The Canadian Investor - Embracing Stock Market Drawdowns and Oil Stocks

Episode Date: September 19, 2022

It’s not always easy to be invested in the stock market during extended bear markets. In this episode, we take a look at historical market drawdowns and how long it took the stock market to recover. We also go over stock on our watchlist, fixed income options with recent rate hikes and more! Tickers of stocks discussed: ISRG, SU.TO, CNQ.TO, TOU.TO Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Bélanger. The Canadian Investor Podcast. Today is September 14th, 2022. My name is Brayden Dennis, as always joined by the legendary Simon Bélanger. Simon, you look different right now, dude. You are in the dungeon currently.

Yeah, our unfinished basement. So it's soundproof, no babies, no dogs barking, good to go. And I managed to get the echo pretty good, I think. So it should be a good sound quality for this one. The sheets on the wall, the towels hanging, the soundproofing. Doesn't look good. This is the most high budget podcast in the history of the world. And so you should treat it as such. Number one podcast in the business category for Canada.

And it looks like we're both homeless with our backgrounds. So that is great, Simone. We have a good show today. We're going to talk about average net worth for Canadians. I think some fun data. It's old data, but it's still fun data. You're going to talk about average net worth for Canadians. I think some fun data. It's old data, but it's still fun data. You're going to talk about what you've been doing in your portfolio, some like fixed income stuff. And I'm going to talk about drawdowns and why you got to stick to the plan and just keep on keeping on.

Keep on buying. Now, that's the show today, man. It's going to be good. Yeah, I think so. I think about some fun topics and then obviously stocks on our watch list after that to finish the episode. So it should be fun. Oh, yeah, true. That's such a fun segment.

Yeah, we're going to round out today with stocks on our watch list. Thanks for the reminder. I usually forget that it's down there and then have to come up with one on the spot. So there you go. All right, let's go with how wealthy are Canadians? So this is Stats Canada data. It's not updated to 2022, but it's Stats Canada data. And there's a couple of categories that I'm going to talk about. There's average net worth in each quintile, the medians per age and the medians for all Canadians. The median net worth for a Canadian is $329,900 Canadian dollars. All right. 62% of Canadian families listed their primary residence

as one of their crucial assets with a median value of $400,000. I am going to say with confidence that that number is now up since this data is two years old. Residences, on the other hand, here it says in the stats can't are also a big reason for debt with 35% of Canadians listing mortgages as their number one liability with a median value of $180,000. Approximately 30% of Canadian families are completely debt-free. With that out of the way, those numbers make sense other than that home value is definitely ticked up since then. Yeah. And I would think the debt value too is probably much higher than $180,000 as well. True. Yeah. Both of those would be correlated to those primary residence assets. Okay. So they break it down into quintiles. So that is just five different categories. So I'm assuming they're going like bottom 20%, then to 40, then to 60, then to 80, then to 100. The lowest net worth quintile has a

net worth of negative $500. The second net worth quintile is 95,000, then 340,000. So again, now you're in line with that median net worth number. The second highest one is 776. So now you're into the top, more towards the top percent. And the highest net worth quintile having a median net worth, or sorry, this would be average net worth of 2,480,000. So call it two and a half mil for that upper snack bracket. So that's the breakdown. Now, how about by age? It says here under 35 is 48,800. 35 to 44 is 234,000. 45 to 54 is 521,000. 55 to 64 is 690,000, which is the highest of any age bracket that they characterize here. And then 65 and older at 543,000. So you can see the big discrepancy. It looks like people start

to really accumulate net worth between the ages of 35 and 44, and then essentially double it until their mid-50s, and then grow a little bit more until they're 64, and then start decumulating assets at that point is what the data is telling us. Now, of course, this may have changed a little bit since then, but I still think that it's worth bringing up. It's not a exercise of seeing how you stack up. Some people will be way, way above this median. Some people will be in line, some people a little less, but it is to give you some context that when you drive, when I'm biking around Toronto today, we have office space now for my team. I'm biking around Toronto today and I'm going through the streets and it's like, how does everyone have $4 million houses and four Audis and three Lambos? Obviously I'm exaggerating, but like you can get trapped into thinking

everyone's like hyper wealthy, depending on where you live. When the reality is, it's like, it's just, that isn't the reality. Like that's just a, what you see and keeping up with the Joneses type moment. Yeah, exactly. And I think we're unfortunately going to see a lot of people losing those luxury goods because they're living above their means, having access to cheap debt and then the fun, the music kind of stops, right? And you're going to see a lot of people that you may have thought they were really well off and they're not at the end of the day was all financed by debt. You know, who I know is extremely loaded is when I see someone with a like unreal house

that I know is worth like in Toronto is worth like, you know, five plus mil and they're driving like a 07 Toyota. Like that's what's in the driveway. That is billionaire type stuff, right? They understand money. That is an absolute power move when your house is worth five and your car is worth, you know, 600 bucks. Get some point A to point B. There you go. That's right. All right, Simon, let's segue into what you've been doing. You're talking about like how you're actually planning and adjusting for your personal finances. So I think that people can take something away from this. Yeah. So I recently started buying some GICs. So it's actually the first time in my life that I've ever bought a single GIC, mainly because I never thought it was really attractive. And it's very,

it's also circumstantial as well with things going on right now. I mean, until recently, I think you were hard pressed to get more than 2% unless you bought some market link GICs and were fortunate enough to get some good growth and then higher interest based on that. But those linked GICs also have like, they give you almost like basically nothing if the market's not doing well. So it's kind of a risk reward, a bit like the stock market, but it has a four, which is your principle. Now the GIC I bought is with EQ Bank. Obviously they're our sponsor, but it was the best rate I could find on a one-year term at 4.5%. And I put that in my TFSA. So 4.5%, that's on one year? Yeah. One-year term. Yeah. And honestly,

personally, I don't think it makes a whole lot of sense to be purchasing any more than that because the increase in yield is not very substantial. At 4.5%, one year, you're not locked in for too long. You can use them kind of staggered. Obviously, the Bank of Canada, the Fed have been signaling that they'll keep in increasing interest rates until inflation is coming down. And, you know, there's good reason to believe that these rates will be increasing in the upcoming months. So I think locking in five years probably doesn't make the most sense. I could be wrong, but that months. So I think locking in five years probably doesn't make the most sense. I could be wrong, but that's the way I see it. Now, you know, people might be

wondering, okay, so if you're getting a GIC yielding 4.5% on a one year term, you're still lagging CPI, which is running at about 8%. And the second question, why did you purchase something that's yielding 4.5% in your TFSA and use your room for that? Well, those are two really good questions. And obviously, I thought about them before I did this. Now, everyone, like I said, knows that the Bank of Canada has been raising rates aggressively. So, you know, one of the big factors here is our current mortgage is a fixed mortgage on a five-year term at 2.6%. And there's 27 months remaining. Now, yeah, go ahead. This is important context, right? You have a five-year fixed rate. You got just a little over

two years left on it at a really good rate. Such a good rate. Kudos to you locking in that fixed mortgage rate at the right time. But this context is important because if you've been listening to this podcast and you know our stance, if you told us like two years ago that Simone's going to have a segment on the show, but I'm buying a GIC, I would say that is the most boring thing I've ever heard ever. And two, have you lost your mind? And the rates have changed so significantly that this conversation changes already. And then two, this is why personal finance starts with personal is because it's very specific to what you're doing. You're not going to have a lot of money in a volatile asset with potentially rates still on the rise. And you're going to have to have yourself shored up for this renewal.

So you're just playing conservative with that scenario. Yeah, exactly. And the reason why I'm talking about my mortgage here is I don't know what the rates will be when we renew. And honestly, anyone who tells you that they know is simply lying to you. So we see the bank economists, the big banks, they're making predictions. And I think they're probably wrong more than half of the time. And these guys are supposed to know what they're doing. So just to give you an idea. Now, we are pretty conservative in our mortgage amount. So we used about, I think it was 65% of what we

were approved for. And I want to add an extra margin of safety here because there is a likelihood that our rate will be significantly higher when we do renew, whether we choose variable at that time or fix. Now, so to be prudent, I'm adding to a GIC in a staggered way to make sure that we are well set up, even if the rates are significantly higher at the time of renewal. And we have an emergency fund, of course, already, but that's really for unforeseen things that could occur at any moment. I don't know, maybe we have to change a roof or something like that, or a big repair on our car. So we are starting to add money in that GIC for that specific mortgage renewal reason. And like I mentioned, 4.5%, it's really attractive. It may keep going up, but I think,

you know, it's much better than a savings account right now. And because we don't need the money until 27 months, there's really no issue in locking it in. Obviously, if we would need money at moment's notice, like an emergency fund, locking in doesn't make much sense here. And like I said, the longer term didn't make sense because I think it's just, if I remember correctly, it's about like 10 basis points more for like two years. So it just doesn't make that much sense with the likelihood that rates will probably keep increasing. So that's the first kind of question here that people might have. The second one, why in my TFSA? Well, that's pretty simple. I was 18 when the TFSA came into

effect in 2009. So I have essentially accrued the maximum room that you can have. I was tighter financially when I was younger, so I've never came close to maxing it, although I do have a pretty decent TFSA now. I've also had great returns and have withdrawn some money three years ago when we put the down payment for our house. And even with the GICs that I'm planning to purchase, I'll have more than enough room to continue contributing to my TFSA for regular investments in the next two years, and at which time I'll start withdrawing the GIC to either supplement my mortgage, you know, pay it down a bit more. So our monthly payments are less if the interest is higher, or if I ends up rates are pretty low, I don't need it.

Then I'll have a whole lot of dry powder to use on investments back then or in the future. I mean, yeah. Right. Because you actually unlock more than the ceiling when you sell and withdraw a gain in the TFSA, which is a bit of a cheat code, awesome little feature of the account. Yeah. Yeah. Because I think, you know, I don't know the exact amounts, but just on memory here with the gains I've withdrawn and so on and the money I have in my TFSA, I have like total, I have more than six digit in room. Yeah. No, that's nice. That's really nice because you've maxed it and unlocked more value. And when I say maxed it, I mean like time that it's been open since. That's good stuff. And you know, it's a reminder that of course, nothing here is advice and personal finance is personal. Exactly. So what someone's doing might not make sense for you. Like I hear that. I'm like, I'm not in the market. No, it would not make sense. I don't have a mortgage coming due in 27 months that I want to, you know, shore myself up for. Yeah, exactly. And think about that. You know, someone said, I posted that on Twitter and someone said like, well, you know, why don't you just get like blue

chip dividend stocks paying a higher yield? I'm like, well, the issue is they might be blue chip, but there's no guarantee in capital. I'm not looking for income. I'm looking for that capital guarantee and hopefully keeping up with the cost of living. That's why the GIC makes sense here. And now you're getting four and a half percent of EQ on that GIC. So that's like a solid bank stock dividend. And it's only on a one-year term. It's kind of awesome, actually, now that I think about that. Those numbers are nice in my head right now. Yeah. And especially thinking about retirees here or people close to retirement, GICs are making a whole lot more sense right now, that's for sure. Yeah, especially when they've seen bonds fall 14% in value in the past four months.

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. 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 Airbnb. your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host. All right, let's do a segment called Just Keep Buying. All right, so I'm going to list a bunch of S&P 500 drawdowns, okay? They're all very scary at the time. They're the most important thing until the next most important thing that you are, and then you already forgot about the last

most important thing. What about the-com bubble burst of 2000. Subprime Mortgage Crisis of 07-08, known as the GFC, the Great Financial Crisis. They always have very scary names too, of course. The COVID-19 Crash of 2020. And what I'm calling right now, there's no official name, but feel free to write this in the history books, the COVID hangover slash Russian invasion of 2022. That's what I'm calling it for now. I have the top 15 S&P 500 drawdowns here from 1871 peak to trough in the peak to trough of 29. That's the Great Depression, right? Investors lost 85% peak to trough. In the peak to trough of 29, that's the Great Depression, right? Investors

lost 85% peak to trough. That's spooky. Here they are from largest to smallest in the top 15, 84%, 50%, 47%, 43%, 43%, 42%, 37%. You get the idea. All the way down 22% now in 2022. These are peak to trough drawdowns. During that time, the S&P 500, those drawdowns I'm listing, during that time from 1990, like the first crisis I mentioned there, the Japanese asset bubble crash, crash. Total stock return of the S&P 500, including dividends, you made 2,166%. You made 22 times your money from 1990 to now. And that includes today's drawdown. So it was more of, you know, we're keeping score last year, still made 22 times your money. Just incredible returns on a long time horizon. And people get caught up in the latest drawdown until the next one happens and you already forgot about the previous drawdown. Keep on keeping on, keep dollar cost averaging, keep to your financial plan because

the reality is, is that drawdowns are a feature of the stock market and not a bug. So there's going to be another one. There's going to be a bunch more if you have long time horizons. So that's when you make money. You make money in bear markets. You just don't know it yet. Yeah, exactly. And you just have to think about it when you have a bear market. Obviously, ideally, you can at at the very least, keep dollar cost averaging. But let's say, you know, inflation's catching up to you, you just don't have much money, or you don't have any money to invest, but you have existing investments, you just have to write it out. I think you have to not panic, you have to write it out. That's really important. I know it's not

easy, especially if it's the first time you're seeing that, you know, you're seeing that wealth kind of go down every time you look at your portfolio. But if you look at history, how it's kind of happened over time, you know, it should work out in the long term. You just have to make sure to not panic because usually what happens when you panic is you sell and then maybe it keeps going a bit lower. But by the time you buy back in, you've foregone a lot of the gains because you were just hoping that it will go lower and lower and you'll get a better price point. And then you never pull the trigger. And then you really, you know, you end up paying the price afterwards. This is why I like your strategy of just going super long the index

when everything's down because you don't have to make decisions or have gut checks on individual securities, right? It's just an easy game to play, right? I like what you're doing there. You know, what I think needs to be brought up here is investors that have only been investing for five or less years, I'll say. Maybe I'll go and say even if you've invested for the first time. Early 2010s. Yeah. Yeah. Yeah, exactly. Like since post great financial crisis, you have been tricked into thinking the COVID crash of 2020 was a normal drawdown. The peak to trough length to recovery was only four months. That is not normal. It was last, I guess, right? Like February 20. It was no, it was last. It was like two months, February 20th. Okay. We'll call it whatever. It's a few months. Single digit. Let's just say single digit months.

Okay. All those peak to trough drawdowns I was talking about. Let me read how many months they lasted until you were back to where you started. 48 months, 32 months, 267 months, 51. That was the depression, but we'll throw that one. Okay. So 48 months, 32 months, 51 months, but we'll throw that one out. Okay. So 48 months, 32 months, 51 months, 67 months, 52 months, 21 months, 17 months, 19 months, 15 months. So, you know, you gotta be prepared while dollar cost averaging for the next, you know, year and a half, two years, maybe longer that it might just, you know, grind along or get worse. Because that is the reality, and you're not going to time it correctly. So don't be fooled into thinking, you know, the market crashing 25% in March 2020 and hitting all time highs by July is a normal bear market.

It's not. It is a statistical outlier by a wide margin. And so that's important to recognize. Yeah. And if your dollar cost averaging, you know, like I am in a broad based market ETF and I still have extra money. So I am being strategic and buying stocks as I see them, you know, approaching a value territory or valuation that I like for a specific company. But just think of it when your dollar cost average, the more it goes down, the more units you get. Just forget about the money. Just think about it. You get more units for the same cost. And I don't know if it's because it's a mentality in poker where you kind of try to zone out the money aspect. You just think about it in terms of units. But I find personally does help to kind of separate the money aspect of it with the investment.

I like that. All right. Let's talk about your last segment here before we get into stocks on our watch list. And we'll talk about some individual securities that we're looking at. Yeah. So I came across this and I'll be honest, I can't believe I did not know this rule before. So it's called the rule of 72. Did you know? Oh, wait, you didn't. You just learned about this recently? Yeah, I just learned about it. You're kidding. No, I'm not kidding. Yeah. I would always do the calculations, man. I know you're not lying, but I don't believe you. That's like pretty...

No, I mean... This one, everyone knows this one. No, no. Yeah. And I came across it because I would use a compound income calculator and I'd figure out what it was, but it would take me way more time than this simple rule. And it's really, really easy to use. And it's pretty accurate, not, you know, the dollar, usually you'll be kind of pretty within one or 2% of the value, I would say. Now, the rule of 72 is just a rule of thumb that investors can use to estimate how long it will take an investment to double, assuming a fixed annual

rate of return and no additional contributions. The rule is that you take 72 and divide it by whatever the expected annual rate of return will be, which will give you approximately how long it will take to double that investment. Now, I'll just give two very easy examples. So you have an investment balance of 10K and you want to know how long it will take to get it to double to 20k without adding any more funds to that investment. And you have an estimated annual rate of return of 7%. So you just take 72 divided by 7, which is equal to 10.28. 10.28. And that means it's roughly 123 months. And if you put that into a compound income calculator, the calculation, it's pretty close. I think it's something like ridiculous, like $20 close, really, really close. And then the same thing, you have $10,000 with a 12% annual return, 72 divided by 12 equals six years. Again, if you plug those numbers, this one will be a couple hundred dollars off, but very close. Really good rule to have just if you're, you know,

wanting to figure out something quickly without using the long method like I was doing. This is a great way. Yeah. I'm still shocked you never heard of the rule 72. Well, there you go. It's a good little rule of thumb to think about like how rate of return affects like payback period basically yeah and if there are poker players and there's a little rule of thumb like that for poker players so if you're playing no limit hold them or hold them if you want to know the odds of hitting you know your cards on the turn and river so by the turn turn and river, if you add both together,

you just time for the amount of outs that you have. But if you're just looking on the next street, so from the flop to the turn, times two, and it'll give you the approximate odds. What does an out mean? It means like to make your end. So let's say you have a straight draw. You have four cards to make your straight draw.

So four times two, you have 8% roughly to make it on the next card. And four times four. So you're looking for a fifth card in the river or flop to complete your run. So it's a nice little rule of thumb for people who play and they don't want to try to calculate the odds mentally. Like that'll give you a bit like this pretty good idea of what it is. So if there's three hands on there, I have four my my straight i have like an eight percent chance if you need one card specifically if i need one because there's four of that one card theoretically although there could be one that's out but we just assume and i can catch either tail end of it like i say i could get like a two or a

seven or well now you have eight so you'd have do eight times two. So you have 16% on the next card. And then if you want to see by the river, you do eight times four. So you have 32%. That's a scenario where I have both ends of the straight. Yeah, exactly. So it's a great way to calculate odds quickly. Hopefully we didn't confuse people. No, dude, I like playing poker.

I just know I'd get absolutely smoked by it. Little trick when you play, now you'll be able to calculate the odds quickly. I always imagined one day I would learn how to count cards because I'm a math nerd. And I think if I put enough time into it, I could do it. I think it's quite possible. I think it is, but it's not. Yeah, you have to focus. Probably a lot of caffeine and a lot of practice. It's not, yeah, you have to focus. Probably a lot of caffeine and a lot of practice.

Caffeine. All right. Let's do stocks on our watch list presented by friends at EQ Bank. You're going to hear from Hima, one of the executive vice presidents over there, after this podcast because we're talking about how EQ Bank is awesome. And, of course, they're a sponsor of the show, but we use them. So it's good stuff. All right. I will kick us off here.

And I am going to say the obvious one here is probably Aritzia, given we did the deep dive recently. The growth and the opportunity is enormous. I just don't know if I can get around the fashion risk. So I'm going to bypass that. And I'm going to go with one that's lived on this watch list for more than two years. And I'm so close to being able to like the valuation. Like I'm very close. It was nosebleed before, and now it's still, it was nosebleed and now it's just expensive. It was stupid nosebleed before, and now it's still, it was nosebleed, and now it's just expensive. It was stupid nosebleed prices, and now it's just an expensive growth stock.

And I've done this one on the segment at least once, but here it is again. Intuitive Surgical ticker ISRG is now on a 40% drawdown, 42 to be exact as of recording today, with the rest of the basket of growth stocks. But not all growth stocks are equal. They're not all created equal. There is a massive disparity in the high quality between some of those names down 40 plus percent and a name like intuitive surgical. All right, so let's get this glossary term out of the way. RAS stands for robotic assisted surgery. Intuitive surgical operates their product called the DaVinci, which is most widely known as the best in class RAS, which is robotics assisted surgery system. It performs minimally invasive care and surgical procedures for soft tissue procedures. Okay. Now the company offers

complimentary things like software tools and accessories. In addition to once they sell that DaVinci to a hospital. Now they are light years ahead of anyone in the space. They're building a moat in the hospitals. And with the surgeons who use the robotic surgery, they've performed 1.7 million surgeries to date and have over 7,000 robotic-assisted surgery systems installed. This is the picks and shovels play, baby. This is the picks and shovels, high-quality type business.

I think it's very durable. The growth is astoundingly impressive. It's not growing 100% year over year, but that growth rate is going to be sustained for a long time, in my humble opinion. It is a growing opportunity in healthcare. And once a surgeon uses one of these bad boys, they're not going back. It makes their life so much easier, better outcomes for patients. And the tech is just astoundingly cool. So they

have that moat and that huge R&D advantage over everyone else. Johnson & Johnson's work and Medtronic are working on competitors. It's been four years since they heavily invested in a competitor to DaVinci. And it's like, what do they have to show for it? Like almost nothing. Not nothing, but almost nothing financially. Once they're installed, the high margin recurring revenues for equipment, software, and accessories that go with operating these things, it is the perfect razor and blades business. It's a business model most people would dream to own. And it's gone from

nosebleed to expensive. And I'm pretty close to being very interested in going quite long on this thing. Yeah, I wonder if you should just hold off until the Fed announcement for the rate hike next week. If it's above expectation, I feel like this is a name that will probably pull back. Yeah, everything 50 earnings plus gets decimated at that point and so I'll be happy to do it. If not, then... I'm not advocating timing the market. It's just like... I get it. Yeah, you know what I mean, right? So yeah.

There is short-term risk for sure with any of these expensive securities. When I say expensive, it's trading like 50 times like EV to EBITDA. But don't get me wrong, it has come down wonderfully. And this is not a business that's hardly growing. It's growing very fast with incredibly high margins and a high moat. So it demands a high multiple. Did it demand the multiple it traded for last year? Probably not. And that's why it's had this drawdown. So if you start a position, would you start basically do the whole position or would you do it like in three, two? I don't go full position unless I have insane conviction about the valuation on these expensive growth stocks. I dollar cost and almost

always start a small position to start. Because hey, if you're right, if in 20 years, they still have monopoly on this market, 7,000 installed RAS systems, 7,000 plus DaVinci's turns into 30,000 installed base in 10, 15 years, this business is going to be gigantic, like mega cap name. It's a 75 billion in market cap company today. This is a large cap business. This is one of the largest companies in the world. In the grand scheme of things, it's 75 billion in market cap company today. This is a large cap business. This is one of the largest companies in the world. In the grand scheme of things, it's 75 billion in market cap. It's still gigantic. And if they hit those kinds of scale, which hospital-wise could be hit from a total addressable market, it's going to be one of the biggest companies in the world by far.

That's a roundabout way of me saying, I don't think it needs to be a giant position to start. No, that's a good point here. 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 Airbnbbnb.ca forward slash host. That is airbnb.ca forward slash host. Okay, now I'm pretty excited for this segment. I could have gone a few different ways here, but just because I have a lot of things on my radar right now, especially with some of the pullbacks. Now, before I get started on my stocks on my radar, I'll say that my overall investment strategy has not changed, where the majority of my portfolio is still going

to be in great businesses that I can hold for a very long time. But having said that, for about a year now, I've been thinking of adding some commodity exposure to my portfolio. I've mentioned it before with Franco Nevada, the precious metal streamer, but recently I've been looking at oil and gas plays. Now the issue- Everyone in Western Canada is having an absolute field day, Ryan. They love this. They love this segment right now. Oh man, I tweeted about this. I think it's- Dude, the activity on your tweet that you put out as soon as you're talking about an oil and

gas name was crazy. Oh, I know. It's like people are passionate about oil and gas in Canada. I will just say that. Dude, I get it. I'm from Calgary. Half my family lives in Edmonton. And when you're there too, like especially when I was there recently in Edmonton with things going well in Alberta right now, like with the oil price, it starts to rub off on you because you know how much it impacts everyone's well-being over there. So I get it. I completely get it. Yeah, exactly. Now, the issue there is I'm fully aware that I'll need to be opportunistic when it comes to the names I'm going to mention here. I've been reading and listening to some podcasts on that subject

with some professionals, and my intent is to start a position, but if and only if they are increasing fears of a recession and slumping oil demand, because if we see that happening, you can bet that there will be some really good opportunities for oil and gas because there's going to be less investment done in that space. That's usually what happens when prices fall. And that means that when things do recover, the strongest players who have existing, you know, businesses that are producing well, that have a low cost to produce well, the best operations

will usually do really, really well. And I think we're probably going to approach a certain point in the next year or so where the recession fears will really be a pullback on the price of oil because people are afraid of a recession going on. Yeah, no, I'm seeing these names here too, and they're high quality as well. Yeah. So the names I'm looking at or the names I posted actually were Canadian Natural Resources. So CNQ and Suncor that were on my radar. But after that Twitter post, a lot of people were saying, oh, you should have a look at Tourmaline. And I ticker T-O-U. I don't know if I'm pronouncing it correctly, which has been growing extremely

quickly, both on revenues and free cash flow basis. So it is an interesting play, but I still need to do some digging on all three names there, especially Tourmaline. A lot of people were saying, why are you looking at Suncor? You know, it's not that well run. There's been plagued by issues. Well, first of all, the case for Canadian Natural Resources, I think that's pretty simple. Pretty much all the metrics here, if you look at them, are better than Suncor. If you're comparing one with the other, for example, the return on invested capital, ROIC, and the operating margins are way better for Canadian natural resources. It also didn't cut its dividend in 2020 when most oil and gas companies did, including Suncor.

Now, the case of Suncor is a bit different. I look at it more as a standpoint from a value play here because there's a lot of room for improvement and that's an understatement. There's been some debts in recent years at their facilities, which is obviously terrible and has led former CEO Mark Little to resign this July. And shortly after that, Suncor reached an agreement with Elliott Management to let them have three independent directors on the board. I think it was like 10 days after he resigned approximately. Now, the last two reasons here that I think Suncor is a really interesting play, and don't get me wrong, I'm well aware that, you know,

their metrics in the past has been a lot of issues with Suncor. I mean, they've still been very profitable, but not as well managed as CNQ is because they have refineries. And refineries are really interesting because oftentimes those margins will actually be, you know, they'll vary the margins on the refineries. And sometimes if the price of oil is lower, you'll see the margins for refineries actually go up. So that's why people sometimes will wonder why the price of gas is going up, even though the price per barrel is stable or going down. That's usually because the price of the margins for those refineries are going up.

So that's why I really like that part. And of course, the good old Petro Canada, they could definitely at some point, and there's still some rumors that they're looking at potentially selling those assets off. If they do sell those and really focus on exploration, production, and refineries, they could use that money to pay down debt and return even more money to shareholders. So that's the case for Suncor. I do know it doesn't have as good a track record as Canadian Natural Resources, but I think there's a case to be made for them as well. Does Buffett still own a bunch of Suncor? I don't know. Yeah. I don't think he does. I'm

looking on his 13F right now. No, well, he's been going crazy on oxy petroleum, right? Oh yeah, exactly. He loves oil plays. He does. And Occidental, I'm pretty sure they have tons of refineries. Yeah. He owns 6% of oxy now, which is a double from his 13F before. He owned 3% of the company in Q1 and 6.23% in Q2. So he bought a ton of Oxy, 71% more. And the thing too about refineries is, I was reading- Oh, wait, sorry, sorry. He owns 29% of Oxy. It's 6% of the Buffett portfolio. I read that wrong.

He owns 29% of Oxy. Oh, wow. That's crazy. I didn't know it was that high. Yeah, it's a lot. And what I was going to say, sorry, for the refineries is I was reading something is apparently there was a lot of refinery projects that were put on hold in 2020 when we saw the oil slump. And at a point it was, I don't know if you remember, right? When it was trading negatively, the futures for oil had to start the pandemic. Oh, yeah. I point it was, I don't know if you remember, right, when it was trading negatively, the futures for oil. Oh, yeah. At the start of the pandemic.

I remember it was the peak of lockdowns, basically. Yeah. So what's happening is there's a lot of these refineries, replacement or new projects that were put on hold or completely canceled. Some were delayed. And, you know, at some point, you know, there's going to be increased demand for those refineries and companies that do have them, you know, and operating well will probably be able to extract a lot of value out of those because there's going to be a shortage of them going on in North America. So that's something just to keep an eye on as well. And that's why I like that part of Suncor. Yeah, I think that the value is there for these Canadian oil and gas names. Even after the run they have had, the value,

there's no argument there. I'm fully there. I guess my question to you is, when do you move on? I know you and I know that these commodity plays are not buy and hold forever. So what is the plan? Yeah, that's something I'll have to work on. I'll need an exit strategy and that's 100%. I will need an exit strategy, but probably a certain type of valuation or an increase in oil price, something like that. Maybe a combination of both where you just tell yourself once it reaches a certain level, you just have to cut bait. Are you interested in owning Couchetard? I mean, which I know you can say properly 10 times better than me. Yeah. I mean, it's just the future for Couchetard is a bit murky. I'll just say that.

So I'm still kind of debating. Yeah. I mean, it's not a bad play. Yeah. I'm kind of on the future's confusing to understand. Yeah, exactly. I know some people say like, oh, they'll be Yeah. I mean, it's not a bad play. Yeah. I'm kind of on the future's confusing to understand. Yeah, exactly. I know some people say like, oh, they'll be able, I think that pilot project that they're having, I think in Norway that you were mentioning. And I think someone mentioned they're planning eventually to just have robots in their gas station. So lower some of their expenses that way, you know, those are all good things. But I mean, and especially the acquisition part, obviously, if they bought Petro Canada from Suncor, that would definitely help their growth. But I don't know, beyond the next 10 years, I don't really know where Kushtag is.

That's my big thing. And if I would invest in them, it's probably a long term investment. So I'd want to know that I can hold them for 10 years and more. Yeah, got it. I haven't heard anything recent on that whisper of that deal going through. No, me neither. Or like any further development on could start buying Petro. No, and I think they're still evaluating Suncor potentially selling those assets. I think Elliott Management has really been pushing for that. And they have a new CEO interim though. So maybe it's something they want to delay until the interim tag is either removed from him, either that or they have a new CEO that's there

permanently. So maybe, yeah, it's such a big move that they want to wait a little bit for that. Yeah. Because I think it would be around 15 billion would be the price tag. That's what I'm seeing on an article. That's estimated. Yeah, I've seen anywhere between like, I think I've read like anywhere between like seven and eight to 15 is the range. So, there's a pretty big range. Yes. So, one or two or 15 billion. Yeah. Okay. That's the range where we're dealing with. Simone, this has been awesome. This has been good stuff. I love these convos. We're showing the data. We're showing our opinion. We're showing what we're doing. An open book. And you know

what else is an unopened book? Join tci.com. Join tci.com as the Patreon to support the show. join tci.com join tci.com is the patreon to support the show and we disclose our book there so you can see our portfolio updated every single month what we're doing positions to the exact percentage of what we own it helps us provide some additional portfolio disclosures as well as a way for you guys to support the show so it's's a way there. JoinTCI.com. All right, guys, here is my interview I did with Mahima Poddar from EQ Bank. She has been crushing it with this company. I don't think I like kind of pumped her up enough

on the interview because, you know, I was keeping it cool. Dude, she is killing it because the deposit growth on this company, Freaky Bank, I mean, it's a public company. You can look it up. The deposit growth has been absolutely nuts. And the product's slick. So I'm sounding all sales pitchy here.

This is not me sales pitchy. It is a position I own. And the growth is absolutely absurd on the deposits. All right, here it is. Let's go to the interview. TCI listeners, we have an interview for the end of today's show. We just did Stocks on Our Watch List by EQ Bank, one of our favorite sponsors. And not just because they're longtime sponsors of the show, but we actually use it. And we mean it when we say we actually use it. And part of our discussions around that today, selfishly for my own questions here with Mahima

on how I can use it even better. So Mahima, thank you for joining the show today. Can you give a quick intro on your role at EQ Bank? Sure. And thanks for having me here today. I am the group head of personal banking at Equitable Bank. And so that includes any business that touches the end customer or ideally one of you. And I have to say the favorite part of my job, which is EQ Bank, our direct-to-consumer digital bank. And so I run product, operations, marketing, and anything else. Anything else. Anything else that fits into the day-to-day of EQ Bank.

And we got to talk about that because it says group head here on your LinkedIn, and you just said group head. When I go to EQ Bank, you're on the executive leadership team. So that title seems like a very unsuspecting. You definitely are one of the key people over at EQ Bank. So I just want to say you guys are doing a really good job. Thank you. No, I really appreciate that. All right. Let's begin the convo with this is an investing show and establishing that rainy day fund is like kind of step one for people getting their finances right. It's something that I just kind of always have on hand and throw some liquid cash available

for tax time, being self-employed, that kind of thing. Is this the most common use case for the high interest savings products? Because there's just so much better than the other banks. And can you talk about how it's a great complimentary service to the bank you may already be using? Yeah, absolutely. I mean, I think the thing about EQ Bank is we've designed it so it's a no-brainer. There is literally no gotcha moments on the platform and everything is designed to help our customers make more money. I would say that it's a really flexible platform in terms of you can use it how you want to use it. So we definitely have a large segment of customers that use EQ Bank as a savings platform. And within that, specifically for a liquid emergency fund.

So even like when we go into the customer data, there are thousands of accounts that are called emergency fund. So there's house fund and then there's emergency fund. Those are the kind of top two account names that we see. And so given our premise of everyday great interest rates on all of your money in the EQ bank savings account and there's no fees on the account, an emergency fund is a great use case and a kind of, again, a no-brainer use case. The other piece here is because we allow you to connect to any other bank account that you own in Canada, so with any big bank or any even other digital bank, there's free transfers in between those accounts. It's a really seamless way to keep your emergency fund separate, but earn

great interest on it. And then when you need it, or you want to transfer it back to your main bank, again, like a seamless interaction there that doesn't cost you any money. We also hear from many of our customers that they like that the money is separate from their everyday account. So they aren't tempted to use it or spend it. So I say that because again, I believe that the emergency fund is a great use case, but I also want to preface that what we're really trying to build, and we have a group of customers who have figured this out as well, is an alternative to an everyday bank account. So this segment of customers will get their payroll deposited into the account. They pay their bills from the account, including a credit card that

they might have with a big bank or mortgage or rent. And then they're sending e-transfers or international transfers as well from the account. And throughout all of that, they're paying no fees for all of that service, but they no fees for all of that service, but they're also earning interest on that money every day. So let's say they get, I don't know, a thousand dollars at the beginning of the month, then they end up spending 500 a month. They're earning interest on that 500 that's left over,

but they're also earning interest on the thousand dollars as it depletes. So depending on what's there every day, they're earning interest. And then I'd say the other piece is because you can open a subsequent account, or you can actually open up to five other accounts. What we're also seeing is some customers have one account for their everyday needs, but then they'll open a second account as their emergency fund. And then a third account as, hey, this is the money that I'm going

to owe in taxes the end of the year, so I better not spend it account. And so because all of the accounts pay great interest and there's no fees, it's a pretty great way to separate your money into different pockets, if you will. Gotcha. So it sounds to me like the product roadmap is leaning towards more a complete solution for banking. And I personally would love that. So whenever I can just do everything on the platform, sign me up, I'm there. Is that basically the underlying mission with the product and the roadmap overall is that I can confidently do that? That's definitely the goal to make it your primary bank. It's not going to be everything to everyone, but in terms of the things that you do on a daily or monthly basis,

it's going to all be covered. And a lot of it's there. Like you can deposit checks, your payroll can come in, e-transfers, international transfers. I'd say the biggest missing piece on the account is a payment card, which is actually coming out later this year. And so with that card, the intention is to make EQ Bank the best primary bank in Canada. So the card will allow you to do in-store purchases. It allows you to do e-commerce purchases. You can take cash out at any ATM in Canada for free. So that means you're not looking

for an EQ Bank ATM, but you can go to RBC, for example, and take out money from your EQ Bank account with no fees attached to it at all. And you can use the money for in-store purchases. So the goal is to give you enough functionality as a customer to use EQ Bank as your primary bank account and also extend that value prop that we have where you're earning more by using EQ Bank as your primary bank account and also extend that value prop that we have where you're

earning more by using EQ Bank products for every single transaction or function that you're doing on the bank. Well, you can count on me to be some piece of data that you guys look at, which is like someone came in as the gateway drug of just using it as an emergency fund. And then they are just full fledged using it all the time. So from my account on the data. No, I appreciate that. And I think the thing is too, like, we're not trying to say this is the only way to use EQ Bank. Like everyone has different needs and the account is meant to be entirely flexible. So we actually have a new marketing campaign that's going to be hitting the market in October. And if you see any of the commercials or media, you'll see that it's all about add EQ Bank in minutes. And it's that idea of,

it's really hard for people to switch their bank. And so we're not asking you to do that on day one, but it costs nothing to add EQ Bank and start playing around with it. And so that's what we're really encouraging people to do is see all the benefits on the account and then hopefully transition most of their day-to-day transactions over time. So my mom should be the spokesperson for EQ Bank, just so you guys know, because she literally like well before I even knew what it was, way before we ever reached out to you guys to sponsor the show. Hanging the drum on EQ Bank, telling everyone about it. And like, you know, there's no fees. There's like, there's no reason not to use it because the savings rates are better. So if you guys are looking for like

some marketing talking points, she is, she is. Absolutely. She's your person. I love this part of the job because even if somebody's like kind of bad mouthing EQ Bank on social media, it astonishes me how our customers come to our rescue every single time. That's awesome. There is like this actual fan culture around EQ Bank, which I love.

And I love that your mom is part of it because people really get it. Like I can't think of any other financial institution that genuinely has the interests of the customer at the core of what they're doing. And so, yeah, I love that people recognize that. That is refreshing for a large Canadian institution is what I will add there without any more clarity. Well, thank you so much for doing this. It's great to have you on the show again and just provide some additional light. And usually me and Simone, we're very hesitant to do these types of interviews. And with you guys, it's just like, okay, we use the platform. We actually like it. We're on it regularly. So it feels quite good to

do this kind of stuff. And so I'm happy that you guys are around and support the show. Thank you. We really appreciate the opportunity. We love what you're doing as well. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.