The Canadian Investor - Episode 7 - Income Statement, Adobe, HEXO and the Canadian Marijuana Market

Episode Date: January 13, 2020

This week on The Canadian Investor Podcast we talk about what we look at when reviewing an income statement. We then discuss HEXO and the canadian marijuana market followed by the software giant Adobe. We finish the episode with another Tip of the D’eh!--- Send in a voice message: https://anchor.fm/the-canadian-investor/messageSee omnystudio.com/listener for privacy information.

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

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We'll be starting off by talking about the income statement. After that, we'll talk about EXO, one of the marijuana companies, one of the major players in Canada. After that, we'll be talking about Adobe and we'll finish off with our tip of the day. Braden, do you have something to say to our listeners before we get started? Yeah, welcome back, everyone. I think today's episode will be interesting to a lot of people, especially Canadians with the kind of mania that occurred in the market with marijuana stocks as they entered legalization in October of 2018.

Obviously, to date since then, it's been a bit of a sad story for investors. So we're going to talk about our take on that, how you can avoid these kinds of mistakes in the future and some common rookie mistakes of things that rookie investors tend to get themselves into. And they get burned by these types of examples. So yeah, I think it's going to be a good episode. Yeah, exactly. So we'll start off by talking about the income statement. And in one of our next episodes, we'll finish off with the cash flow

statement so those are definitely the three major statements you'll be looking at if you're wanting to look at a company so the income statement the first thing that i look at is the revenue line so the top line so you might uh you might when you look at the uh c or any other financial network they might be saying top line a lot top line means revenue means sales so those are all synonyms that they'll be talking about bottom line means your net income so your net profit these are all synonyms as well so that's the first thing I'll be looking at I definitely want to see at least an increase in revenue, even though it might not be major. I want to see that revenue line, that top line increase.

Yeah, that's a huge one for me. I have a rules-based investing strategy and I simply do not invest in companies that do not have a proven growth of the top line or revenue. For very beginners, we want to invest in high-quality businesses. And high-quality businesses grow revenues over a long, long period of time and will continue to do so in the future. So that is an absolute must-check box for me. Yeah, exactly. And revenue, one of the things too, you might hear like these stories about back in the day, Brayden, you might be a bit too young for that.

But Enron, for example, you might have heard of that story. I don't know. You might have been in elementary school. I'm very familiar with the story. I was a young lad. That's for sure when it was happening. But yeah, I know what happened. Yeah, and it's a lot more difficult for companies to fudge the revenue line.

In terms of the rest of the income statement, there is accounting principles that they have to follow. You have in the US, you have GAAP, so Generally Accepted Accounting Principle. In Canada and a lot of other industrial countries. They have the international financial reporting standards, I think, if I remember correctly. And it's a lot more difficult for companies to fudge that top line, whereas the other items, companies can put something like one-time items, but they magically reoccur every other year or every year and things like that. So that's why why for me, the revenue is really important. So the next line will be the cost of revenue.

The cost of revenue would be essentially what the company, a lot of the expenses that go into producing whatever the company is producing. The next one, Brayden, do you want to talk about gross profits? Yeah, gross profit essentially is your first profit margin. You just have taken your top line revenue sales and then taken away the cost of goods sold. And that's or your cost of revenue. So at its basic principle, that's the gross profit before you get into any of the operating expenses that we can talk about here on the next line. So a healthy gross profit margin is definitely helpful. And what I find really, really interesting and a lot of really high quality businesses all have this type of characteristic where the revenue is increasing and the cost of goods sold will naturally increase as well. But if it's increasing at a slower pace than the actual top line, and that gross profit is trending upwards, that's a very good thing to be able to see.

And yeah, I think that one's pretty self-explanatory. It's just revenue minus the cost of goods sold. Yeah, exactly. So generally, you want that margin, like at least you want it to remain stable, at least increase a little bit. So now down the line, we'll go into the operating expenses. So there could be in there, you'll see restructuring, mergers, sales, general and administrative, research and development. There could be other operating expenses. So those are all part of operating the business without going into too much detail. I think you'll also have, you can correct me if I don't have this right. The one I'm looking at is the income statement of XO, so they don't have anything there.

But I think the operating expenses, do you have depreciation and amortization in there as well? Yeah, typically you will. You'll have depreciation and amortization in the operating expenses. And then that'll lead you to the next line item of operating income. It depends on the source you're looking at. I'm looking at QuickFS, which is a free source I like to use for 10-year income statements, cash flow statements, balance sheets. It's a very, very useful tool.

And it doesn't list it there as a line item. It probably tucks it in under other operating expenses, I would assume, but then if I look at another source here on CIBC, it's showing it as a line item as well. So I like the sources online that show you every single line item. Even if that line item is zero for that particular business, it helps you understand the whole picture and reduces a little bit of confusion.

But typically you'll find it in there, yes. 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. Calling all DIY, do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community

that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning, Duolingo-style education lessons that are completely free. You can search up Blossom Social in the App Store and join the community today.

I'm on there. I encourage you, go on there and follow me. Search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Yeah, exactly. So I wasn't sure I was looking at Morningstar. So as you guys can see,

we're looking at two different sources. Usually they'll be pretty similar in terms of reliability. However, it's always good to go into the actual financial statements when you're looking seriously into doing the homework for a company. You can use the sources like what we're using more as a screening tool, maybe to kind of rule out some companies. Just a quick note, depreciation and amortization, for those of you not aware of that, depreciation is usually when you have some equipment and you're slowly writing off the usage of the equipment over time. So that's depreciation. And then amortization is you're essentially say you're going to use something for a five-year period you're amortizing it so you're putting it over

those five years and basically splitting the cost into those five years instead of the year you actually purchased it in so those are things that sometimes people won't be a hundred percent of. That's why real estate investment trusts, usually they will add back in the depreciation is because the buildings usually won't be losing their value as much as it will show in the income statement. Yeah, that brings up a good point as well. I was lucky enough to, a few years back, interview a guy named Mihir Desai who is a Harvard business professor and law professor and he sent me an early copy of his book called How

Finance Works and how it basically leads to that true finance nirvana is cash flow items and removes a lot of the uncertainty and problems with looking at items like depreciation and amortization on an income statement. So a more important metric to net income is typically called EBITDA, which removes the depreciation and amortization and moves it to more cash-based metric. And then eventually, if you include removing capital expenditures, you're going to be getting to a metric called free cash flow, which is very similar to earnings, except you're taking away that line of capital expenditures.

So it's all kind of related and it links to the cash flow statement. But we're finding that analysts and big institutional funds have changed the way they invest significantly over the last 10 years to more cash-based accounting because that ultimately leads to what the company can then use to reinvest into the business or reward shareholders with dividends. So you're seeing a lot of these line items become not favorable for investors because companies are able to do some pretty funny accounting stuff and manipulate numbers in a way that can be kind of misleading. So moving to a more cash-based accounting system is very important, but it all comes down to the income statement first and how it leads to the cash flow statement.

So I'm going on a long tangent here, but basically the important part here is there are some pieces here in the operating expenses that can be accounting tricks. So be wary of that. And we've seen in the past, you talked about Enron, we've talked about Lehman Brothers. These are companies that were using accounting tricks and lying to shareholders essentially. And you know how that ends for everyone. Yeah, yeah, exactly. Just a quick note, EBITDA, it's what Brayden just mentioned. So it's earnings before interest, depreciation, taxes and amortization. So I think I messed up a few

letters in there, but that's essentially what it is. so you'll see analysts using that quite a bit so next on the income statement one of the lines I pay the most attention to especially when a company has a decent amount of debt is the interest expense so this is what they're paying in interest costs I usually I'll try to compare that to their EBITDA what we just talked about because that'll tell me before all those expenses, those non-cash items, how much money that they're actually producing and how many times they're actually covering their interest expense. Yeah, that's a great point. So, have we got to the bottom line yet? We're about to get there, yeah.

Okay. So you want to fill in the gaps. I don't know where you finished off here. Yeah, just the interest expense. So there's other – yeah, we can look at – I guess the most important after that is probably net income and then cash flow statement that we'll look at in another episode. then a cash flow statement that we'll look at in another episode. Yeah. So once you get, you know, you've reduced your cost of goods sold and got to gross profit, typically that'll be a bolded line on the statement. And then it'll list your operating expenses and you'll get another bolded line of total operating expenses. And under that,

you know, you'll get another line that says operating profit. So operating profit is typically, what is the actual profits of regular operating activities, typically? I mean, sometimes you're getting depreciation amortization in there, which can be confusing. And then you go into net interest income and other non-operating income to get pre-tax income. And then you're going to be paying your income tax to get net income. And if you're not looking at an income statement right now, this is probably hella confusing, but essentially that all boils down to the bottom line of net

income. And net income is the bottom line of the income statement, but is the top line of the cash flow statement. So you're seeing how these are all starting to work together. Now it is the first line of the cash flow statement. So how these statements all work together, the three financial statements, they all start to come together once you start analyzing certain companies. And I think that's where you kind of come up with a story when you're looking at these. And a source that I talked about before, quickfs.net shows you 10-year statements for all of these items, which is actually very difficult to find on the internet. Yahoo Finance will only give you four years. Sometimes your brokerage account will only give you three years.

So if you know any awesome other free tools, feel free to go to GetStockMarket.com and drop us a line on what you like to use. But QuickFS.net is a very great free tool. Yeah, I've looked at it and I've used it a few times. It's definitely really nice. looked at it and I've used it a few times so it's definitely really nice. So and in general basically the income statement I think what's more most important to understand is it'll give you an idea especially of the sales growth of the company, what the cost of the company of doing business as a whole and then their profits but it's important to understand that the way the income statement is structured, even though it doesn't necessarily represent exactly the cash coming in and out of the company because of the

reasons we mentioned, for example, depreciation and amortization, well, those are non-cash items. So that's why they're added back into the cash flow statement. So that's why it's a good thing to understand, but there's a lot of emphasis put on earnings per share, price-to-earning ratio, and so on. So stocks on a short-term basis I find will move a lot with earnings per share. But if you kind of factor everything in in the long term, if you do a good analysis of the company, it should pay for you in the long run. Any more comments on that, Brayden? No, I think that's good. We should move on to some fun stuff. Yeah. Talk about some companies. So I guess I'll start off with XO. I know we've had a few requests about talking about marijuana stocks. I know XO pretty well. So because we just talked about the income statement, I think it's interesting to look at XO's income statement. So if you're looking, I had to use the quarterly.

So the last five quarters, I don't love using quarters usually because it's very short term. But because marijuana was legalized in late 2018, XO did not have much in terms of revenue back then. So if I'm looking at the last quarter of 2018, they went from 5.6 million after that to the next quarter, 13 million, 13.4, then the next one 13, then the next one 15, then the next one 14.5. So you can see they kind of leveled off a little bit in terms of increase. And it's hard to make a case that cannabis cell will increase during the holiday period. I feel like that's probably fairly steady throughout the year, technically, for people's consumption, maybe a little bit around Christmas time.

For them, what's really alarming is the cost of their revenue has gone way up, way faster than their actual sales increase. There's other issues, which I'll talk about, about Excel. But if you're looking at their operating income, so it's well into the negative. There's the same for their earnings. It's not looking good. They are going more and more in the negative. And that's also reflected on their cash flow statement. Their free cash flow has gone from 50 million in the negative per quarter. So the last two quarters, it was 120 and 79 in terms, obviously,

million. So in the negative again. So it's really not looking well for them. There's a few issues that are plaguing XO and the marijuana sector in general. So first of all, people got overly excited. So there was definitely a bubble for marijuana stock. Everyone that I was talking to, I was trying to tell them, look, this is just FOMO. So fear of missing out. People are just going crazy. This is just FOMO, so fear of missing out. People are just going crazy. They were making, I remember in like late 2017, and they were just making these ridiculous predictions.

Like I could see articles saying like, oh, the cannabis market will be 10 billion. It will be 5 billion. It'll be like no one really knew because it was a black market. So how you really know what the the toll market will be not only that as there is competition the margins margins would most likely shrink which is what is happening there were some production issues so there was a lot of things as a sector as a whole that was not going well i know in ontario they were also slow at rolling out retail licenses that affected sales but for EXO specifically there's a couple things that came out in the last three months that are super alarming that makes me think they're really desperate for cash so in October they came out and said they were laying off 200 people so this is not a huge company. So 200 people is a lot of employees. Shortly after

that, they came out and they announced that they had secured a deal with a group of investors, including the CEO, that this group of investors would be offering $70 million in terms of convertible debt. So what that means is they're essentially issuing debt to EXO. They're getting 8% in return in this case but they have the option to actually convert it to stock afterwards. What that tells me is if you combine that with the layoff of employees and the fact that the CEO has to put money in, it starts to tell me that they're getting desperate to get funds and you can see that their cash is going way down in their cash flow statement and

their income statement sorry well you can see it there but their balance sheet as well so you can see that their cash and cash equivalents is actually dramatically going down and then the last thing that really really hurt them is about two weeks ago a bit less than two weeks ago they announced that they would be issuing 15 million shares at a price that was 15% lower than the previous close to an institutional buyer and that they would give the institutional buyer a 7.5 million extra shares as an option for them to exercise in the future. So what that tells me is they had trouble getting institutions to

actually invest in EXO. So they had to give a steep discount to get that money in. And they had to swing the pot with an extra 7.5 million shares. So those two combined together represent about 10% of their outstanding shares. So it represents a lot of dilution for existing shareholders. And it also tells me that if they're willing to take that deal, they're really desperate. They probably can't get any loans from banks or any type of financial institution. get any loans from banks or any type of financial institution. And they have trouble finding institutional buyers that are willing to invest in the company at a somewhat fair price, I guess. And having said that, the last thing for me for EXO is even with all these things, it's still trading at 7.5 times sales.

They're still losing money. And just to wrap your head around it, 7.5 times sales is, I would go to you and just say, for example, so this company produces $100 a year. I'll sell you this company for $750. So that's essentially what it means. And by the way, it also loses a lot of money. So does that sound like a good deal to you?

I'm not sure, but to me, it does not sound like a good deal. 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. Calling all DIY, do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked.

The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas

and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Simon, man, I think we're going to have to get you as an analyst in the weed stock market here. You're a wizard, man. Yeah. Well, this one I was keeping an eye more on it because I had friends and family that invested small amounts in them even though I was trying to convince them not to. So I've been keeping an eye on it a little more, yeah. Yeah, just so you can, I told you so.

Yeah, no, so I'm gonna hit you with a couple of questions here. So, I mean, XO has been, it's a weed stock that is down 82.5% since it's high in April 2019. I had been writing blogs about not this name in particular, but the sector entirely trading at over 200 times sales way back in the mania. And I just couldn't come up with any certain valuation or how anyone was coming up with any valuation. So I was writing blogs about it just with the, hey, go ahead, but be aware that this is very possibly a bad, bad idea.

But if you want to, you know, go ahead. Throw some money in there with a reasonable amount of money. You know, don't go throwing your nest egg into Canopy Growth Corp and think it's going to be a good idea. So I've been writing about that a lot. And so weed stocks in general, since, you know, the legalization and the hype built up to them, is a really funny thing that I think about all the time because it was a time when, you know, I've only been out of school for now two and a bit years. And it was a time where all my friends had just come out of school, just started working, have some money and are putting money into Bitcoin

and lead stocks. They were both going popping off like 10% a day. It like, you know, that was a, that was a slow day for them, you know, you know, 10% gains this. So everyone's making all this money and thinking that they're absolute geniuses. And, um, you know, knowing that I, you know, have a website stratosphereinvesting.com and all this stuff they're asking for my opinion on it. And I'm just saying, be careful, be careful, be careful. And they're like oh you're an idiot it's so easy you just make 10% a day it's so easy so you know that fast forwards to to now and no one's talking about the stocks anymore funny how that is right so I like to use you know the old cocktail party analogy where if you if your most casual investor can't stop

talking about a particular company at a cocktail party, be very wary. All the time, Peter Lynch talks about this on One Up on Wall Street, and he has some hilarious quotes about these types of cocktail party stocks. So do your due diligence if you want to invest in weed stocks, because I do agree that the overall market is strong over the long term. Just don't go throw your whole nest egg at Canopy Growth Corp or cannabis, or in this case, Hexo. That is my takeaway. And I hope listeners take that with some seriousness. All right, let's move on to my favorite part of the show where people ask us certain companies that we'd

that they would like us to talk about. And in this case, friend of mine, Seth from Oakville, Ontario would like to know about Adobe systems. He says myself and the photography community that he works in are very interested in knowing about this because they use their products all the time, every day, and they have such a strong grip on the market. Um, so no, is this a, you know, a good company? Is this a good stock? So I'll answer my quick take on it. So is it a very good company? Absolutely it is. Is it a very good stock?

I'm not sure. And I'm going to talk about that for the reasons that I'll list here. So let's look at a couple things here. So if we're looking at an overview, they have a ridiculously high return on invested capital of 35%. And from a qualitative perspective, Adobe has such a tight grip on their market. Seth even mentioned that photoshopped it is a verb that people regularly talk about when editing photos so that you're going to Photoshop it. And it's all on subscription revenue SaaS type models

that we've talked about a bunch on this podcast, which is really predictable revenues and then leads to really predictable free cash flow and free cash flow growth. So they've been growing the top line by double digits. They've done over 20% for three years in a row. And so the top line is growing very fast. Let's talk a little bit about valuation. It's trading at 55 times earnings, which is quite expensive and more expensive than SaaS models I've seen in this space with similar revenue growth numbers, more expensive. However, do those companies have the grip on the

market or the moat that Adobe has? I'm not sure. I think Adobe has one of the best moats in software entirely. So they're trading at 15 times their book and almost 15 times their sales and 50 times enterprise value to EBITDA. This stock is crazy expensive and for the amount of growth you're getting, I think it's too expensive. However, in the long term, if you own high quality companies that are growing with a competitive moat, if you pay a little too much for them over a long, long time period, it'll probably work out

for you. Right now, I think this stock is crazy expensive and I'd be sitting on the sidelines in the meantime do you have anything to add to this one on Adobe here I mean not too much I mean just looking at it quickly obviously they're pumping out free cash flow like crazy their revenue have been increasing steadily so those are all the things that we want to be looking at the balance sheet looks solid but again i think you're paying like brayden said a pretty high price for it right now but they have done a really good job of transitioning more of a you know you had to buy the software back in the day when brayden was in elementary school but when i was a bit older but no you had the ageist yeah I know exactly I was gonna say

earlier oh you finished at what elementary school two years ago yeah I just graduated from middle school exactly but no they did a really good job of transitioning to just software as a service company a bit like Microsoft Microsoft has done a really good job of doing that too. So yeah, I have not knowing the company super well, but I know their products are really sticky. And from what I've heard and read, I think it's a good company. But again, I think it's the kind of company you probably want to buy at a fair price. You probably will never get it cheap.

Yeah, that's the thing, right? So often when we get these requests for these companies, typically they're very popular companies and they're usually very expensive because they're fast growing or have very sticky moats. So we don't mean to be those guys that are like, oh, it's too expensive every time. These recent examples have been trading at very high multiples, but Simon brings up a good point that very, very good companies don't trade at deep discounts very often or ever. So that is something to keep in mind. If you thought I was wrong about Amazon when it was a third of the size it is now. I kept telling

people that it's way too expensive. How do you buy something at 250 times sales, blah, blah, blah. And although I stick by my rules-based investing and I still will in the future, sometimes, you know, paying a high price for a high quality business works out in the end. So this is the, you know, the art of investing and what makes it difficult is these types of situations. What I do find interesting about Adobe is up until 2013, free cash flow was basically stagnant and so was revenue. Pretty much everything was stagnant up until around 2013. Everything kind of started exploding. They were hitting double-digit growth every year from that point forward. I don't know offhand if that's exactly when they transitioned the business to SaaS or not,

but whatever they've been doing in the last five years has clearly been working. Yeah, and they don't pay a dividend, but they've been buying in the last five years has clearly been working. So yeah. And they don't, they don't pay a dividend, but they've been buying back stock like crazy, like really crazy. So I went from 600 million in 2014, 625, 2015, 1 billion in 2016,

again, 1 billion, 2017 and last year, 2 billion. So they've been repurchasing. Oh, wow. Yeah, they are buying back a ton of stock. Trailing 12 months is $2.5 billion.

Yeah, so I think they'll probably either continue doing that or pay a dividend. I mean, you can make a case that it might not be the best capital allocation given that their price is so high, but you probably could have made that case about a year and a half ago and their price has gone up since then so yeah that's the thing right like it's we can do a whole episode on buying back stock right it's it's such a it's such an interesting topic because you want you want the companies to buy back stock because then you become a large shareholder but then you go well i definitely don't companies to buy back stock because then you become a large shareholder.

But then you go, well, I definitely don't want you buying back stock at exuberant prices. So it is one of those really tricky ones. And yeah, I mean, they seem to think the stock's undervalued in 2018, buying back $2 billion and almost $ and a half billion in trailing 12 months so very interesting thing you you point out there so uh do you have anything else for adobe or should we uh transition to our tip of the day no i'll let you uh fire off the tip of the day d apostrophe a yeah so the tip of the day today is uh don't buy a stock just based on one share of the stock. So the price of one share. I think XO is a great example of that.

It peaked around $10 about a year ago, not even a year ago. And now it's at $179 a share. You can make a case, yes, in actual dollars it is cheaper. Obviously 179 is much cheaper than $10 a share. However, when we look at the metrics like we just discussed, it still trades at 7.5 times sales like I mentioned earlier. So it's still pretty expensive. And on the other end of the spectrum, you don't want to be buying a stock just because it keeps going up. So kind of the fear of FOMO, so fear of missing out. You don't want to be just buying a stock because, you know, oh, it just keeps going higher.

I'll miss out and so on and not do your due diligence because of that. Because those are situations when you can really make a mistake. Yeah, that's good to bring up. The notion of buying or not buying a particular stock because of something happening on a chart should never really be part of your hypothesis. A lot of people believe in momentum investing. And although there's been

some studies that it, you know, could work, this should not be a long term investing strategy for anyone that, you know, brings any kind of real success. So same goes with a company that is trading very cheaply at attractive valuations, but has just had a massive run-up. That shouldn't be the reason that you don't buy the stock because you think you've missed out on it already too much. So it goes both ways. Yeah, so that's it for our show today. Thanks everyone for listening.

And as always, if you have questions for us, go to getstockmarket.com and we'll be we'll do our best to answer as many questions or do the stocks that you guys want us to talk about the canadian investor is not to be taken as investment advice braden or simone may own securities mentioned on this podcast always make sure to do your own research and due diligence before making investment decisions. Thanks for listening to this episode of the Canadian Investor. To get a list of the top

Canadian dividend stocks right now and other valuable investing resources, go to GetStockMarket.com.