The Canadian Investor - Is it Time To Invest in These 13 Under Pressure Stocks?

Episode Date: March 31, 2025

In this episode of The Canadian Investor Podcast, we delve into the significant market fluctuations experienced since the beginning of the year, with a particular focus on the transportation and logistics sectors. Despite the prevailing macroeconomic uncertainties, these industries have faced notable drawdowns, potentially unveiling investment opportunities. We discuss 13 prominent companies within these sectors, examining their recent performance and assessing whether the current market sentiment presents a compelling case for investors to explore. Tickets of stocks/ETFs discussed: CP.TO, CNR.TO, UNP, TFII.TO, R, ODFL, FDX, UPS, CJT.TO, XPO, GXO, 1919, MaerskB 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 Dan’s Twitter: @stocktrades_ca 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  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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Welcome into the show. My name is Brayden Dennis, as always joined by the impeccable, Simon Belanger. Brother, Nike stock is down 63%. Yeah, quite the drawdown. We actually, Dan and I talked about that a little bit because we did. Yeah, we did the earnings and markets did not like it. No, it's just like. But it's been steady. No, it's just like. But it's been steady.

Yeah, it's not been. Steadily going down. Yeah. If that's what we call steady. This is one of those really hard stocks to own. If anyone's ever owned one of these, they'll know what I mean. Say you have like an earnings come and the stock drops off a cliff, like you have like a 20% haircut

and you know why, oh, like guidance was poor, results were poor, this, that, and the other thing, maybe a combination of things. But when you keep getting those elevators down quarter after quarter, like you're like eight into it, those, you know, those start to really hurt. Those are like gut punch after gut punch. Like in round 10 of a boxing match

and you've just been getting smoked to the ribs. Yeah, it feels like it's just a combination of different things, one after the other, right? I think you had mentioned rightfully so, there's a lot of competition on the sneaker front, more and more increasing competition, but then now they came out to basically say they're gonna be one of the early, the lack of better words, victims of the tariffs

from the Trump administration and obviously I'm saying victim I know it's they still make a lot of money so don't take this out of context but you add that to the increased competition, reduced profitability over time too and a name that was once seen as probably a blue chip stock for a lot of people that now it's definitely debatable whether it's a blue chip chalk and you can make a case that it's probably entering the dilemma of fashion stocks where you never know if it's gonna stay in or not, which I always kinda assumed that Nike was the exception to the rule. That's how I operated.

I mean, I don't own it, but that's my perception. Agreed. Yeah, that kinda was like the consensus. It's like, don't touch fashion, but Nike's not fashion. It's like, oh, hey, maybe, you know, maybe it is. This is the thing, right? They're still doing like, I don't know, I'm just making this up, I'd have to look on Finch app.

Called 30 billion, and let me get the number right, I have it up here, 30 billion in footwear revenue. Okay, so trailing month, yeah, oh wow, that was, I must've seen a graph before, because it's exactly 30.5 billion of footwear revenue, which was last year 33. So it's not like, you know, it might seem so alarmist, right?

Like, you know, 33 billion of footwear revenue goes down to 30 billion. It's like, okay, what's the big deal? The big deal is that those other companies are growing so fast, whether it's Hoka or On Running, and they're just not the default shoe. That's the problem. And then there's the question around like, oh, like they do apparel,

they do equipment, they do all this other stuff. It doesn't matter. You know, when 30 of 45 billion is footwear, the footwear business slowing down matters a lot. Like it doesn't matter if they're diversified when like, you know, it's called 65% of the businesses in one segment. It matters how that segment performs.

It would be like a portfolio, you know, I'd be like Simone if you had a stock portfolio and you had 20 stocks, but one of them was 65% of your portfolio and it was a dog. And the other ones were doing great. And you'd be like, who cares? Look, everything's doing great.

It's like, well, because 65% of your portfolio is in this dog, so. No, exactly. And like I'm showing, look, they're still doing pretty good. Yeah, the growth rate's still great on a longer term, yeah. Exactly, and I'm showing though, look, they're still doing pretty good. Yeah, the growth rate is still great on a longer term. Yeah. Exactly. And I'm showing people here, they still generated the last year over 6 billion in

free cashflow, so they're going to be at least okay for the foreseeable future. But it's a trend that you don't like to see reduced profitability, increased competition, and then you compare their total revenues like you just said with the footwear and footwear being a significant portion of their revenues here. There's definitely some cause for concern. I wouldn't like ring the alarm bells, but there's cause for concern. But again, could be an opportunity as well where sentiment is at its lowest and they have a good plan to turn things around. But like I told to I was talking to Dan when we recorded the Thursday episode,

when you invest in these companies where sentiment is down and things may be looking like they're trending the wrong direction, you may have a great thesis but you have to also be ready to You may have a great thesis, but you have to also be ready to Look stupid for a couple years until things turn around Hundred percent and that's really hard harder to do than you might think. Yeah. No, it's it. I think the the slap in the face the market gives you with with this type of example here with Nike is The fundamentals can still be strong, but when the story changes from a growth story to a slowing growth story

to actually a negative growth story, whoa man, like you wash out basically an entire cohort of investors who had one idea of what that company was going to be over the next few years. So it might seem extreme and detached from reality, but that narrative switch from a steady grower to a, to then know it's a slow grower to, oh, we're actually negative year over year now for two years in a row. That's a problem. Yeah, yeah, exactly. And it's something to keep an eye on,

whether it's a value trap, value play, I think it's really hard to say. But like I told Dan, I mean, look at Warren Buffett. A lot of the time that Warren Buffett will make investments, you'll hear people saying that he's lost it, what is he doing? He might look pretty stupid for a year or two, and then little do we know, five years later,

seven, eight years later, you're looking back and like wow, Buffett, you had bought it at just the right time, he stood by it, he had a thesis, and now he looks like a genius. Yeah, yeah, you have to be willing to look dumb. I don't know if you noticed this, but I looked at what you had prepared for the pod and I moved the order of your segments

because I wanna talk about this right now. I love this, so just take it away. Well, and so the segment here is the opportunities in the logistic, freight, and transportation. I touched a little bit about it on it with Dan just very quickly because we were talking about FedEx and that enters this kind of sphere. And obviously there's a different type of companies

but they're all facing some pretty significant drawdowns here and the reason why I wanna look at them is, look, there's been a lot of volatility. Unless you've been living under a rock, ever since the orange men Donald trump has been elected and Especially since the beginning of this year There has been a lot of ups and downs and obviously a bit more downs than ups

but still it's been very volatile and it's easy to Freak out a little bit to get nervous. I mean, these are all normal emotions, we're emotional beings, so it's completely normal to feel that. But I think people sometimes forget that with this volatility, you can start having some pretty interesting opportunities come up because the market will be so pessimistic on certain parts of the market

because of all of what's going on right now and I pulled 13 different names pretty much like in this part of the market I don't know if they're all considered the same sector but they they're affected by the economy they're definitely affected about their rhetoric about tariffs with Trump's flip-flopping every day it seems like on social media about the tariffs and I think these are worth looking at whether they're good investments or not. I haven't dug in very deeply in each company of course but there's a couple that I do have on my radar. So before I get started anything you want to add? So to summarize the list you're going to go through

it's companies that move goods. Yeah that's the best way to do it. Yeah move goods, exactly. So the first one there's 13 in total. Some people will be familiar, some may not be familiar as well, but the constant here is that I did it over the last year and I looked at what amount of drawdown they're facing and obviously that would be versus the peak they would have had in that past year. So CP is the first one here Canadian Pacific 14.5% drawdown. Canadian National Rail obviously CP, CNR usually they're talked together quite a bit. This one 21.3% drawdown. I wanted to use a US name to compare here, Union Pacific. There's a few different railways

you can look at in the US. That's one of the better known ones. 8% drawdown. TFI, we've talked about it on the podcast. This one is the number one on this unfortunate list of 45% drawdown. And obviously we saw most of this happen in the last month or so with Alain Bédard coming out and basically just laying it out there being very straight and upfront with his shareholders and saying like things are not good. It's not just us, it's just the industry in general. Rider Systems, Ticker R, and Union Pacific, I forgot, Ticker is UNP. Rider Systems in the US, 14.9% drawdown.

Again, it's kind of a rental trucking company you have here. Old Dominion Freight Lines, very well regarded, typically in the trucking space, ticker ODFL, 27% drawdown, which kind of started when the TFI earnings call came out. So I think TFI kind of dragged down Dominion at the same time. It's interesting. You can literally see it on the chart if you look at it. It's almost like simultaneous That has crept further and further up my watch list. Yeah. Yeah, exactly There's definitely very interesting companies there FedEx ticker FDX

22% drawdowns. If you listened to the previous episode I was talking to them, if you haven't feel free to listen to it. They had some really interesting things to say on the call FedEx, mainly saying that yeah they're seeing that there's a bit of a slowdown. They've actually revised their guidance down three quarters in a row now, their revenues guidance. So they issued it at the end of Q4 of their last fiscal year for 2025 fiscal year and every single quarter they've revised it down. So I think it just goes to show the uncertainty. I don't think obviously they're doing it on purpose. They're doing the best they can with the data they have. The problem is there's just so much uncertainty.

And I think just that guidance revision, a bit like BRP did as well a few quarters ago, management teams are trying to figure it out and they have trouble doing it. I think it's just a reflection of that. UPS, 26% drawdown, ticker UPS. Cargojet, 36% drawdown, ticker CJT. I know that's on the TSA.

I know Dan is a big fan of this one. I think he started a position. This one is definitely intriguing for me. XPO Logistic, ticker XPO, 29% drawdown. GXO Logistics, ticker GXO 36% drawdown Costco not not the Costco that we know CO SCO shipping holding This is a kind of maritime freight company. So they do shipping on these large container ships It's listed in Hong Kong. So a bit more difficult to buy ticker one nine one nine This one is 17% drawdown and the Maer SK Group listed in

Denmark again same same kind of thing sea shipping or maritime shipping 10% drawdown here. Yeah it's a so you have Union Pacific in a small drawdown of 8% all the way to basically cargo jet at 36%. It seems like- TFI 45, yeah. TFI 45. Yeah. TFI is a big winner here.

The big winner in the drawdown fast here. My best sell of all time, not a big deal. If you were to sort these by drawdown, you would find almost a perfect correlation to closest to the sun of moving goods across the Canadian and US border. Yeah. Yeah. Right?

Yeah, that's right. Yeah. So that's the story on these in my view. I mean, freight is sick. You have a kind of a double whammy freight cyclical to begin with. So you're you're you're you have like this the down cycle, you're going into the down cycle while you have a bad narrative on top of it. That's a that's a good perfect storm for some big equity drawdowns.

Yeah, yeah. And then you get the added uncertainty, like typical slowdown. At least companies know what to expect. You have that extra degree of uncertainty and you cannot blame companies. What is trade, world trade going to look like five years down the line? It's very difficult to say. If you know, Braden, please tell me. I don't know. I feel like even-

I would tell you, but I- You don't feel like it? I don't, yeah, I don't have the energy, sorry. I think there's a bunch of different ways it could go. Whether, you know, a lot of it'll be dependent on the US. It'll be not only dependent on the Trump administration. What happens in the midterm? Do we see a shift to the Democrats

who gets elected the next administration? What happens in the midterm? Do we see a shift to the Democrats who get selected the next election? What are countries going to do against the US as a pushback for all these tariff threats? Is it going to be a different approach for North America, this hemisphere versus Europe versus Asia? There's all these different questions that it's impossible to answer. We just don't know. So you have to feel for these companies that are in the thick of it, and it's hard to blame them for revising guidance like FedEx did. FedEx is probably one of the most international

of all these plays, I would say, but they still get the bulk of their revenue in the US nonetheless. Yeah. 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 on a regular basis to set money aside for personal income taxes in April or February. 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, EQBank's GICs are a great option. The best thing about EQBank 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.

TCI listeners, you know that I'm having to constantly travel for work. One week, you're up for meetings. Next time in Montreal, meeting potential investors. And while I'm away, my place at home sits empty. So I've been thinking, why not put it to use, make some extra income by hosting it on Airbnb. Hosting feels like the smart thing to do, but it can also feel overwhelming to some. But Airbnb's new co-host network makes it a lot easier. I can hire a local vetted co-host to manage everything. Handling reservations, guest check-ins, and even cleaning. If you've been thinking about hosting on Airbnb as well, and you could with the right help,

why not let your home work for you? Find a co-host at airbnb.ca forward slash host. As an investor I'm always looking to reduce my fees which is why I'm excited that Questrade now offers zero dollar commissions on stocks and ETFs. But Questrade isn't just about commission free trading. You can also get USD accounts so I avoid forced currency conversion fees when trading US stocks. Plus get access to their advanced edge trading platform available on desktop, web, and mobile. I've been using Questrade for many years and so has Simon. And their platform makes

trading seamless whether you're managing a long-term portfolio or making active trades. Don't miss out start trading commission free stocks and ETFs today. Visit questrade.com to learn more. So what are you looking at? Well for me I do I'm intrigued by definitely well CP is the one I am probably the closest to pulling the trigger on, mostly because I'm thinking of just swapping Canadian National Health for CP, mostly because I've not been a fan of the CEO and the capital allocation they've done buying back shares at an elevated price and now it's not looking like a great capital allocation strategy,

especially that they were buying back shares more than their free cash flow in the last few years. So it's been something I'm a bit critical where that extra balance sheet flexibility would have been pretty handy right now. So that is the one from that perspective and I love having a railway in my portfolio so that CP would make sense here Cargo jet is definitely intriguing given that they're one of the only players in the airfare Cargo in Canada. There's Air Canada cargo I know they have a little bit there, but they're one of the ones that does the quickest overnight delivery So I think they do have a bit of an advantage there on the domestic market and I think they're probably being drawn down more than they need to just because of the sentiment being so pessimistic in Canada

right now. And the trucking companies are also very intriguing for me. So whether it's a TFI or Old Dominion freight lines, those are the other two I'm really interested in. The logistics, I don't know them enough, just based on the drawdowns, it may pique my interest just to see what's going on and what they have to say. Yeah, no, it makes sense.

How about you? Anyone piquing your interest here? I've always admired Old Dominion. It was kind of like TFI and Old Dominion, I believe have been like the two best run trucking consolidators in North America. And Old Dominion has just been a unbelievable compounder and so has TFI, but Old Dominion's always just traded at an egregiously much, much higher multiple.

Like that's why I could never justify owning it. It's always traded at such a much higher multiple and probably will continue to, but I haven't touched trucking basically since I sold TFI. I haven't looked at it really since. TFI could have a lot of upside. Not before maybe it has a bit more downside. That's very possible too.

The reason why I say upside when I listened to the most recent call is Alain Bedard was very upfront that their US operations can be very, like much more efficient than they are. They are very efficient in Canada, but the US operation I think it's two-thirds of their revenue There's still a very small player in the US because even if it's two-thirds of their revenue

It's still a small pie like in terms of the US what would be available and in Canada It's a third but it's as much smaller market So there they have a much bigger presence in Canada. And they said that they have a lot of things that they could improve on efficiency in the US. So that's why I'm saying he's a good, you know, he has a great track record. And when he says it, when he's upfront like that, I can, I have no doubt that that will be a big focus of them, especially if they see that it's going to be a rough couple years for recession, even mentioned that word in the earnings call. So there could be some upside as they focus on being more efficient in the US and then when the economy starts turning and things

start looking better, TFI could potentially have quite a bit of upside here. But again, it's the kind of thing that you could look stupid for a long time before it turns around. So do your due diligence, obviously, that's not an investment in vice, but these are, it just, it was hard to ignore. Like that whole part of the stock market seems to be completely hated by the market in general. Yeah, it's like analysts wanna work on this like

perfect spreadsheet where you can kind of map out all the numbers. It's already impossible to forecast and then you get like this flip flop whiplash of the future of trade and it's like, all right, I, you know, throw in the towel until there's some sort of certainty here and you just see that come out

in the price of the equity. Let's shift gears, let's talk Canada a little bit. We have two things here. So first of all, when this comes out, it's not really breaking news, but it's fairly new news here as live recording. When this podcast comes out, the Canadian election will be in four weeks,

if my math's correct. That's right, yeah. Yeah, four weeks after this podcast comes out. And we will be providing objective political commentary of the next four weeks, knowing that there are, this is not a bias show one way or another. I think you'll see that naturally,

you'll see which ways we lean. I don't think that that is a shock to anyone. So that's a caveat of the next four weeks. What I will say is when we have more stuff to talk about, and we probably dedicate some time around this election over the next four weeks to talk about it here on the podcast, this is such an incredibly important election for Canada. And I can say that for all federal elections. But look, we've been operating without a government for how long now,

Shimon? I know now they've, Karne is in the seat and they're going again, but how long was that period? Like a month and a half? Yeah, I mean, you can even make a case that we've been, even since mid December, right? Since the Krishchev-Freeland, like, departure that happened. Yeah, exactly. Mid December, because at that point, I think there wasn't a lot of legitimacy left. So I think it's been, it's been a period of time and whichever way

you're leaning, right? Whether it's liberal, conservative, NDP, green block, if we have some Quebec listeners, or even the PPC doesn't really matter. At the end of the day for me, I think one thing I've said is we need to have an election to give whoever is elected a mandate because you can say whatever you want about Trump and in his administration. And you know, I've been very critical of the Trump administration.

I think most Canadians are. But at the end of the day, they have very smart people the Trump administration. I think most Canadians are. But at the end of the day, they have very smart people there as well. A lot of people will disagree with their approach and that's fine, but they're also not stupid. And they also know that there's an election around the corner and why would they negotiate right now with the current government? Why not just write it out until the election is done and then deal with whoever will be there in power for the next four years if it's a majority government or the next year or two

if it's a minority, why would they, right? Like it makes no sense. Yeah, that's such an incredibly important fork in the road. I don't know how else to describe it. Yeah, I think that's a good way to put it yeah, cuz just like There's so many things that need to be addressed in the middle of like obviously these tensions with the south of the border And it just needs it needs some serious skill

But I think we've lost here I'll leave it at this and I'll talk about the loony and facts. I think the Canadian public based on what I'm seeing on polymarket and some polls and stuff, I think we've lost the script a little bit. And let me explain what I mean by that. There has been a ton of issues with this country, namely housing, the economy, the growth of public sector, the lack of growth in the private sector, squandering of resources, all of those things. Inflation has been absolutely critical and so the election

a year ago was, if it was to happen a year ago, people were thinking about the economy. They were thinking about inflation. They're thinking about getting the country back on track. Like some of the kind of key fundamental aspects of what we need to do, getting the deficit somewhat rhyming with being under control. Like, you know, the core things that we need to do. And I, when I say I think we've lost the script, it's just been Trump derangement system, Trump derangement syndrome. Not system.

Yeah, I was going to say, I think you got it. System. There's a system around it. Yeah. We've lost the script around, it's just about the US, it's just about getting back at him. Okay. Do you know what I mean? That's where I think we've lost the script around, it's just about the US, it's just about getting back at him, okay? Do you know what I mean? That's where I think we've lost the script. Even if that does matter a lot, which it does,

you gotta fix home base a little bit here. And the narrative has been so dominant on the last 60 days of news and really just been drowned out around what we really need to focus on. Yeah, I mean, I think it's important to remember that there are some domestic issues, some really important ones like you just mentioned.

And of course, the US is front and center right now. It's taking everyone's attention. I mean, it's like- Just suck, this is what Trump does. He sucks the air out of the room that's exactly that's what he does but at the end of the day I think you know hopefully all the parties will talk about their policies and I have not read all the platforms yet I'm not sure if they're all out or not probably not usually takes a week or two. Maybe it will

be out. But yeah, those are the things I'll be looking for is just I want I've been pretty clear I want the government to spend within its means. There are some social things that I have dear to my heart. And I'm sure you have some I'm sure listeners will have some of their own too. But for me at the end of the day is also making sure that You know our GDP per capita actually stops going down. For example These are things that happen well before trump that you know, you don't have to pay over a million dollars to have a Decent home like it's things like that. Right? It's just affordability sent home, like it's things like that, right? It's just affordability is really important,

whether it's housing affordability, but just necessities as well. And I've said it time and time again on the podcast, someone even like was saying that, you know, I was being too political by saying that the counter tattariffs that would be imposed by Canada on produce would be hurting the more vulnerable population in Canada. I'm like, I don't know how that's political. It's just a reality. The basic needs, when you

have a lower household income, a bigger portion of your income actually goes to food and lodging for those necessities. And if you're putting higher taxes on that which are paid by the consumer in the end by the companies importing and then it's passed on to the consumer it's going to herd the lowest income household the most and thankfully we're not in that bracket of people but that's something I think will be very important during this election and I think it should be and obviously Trump as well, but I think those things is important and people vote with whoever kind of aligns best with the things

that matter most to them. The loony, let's talk about the weak loony. So year to day, or actually not year to day, on a trailing one year basis, the TSX 60 has outperformed the S&P 500. On a trailing one year total return, the TSX 60 is at 18 and a half percent, where the S&P 500 is at 12 percent.

Who woulda thunk? Yeah, who needs big tech? Who needs big tech, right? And you might be thinking, why, how, what's the discrepancy, okay? And so I pulled this tweet from our good friend, Barry Schwartz, good friend of the pod of basketball management.

His office is just down the street actually. Barry pulled, I'm gonna assume Ernest pulled this up for Barry, TSX companies, TSX companies with low exposure to the Canadian dollar, Magna, Gildon, Couchthard, Brookfield, BAM, Waste Connections, Rooters, Shopify, Constellation Software, Tech, Nutrien, CCL, First Service, CGI, and CAE. All those companies have less than 15% of their revenues in Canadian dollars, which is interesting. A lot of them you would think is very Canadian.

Some of them you think is very Canadian companies. Some of them, you know, are mostly international. Like a Shopify, no one's really surprised that that's a thing. And I commented, these companies love a weak loony and he replied, so does my portfolio. Okay. So I think this back forth and the discrepancy

between the performance of the indices tell you kind of a really big story happening here, which is there is some really nice arbitrage with a weak loony. And there are a lot of businesses that really like a weak loony. Magna is a good example. Shopify is a great example. I guess like think about it this way. No, I don't have to get all macro economics.

Okay. USD coming in the door, CAD going out. There's layers to this, but that's a really over easy to understand simplification. USD goes in in CAD goes out you have you have an arbitrage on the CAD there mm-hmm yeah I think a company I was looking at Kustal's earnings Kustal has it's hurt them a decent amount the stronger US dollar but there that's because they also have a pretty big presence in Europe so the US dollar has been not only strong against the Canadian dollar but also against the euro so I think for them it was more on the lukewarm side and that's probably going to vary right from

business to business depending because this is just looking at the Canadian dollar but depending whether it's a lot of their businesses in the US or US plus the rest of the world it's going to have a different impact there. Yeah. And your portfolio too, right? Like if I'm holding a bunch of US stocks and I'm measuring my returns in CAD, right? Yeah. I mean, you could argue I should do the returns in US dollars, but I, I, you know, I'm living my life in CAD for the most part, right?

So there is some baked in returns there when the loonies weak, you know, at least as it rides down that curve. Yeah, yeah, no, it's a fair point. I mean, it's definitely been a boost to my portfolio because I have a decent chunk of change in US treasury bills, which has seen, would I, you know, I measure it in Canadian dollars too. So it's seen a good boost for that.

And to me, that's the correct unit to use CAD just because I mean, it's I until I start using US dollars to spend every day, I was still measuring in Canadian dollars. Yeah, last time I checked you live in Ottawa, Ontario. So yeah, one writing away from Mark Carney's writing. Is that right? Yeah, yeah. It's not far from my writing, but yeah, I think my in-laws are actually in that writing, so yeah. There you go.

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 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, EQBank GICs are a great option. The best thing about EQBank 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. Again, EQBank.ca forward slash gic. TCI listeners, you know that I'm having to constantly travel for work. One week, you're up for meetings. Next time in Montreal, meeting potential investors. And while I'm away, my place at home sits empty. So I've been thinking, why not put it to use, make some extra income by hosting it on Airbnb.

Hosting feels like the smart thing to do, but it can also feel overwhelming to some. But Airbnb's new co-host network makes it a lot easier. I can hire a local vetted co-host to manage everything. Handling reservations, guest check-ins, and even cleaning. If you've been thinking about hosting on Airbnb as well, and you could with the right help, why not let your home work for you?

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start trading commission free stocks and ETFs today. Visit questrade.com to learn more. All right. I have, okay, we have two segments left here. We're at 35 mint. Where do you want to go from here? I don't have a specific order. Yeah.

Mine will be pretty long. So why don't we use your do yours and then Depending where we're at. We can just keep mine for next week It's more of a it's more of an evergreen topic for mine. So sure sure sounds good Okay, so I have I don't know if you want to share this for joint TCI listeners small but I have up here a Venn diagram of Basically, it's a three a Venn diagram of, basically it's a three circle Venn diagram, okay? So I have no idea who made this.

I would love to give the credit and source for this as I always do on the pod. Definitely not AI. But yeah, definitely not AI. It looks like it's from an old textbook. Seriously, I'd love to give credit to who wrote this, but I have no idea where I got it from. I have this process where I basically just email myself

a screenshot and add it to the docs later if I see something that I want to get on the podcast. Because- I text myself, so it's just saying. You have to have a process because you will think of, if you don't capitalize on when you get an idea in the wild, like I could be anywhere, then you'll never have enough ideas for the pod.

So you gotta have a system. Anyways, it's a clever little diagram, which is a three circle Venn diagram. So if you can picture a Venn diagram, there's the two circles. This is the one with the three circles, which basically means if it's in the circle that shares area with all three of the circles, that means it shares common characteristics of all of them. And so it's basically this framework for thinking about

when a stock is in kind of like the strike zone. Okay. And so the three circles are moat. So, you know, kind of quality of the, of the business, the characteristics that can make it durable for a really long time with its moat. Number two is the management. So, you know, who's running this? Are they skilled? And then the third is the valuation, the price, okay? If you have a strong moat, but a bad price, it shares those two, you gotta think, does the market know something I know I don't? Maybe, this is where the value trap, this is where the value traps come in.

It's not necessarily a value trap, but beware of value traps. It's in that zone of where you might have a value trap. Okay. The management is good and the price is good. There's overlay there. Avoid a turnaround trap. This could be the turnaround trap where even the best jockey,

AKA the best operator of the business, can't do well on broken legs. So you have the best jockey, but the worst horse, you're not going to win the Kentucky Derby. So this could be the turnaround trap. Now on the top, you have really good management and a really good moat, but you don't have the good price. So is this business priced for perfection? You know, this is the like, will I buy a quality company at any price? Great

management, great moat, but the price ain't there. Okay. So you kind of have these three overlaying scenarios where you only have two out of the three. You have a great management and great price, but no moat. You have a great management and great price, but no moat. You have great moat, great price, bad management. You have great management, good price, bad moat. Those are the areas where things can get a little bit complicated. But when the market gives you something, AKA the price is good for a capable management team with a strong moat, that's the strike zone. And in the center of all three of those kind of pushing and pulling ideas is the strike zone between all three

of those. And I tend to agree. This is where you have to be really patient because you don't get all three of those lining up all the time on a regular given day. Those are, these are the opportunity strike zones. And you know, you only get a few. get all three of those lining up all the time on a regular given day. These are the opportunity strike zones and you only get a few. We had one in 2022 and they happen every three or four years

in my opinion from studying history. So that's the strike zone. Yeah, and it looks like it could very well happen for certain types of businesses this year or the next year. And I think that's, I think a theme that we'll be talking about quite a bit in the upcoming couple of years is this uncertainty thanks to a big part of Donald Trump.

Let's not, you know, let's say how it is. I think it's going to create some opportunities because the market is gonna be jittery and not sure where things are going. And if you're able to create some opportunities because the market is going to be jittery and not sure where things are going and if you're able to identify some businesses that will be resilient regardless of what happens down south and the market does not have the same opinion in the short term, then it's going to create some really good buying opportunities for some really good businesses that have good modes at a very reasonable price. Yeah, definitely well said I mean

This strike zone doesn't happen all the time and I think that it's easy to come up with a long list of reasons why It's not the right time, you know, it could keep going down Is now really the right time, there's still so much uncertainty, blah, blah, blah, blah, blah, right? Like, of course, if I rewind the clock, it's bottom of the drawdown in 2022, software has been, oh God,

tech was really, really rough. I mean, meta Facebook stock was down 75%, which still to this day is crazy. This like absolutely absurd. So you get those types of situations and you're thinking, oh, like, no, it's not the right time. It can keep going down. Yes, of course it can keep going down. Of course you don't you don't have a crystal ball. However, you can say it meets all three

of these criterias. I think it's a good to fair price. The moat is there and the management's there. It's in the strike zone. So who cares about the next six to eight weeks or six to eight months when I care about the next six to eight years, right? So if it meets those criteria in the strike zone,

don't worry so much about timing it perfectly because you might or you might not. That's gonna be luck coming into factor and it's not gonna matter that much. On the margins over a long period of time, it'll work itself out. Sometimes you'll get things right timing wise, some things you'll mess things up timing wise.

But in the long run, on the margins, those things are not gonna matter so much. What is gonna matter better is that you're getting those things in the strike zone. Yeah, and I think that that's a great opportunity. If you find a company that you really like, it's starting to get around that sweet spot of, you know, the price is starting to be attractive, it has a good mode, a good management team.

What you can always do if there's a whole lot of uncertainty, that's where you can probably dollar cost average and you tell yourself, okay, I'll just buy a third of my position now a third of my position couple of a third of my position couple weeks, and another third in like a few more weeks, whatever time frame you want to do. If you want to make sure, you know what? There could be a universe where this company still goes down another 10, 15, 20%. There could be a universe where it starts going up from here and it's bottom. You can hedge that a little bit with just doing a dollar cost average and just averaging

out your costs you're going to get at the end of the day if you're making the right call you're still gonna get a pretty good average cost basis by doing that because you're gonna be in around the bottom one way or another that's right, yeah. You don't have to time it perfectly. The problem with doing that is you do have to have a plan and pull the trigger. Because if you just start with the one third as my example,

and then the stock starts going up a few weeks down the line, then you're like, oh no, did I miss my opportunity? You just have, you need to have a plan. Maybe you tell yourself, you know what, I'm doing it in three installments. As long as the valuation stays within this range, I am doing it.

If it doesn't, then okay, I'll just do the one third and wait until it gets back there. But you need to have a plan in place because it's too easy to chicken out, lack of better words, just because you start seeing the price going up. Yeah, so you're saying do it in tranches could work. Yeah, yeah, exactly.

But having kind of a plan is what's really important, yeah. Yeah, I don't hate that idea. Whatever psychologically can get you to buy stocks when they're beaten down is probably a good thing, right? Even in it feels bad, especially if you're someone who like doesn't, like for me, it feels good. For some people, psychologically feels bad to buy them on when they're on a drawdown.

So whatever you can kind of psychologically get you over that hump is probably a good thing. Yeah, and whatever helps the emotions die down a little bit, right? But I think that's the biggest thing that investors, whether it's retail investor, professional investors, I've talked to portfolio managers before, I've been in the same room as investment managers for pension funds, and they're regular people like everyone else like there are Emotions running like they're not robots. They also have emotions. Yes, they're smart people

They will look at the data but like everyone else emotions can get the best of them and I think it's important to Look at ways to make those emotions not flare up too much and that you focus on making a good investment and forget about the emotional aspect of it and you know buying a company that you think is a strong buy at the time and then freaking out because it drops another five ten percent if there's a way for you to Just make sure your emotions don't get the best of you, I think you should definitely do it. Whatever

that is. Some people will be just to do the position right off the bat, the full position. If you do entranches like we just talked about, that might be the best approach for you. But there's different kinds of things, but it's recognizing those emotions. I think it's a big part of what makes good investors versus kind of break even is recognizing those emotions I think it's a big part of what makes good investors versus kind of break-even investors or those who won't necessarily beat the benchmark. Speaking of barely beating the benchmark, you know Manish Prabhai right? Yeah, oh yeah, yeah. What if I told you his fund since inception has done two percent a year. Are you serious? I mean, he must, depends what benchmark he's using,

I guess, huh? Maybe he's- Yeah, is your benchmark 0%? Benchmark is cash, yeah. I think, yeah, he's been close. Yeah, I know it's crazy. So the way, I mean, you can look it up. It's the Pabrai Wagons Fund.

I just gotta say, okay, hold on. Let me share my screen so I can show you this. I'm not trying to talk trash or whatever, but this is just not what I would do, okay? If I ran a fund, this is not what I would have. Okay, so it's the website for those listening in on it. I mean, he's being transparent. He listening. I mean, he's being transparent. He's being transparent.

Oh man, I don't know. So do you wanna explain to those that are just listening? Yeah, yeah, yeah, yeah. So you can see it for yourself on wagonsfund.com. Wow. There is a picture of like two AI horses. This is AI, right? Yes.

Okay, there's a picture of two AI horses as the backs. I guess that's symboling the Wagon Fund. Since inception, S&P 500 up 41.65 percent, Wagon Fund up 2.18

percent. So it's a short time frame that, you know, the funds started in 2023. So I'm not saying like he's trying to clown on him, but like. The year to date, wow. Year to date, yeah, down 15%.

So. So the risk adjusted returns are all out of whack. Risk adjusted returns are unbelievably bad. Oh yeah. Like how can you, like basically you're paying this what it's sell me and granted it's a small sample because it's from September 29, 2023 to February 28, 2025. But this is what is telling me is you're getting less returns when things are good and more downside when things are bad. Correct. That's right. That's exactly right.

Wow. Yeah. Yeah. That's okay. So I've opened up now the presentation. I wonder what they're invested in. It shows you it's like Turkish stocks or something. Okay. Oh, here it is. Okay. Here's the holdings. TAV Airport Holdings, which I guess is like the Turkish Airport Holdings. Okay. Yeah.

It's probably a pretty moat moaty stock, but I think the currency you've just been getting rinsed by the Turkish currency. Yeah. And it's 16% of the portfolio. Yeah. Yeah. And then just like a bunch of really cheap, US stocks, really like value value, like low mega low PE stocks. and then Edelweiss financial

services and Indian companies 50% of the portfolio. Toll brother is not probably not the best move to bet on housing on home builders, US home builders during that timeframe. It's not been the best bet to do. Yeah. Yeah, this is the best bet to do, yeah. Yeah, this is the, I mean, this is the problem, right? When you just own, like, you take like a low P.E. quant approach to investing, you end up with a portfolio like this, honestly.

Like, it's kind of gutless to say, but it is. You end up with junky stuff like this. And it doesn't work. Maybe five, 10 years down the line, we don't know. Maybe they'll, I'll crush the benchmark. They're having a rough start. But who knows? It hasn't worked for like 50 years. Do I have to wait another 50?

We're in the fourth turning. So maybe it's gonna work now. Oh, man. Again, it's just kinda crazy that like the performance, usually people on the website I kinda say like what they do, but no, his is just the performance right there. So you know, you can't say he's hiding anything. That's for sure. No, no, I'll give him props for that.

Yeah, he's very, yeah. And he's not using an obscure benchmark, He's just using the SMP 500 so props to him for doing that for sure, but Yeah, that's definitely alarming where you get Like minus 15 percent here today. Like I don't know if he's doing better now It's a month later, but to underperform that badly last year. Like it's one thing if you did like 50, 60 percent last year, you crush the S&P 500 and then you're down 15 percent this year more than the S&P. Like that is one thing, right?

You're okay, you do better when things are good and you do a bit worse when things are bad, but overall you're probably in front still Yeah, that what's that Turkish? airports yeah that thing is Getting smoked this year and they're probably charging decent amount of fees to that's probably a kicker Yeah, that's right. Yeah, that's probably another part eating into the returns and at that point I mean you might as well if you want to do that approach You're almost better off doing it yourself at that point if you want to put that the time in Because yeah, if you want to do a more value approach

I would say there's probably not necessarily like all better names like Occidental I think that one you know even Buffett has been buying that quite a bit so there are some names that there's some validity to them but I think that probably the biggest issue I see is like it's very concentrated first of all in like you know the two top two holding one in Turkey one in India 15%. And then all the US ones, they're very kind of value, similar type of industries, not the same, but similar types of industries,

nothing like tech stocks or anything like that. So that's the other problem, it's super concentrated. You're not really well diversified. I was just thinking, did he call his fund wagons fund because the only reason people know him is because he hitched his wagon to Charlie and Warren He sure did it's smart. You know what?

Smart. If you're gonna- And he's more of a macro guy too, right? If you're gonna hit your wagon to someone, those are two guys to do. Yeah. Thanks for listening folks. We really appreciate you for tuning into the podcast.

We are now, when this podcast comes out, four Mondays away from election day, which is crazy. I honestly thought it was gonna be pushed out further, but I was wrong. I'm happily wrong. So that is four Mondays away. Simone will probably have to dedicate a kind of episode.

We can do our weekly Polymarket update. Yeah, let can do our weekly Polymarket update. Yeah, let's do our weekly Polymarket. So Polymarket currently has Mark Carney at 54%. We're recording this in the afternoon of the 25th. 54% versus 47% for Pierre Polyev. So now's the time if you think Pierre is gonna win and you wanna buy it on the cheap now is the time to do that. Yeah. Smash.

I mean at the end of the day it's like a coin flip that's what it's telling us. Like I've played enough poker to know 54-47 I mean it's a coin flip at this point. Yeah. That's about the odds I get at a roulette table, isn't it? Yeah, well if you really want good odds you should bet on Jagmeet Singh less than 1% So you're getting a magic Wow, think of all, yeah that's such an asymmetric bet, isn't it? So much asymmetry No, speaking of gambling, I didn't put any money on this but I We put together a finch at March Madness bracket.

Okay, yeah. And I just put one team in. I only made one team and I put it in this. I had no idea what I'm picking. Oh, I would be the same. Most people do, I'm not a college basketballer until the tournament starts. Give me a dartboard and I'll throw some darts and that's gonna be my pick.

I got 13 of 16, sweet 16 teams. Nice. It says I'm in the 99th percentile. That is, I don't know what the math on that is, but that is extremely lucky. Yeah, well yeah, if you didn't know it. Even if you know, I mean, there's always gonna be some element of luck, especially I mean, I'm not very familiar It's almost better if you don't know that's a big of a crapshoot these games are yeah Yeah

I guess yeah if if you stayed on the podcast and listened to us to all this long good for you I think for me the only betting I might do is Montreal Canadians making the playoffs. Should have done that when they had the Four Nations break. I think they were probably getting 20 to 1 on those odds. Yeah, they could sneak in that wild card spot. That's the pod, folks. We appreciate you. See you in a few days. The Canadian Investor podcast should not be construed as investment or financial advice. The hosts and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or

investment decisions.