on the Unreal Engine, which Tencent owns a big stake in Epic Games, who owns that engine. So there's all these different facets to Tencent's business that I want to be a part of, whether it's their social media business, their ads business, their gaming business. It's the largest video gaming company in the world. So we've talked about Tencent a lot. I want to own this for the next 10 years. We are tucking that away. Okay, so I'm looking at the list here. We have some more tech names,

and they're all in my bucket. So I guess I can keep going. Autodesk for me is a complete no-brainer on owning software as a service that serves the engineering, architecture, and construction business as well as manufacturing being a big growth driver for them. They have millions of paid users, over 100% net revenue retention rate, really, really strong moat. They developed the AutoCAD software, which is by no stretch of the imagination new, but very sticky. It's held the test of time. They have a suite of offerings. And they have 12 million users that are currently using the product very regularly, but are on legacy, non-compliant ways of getting the software. Now, they don't want to just hit the kill switch so they can't get that software anymore, but they're slowly converting

them onto the subscription very tactically. And it's working. So they have this awesome upside, but they also have this growth lever to pull of converting these non-compliant users of 12 million users. That growth alone of pulling that lever is enough to sustain a 15 plus revenue growth rate based on what I've seen, based on what management says, and the numbers kind of speak for themselves. So I want to own that. It's a really good way to own a high margin business in architecture, engineering, technology, and manufacturing. So that is Autodesk, ticker ADSK. Let's go back to tech after Simon, I'm seeing here that you want to own data centers for reasons that make complete sense. Can you give us an idea of what those names are? Yeah, so the two names that come to mind, and we've already talked about them. I'm a big fan

of digital, digital realty trusts, DLR is a ticker and Equinix. I don't have the Equinix ticker offhand, but no worries, I will add it to the show notes. EQIX, I'm almost positive. Almost positive. So those two, full disclosure, I do own both of them. I don't think you can go wrong with any of those. Digital realty trust, on the one hand, they pay a higher dividend,

but their dividend is growing a bit slower than Equinix. I think it's around 5% per year that it grows. Equinix is around 10%. Equinix, on the other hand, has a 1.5 or so, 1.5% dividend, growing faster, like I said. But they're both really they're increasing their funds from operation they're adjusted fund from operations as well growing very quickly the the top line but those two metrics as well it's really I think the way of the future there are well-run businesses I don't think you can go wrong with either of those. If you're someone who's close to retiring, I'd probably go with Digital Realty Trust just because the yield is higher and the income would make more sense for a retiree or someone close to retirement. If you're not close to retirement, Equinix might

make a bit more sense because it's growing a little faster, whether it's the dividend, but also the top line. Equinix is the bigger player of the two. But again, I think there's huge tailwinds going forward. And it gives you kind of a play on the tech sector as well, but the stability of a REIT, if that makes sense. Yeah, totally. They're both structured as REITs, I believe. These are kind of like no-brainers. I mean, are we going to use more data in the future? Are we going to need the infrastructure from a DLR and Equinix?

Yes, absolutely. This is a really, really stable way. I mean, if you want to own a REIT, this is a really good way to do it. I mean, you're not going to get the super high yield you might find on an industrial REIT or a, you know, cap REIT, like Canadian apartment REIT, something like that, or even like retail. Retail, I was thinking. Yeah, miss the obvious one. Retail REITs have super high yields. And let's not forget, right, dividend yield, or in this case, distribution yield, if it's really, really high, it's because this price probably hasn't gone anywhere

or potentially gone down, right? So that's why you're seeing a super high yield on retail. No one wants to own retail, but everyone wants to own data centers. So, I mean, this is a part where the consensus is right. Yeah, and those two, I mean, we've chatted, we texted about this. They've actually had like a bit of a pullback recently while the market is at all-time highs. So for those interested in starting a position, it might not be a bad time to really start looking into one of those two. I know I recently, a couple of days ago, started my position in Equinix.

But again, regardless, a lot of these plays, evaluation is quite high. The whole purpose of this is a long-term approach right so yeah super yeah super long-term mindset companies you want to own for a while i mean this should be how everyone constructs their portfolio uh and yeah we were joking before we saw dlr connects a lot of these like stay at home internet age businesses go down on vaccine news and we're just joking about like yeah once there's a vaccine out there you won't need ever need to use the internet again so uh who needs these businesses in a post-vaccine world right uh obviously that is not the case so could be good time to buy some of them up um simon we have a couple canadian names here

um which i think is important because we've been talking about a lot of u.s names and a lot of canadians typically construct their portfolio with too much canadian bias but that being said there are some really really good companies here that have global exposure have the ability to scale outside of these walls and they also trade on the tsx if not i, I'm looking at the names. I think all of them, but one would be dually listed in the States as well. So if you can trade in Canadian dollars, and you're, you know, planning on retiring in Canadian dollars, it's something to consider long term. I mean, does it really matter? The US dollar probably not going anywhere, but who knows what's going to happen with currency. So it's worth owning Canadian businesses as a Canadian investor. And we have a couple names here. Simon, can you talk about potentially the most strong moat I can think of? And I know I don't even have to actually say what these names are because i'm looking at the list here and i'm just thinking a never-ending moat can you talk about these two

names yeah so uh the two names um canadian national rail but also canadian pacific so the two two big railways in canada um i really don't think you can go wrong with either. I personally own CNR, Canadian National Rail. They have coast-to-coast, and it goes to the Gulf Coast as well in the U.S. You're really, with these names, like Brayden said, they have a super strong moat. It's a big barrier to entry. Think about it. All the environmental impacts of building new railways, all the approvals that would be required from each province,

from the federal government. Would it even be approved? Not only that, but the large money investment that would be required. I mean, it's almost impossible to compete in that sector. So they have super strong moats. Of course, it's going to be a bit tied a bit more to the economy and how well it's doing. But again, if you're looking at it, just the returns from either of those, if you look at the chart for the past 20, 25 years, just have fun and look at it.

It's crazy. The returns are just kind of steady, pays a nice little dividend, and steady as she goes. And you can just kind of buy it and forget it. Those are great example. And I know Mr. Buffett would approve. 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. Oh, yeah, he would. exposure to the US economy as well, is this infrastructure has been in the ground for well over 100 years. And it's going to be in the ground for another 100 plus, maybe sideways

eight infinity, right? It's unbelievable the barriers to entry that you have to even cross to think about competing with these companies so you can sleep really really good at night owning the railways they pay a solid growing dividend um and this is this is kind of just a no-brainer perfect for this coffee can portfolio okay moving on i'm going going to talk about two tech names. The first one is Alphabet, which is, of course, the parent company of Google. When I look out into what is potentially the greatest business of all time, Google tops in my mind almost immediately. Yes, the stock is worth more than a trillion in market cap because of that. So it is super, super large. Is most of its growth behind it? Maybe. I don't know about that. There's so much optionality when it comes to a business like this that generates

so much cash. And Google has become such a strong moat in this internet economy. They are the gateway to all information these days, it seems. And so many people have tried to come up with a competition in terms of search. They've all failed. You know what the number one Bing search is downloading is Google or downloading Google Chrome. You know, like that just speaks for itself how much better it is if you want to get the right search results, you're going to Google. So that's just the search business. So I look at its valuation right now. And from a cash flow yield perspective, this is not an expensive fang stock by any stretch in fact other than netflix the fang stocks are all really cheap um so google generates so much cash has this incredibly strong moat and there's so much optionality with youtube growing really fast with cloud growing really fast, with cloud growing really fast, this business has the

backbone of the ads business with the search business. And if you're not, if your business is not seen on Google, you don't exist. You're completely irrelevant. And that just speaks to how powerful this mode is. 10 years from now, Google will only become a more important company in the future. They've secured their position and the amount of cash flow this business spins off is absolutely obscene. The optionality they have to grow in other ways is going to be the key for them over the next 10 years. But I want to be a part of it. Yeah, and don't forget about a little thing called YouTube. I mentioned YouTube, yeah.

Oh, you did? Yeah, sorry I missed that. But I was looking at it. And they purchased it for $1.65 billion back in 2006. And I think most people would agree that it would, as a standalone company, it would be worth over $100 billion easy. So it's probably a good investment on the rent. Yeah, no kidding. uh strip it apart like in these anti-trust concerns that we're hearing about some google shareholders would be like go ahead you know rip it up into pieces the sum of parts is worth

much more than just the one whatever it is in market cap over trillion in market cap because of these super high growth high mo moat businesses like YouTube, like Google Cloud, like the search business, all of their... And so before, you couldn't actually see... Google for a long time was not very well liked by not disclosing segmentation revenue. So we didn't know how much of the business was actually YouTube. We didn't know how much of the business was actually YouTube, we didn't know how much of the business was from search, it was kind of all just modeled out and guessed by analysts up until a few years ago. And once you saw how important some of these other segments are in the business, and how strong they are, that's when you realize, okay, you know, the sum of parts is,

is probably worth more than, than, uh, it trades for. So that's not typically a great investment thesis, but it is worth mentioning. Um, Simon, I, I'm going to go back to another tech play, but before that, let's talk retail's talk retail retail so my big retail play would be home depot that i have so home depot obviously everyone knows them it's kind of a duopoly when you think about it for renovation but also housing equipment material. You really have Home Depot and Lowe's are the two biggest players. The reason why I like it, there's a lot of reasons. First of all, I mean, they've been on a tear this year, but they've had an incredible run. If you look pretty much since the 2008 market, 2008, 2009 market correction.

And I mean, it's what's not to like, right? As homes are getting older, people need to renovate them. That's obviously some huge tailwinds for Home Depot. They've been very Amazon resilient as well. And they've put a lot of emphasis on their professional clientele. So contractors that need materials. So there's a lot of good incentive and membership program for those contractors. They pay a nice dividend. I mean, to me, it's a great way to have a skin in the housing market without necessarily the volatility and the cyclicality of some of the home builders. You'll see some cyclicality with home depot as well but i mean they've done such a good job management is solid and uh they've done really

well online they've been investing for years and uh the the pandemic has been uh they've done very well in the pandemic for that reason so um that's that's uh it's a company i own but i think it's a company you can easily just kind of let it just forget it. Just put in your portfolio and own it for at least 10 years. Yeah, this is such a well-run company and it takes a special type of business to thrive in a pandemic economy. And you're seeing the record numbers that they're putting up. A lot of these big box stores are putting up record numbers, but Home Depot and Lowe's are, you know, shining stars among them. And, you know, bathroom renovations aren't going away.

They're not going away anytime soon. This is probably the bet one of the bat one of one of the best retail businesses in the world if not the best really strong brand don't you just love the smell of home depot by the way like going yeah i mean so fun like it's incredibly fun i've never really thought about it that way but yeah i mean uh it's not uh it's a it's a specific smell like a very specific smell yeah and it's uh i mean the stores are almost as big as costco right but i feel like my blood pressure is lower when i go to home depot versus costco that's probably probably very fair. Okay, so we only own in this mock portfolio one retail name. So to recap so far, we have a couple more picks. Recap so far, we have a couple tech names like big conglomerate businesses and tech like Tencent, Google, or sorry, Alphabet, correction. We own some payments businesses. We said PayPal, Square, MasterCard. We own some

TechPlays, Autodesk. We got Home Depot in there. Digital Realty Trust. That's a hard one to say. Equinix in the data center business. CN Rail, Canadian Pacific and the rail business. So we got a couple more names here we're going to throw out. Let's talk infrastructure because we have actually two Brookfield names. And we get this question all the time. Simon, is there a point to owning multiple of them? Your stance has always been yes. My stance has been yes, but keep it simple. So in this portfolio that Simon and I are co-creating, we do have two names.

And the first one is Brookfield Asset Management, which is the Brookfield holding like the parent company. It owns a large, large stake in all of its subsidiaries and then also has the asset management business. Infrastructure is not going anywhere. The types of deals that BAM does is its moat. You know, they do things that no one else can. No one else even thinks of bruce flat is a value creator on steroids and i'm happy to own brookfield it's also a canadian name which is nice and then of course they own brookfield infrastructure partners which simon you've

listed here as something you want to individually be a part of. Yeah, and I mean, if someone is looking to own BAM, I think BAM on its own is fine. I would not own BAM and then BIP, Brookfield Infrastructure Partners. But if you're looking to get a bit more specific exposure, like you like BAM or you like Brookfield as a whole, or you like Brookfield as a whole, but you want more of a specific exposure to one or two types of their businesses, then you know, you're either owning BIP with BEP or BIP alone or BEP alone. And BEP is Brookfield Renewable Partners, I think is fine. But if you own BAM, just own BAM. That's my personal view on it. The reason why I like the Brookfield infrastructure play is just because of those really stable cash flows. It's also a Canadian way to have some exposure to the data REIT center because they do own some data REIT center. I know one and it's a partnership that they have in

Brazil. But yeah, it's again, like you just mentioned, it's really well managed. What's not to like? I personally, the part I don't like as much of Brookfield asset management is the BPY. So the, sorry, Brookfield property partners. There you go. Kind of had a blank there so that's the part i don't like as much right now just because they took on a lot of debt and there's a lot of retail but also office space exposure but again i don't think you can go wrong with any of these approaches and you'll get a really nice dividend whichever one you want to go with a steady dividend that increases from year to year for the most part their target is to increase it just based on memory about like seven eight percent per year they usually give a range and they're very consistent with that so you can't really go wrong if i had to choose one of the two bip or bipc i'd probably choose BIP right now because the C Corp have really gone on a tear. And I don't remember where I read that, but I think Brookfield will be looking to buy back shares of their

limited partnerships because they view them as being undervalued. Don't quote me on that, but I recall reading that at some point, maybe a month or two ago. on that, but I recall reading that at some point, maybe a month or two ago. 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. That doesn't surprise me at all because there's such arbitrage there. Like for instance, as of today, TSX is open today. As of today, Brookfield Renewable Partners, BEPC, the corporation is up 76% this year. Not bad.

That's not a bad year. And a humble 36% on the unit version, like BEP. Yeah. And you're not upset about 36%. No, no, no. There's a discrepancy there. So it's worth considering. And you own the same part of the business too.

That's what's really important, right? So aside from the structure, you own the same rights of the business. You'll get the same distribution for both in terms of dollar amount. Obviously, the yield will be lower on the c-corp because it's much higher um you're obviously your your average price if you start a position now um it will be higher but uh yeah i'm actually like i've debated swapping some of my bp shares to uh just regular limited partnerships because of that because i feel like your bpc shares you mean. Yeah. Yeah. Some BEPC shares for BEP. Basically just selling one.

Buying the other. Because I feel like at some point. They're going to come a bit closer. I think there's just. I mean. Yeah. That's just my belief. So who knows if it's going to happen.

But the arbitrage is just insane. Between the two. There's tons of arbitrage. That exists in the Brookfield names. I know we've been back and forth on that. We'll see. I mean, Flat, I've seen him pull all stops to create value. And if he sees value, if he sees arbitrage,

he might go ahead and just buy some of that back. Okay, so we've talked about some of those infrastructure names i'd be holding bam i hold bam i'll be holding it for the next 10 years okay so we only have looking on here so we have we're going to recap after there's only one name left and it's a canadian name unless i'm missing one here simon constellation software is canada's insanely large holding co of small to medium-sized software businesses that are profitable free cash flow positive and they buy them up hand over fist through their five operating companies part of the constellation software brand they this is what they do they buy two types of companies

this is what mark leonard who is one of canada's best ceos of all time, he founded Constellation Software. So it is founder-led, too, still to this day. It's been in a hundred bagger. And so I want to be a part of this. But this is what they do. They acquire two types of companies. They acquire either good software companies or excellent software companies. This is their wording that they use.

The excellent software companies are growing at a certain clip, have really strong network effects, good moat, but they're very rare. So they're trying to find these excellent companies all the time. But these good software companies that are out there are in the thousands in their, you know, acquisition targets database. And they have things that they can do to try to make them excellent. So they have this long process of trying to integrate them, give them the resources they need, give them the cash they need to try to turn them into excellent businesses if there's something stopping them, so they can create value there. And then they just hold on. They take the cash flow that's being pumped from these hundreds of software companies, buy more, and rinse and repeat. and you could argue most of the growth is behind them.

Like I said, they've been in 100 baggers since IPO, which has been great for people who have held Constellation Software, but they can still do this in the future reliably and predictably and create value for shareholders. They do pay a growing dividend, and just expect a constant stream of software acquisitions from this company. Now, they don't have very much organic growth, which has been the reason for people to be bearish on the company because the companies they own have very little organic growth. That may be true, but it just takes a few of them becoming excellent companies

or a few acquisitions being excellent companies to actually move the needle. And that's really important for them. So they can continue to do this, buy software companies hand over fist, and owning a big, big diversified piece of technology with high recurring revenues, owning a big, big diversified piece of technology with high recurring revenues, really high margins and constellations absurd, like 36% return on invested capital,

which is a median over 10 years, which is very hard to find. That's nuts. Um, I think you'll do very well owning this. So I I'd like be a holder of consolation software for the next 10 years that is ticker csu and it only trades on the tsx so you can find some alpha against the rest of the market by owning that yeah and uh you guys don't need to worry i will be adding all the tickers to um to the show notes so um if you miss some they'll be right there so i'm looking at the names here one two three four five six seven eight nine ten eleven okay so it's 13 names if we throw in square and visa in there as well because we had them as like you know like in brackets beside PayPal and beside MasterCard. That's 15 stocks. That's a great number for a portfolio. So Simon, if you were starting out right out of the gate,

people want to know, do I go take these 15 names, whatever, again again this is just our opinion do you go and buy them all at once i know we've been over this many many times and we have we have opinions on how people should actually go about doing this do you go buy small little 15 1 15th pieces or do you add to one name and just do it over time yeah i would just start a position and I've said it before, I would do it over time. So if you have, for example, let's just say 15 names, so you divide the money that you want to invest. Ideally, you want to do it equally weighted. So you divide the amount of money you want to invest in each and then you want to do that probably in like three or four installments. That's how I would do it. You reduce the variance. So you reduce that

the market timing aspect. If you divide the full amount you want to invest by those 15 names, and then you just do one investment, one chunk, and that's it. The problem is you're kind of at the mercy of the market, right? If your timing was impe impeccable then that's fine you're you know you're laughing everything's great but if you end up buying that position the whole position at a market top then yeah you just kind of shot yourself in the foot so I think to me you know the easiest approach and the one that will lower your variance or lower the risk at starting positions is just, yeah, you divide. Like I just said, you divide the amounts that you want to invest for those 15 stocks and then you do it for each in installments. I would just say regular installments.

It's up to you how you want to do them regularly. But three or four installments is usually what I go with. So what you're describing there can be summed to patience, right? Is reducing your short-term market timing risk by just taking your time and deploying your capital as you go. And if you're like me where you pay yourself first and then invest within your brokerage account, really just adding to one name per month.

So whether you're adding to an existing position or a new one, it takes time to build a portfolio of many, many names. And 15 is a good zone to be in. I think, you know, portfolio diversification wise for an individual investor, 15 is plenty, like more than enough, if anything. So it comes down to patience. So you don't have to deploy all the cash right away. I get that question all the time is just take one name and keep going. Like say you start with Google, one you know really well, use all the time, start there, add to others as you go. If Google pulls back, you add some to Google and then you build out a portfolio that you, that you want. So it comes down to patience. That's really,

really what it comes down to. Simon, I'm looking at, looking at these names. I really like this portfolio. We got to back test this in like 10 years, 10 years. We'll back test this and we'll either be uh geniuses or thinking to ourselves what were

we thinking with that name yeah i mean i feel like a good bet would be 10 years from now at least 10 out of the 15 have really good returns and maybe five there's something unforeseen that we we don't see that happens and ends up being not so great. Um, I'm sure we won't get a hundred percent, but I think overall this would do well over a 10 year period. Yeah, that's right. The 10 year period is, is key. Um, next episode, we're going to answer some questions. We've, uh, we sent out this link and we're going to put this in the show notes, where people can actually record their voice, put it on the show, and then we can answer it live here on the show if you have questions. So thank you, everyone who sends us all kinds of

questions via email. If you put it into a voice message, the chances of you being on the show is very close to 100%. So Simon's going to send out a link there. Use your phone, use your computer mic, whatever it is. It'll be more than good quality for the show. So we appreciate you guys for listening. We got to back test this portfolio in 10 years, see how we did. I think we're going to look pretty good. One side note is you mentioned we're not going to get all of them right.

That's completely true. I was looking at what would have been like kind of like a buy and never sell ever type portfolio that was put together in the 2000s in this old, old blog post. And, you know, the names were some of the sad stories of ExxonMobil and GE, which is reason that you are a long-term investor, but you need to continually verify the thesis. If the real business fundamentals have greatly changed, then you need to circle back and just continue to look at it. That doesn't mean sell a position on any volatility that you see,

because that would be also unwise, but verify real business performance. If revenues are declining, that's important. If the stock price goes down, that may not be as important. Volatility is completely normal. So that's something to consider. We will see you guys next week, guys. Getstockmarket.com. We'll bring you to Stratosphere. All the data we talk about on this show, I pull it from there. We'll see you guys next week. Do not forget to put in your questions on this link that Simon's going to send out in the show notes. Thank you, guys. We'll see you guys next week. Do not forget to put in your questions on this link that Simon's going to send out in the show notes. Thank you guys. We'll see you next week. Bye-bye. The Canadian investor is not to be taken as investment advice. Braden or Simone

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