The Canadian Investor - How Often Should You Check Your Portfolio?

Episode Date: December 19, 2022

Psychology can be an investors’ greatest asset or downfall and how often you look at your portfolio returns could have a big impact on that. We discuss if you should be owning stock in the company you work for and answer a listener question about navigating taxes in a non-registered account. Tickers of stocks discussed: MSFT, PM, EL, ADP, IDXX, PEP, SYK, MKC, V, WAT, BFB, AMZN, META, GOOGL, INTU, MTD, CHD, ADBE, NKE, PYPL, OTIS, VRSN, SBR, FTNT, MASI Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital 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. Register for ShakepaySee 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 Belanger. The Canadian Investor Podcast. How are we doing? Today is December 14th, 2022. Welcome into the show. My name is Brayden Dennis. As always, joined by the very famous and insanely wealthy Simon Belanger. We're going deep into the thesaurus of names

here for Mr. Belanger. Now, Simon, we got a good episode today. We're going to talk about all kinds of frameworks, some famous investors, some listener questions, and I'm going to go into a deep dive on it. If you stick around a stock that I recently trimmed, which is something I don't very often do and my thought process around that, how are you doing this morning? Did you do your morning stretching? Is there a morning recording? Has the stretching been crossed off? Stretching has been done. So I'm all, you know, I'm nimble as a 32 yearold. Dude, you are very dedicated to your craft of stretching. I'll kick today's show off with something I thought was interesting I saw on the internet,

which was a part of a book called Fooled by Randomness by Nassim Taleb. I know it's quite popular. I have not read it. So it's called Fooled by Randomness by Nassim Taleb. I know it's quite popular. I have not read it. So it's called Fooled by Randomness by Nassim Taleb. And someone pointed out an illustration, a guy on Twitter, MT Capital, showed it to him. He's actually a Canadian lad, good lad. And it shows a table. And what it means is if you, on average, check your portfolio on a certain frequency, what is the probability you will have seen a gain on the market? So if you check once a year, Every quarter, 77. Every month, 67. Every day, 54. Every hour, 51. Every minute, 50.17.

And every second is basically just flip a coin. And so this is using a hypothetical portfolio with a 15% annual return and a 10% standard deviation. So if those numbers seem high, like a year of gains happening every 93%, that's because this portfolio is doing 15% on annual returns. So it's not the market. So it's a very good performing portfolio. But it just goes to show, the less you open your brokerage, the more likely you are to think you're on the right track. You know what I mean?

It's like, if you check your portfolio every day, and you are crushing the market with this amazing portfolio, basically flip a coin. Every month, every quarter, still, you could just see red almost half the time. So, you have to zoom out and remember that in the short term, this is not where gains are made. And that's why the book, I guess, is called Fooled by Randomness. Because this mathematically can fool an investor into thinking that they're either doing something really right or something really wrong when they're actually just being fooled by short-term randomness. So, I thought it was an interesting little statistic to bring up on today's show. Yeah, yeah. No, and I like that you just said the caveat of 15% annual returns.

As I was saying the numbers, I'm like, hmm, this seems high. Let's just say, I mean, I think that's probably a little unrealistic, the 15%, but I think that, the spirit of the post and the book, I think is just to show that to me is just sample sizing, right? So, if you have a very small sample, meaning that you're checking very frequently, then the probability of seeing gains become much lower. And then if your sample size gets bigger, bigger, bigger, and I mean, I can imagine if you're getting 15% a year annual return on average, if you look every five years, it's probably near 100%. And 10 years, it's probably 100%. Right., I think it's just, yeah, it's kind of

if you understand probabilities, I think that makes a whole lot of sense. There has never been a rolling 20 years in the history of public markets that you've seen a negative return on any rolling period ever. And so, that gives you some important context on, yeah, there's randomness on the short term, but over the long haul, that kind of sorts itself out statistically. giving time and my friend asked me about a specific situation. I won't say his name and obviously I won't say the company I'll be referring to just because I don't want to single him out, but he's been with his company for a while, which is what most people would consider a blue chip company and that blue chip company is listed in Canada. He's been with a company for years, has accumulated a lot of stock through an employee

stock purchase plan, where his employer will match up to a certain amount of stock that he buys for their stock. So that's not uncommon for public companies. They'll offer a matching program like that. It's a bit similar, I guess, to some companies where they'll do a pension plan or defined contribution matching. Some will offer stock if they're publicly listed. He's done extremely well over the period of time with this plan. Just for context, the stock in question has almost had double the returns of the S&P 500 over the past five years, and it's better the further you look. It is listed on the tsx so needless to say that it's crushed the snp tsx so obviously that is affecting his reasoning a little bit and now he was asking me if he should sell some of

his stock because the price has been a bit volatile recently and that he could sell just a part of it to pay off his mortgage so what i started by started by asking him, I'm like, okay, well... You know this whole time I'm like trying to do the math on which ticker it is. And I think I have a pretty good guess. I can tell you offline, you know. I can tell you offline which company and I think... I don't know if you'll have guessed it, but it pays a dividend. I'll just say that. Not a big dividend. Oh, okay. I was wrong then. I'm back to the drawing board. One second while I just go look up more tickers. So the first question, I asked him two questions. So do you have a pension? And he said that no,

he doesn't have a pension. And do you have other stocks or investment? He said that he has tons of equity in his house, but that his company stock was all he had in terms of other investment. So I basically, what I told him was to just forget about his mortgage for a second, what he was wanting to do or potentially contemplating selling part of the stock to pay his mortgage. I said, think about it this way. Your salary is dependent on your company and all your investments are also, excluding your equity in your home are also dependent on this company now what if something bad happens to the company and say you lose your job and you know

because they're doing job cuts and consequently the stock is not doing well it gets smashed you responded that well it couldn't happen i said look as unlikely it may be it could still happen because you don't need to look very far and i'm sure you've heard these stories before if you just think back about general electric so ge ge was once considered as blue chipper as you could find i mean if you go back about a decade ago, just ask, you know, if you ask people back then to name one blue chip company, I'm pretty sure GE's name would come up a whole lot. It may not be the only name, but that was, you know, even me in my mind, that was a company that just, you know, instinctively was a blue chip name. And I remember reading several stories about employees that had been

with GE forever and had accumulated large sums of GE stock through a similar program, but never bothered to diversify because they thought nothing bad could ever happen to GE. Well, those employees lost a whole lot of money in the last five years, and some even lost their jobs with GE. And you can just Google it, you'll find a whole lot of money in the last five years and some even lost their jobs with GE. And you can just Google it. You'll find a whole lot of stories like that of employees specifically with GE that were in that unfortunate situation. So you probably guessed it at this point. I basically said personally, if I was in a situation, I would sell a very large portion of the stock that he had in the company and use that money to diversify out. Whether it's an index fund or other stocks.

Probably an index fund because his knowledge of the stock market is not that great. And I just make sure to also do it in the most tax efficient way since it was not a registered vehicle. efficient way since it was not a registered vehicle. Now, no matter how great the company is, having all your eggs in one basket salary investment is just a whole lot of risk, even as when you're looking at really good companies. And, you know, you can also translate that to other professions. I know like there's a lot of realtors that, you know, were getting their income from selling homes and they were also buying real estate. And I'm sure there are some right now that have no other investment that are in tough spots. So you have to be careful and make sure that you're prepared for the worst case scenario, because as unlikely as it may be, it can still happen. Three thoughts. One, I am very confident on the ticker now.

Okay, okay. I think I know. Don't say it. No, no, I won't say it. I think I know within a 95% confidence interval here. The math is all checking out. Two, I've seen this countless, countless times. You get Canadian blue chipper company or, you know, globally you're in the US, whatever.

And you work in there, you're getting the stock purchase program, like the employee purchase program, which is great, by the way. But you accumulate like so much of your net worth in the company stock and your employment. That's not like what people typically think of as having all your eggs in one basket. Usually they mean like your portfolio. This is like your life, your whole, like every egg is in that basket. So it's just kind of like risk management 101. I know it's become such a cliche, like, you know, eggs in one basket has become such a cliche thing. But I mean, there's merit to it, right? Like you can't have some black swan event just completely destroy you.

And three, this goes back to what we've been talking about so much and what I'm going to be talking about again in this next segment, which is, yeah, GE. I mean, the blue chip of all blue chips, right? Like you couldn't get fired for buying GE back then. It was so diversified as well, like the actual business was and still kind of is just not that great anymore. So, yeah, you have to value what you don't know. Because predicting the future is incredibly hard, especially in business, because business is a very competitive game and things change. So I agree with this, especially if you've acquired tons and tons of company stock over a 30, 40-year career. I used to work at Magna.

I knew people that had worked there for 30 years and had literally millions and millions of dollars in the stock and no other securities, no no other like, luckily, the stock has basically matched the index during that whole time. But if it hadn't, oh boy, that would be a recipe for disaster. Yeah, exactly. And I think there's also a confirmation bias, right? Because it's performed so well over long periods of time that people automatically think is just going to keep happening this way. And unfortunately, that's not the reality. Things can happen. The G is just an example that made the news a whole lot. But I think it's great that you added, you know, just add Magna here was in the same situation. So I

think, you know, personally, I would definitely take advantage of these programs for sure. But when you can sell the stock, I mean, there's nothing wrong with keeping a small portion of it. That's fine. But definitely diversifying out, I think you'll be sleeping much better at night. You probably were, you know, some were probably sleeping well, but probably not realizing the amount of risk that we're taking on. Because you got to think, right? Like, if you didn't work there, would you own a single share? In many cases, probably not, or at least maybe not. And so it's an interesting thought exercise. 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. All right. Let's talk about something I recently did a couple of days ago now, which is something that may come to as a shock to many people. And I'm going to explain my thought process. I was a little surprised when you texted me about it.

Yes. Well, of course. Of course. I mean, just not too long ago, I was telling you about how I was adding shares. I recently trimmed my alphabet position, Google position. And here is why. Okay. So before, you know, it sensationalize it, I'm still very long the stock. It is still a very large position for me. That context is incredibly important when you hear something like this. So I try to match my conviction for the business to be able to maintain their competitive advantage with portfolio concentration. I do my best to match my conviction with weighting of a position in my portfolio. Because my conviction for the business to be able to maintain its competitive advantage results in my conviction for them to be able to sustain wonderfully high returns on invested

capital inside the business like Alphabet achieves. Now, the reality here for me is that the search engine results page, which is internet markers, we'll just refer to as the SERP, which is the search engine results page. When you type in Google and you type in the TCI podcast, what are the results that come up? That's the search engine results page. And this is where they make all of their operating income. I just don't believe that it's going to look the same in five years from now. My level of conviction to project the future of search has changed. Now, Google Cloud, the GCP, and YouTube are also fantastic businesses, lots of room to run, and they have a lot of optionality. Currently, where it stands,

Google Search is one of the best business models imaginable, regardless of what the future holds. So I still in a position, it's still a fairly large position. And this update will be reflected in my latest joint tci.com portfolio turnover update in about 15 days or so. Here's where I'm going with this. Machine learning is already quickly changing people's habits with those who are early adopters to new artificial intelligence tools like chat GPT. All right. And it's not just like, oh, here's some new fancy thing. It's like, they can't even run the demand for how much people want to use it. And it launched like, what, a week and a half ago?

Like probably they haven't disclosed it. It hit 1 million users in four days, I think four or five days. It got up to 5 million quicker than it hit one. And that was like over a week ago. I wouldn't be surprised if over 20 million daily actives are using this. There has been whispers that Google had a

all hands on deck, like emergency meeting about like, what's the future of search? And there's a couple of things here, right? Google is a powerhouse in artificial intelligence and machine learning. They 1 million percent have the ability to serve up a competing product that they probably already have and tie it into search right away. They already have the distribution, the data, the existing R&D, the computing infrastructure, the scale, the talent. And if they're able to navigate this as the winner and give people even better results using machine learning, they're going to be rewarded because they can maintain their high ROICs, the moat. And I am completely unconstrained as an investor where I can increase

my position if my conviction changes again for the positive on this exact front. And they're already using tons of machine learning in the existing SERP. But the SERP, the search engine results page, will undoubtedly look different. And they have what is called an innovator's dilemma. If you don't cannibalize yourself, someone else will, which is a Steve Jobs quote, which is, if you don't cannibalize yourself, someone else will. So this is a business and stock I speak incredibly high of. I talked about like two months ago, like on my watch list, like I know everyone knows what this company is, but I'm buying more of it. And it's an investor's job to remain completely unbiased

and change opinions and frameworks with presented new information and a different landscape. So I'm still long the stock, but I'm just committing to the way I operate, which is matching my conviction to be able to determine the future with position waiting. And the SERP will look different in 5 to 10 years from now. That's what they're monetizing. It's not that they can't navigate around it, but I don't know what that looks like. And so, that's the segment. No, no. I think it's a good breakdown. I mean, you convinced me. I'm selling my Google position. I'm just kidding. No, for me, it's... Just put in a sell order.

Yeah. No, for me, it's a much smaller position than Braden had. And I kind of saw that as an ad play, but obviously, this would potentially affect the a lot of their ad business if it goes sideways the ad business exactly so I think it's smart to probably just edge a little bit here and you know not having too many eggs in the basket for something that could be disrupted and if it's not disrupted and they are able to pivot, you'll probably still have enough of a position to benefit from it. That's right. Yeah, like it's went from like a top three or four position to top like 10. So, I mean, it's not like it's still quite in size.

I'm long the stock. So, that context is incredibly important when talking about trimming something or selling something. Yeah. And we've talked about that a lot, right? We've done a couple episodes over the years about portfolio allocation. And now it's such an important tool to be able to mitigate risks that you might see in certain businesses and also reflect your conviction in the business. And I think that's what you did here. You saw some additional risks. So, you're kind of mitigating that a little bit. Yeah. And new tech comes all the time. And it's always, especially like how many times has the AI revolution come to like, my entire lifetime, I've been told AI is here, AI is there.

My entire lifetime, I've been told AI is here, AI is there. It was the first time now that the general population is interacting with its greatness, is within the last two months-ish. And 2023 is going to be the year of an absolute bubble in both private and public markets with artificial intelligence. Just wait. It's literally going to be the NFT BS of all these companies being spun up that are just being run on top of the APIs of OpenAI and Stable Diffusion and stuff like that.

Yeah, it's taking over the electric vehicle. What was it a couple years ago the bubble with nicola and all that yeah nicola and something lucid motors yeah those were all zeros like it was so obvious being sued or charged or something like that i think the nicola ever melt was it trevor milton that was yeah trevor Milton. I think he's being sued by the SEC or something. I remember seeing that. Nicola founder Trevor Milton found guilty of fraud. Found guilty.

Yeah. Okay, never mind. Found guilty of three counts of fraud. That's actually quite a lot. Don't worry, buddy. SBF will talk you on that i think he's up for like 12 counts of fraud or something yeah something like that and i mean yeah you don't want to be and also defrauding the u.s government which is never a great charge and anyways we've talked about that already we won't

go again but yeah i'm sure we'll have some more news it's gonna be a especially when this goes to trial it's gonna be something else i think i'm just getting my popcorn ready for the documentary you know there's gonna be a documentary and a full-on movie yeah oh and a movie yeah yeah and a movie about the making of the movie dude i absolutely love white-collar crime documentaries because it just blows my mind how sociopathic some of these people are. It's actually just hard to comprehend. Yeah, no, exactly. So now I'll move on for a question from a listener. So a question from Amanda.

So she was wondering if we could do a segment on tax implications of trading stocks. I've heard that stock held for a certain period of times or tax differently than short-term ownership. If you sell at a loss, are there tax implications? Does investment income affect your tax bracket? And she says that she's maxed out her TFSA, which by the way, good for you, Amanda. And I'm in the lowest tax bracket and will remain there. So I don't see a benefit to a RRSP. So I have additional- Hey, by the way, Amanda, you mentioned low tax bracket.

So the lower income, but maxed out or TFSA. Yeah, well done. That's not easy to do. That requires a lot of savings, discipline and great job. And she said she has additional investment in an unregistered account. She's crushing. Yeah, she's definitely doing very well here. I don't even have my TFSA maxed out, but I'm working on it. Well, first, I think just before I get started,

this is just for information purposes. And obviously, this is not investment or tax advice. Make sure you do consult a tax professional if you're seeking advice about your personal situation. Now I've said that I broke it down in about four parts because that's kind of what I got from your question here. So the first thing for the taxes if you hold a stock for a short period of time versus a long period of time as far as I can see there is no difference in Canada. I think where the confusion comes from is in the US, if there is a short-term capital gains and a long-term capital gains. Essentially, if you hold a stock for less than a year, you have the short

term, which is taxed at a higher rate, and then the long-term capital gains if you hold a stock for more than a year. In Canada, capital gains tax happens when you sell a stock at a profit in a taxable account, so unregistered account. 50% of the capital gain is taxed at your income tax rate, at your marginal rate. For example, if you buy a stock at $100 and sell it for $150, you made a profit of $50, So 50% of this or $25 will be added to your taxable income and tax at your marginal tax rate. So the marginal tax rate, I know sometimes people are a bit confused by that. It's just whichever rate you are at in Canada and in the US too. It's a progressive tax system. So usually what you'll have is the first like 13,000 that you

make, it's tax exempt. And then the next bracket, so the next 13 to let's say 25, I'm just going on that will be taxed at 20%. And then the next one, so it's not like you have a whole rate, what your employers will do is they'll kind of project what you'll make and they'll smooth that out on every pay. So you have a consistent amount. But that's important to understand because even if you jump a tax rate, it's not like your whole income will be taxed at that rate. It's just that extra amount. I just wanted to clarify that. Before I get to the other points, anything you wanted to add, Brayden?

No, I'm good. You're dealing. Let's keep going. Okay. So if you sell stock at a loss in an unregistered account, it means that you will have a capital loss, which is the opposite of capital gains. You can use that to reduce your capital gains. And the nice thing about capital losses is you can carry it forward to another year indefinitely until you need it. Obviously, that could always be changing in the future in the Income Tax Act, but that's how it stands right now. You can also use the loss to offset gains during the three previous years, which is something I actually didn't know until I read about this.

I actually learned a little bit as I was doing the research. And the last question I think that you had is, does investment income affect your tax bracket? Like I said, it could, but not necessarily. I wouldn't worry too much about it since it would be taxed at your marginal rate, like I just said. And essentially, you know, if you do have capital gains, it's a good problem to have. I think that's one thing to remember. You know, I think you have to be careful sometimes with tax loss harvesting, which means you are at the end of the year, like right now you're looking at your portfolio, you're like, okay, I made some money this year on capital gains, what can I sell to offset it, that can be a bit of a tricky proposition,

because sometimes you may end up selling a company that's actually pretty good, it's just having a hard time. So, I would just say if you do have capital gains in a year, it's just a good problem to have because you've done pretty well. This is good. I mean, again, this is your personal situation. Can't know for sure at what rates, you know, your brackets in. I think for the most part, this is a good breakdown. The best part about the TFSA is that we just, it's just a blanket statement. Like,

yes, like use it. You don't have to worry about any of this stuff. Yeah. It doesn't like, I don't care what anyone's situation is, use it and then use it for investing, not for cash, not for just putting away cash in a quote-unquote savings account. Make sure it's an investment account. No, this is good. I don't really have any more to add. The taxation landscape, how it mixes in with investments and everything else. I get it. It's a difficult landscape for like 99.9% of the population to navigate.

It is not clear. It is not easy. The documentation on how to actually do it on your own from the gov is not easy to follow whatsoever. And so I totally get these questions. Yeah, the Income Tax Act is notoriously bad at making things clear. And oftentimes you actually will find better information from large accounting firms like Ernst & Young, for example, or KPMG, things like that, where they actually

deal with clients and they'll have articles on, you know, where it's clear and easy to understand with some examples. And personally, I think there's nothing wrong with if you have, you know, pretty large amounts in a unregistered account. So you have some capital gains and your taxes start being somewhat complicated. I think, you know, especially if you have larger sums of money, personally, I think there's nothing wrong with just hiring someone to do your taxes. That's really good at doing that because at the end of the day, the cost may be offset with things that, you know, they might be able to make more efficient for you and reduce your taxes that you would not be aware of.

And some of the software that you can buy to do your taxes, they're good. Don't get me wrong, but I think they do have some limitations too. Yeah, totally. Like I've always said, getting someone to... Dude, I played hockey last night and it was the first time I had played a game in a while and i got like complete shock right now where it's like the cold air mixing with the cardio and the kid is hurting this morning blood almost basically yeah it's like taste no no i was just breathing no no i was just skating like you know how i'm so out of shape no i, I already lost. I completely lost what we were talking about, Mr. Belanger. It's okay. It's time for a transition. That's what it means.

It's time for a transition, Amanda. I choked on my thought 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. 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. All right, let's talk about Terry Smith. Terry Smith on global investing. Terry Smith is a very famous investor, runs something called Fundsmith, which is obviously an investment fund. And he's had lots of good nuggets through the years about long-term investing, buying high quality companies. And it's the old adage that they have, which is buy good companies, don't overpay, do nothing. That's their mantra. And so I just pulled something here from a quote from Terry Smith on one of their investor letters. And I thought it was interesting for Canadians and everyone across the world to hear this talking about their strategy. We are global, because they're from the UK. So they're a fund based in the UK.

It says, we are global investors. The idea of having an investment fund restricted to UK equities strikes us as bizarre. Why should the best growth companies in the world be listed in a stock market based in a country which only ranks fifth in the world by listed in a stock market based in a country which only ranks fifth in the world by size of its economy and is located on a small island off the coast of Europe. Another advantage of investing with a global perspective is the ability to contrast and compare growth rates and valuations of companies from all geographies. Some of the companies we seek to invest in derive a significant portion of their

revenues from developing markets. This can enable us to obtain some of the benefits of developing market exposure, mostly growth, while benefiting from the governance structure of a large international company, typically, but not always listed on one of the world's major stock markets. This is brilliant because how often do we talk about this, right? It's like, there's nothing wrong with owning Canadian equities. And Terry Smith's example, nothing wrong with owning UK equities. But the companies that we're trying to own that trade on those markets have exposure to global opportunities. They might be based here in Canada or in the US or in the UK, but a lot of them have literally global opportunities

in fast growing markets, but underneath the corporation with proper governance, less bad actors, and just well-known, well-capitalized businesses. And so I thought that this was particularly useful because you and I see Canadian home bias very rampant all the time. And the way Terry puts it, he goes, why should the best growth companies in the world be listed in a stock market in a country which only ranks fifth in the world by the size of stock market in a country which only ranks fifth in the world by the size of its economy? And he's talking about the UK there. And it's true. Statistically, they don't exist there. They're usually listed on major US exchanges or major

global stock markets. So I thought it was an interesting little takeaway here. Yeah. No, I think it's a great reminder. I mean, even, you know, UK, which is much bigger in terms of its stock market than Canada. And I think it's just a good reminder, unless you're American, which I think it's fine to have home country bias at that point, because you have so many securities that are listed in the US, you even have foreign companies that are listed in the US. So it's much different situation than pretty much any other stock listed in the US. So it's it's much different situation than pretty much any other stock market in the world. And I always remember I had someone I was talking about Canadian home country bias. And I think it was on Twitter. And someone's just responded, well,

you know, I have like 75% of my portfolio in Canadian stocks, because I just know the companies better. And my answer would be like, well, just know the companies better. And my answer would be like, well, just learn American companies better. Also, that's a load of shit though. It's just, I don't think that's a great argument because with the resources out there, I think it's just very easy to just learn about companies outside of Canada. Yes, you may not encounter them as frequently as if you're a TD Bank customer. Yeah, clearly, you'll probably know TD Bank a little bit because- But I am willing to bet with complete confidence that that person interacts with US-based companies

more than Canadian companies in their daily life. Oh, yeah, probably. But I guess- 1 million percent. They use Google Maps to go to, sure, their Canadian bank while they work there and work on a Microsoft suite for eight hours a day. Like, it's an American, you know, it's an American business economy we live in. No, no. I mean, I totally get it. I didn't think it was a great argument, but I think it's just a good reminder. I'm like roasting you for someone else's thing.

I think it's just maybe, I don't know if there's a comfort level, but if that's, if the whole reason you're mainly overly concentrated in Canada is comfort level, then, you know, get out of your comfort zone and, you know, explore a little bit, you know, as, yeah, I think that's the only way I can put it. I love it. And then I just pulled up here, you go on stratosphere.io and you type in Terry Smith, because you can type in any famous investor and you'll see their top holdings. Let's look at his top holdings here. Microsoft, Philip Morris, and this is going from largest position to smallest. Microsoft, Philip Morris, Estee Lauder, ADP, Idex, Pepsi, Striker, McCormick,

Visa, Waters, Brown Foreman, Amazon, Meta, Alphabet, Intuit, Mettler Toledo, Church and Dwight, Adobe, Nike, PayPal, Otis Worldwide, The Elevator Company, Verisign, Sabre, Fortinet, and Massimo Corp. A lot of quality in here. Props. A lot of – Props to Terry for liking his Arm & Hammer. Exactly. You recognize some Arm & Hammer.

If people are wondering, I think it's – you'll know on December 29th what we're talking about. Little preview. Yes. Yeah. Yes, that's right. You got to listen to the'll know on December 29th what we're talking about. Little preview. Yes. Yeah. Yes, that's right. You got to listen to the episode dropping on November 29th. That's a high quality portfolio, man. Just looking like global, wide moat.

Some names I know a little bit less for sure. Like some of them are, you know, obviously mega caps and some of them are smaller mid caps as well. But global businesses, this is a UK based firm. I don't see any bias here, which is nice. Yeah, no, definitely. And I mean, I think it looks like they invest in, you know, there might be some companies that are a bit more growth, the smaller percentage, smaller allocation companies. Some of them I'm not very familiar with. Verisign, I know, but it's kind of interesting to look at the percentage too, where the big allocation is

probably, I would say, in the top 15 names, 15, 20, and then there's kind of a sharp drop off for the last four. Yeah, there's like 12-ish names that all have a 4% portfolio allocation. So it's pretty concentrated. Well, even if you're looking at 2% right after Otis, it really drops off like pretty big. Yeah, VeriSign. Buffett's owned VeriSign for ages, I'm pretty sure. Could be, I don't know.

I have to check that. Thanks for listening to the pod. We appreciate you. I am going to hand it off now to an interview, a short interview I did with Mahima Poddar, who is one of the execs at EQ Bank. We're going to talk about their newest launch in Quebec, people in Quebec. If you have not, there's a reason you haven't been hearing the EQ Bank ads because we've been restricting them from delivering in Quebec, but they just launched in Quebec. So I use it, Simone, you use it, EQ Bank, people. I know it's funny because when we talk about sponsors for the show and then you talk to listeners and they're all like, oh, yeah, I use it.

But like, I love it. And so EQ Bank is killing it. Here is my interview with their plans for next year and the exciting launch in Quebec for EQ Bank. We appreciate everyone listening to the show. We are here Mondays and thursdays all through the holidays and some of our best content is coming out through the holidays i guarantee you'll enjoy the episode that you and i recorded yesterday it was quite fun and we'll see you in a few days take care bye-bye tci podcast listeners we have our fourth interview with Mahima Poddar from EQ Bank of 2022.

And I'm very glad to have you back, Mahima. This has now been the fourth time we've done it this year and just watching EQ Bank kind of evolve. And congratulations now launching in Quebec. It's a big milestone. Thank you. We really appreciate the support from the listeners. And yeah, we're really excited to be in Quebec now. That's great.

So tell me a little bit about that process. Now, obviously, I guess out of just my own curiosity, why is it that there had to be a delay in different jurisdictions for banking? Can you give me like a kind of a high level on how that works? I mean, I think the simplest answer is it's significantly more complex to work in two languages to be quite transparent. And the other reality is that Quebec is under just such a different regulatory landscape that when you're operating with bank accounts and banking products, the amount of nuances that are different for Quebec creates a significant amount

of build when we're going into that province. So that was our hesitation, if you will. But it's been hard to ignore just how vibrant a population there is in Quebec, how active the savings community is. And then transparently, what we keep hearing from potential customers is that there is this real demand or want for EQ Bank in Quebec. And so it's hard to continue to deny what we believe to be a much better product to the whole province of Quebec. And so we kind of, you know, jumped in and took the complexity investment to make it work. But we're really excited that we're now in Quebec. And what we've done is launch with our most favored products, if you will.

So the ones that have gotten the highest response from customers. So we have that benefit of testing in the English speaking markets to launch best of breed in Quebec now. That's smart. Take everything you learn. I mean, I personally use it every single week without a doubt. And Simone has as well. And like I've told you before, my mom's been the earliest adopter to EQ Bank. Mom is my favorite. Yeah. Yeah. So no, that's great. And because we've gotten lots of listeners being like, I know you guys actually use it beyond just them being a sponsor. So when they come to Quebec, actually use it beyond just them being a sponsor. So when they come to Quebec,

we'll be first to sign up. So that's exciting. Let's talk moving into 2023. What's next for EQ Bank? What's on the docket in terms of features and strategy? And what should I get excited about? So there's probably two things that I should probably keep quiet, but one is... But instead you're going to announce it on a... I'm going to announce it. Giant Canadian podcast, yeah. One is our card product is launching early January. So we're really excited about that because that has been a labor of love for almost two years now. But it will give customers cash access

to the funds in their account. They can obviously use it in store for e-commerce with rewards built in. So we're really excited about that coming to market. And then there's a whole slew of features. Would that be a debit or a credit card or both? It's a hybrid debit credit card, if you will. So it's more of a prepaid card.

It'll use the funds on the card, but because it's a master card, you can use it for e-commerce or point of sale. So it's not as limiting as debit, but the big advantage is you can use it at any ATM in Canada for no fees. So it doesn't matter. Oh, really? Wow. Yeah. So you're not looking, this was a big thing for our customers in Quebec as well, is you don't need to go find a certain bank ATM. You can use it at any ATM in Canada and we will reimburse all the fees back.

Unreal. Okay, cool. So yeah, because to me, that seems like the one thing that I do like financial wizardry around because right now I keep like all of my dry powder in terms of cash and emergency fund in EQ Bank with one of the products or usually just the Savings Plus account. And then I got to move stuff out and around because I don't

have an actual card I can use. So that seems like a logical next step. All right, cool. One more thing, you mentioned two. Two is that we are working on a small business product. So what we found is that almost 10% of our customer base is part of the gig economy or has a small business or a side business. And so there is a considerable amount of disdain in the market with the options that are available for digital banking and the fees that are tied to it, plus the lack of interest earning options. So we are on a quest to extend the best of EQ Bank for retail customers now to the small business segment.

That is music to my ears again. I sound like I'm just saying this, you know, I'm like trying to please the EQ Bank here on the podcast. But I run two small businesses and I would like to have another option because last week, I waited on hold with a Canadian big bank to do a very, very simple business transaction that you'd hope your business bank, a couple hundred billion in market cap would be able to do. And I waited on hold for a combined four hours across those two calls. So I don't want that to happen anymore. You know, like paying taxes to the CRA from a small business is so

painful. It's those things that people have to do every day, every week that we're trying to create much more seamless experiences for. I love it. Mahima, thank you so much for the update. I'm looking forward to those things mentioned in 2023. It's like you guys asked me what the product roadmap should be because those are the two things that I find would add a lot of value. And best of luck. Have a great holidays to you as well. Thank you. 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.