The Canadian Investor - Episode 25 - Food delivery, robo advisors and bonds

Episode Date: April 24, 2020

In this episode we discuss several topics. We start by discussing food delivery companies and robo advisors. In the second half of the episode we talk about bankruptcies, debt and bonds and finish the episode by talking about travel stocks as part of our Tip of the D’eh!Tickers of stocks & ETFs mentioned : GRUB, ZAG.TO, VAB.TO, XHY.TO, CCL--- Send in a voice message: https://anchor.fm/the-canadian-investor/messageSee omnystudio.com/listener for privacy information.

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I'm Brayden Dennis, joined by my co-host, Simon Ballinger. And today, we are going to talk about a couple things. First, we're going to talk about the food delivery services. The big ones here in Canada being obviously Uber Eats, DoorDash, Skip the Dishes, the list goes on. And the big one in the states that IPO'd last year, the big hot IPO of Grubhub. So we're going to talk about food delivery. And then we are going to transition into a listener question about, should I buy self-directed ETFs or just use a robo-advisor?

This is a great question and one I'd like to elaborate on. And then Simon's going to, we're going to pick Simon's brain a little bit about debt. Companies taking on debt during this time. Obviously, the balance sheet, a critical financial statement during a pandemic. People are checking the balance sheet. What's the cash situation like? How much debt are they going to take on? Who is going to supply that debt and at what interest rate? So these are the kinds of questions that we're going to answer. Simon, what's going on, dude? How are you today? Hey, I'm good. Just finished my day's work and getting ready for some pretty fun conversation about those companies you mentioned, robo-advisors, and then we'll talk about debt and bonds like you mentioned.

But yeah, I mean, it's quarantine. Just keep going at it. just uh keep keep going at it i'm kind of excited to get some nicer weather outside so we can actually enjoy the nice weather by obviously still doing our physical distancing uh but yeah i'm good overall how about you good man uh just before yeah i'm very good uh just before we move on i just wanted to say i just thought of this now. My condolences to Nova Scotia, man. This is really, really tragic, really sad given the circumstances that we're already in. And then, you know, what happened in Nova Scotia is just horrendous. And my condolences go to Nova Scotians and Canadians across the country.

This is just brutal, man. And other recent news, oil contracts into negative territory. WTF. I'm no macro WTI crude oil price tracker, but this is kind of insane with the supply shock that we have seen. And then what was happening before with the Saudis and the Russians, it just seems like the perfect storm. I think Charlie Munger called the yesterday on CNN the perfect typhoon of, you know, wow, that is possible. So finance memes aside about oil these days being quite hilarious. This is crazy, man.

So I don't know if you've been following that as well, Simon. Yeah, I mean, I've never thought I would see negative oil prices. I mean, essentially what it means is, I think it's the WTI in the States that turn negative. That's right. Yeah, what this really means is that businesses are paying other businesses to get rid of the oil. Because they have nowhere to put it. They have no one to sell nowhere to put it they have nowhere no one to sell it to so they're overflowing so what they have to get rid of it one way or another

so instead of selling it they're actually paying companies to get rid of it um so it doesn't take a a math wizard to know that that's not sustainable um it's going to impact a lot of jobs in the states probably in western canada as well because the canadian price um the canadian what is it the one that we follow in canada the western canadian something that sounds right yeah something would be like how do you not know that yeah i mean i follow oil a bit but uh i i know it's a slightly different uh index or the price is different in Canada. I know it was affected a lot by the lack of pipelines, the lacks of transportation. But all that to say the worldwide supply, there's way too much supply, not enough demand.

So this is what is causing it. There's going to be a lot of ripple effect on the oil and gas industry. And this also makes me believe that the mini kind of stock rally that we've seen the past two, three weeks, I already thought it was a bit overdone because there's still a lot of uncertainty. But what's happening with oil is definitely reinforcing that for me. For sure. It's just hard to even comprehend that that's possible but i mean look at it there it is negative oil prices so very very strange and this is why last night i i stayed up late and made an Instagram post on my Instagram, Stripes for Investing. I'm going to keep plugging it until all of you follow it. I made a post about the one single fact that I have dominated the TSX index over the last four years is because the TSX index is so heavily weighted banking and oil and gas.

And I don't buy oil and gas companies, whether they're in Canada or whether they're in the US. There is absolutely no pricing power. This is a prime example, this right here, of the lack of pricing power that they have. Mining companies, mining companies, all of these commodity businesses that rely on the price of their commodity to be increasing for earnings to go up generally. I mean, sometimes mining company will literally hit gold. That's like actually hit gold, and then it'll skyrocket. But I'm talking about the price of the commodity. High quality businesses do not have this issue, do not have pricing issues. And this is a good segue, actually, to what we were talking about before we started recording about these food delivery companies, these technology companies, Grubhub, the big one in the US, here in Canada, Skip the Dishes, the list goes on and on. And the reason I say the list goes on and on is because there seems to be so much competition, low barriers to entry with a phone app. And I just can't understand why anyone would have any sort of brand loyalty to any of them. People will just use the one that is the most efficient, most convenient, and the cheapest.

And that is the end of the customer experience, in my opinion, for them. So I think there's just too much competition. They're burning too much cash. And the business model is so price-based that I can't figure out who will be the winner and what that secret sauce looks like for the winner. It's just so far from my style. So I don't have really any other good competitive advantage insight into this industry. But again, very similar. It's all about pricing. Companies that are all about pricing, for me, with no ability to increase prices, mean that they have no competitive advantage, no moat. And that's just kind of like a checklist for me.

And if I can't check that box off, it ain't for me. What about you? Yeah, so I mean, I totally agree with that. So one of the issues with those types of businesses, and we have a question, that's why we're talking about it is it's very it's capital intensive that's the first thing the second like braden said there's a lot of competition involved so what happens is if you're looking at uber and lyft for example just a ride sharing they tend to have a lot of the same drivers and the drivers will actually hop around depending who's offering them the best pay. And you can actually, you know, it's the same type of reasoning when it comes to Grubhub, Skip the Dishes, Uber Eats, you know, whichever company you want to plug in there. Is that oftentimes the drivers will do more than one place at a time and they'll just choose if they have two offers, whichever one offers the best income for them, and rightfully so. The other issue I have with them is some of those companies, when they sign contracts with the local restaurants,

is they actually prevent them from increasing their prices for delivery. And that, you know, it's fine for the customer on one hand, but it does hurt restaurants because those companies actually take a cut of the order. Obviously, they want to make money. They're in business to make money. Well, that reduces the profit margin from the restaurants. I'm kind of lukewarm on them. Grubhub is a good example. It's publicly listed. It's a pure play in this place in the US. I can't remember what the exact GRUB is. I recommend that you have a look at that one if you're interested in learning a bit more about them. But personally, I'm with Braden.

I would be very careful for them. They're burning a lot of cash. And right now, you know, liquidity is coming at a premium. So I'd be definitely reluctant in investing in those type of businesses right now. We should also preface it by saying those ones we listed in canada are not public uh i think they would like to ipo i don't know when i don't but yeah we should we should mention they're not public so you can't go buy skip the dishes stock right now what i will say is if they go public or you know an investment in any stretch for them, for me, it looks like they are

acquisition targets for the big boys. It makes sense for an Amazon, for an Uber, for a Lyft, for a Walmart, for a Costco. It makes sense for them to integrate their logistics network with some of these rising technology companies. I get that. So they are acquisition targets, and then they'll get the cash they need if they are inside of a bigger, bigger company. So from that perspective, I get it. company. So from that perspective, I get it. But I mean, who's to say? I mean, if you're investing strategy is around who you think might get acquired, that's like really next level, man, and really hard to predict. And I don't think that's a sound long-term strategy. But I mean, yeah, sometimes acquisitions are great when they delist it and pay some 50% premium. That can be really, really lucrative. All right. Let's talk about the next question. So the question was,

question was, should I go for robo advisor, like quest trades, quest wealth portfolio, or wealth simples? You know, wealth simple invest platform? Or what is it? There's like nest wealth, there's a wealth bar, there's like, you know, there's a long list of them. And what these robo-advisors do is you log in, you make an account, and you select a portfolio risk tolerance. You say, oh, I'm a mediumly risk-tolerant investor, or I'm a high-risk investor. doing for you is shifting the weight, the allocation from stock equity ETFs to bond, aggregate bond index ETFs. They're just shifting that scale from a like, you know, 80-20 to a 60-40 stock bond allocation. And what they are doing for you is buying and maintaining and rebalancing an index ETF portfolio for you, which is great if you are in mutual funds. This is a good transition. This is like, you know, a big improvement. So if you're in mutual funds and you switch to one of these things I'm talking about, that's great because then you're not going to pay in those two and a half percent management

fees, which are complete garbage. And you're going to move to something like Wealthsimple, I think is 0.6%, 0.6%. But you can, on your own, do better by spending 15 minutes a year by just buying those ETFs that they buy for you. With a WealthsimpleTrader, with a Questrade trade platform, you can buy those ETFs for free. So you don't have to pay that 0.6% management fee. And you can rebalance it once a year. It's super, super simple. And I think that's what you should do. Because sure, they're providing a little bit of value in comparison to mutual funds. But they're not doing really anything for you other than buying ETFs. So I made a full beginner investor guide on how to get started with buying your own diversified index ETF portfolio on stratosphereinvesting.com, or if you go to getstockmarket.com, you can see it. And there's a tab at the top called Beginner 101. And I show you exactly how to set up each ETF and just build an ETF portfolio because it's so simple.

If you can use the internet, you know how to build an index ETF portfolio. Yeah, exactly. And if you're listening to this podcast, there's no reason why you shouldn't be able to build your own etf portfolio um you know just putting a bit of time an hour or two hell like you know probably a lot of you have some time right now in front of you with being stuck at home so that's something that you could start doing without having to necessarily dig through financial statements of specific companies like Braden and I do. Just selecting a portfolio, it could just be like four or five bond, not bond ETFs specifically,

but four or five ETFs and you can achieve some really good diversification with that. So you just need to put a little bit of time in and not a lot and you'll have something that's low fee and that you can manage yourself and it won't take too much time. 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. BestTrade.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 is airbnb.ca forward slash host yeah exactly so to answer your question those robo advisors are good it's a it's an improvement but if you're listening to the canadian investor podcast i would assume that you are in the camp of being able to click a few buttons and go to that next level and really optimize it and not pay a fee for them to put together an index ETF portfolio for you. Because that is so, so simple to do. although it might be scary or intimidating to do at first, because you're like, what is an ETF? What's an index?

What are stocks? I get it. When you don't know and you're just starting out, it can be hella confusing. So an ETF is an exchange-traded fund, which is just a basket of companies. It's very, very simple, big basket of companies. So you could get your entire portfolio fee annually to like 0.06% with some of Vanguard's funds and no commission buy fee. So you can get,

anyways, I'm really just harping on this. You can easily improve from the robo-advisor to just doing it yourself. 15 minutes a year, piece of cake. I have a course on it on my website. All right, Simon, let's talk about debt, balance sheets, all the stuff going on in the market right now and how that is more important now than maybe ever. Yeah, and I'll finish off like good segue and I'll actually finish off with a few bond ETFs. So just stay in that vein. So I came prepared. I did some research.

So, yeah, I thought it would be a good idea to talk about bankruptcies, because if you guys have been listening to us from episode one, you know that we talk a lot about balance sheets. And surprisingly, you know, the whole financial world is talking more about balance sheets now that, you know, some companies are in dire straits, where, you know, prior to like January, it was all about like income statement, sales growth, and very little talk about balance sheets, although Brayden and I always look at them. And it's even more true right now when a lot of companies are struggling financially. So there's really two big types of bankruptcies, and I'll try to keep this as simple as I can. So there's generally bankruptcies that are restructuration bankruptcies.

So usually those type of bankruptcies is when a company is not able to meet its debt obligation so whether they cannot make the interest payments or debt comes due and they cannot repay the full amount so what happens in these cases if the business is still good and viable but it needs to restructure its debt then the creditors so the people owed the money to will usually go to court and come to some kind of agreement to restructure the debt so the creditors so the people owed the money to will usually go to court and come to some kind of agreement to restructure the debt so the company can still operate continue its business but that still has an impact oftentimes that restructuration will result in potential dilution in shares even shares

being you know merged together and things like that. So there's all different types of things that can happen. I won't bore you guys with all the details of that, but that's a type of bankruptcy that we see quite a bit. The other type is probably the type of bankruptcy that people, when they think about bankruptcy, that's the picture they have in their mind. So that's a liquidation bankruptcy. So if you guys are thinking Nortel Networks was a good example company that was in Ottawa. So they got liquidated. So liquidated means that the creditors are going to court. The company's filing for bankruptcy. The company really does not have any viable options to continue operations. So usually what they'll do is they'll take all the assets that the company has, whether they're

physical assets, whether they're intellectual property, whatever they are, they'll sell those and then they'll repay people associated with a company. And there's a reason why I said people associated with a company. So the way they reason why I said people associated with a company. So the way they actually pay, and this is where bonds come in and debt comes in. So there's actually a priority list when a company is being liquidated. So first of all, you'll have the secured debt holders that includes bonds or regular secured debt. So what is secured debt? Secured debt is the easiest way, good example of a secured debt is if you have a mortgage. So your mortgage is actually backed by your credit worthiness, but also by the fact that the banks can actually repo your house if you don't make

your payments. So that's secured debt. So that's usually the debt for businesses that will be paid first if it goes into bankruptcy. The second one will be the unsecured debt. So unsecured debt is the opposite of secured debt. It's when it's not tied to an asset whatsoever. So a company is being loaned a certain amount based on, you know, its business, its operations, and so on. So it's really, it's, you know, it's a bit different, but it comes after the secured debt. And then obviously, you have preferred shareholders, I won't go into too much detail for that, and then regular shareholders. So the reason why bonds and debt are typically safer than stocks is because a company when it goes bankrupt bankrupt they're the ones who get paid first

so really the stockholders are the common shareholders like we are we invest in regular stocks are really at the bottom of the list so when a company goes bankrupt usually the regular shareholders get very little from the the liquidation of the. So that's a bit of a primer of how bankruptcy works, debt works. It's more complex than that, obviously, but that's the reasoning behind it. So in terms of types of bonds, so you have federal government bonds, whether it's Canadian or US government or governments around the world. You have provincial bonds, you have municipal bonds, and you have corporate bonds. So corporate bonds, the other ones are pretty self-explanatory. So they're issued by the federal government, provincial government, or municipal government.

And the corporate bonds are issued by corporations. Usually when a company issues a bond, whether it's a government or an actual company, so they'll issue the bond at a certain interest rate and the interest will actually be paid on a regular basis. And then when the bond comes to maturity, the company reimburses the set amounts of the principal amount of the actual bond. So that's a bit how it works. the principal amount of the actual bond. So that's a bit how it works. Bond markets can fluctuate as well, depending on if interest rates go up and down. I won't go, I won't talk about this right now because I'm just trying to give a primer. But if you guys want to know more about bonds and talk a bit more, we can maybe even make a full episode on it. We can do that. But I wanted to

just give a bit of a primer. So in terms of if you're looking to diversify in bonds, so there's kind of two ways to do it. You can buy the bonds directly when they're issued. Usually those you'll need bigger sums of money because they're not issued for $5 each. I think for the most part, it's usually $1,000 or even more when it comes to corporate bonds. So it might not be super easy to get your hand on one single bond if it's a huge part of your portfolio, depending on how much money you have to invest. Another option would be bond ETFs.

So they're usually low fees. They're just like stock ETFs. they're usually low fees they're just like you know stock ETFs they're traded on the stock markets but they will follow for the most part an index of bonds so same way that exchange or TFs works for stocks so a couple of suggestions for you guys to look into I'm not recommending any of them just I did a quick some quick research so if you're looking for Canadian ETFs for bonds to that are fairly lower risk is the Zed EGTO so that's a BMO bond fund or VAB teal that's a Vanguard bond. I think they track the same index if I remember correctly. Their fees are I think identical 0.08%. And they're mostly government bonds, but they're

about three quarters government bonds, and about 25% corporate bonds and the corporate bonds are investment grade. So investment grade means that the bonds are actually rated by a rating agency and they're rated well enough that the rating agency says there's a high likelihood that this will be paid. When you have bonds that are not investment grades, they're also known as junk bonds or high yield bonds. So these are all synonyms that you may hear. So I'd be really careful about junk bonds in this type of environment because, you know, it says that they're called junk bonds for a reason. So that's because those companies are not investment grade. So the rating agencies are essentially saying, you know, invest at your own risk in these bonds.

saying, you know, invest at your own risk in these bonds. Typically, when the worst a company is in terms of credit rating, the higher their bonds will yield. Why is that? That's because the higher risk it is, the higher the return investors will want. So junk bonds tend to, they will yield quite a bit more than either government bonds or investment grade bonds. But if you're looking to take more risk, I would not recommend it. But a high yield bond or a junk bond that you can look into is xhy.to. So those are just three examples of bond funds. There's like probably hundreds, if not thousands of them whether you want to you know have some that are more for canadian companies canadian governments u.s governments worldwide governments uh u.s companies you know um you know worldwide companies there's there's some

for pretty much everything uh but that's just a bit of primer on debt and bonds uh brayden japanese anything i went on a bit of a rant there? No, it's good, man. My only comment would be bonds are a snooze fest. No, I'm just kidding. If you are a young person and you're listening to this and you're thinking, do I need to be owning bonds? The answer may be probably not. I don't own bonds.

answer may be probably not. I don't own bonds. And the reason for owning them are stability in your portfolio because they do not sink like stocks do. When we saw, you know, a March's downturn. It doesn't happen to your portfolio in bonds. So it provides some stability. If you are looking at retirement in the next few years, five years, you might want to be switching that allocation from all stocks to some bonds. The 60-40 is a classic one you hear, 60% equities, 40% bonds. And then as you go to retirement, you probably go 60% bonds, 40% equities. Again, rule of thumb, I did feel good about my memory there as VAB and ZAG are the ones that I know and recommend if people are looking for bonds. Because 0.08, I think one of them, I think Zag might be 0.06. Regardless, we're talking about peanuts

here to own what is called an aggregate bond index. And like Simon said, this is a mix of government bonds and corporation-issued bonds that have long-term durations to maturity, short-term, mid-term durations. So what the indexes attempt to do with an aggregate bond index like VAB or ZAG, the two common ones, in this aggregate bond index, it's their attempt at taking the entire Canadian bond market and creating an aggregate index for it, just like the attempt to make an index about anything. The S&P 500, the TSX 60, again, it's just an index and they're matching it with an exchange traded fund that you just mentioned. So, I mean, they are a good option for people who want bond exposure. The fees are so cheap. And again, this goes back to why use a robo advisor when the bond fund on the ETFs are 0.06 or 0.08%, like that is peanuts compared to, you know, what Canadians have typically been paying for management is just, it's amazing.

It's great. It's very good for investors that this is, you know, a movement happening. Okay. Before we switch gears, Simon. I just wanted to add something. Yeah. So just as Braydenden said so if you're younger you probably want to be mostly in equities um andrew hallam our interview that we had the

millionaire teacher had a good note on that though when he said it all depends on your temperament so if you're you know you're young but you don't think you can handle like the volatility of a pretty big market downturn, you may want to get a little bit of bond, you know, allocation, just level that a little bit. If you don't, if you think you'll panic and you might sell your stocks, if it goes down, then you might want to consider a decent allocation to bonds, bond ETF that's a bit safer, like the ones we just mentioned. And the other thing that bugs me about bonds is this conception that bonds are always safer than stocks. It depends, you know, as a

whole, yes, they're probably safer than stocks. But if you take the stock of Microsoft compared to a bond of that was just issued by Carnival Corporation, the cruise line. Well, I mean, I can make a pretty good argument that Microsoft stock is going to be safer than the Carnival cruise line bond. So you have to compare apple to apples and oranges to oranges. Sorry, Brayden. Sorry to cut you off. No, that is a good point. The misconception that there's some safe haven is complete garbage.

I mean, if it's a purely government bond, sure, that's very safe. I mean, there's nothing really, no investment instrument more safe, perhaps. But think about the yields on corporate bonds versus what they're attached to. If it's attached to the corporation, it pays a dividend. I don't know why I wouldn't just take the yield and take the stock appreciation compared to owning its debt. I mean, again, they're not the same. You have to make an equal comparison.

not the same. You have to make an equal comparison. I just think in this current environment, bonds are, corporate bonds, the risk reward trade-off compared to owning high quality equity positions in common shares is just so much better to be an investor in common shares. But again, it's just my opinion. So before we change, man, I like your little COVID beard, man. You look sharp. You look handsome. What's going on there? That's new, eh? Yeah. Thank you. Yeah. I mean, I haven't really shaved all that much since it started. Just kind of trimming it a little bit because it was getting out of control and i was eating my my beard with my food so i have to trim that a little bit looks good man looks good all right tip of the day simon remind me man what were we talking about before okay so tip of the day and tim i know it was about uh air oh yes yes lines uh cruise lines and all that okay

so i'm getting peppered with questions about you know all the all the companies that are on the operating table right now i've those are the all the ones i'm getting questions about in terms of is this a good buy is this a good buy and and for one, I don't time the market. So I don't really have a good answer for you on timing it because I think that's a terrible investment strategy. But let's talk about these companies. So my take is that there are so many companies that are already discounted that are not on the operating table are going to be fine, are not going to be suspending dividends, are not going to have 80% cuts to revenue, are not going to have to get bailed out, are not going to have to take on credit that's just not good for investors. There's so many of those options out there that when I look at a company

where I have absolutely no idea when coronavirus is gone, when the country opens back up to business as normal, whatever that may look like, back up to business as normal, whatever that may look like. I have no competitive insight advantage, information advantage than anyone else you talk to on the street. And that's where my advantage of being a numbers-based guy completely falls out when I am now taking on some sort of wall street bet that i have no idea about so there are companies like carnival which talked about they're not going to get bailed out because they're not a can they're not listed as an american corporation um because they they don't want to pay the uh the wage rules on their ships

that sail all across the world. So they're not an American corporation, so they're not going to get bailed out. And the boats are at the ports, not producing revenue. If I look at all of the investment opportunities out there, why would you start with the ones that you go, oh man, this is really bad. This is a horrible situation. I get it. They're trading at supreme discounts to trailing metrics. They are trading at supreme discounts to trailing metrics, not forward looking, because no one knows what forward looking is. I don't care if some MBA on

Wall Street says, this is what earnings per share is going to look like in 2020 and 2021. I don't care that he did some crappy cash flow analysis and has seven degrees on his wall and has some incredible record of predicting earnings per share numbers across different companies because that guy has no idea what forward looks like when there's a pandemic all bets are off there so this is a roundabout way of saying there are a lot of good companies out there and there's a lot of good companies that have pricing power and there's a lot of companies out there that are gonna be fine gonna do okay even excel after this is all done come out as winners and when i look at oil and gas i look at airlines i look at cruises they are all in

industries that are heavily, heavily impacted. All the cash flow coming into the top line of the business, aka revenue, is just compromised. So I think there are better opportunities out there. And it is really easy to say, oh, science, it's trading at two and a half times earnings. Yeah, that was last year's earnings. What does 2020s look like? I don't know. Do you know? And if you do know, well, then maybe you have some great trade on your hands. But self-awareness here,

do you really know? Because not even the smartest doctors know. So I feel like I just got real passionate there, Simon. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense, and with them, you can buy all North American ETFs, not just a few select ones, all commission-free, so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself,

I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. That is questtrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire

a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host. Hey, no problem. I mean, for the most part, I completely agree with that. I've had friends ask me as well about airlines or cruise lines. I mean, Carnival is a great example. I was talking earlier about them issuing some debt for 11.5%.

So just to give you guys an idea, Microsoft's debt is trading at about 0.7%, so less than a percentage point. So Microsoft is as highly rated as you can get in terms of investment-grade bonds. rated as you can get in terms of investment grade bonds. But with Carnival paying 11.5% means that that's the only type of financing they could get. I mean, it's probably good that they did in all honestly, just because if not, they would probably just go bankrupt. They need the cash to survive. So that's just the reality of it. at the same time there's still no certainty as to when cruises will resume when airlines will start getting more people on even if restrictions ease a little bit okay maybe air you know airplanes start seeing more passengers but maybe they'll they won't be allowed to board more than have the regular capacity

to make sure that there is physical distancing in between a passenger. Maybe same thing for cruises, even though there might be demand, they might only be able to sell half of the cabins because of those same restrictions. Like we really don't know how it's going to be. All I've been hearing is that it's going to be staggered. That is the one thing when the economy starts opening. And for the most part, it probably won't go back to 100% to normal until well after there's a vaccine in place for these types of companies. That's just the reality of it. Even when there's a vaccine in place, it will probably take some time before people get back to their old habits of traveling, booking cruises and on. So yeah, like Brayden said,

they're cheap. They're cheap when you compare them to last year's earnings, trailing 12 months or whatever you want to use. But reality is even the experts in the industry don't know bleep about what's going to happen. No one knows. That's the reality of it. And don't read too much of the news. There's goofball governors in the states that are like reopening gyms and stuff like that just because they want to get their their economy going. I think that's really ill advised. And I think that's probably going

to be the exception to the rule. We're probably going to see these kind of restrictions go on at least for probably the next year, year and a half, probably not as intense, but some type of restriction in place. So yeah, all that to say, I agree with you on that. I would be careful. I mean, there's some really good companies out there that you can get for a discount. Maybe you'll get lucky with one of these cruise or airlines companies, but I personally would rather buy something that I can hold for years and years and years, if not decades, and get at a good price. For sure. Because if you look at, particularly, I get lots of questions about oil and gas right now with it being a hot topic. Even if it is cheap, I have majorly dodged a bullet

by having a simple investment rule of I don't invest in commodity-based businesses or businesses where one commodity price drastically changes their margins, which includes airlines. So, I mean, even if they're super, super cheap, it isn't in the investing rules that i've set out for myself and those rules have been the reason where i've dodged bullets and supremely beat the indexes both canada and the u.s um so i'm gonna stick to them even if those look super super cheap and i am a you know a value investor and i see you know I look at these and I think, whoa, so cheap. They're cheap on last year's metrics. So I don't know what they look like in the future. All right, guys, this has been fun. Thanks for listening to The Canadian Investor.

Tune in two times a week. We just launched like a bunch of episodes, including two interviews. two times a week. We just launched a bunch of episodes, including two interviews. So if you have to go backwards and look at those two interviews, go for it. We talked with Andrew Hallam this weekend about his book, The Millionaire Teacher, the first investing book I ever read. So it's always really cool to catch up with Andrew, see how he's doing. And if you're a beginner, that is just a great book to get your mindset right for long-term investing. And then we also talked to John, his last name is escaping me, John Valles from the Bitcoin Rapid Fire podcast. As someone who does not invest in Bitcoin, it was very interesting to hear his take on why a hedge to currency is interesting and perhaps more interesting now than ever. So that was very cool. And then of course,

you'll hear from Simon and I moving forward. Thanks so much for listening. Thanks for the kind messages. You guys rock and we will see you soon. Bye bye. The Canadian investor is not to be taken as investment advice. Braden or Simone may own securities mentioned on this podcast. Bye-bye. To get a list of the top Canadian dividend stocks right now and other valuable investing resources, go to GetStockMarket.com.