The Canadian Investor - Should You Become a Green Bay Packers Shareholder?

Episode Date: April 17, 2023

In this episode, we talk about the Green Bay Packers and their more than 500,000 shareholders and if it is a worthwhile investment. Simon then goes over fractional banking and why US banks are starting to see their deposits go to money market alternatives. We finish the episode with a discussion on holding cash in your TFSA and why contacting investor relations is a great tool for any investor. Symbols of stocks discussed: TD.TO 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.See omnystudio.com/listener for privacy information.

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

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Bélanger. The Canadian Investor Podcast. Welcome into the show. My name is Brayden Dennis, as always joined by the majestic Simon Bélanger. We have a great show for you today, of course, and we are going to discuss the Green Bay Packers is my first segment of the day. The football team. You're going to discuss what is a bank the way you have it written here.

What does it mean to be a bank? I'm going to talk about a tip from Peter Lynch that goes way, way back. And you're going to talk about holding cash and, uh, how to get, how to get some return on it. My dude, have you, have you looked at, uh, this Green Bay Packers segment yet, or is this, this brand new to you? I'm reading it right now, but, um, I would say I'm kind of familiar with it. I knew they had, uh, um, they had something in place that you'll discuss without to not steal your thunder here.

It's unique. Welcome to the show. Let's start here with the business of sports. And for this American football and the NFL, the NFL's Green Bay Packers in particular. And there's no sports league with more value than the NFL. Do you know what the most valuable NFL team is, by the way? Pop quiz.

Probably like the Dallas Cowboys or something like that. Bingo. Bingo. The Dallas Cowboys have exceeded a valuation of more than $8 billion US and are the most valuable franchise in the world. Fun fact. Really? We've been on fun facts lately.

Yes, fun fact. More than like the football teams in Europe, like Manchester United and all that. I would think they're not cheap either. It is more valuable than those very popular soccer teams or the real football, if you will. Yes, it is. And it's crazy how valuable the NFL teams go for. And especially when they go for sale, because it is the ultimate vanity purchase. Owning a major sports league, like I'm getting a little off topic here, but people who buy NBA teams recently that have been sold, they're valued for more and more each and every year because they're so scarce, not because the

business is getting better. The NBA has lost a dramatic amount of viewership since 2014-ish, like a dramatic amount of viewership the NBA has lost, yet the franchises are worth more and more because it's very scarce. What is scarce is valuable. So the NFL, the most valuable sports league, American football, and 30 of the 50 most valuable global sports franchises in the world are NFL teams. More fun facts. Every team has a value north of 3 billion US, every single franchise, which is remarkable. There's no NHL team that touches that valuation. I think the Leafs are the highest valued franchise and we're looking at 2 billion for the entire MLSE. Don't quote me on that. That's just a quick Google search. It's usually, I think, Leafs, New York Rangers, and then Montreal, I think,

one, two, three. That's typically how it goes. Leafs, New York Rangers, and then Montreal. I think one, two, three. That's typically how it goes. Yeah. The New York Rangers? Yeah. Yeah. For whatever reason. I don't know if it comes with part ownership of MSG or whatever it is, but they've always been at the top.

It's a valuable franchise for sure. Yeah. Yeah. And just being in the New York market, iconic and all that. Yeah. Yeah. Very iconic. And one of the older teams too um now none are

more fascinating in the business of sports in the nfl than the green bay packers ownership structure there are 537 000 shareholders of the green bay packers And for the first time over a decade, they recently raised some capital. So from their press release dated February 25th, 2022. So not too long ago, just a little over a year ago. Their sixth stock sale was an outstanding success. It says here, the organization adding 176,000 new shareholders, the exact totals are not available, but more than 198,000 shares were sold at $300 each. So they were all $300 per share. Offering began on November 16th, and then it closed in February. 16th, and then it closed in February. So yeah, now they have over 500,000 unique shareholders. This raised approximately $65.8 million, construction projects at Lambeau Field and whatever else. They also said here on their press release right from the Green Bay Packers website

that Canadians purchased a roughly estimated 3,500 shares as well. So 3,500 times 300. Now it's pretty cool that they do this, Simon, and it's great for fandom, but that is it. It is for fandom. And I'm not saying that in a bad way. I'm saying that in a good way. Fans love to be able to say that they, they love the team and they own a piece of it. That's the ultimate flex. But this is a collectible. It's not an investment. And I think slash hope, maybe I'm too naive. I hope that people recognize that it is not investment because maybe it's a store of value, maybe. but things would have to dramatically change for even that to be true because the shares are not liquid. They don't appreciate, they can't be traded.

They don't pay a dividend. And so there's basically no upside in the way that there, the way that there is today, there is virtually no upside. And so essentially, it's a GoFundMe, right? That's what it is. But for the GoFundMe, you get to be a part owner of the Green Bay Packers. My only concern is the marketing that the team puts behind this, because people might FOMO into buying stock in the team, thinking it's cool and might make some money. There's no like, hey, by the way, this is a shit investment. It doesn't say that anywhere on the marketing material.

You can sell it. So there is some liquidity, actually. You can sell it back to the Packers, but at a very steep discount. You can also transfer shares to family members. But again, what are they going to do with them? You can sell them back to the Pack, but for a steep discount. No single owner can more than 4%. I think this is awesome.

I think it's cool, but it's not an investment, of course. I think it's cool, but it's not an investment, of course. This is essentially to hang the certificate in the garage like you'd hang some team merchandise, like a signed jersey from Aaron Rodgers. I back this, and if I was a diehard fan, you'd bet I'd throw $300 on buying a share and have my own little stock certificate of the team. I think it's great. I think it's cool. But this is an elaborate GoFundMe.

Yeah. I mean, that's what I heard before. I didn't read recently. I wasn't aware that he issued more of it, but that's what I read is that essentially it was very gimmicky. Yeah. was like very gimmicky um yeah yeah and they were yeah look i mean it's a small i think green bay's a it's one of the i think it is the smallest market right in the u.s in their team is extremely valuable it is but at the same time right i'm sure they get really good tv rights and stuff like that but um you still have a smaller market to monetize so maybe it's a way for them to just be able to you know constantly invest in the team and just get some financing which at the end of the day doesn't you know it's almost free financing

when you think it's free finance yeah so it is yeah i mean i guess if you're a fan it's actually brilliant yeah um because you're leveraging the fact that the fans will pay for this yeah and you wonder how many like security guards or people that take the tickets at the gate like they must roll their eyes like hearing like oh can i get this and that because you know i own this stock they're probably like uh doesn't matter yeah yeah i'm an owner they're like yeah so is everyone else here yeah exactly so i mean i would just love like how many times they get that in like in one day when there's a game yeah they probably get that all the time now you're right it's the green bay packers like locally is not a huge market but it is one of those kind of like iconic brands and teams and i don't even know how they get

there or get that so they'll have a lot of fandom outside and internationally from all over the country canada and internationally uh so that's that's what kind of makes these teams so valuable. It's like people will be diehard. People will live in Florida and be diehard fans of the Seattle Seahawks, which literally couldn't be further away from each other geographically. That's kind of the power of of the fandom and the sport and you know kind of you know you're kind of a fan of whatever your your parents were a fan of you know that kind of gets passed on right yeah no exactly yeah i mean i personally would not

no matter which team it is i would never kind of fall for not fall but do that because i feel like it's a waste of money i'd rather you know buy a pair of tickets and actually get the experience but um you know some people may may enjoy it um i guess we'll see if other teams do it probably not because that's been in place for quite some time yeah for a long time. Yeah, of course, it is gimmicky, for sure. But if you have like a garage or like a sports room or the man cave, I think it's a cool thing to put in. People love these kind of collectibles, right? And so what I'm saying is that's all it is.

But we should do more the business of sports and some of these kind of private companies. And some of them are very fascinating and have really bizarre, unique operating structures and ownership structures as well. So, yeah, that's the Green Bay Packers. as well. So yeah, that's the Green Bay Packers. 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. Now we'll move on to the fun world of banking. And like you said, like the segment, I just want to go over essentially what a bank is, because obviously

with some of the bank failures that we've seen in the US, I think a lot of people, I would say probably the majority of people don't realize that, you know, deposits at banks do carry some risk, especially if they're above the government insured limit, which we have the CDIC in Canada, the FDIC in the US, and I think the UK has something similar. I think most Western nations do have some kind of insurance. But I think a lot of people, you know, don't realize the amount of risk that can be behind that. But, you know, obviously, that's debatable. Because now I think what we've seen in the US, I think most governments will just not let banks fail that have any kind of importance

to their country, even if they're not considered system systematically important, because, you know, let's be honest, SVB, whether it was systematically important or not, I think is debatable. It was not considered before the bank failure. And then depending, you know, on which side that you were, I mean, you can make some arguments that, you know, it should have gone under and the government shouldn't have interven I mean, you can make some arguments that, you know, it should have gone under and the government shouldn't have intervened. And you can make arguments for the other side of as well. Now, what I want to talk about is how savings and loans banks work. I won't touch on the other types of banks here, like investment banks or banks that focus primarily

on asset management or even custodial services like a bank of New York Mellon, because those banks make mostly most of their money with fees. And I do have a lot of feeling that a lot of people think that a bank is just somewhere you can put your money and keep it safe for you. But I hate to break it to all those people, but that's just not how our banking system works. It's completely different than that. So I've talked about it before, but I'll go into more detail here. So we work in the U.S., you know, basically the world financial system works on a fractional reserve system.

So my guess is that most people have heard this before, but don't fully understand what it means. So this means that when you deposit your money, they simply keep a small portion of it as cash, and then they turn around and take most of it, the money from it, and they either loan it out to other people, ideally at higher interest rates, or purchase safe investments. And I'll put that in there. Typically, those safe investments will be something like government bonds or treasuries, oftentimes referred to. The difference between what they pay you in interest on your deposit and what they loan

out or guess in investment returns if they purchase treasuries, for example, is called the interest spread. The interest spread is how these types of banks make their money. If they're not able to get a good enough spread to cover their expenses and keep some profits, well, I mean, the bank will lose money if that's their primary business model. And something I think that's really important here is just looking at the bank assets and liabilities. The bank assets is essentially its loan portfolio plus its investments that it has with, you know, government bonds, for example, plus the cash. Its liabilities is the deposits that they have because the people depositing a money can withdraw that money and it's a liability for the bank so that's the primary liability for a bank and if you look at any of the big canadian banks if you look at

their balance sheets look at the liabilities and deposits is by far the main liability that they have it's actually really big numbers if you look at it i I mean, we have big banks and that's the reason behind that. Anything you want to add there? I remember the first time I took an accounting class and looking at a bank's balance sheet, your brain goes for a backflip because you're right. As soon as a deposit, I give you money. You now mark that as a liability. And of course, you know, lots of investors who are hearing that and going, you know, of course, you know, that's how it works. But as a brand new investor or someone just learning the ins and outs of accounting in banks, because it is nuanced and different, you have to kind of wrap your head around uh the loan portfolio is the number that's on the assets and so it's basically kind of opposite to every other business right yeah exactly or investments that they make right

because that's what we saw with svb is a big part of those assets were treasuries. Oops, we bought 10 years. Yeah. Oops. When the rates were at record low and now it's gone up. But yeah, so essentially that's in a nutshell, that's how a bank works. Obviously, there's other types of banks. There are some that are kind of hybrid banks. I would say Royal Bank is a bit of a hybrid where yes it has a strong you know personal

and commercial banking business which is tied to deposits and loans like i'm talking about here but it also has a big wealth management business also has a a big investment banking business but you know there are some banks that their core banks are really, you know, savings and loans, and that's what drives the economy. And the bank run risk for banks is primarily tied to a bank's demand deposit account. So DDAs, these are deposits that people are most often used to. So if you think of a deposit, you'll usually think of it as a demand deposit account or DDA. If you have money in a checking account, for example, or a regular savings account, this is considered a DDA. Essentially, you can go and withdraw your

money at any time you want. These types of deposits are the ones that can be redeemed by the depositor at any point in time. So at moment's notice, and we've seen with technology, that moment's notice can come very quickly. And that was one of the reasons like when we talked about SVB and you talked about that is how rapid that withdrawal base in terms of deposit was happening and way more than the traditional, let's wait in lot of the regulation in the states and i think globally was tied to as they're like okay we have to make sure there's no bank runs but bank runs are always done in person well that's not the case anymore and there are other types of deposits like term deposits where the money can only be redeemed when the term is done this allows the bank to have more certainty regarding this type of liability since it knows that it cannot be redeemed until the maturity date, at least not without a significant penalty.

And if we have a look at TD that we talked about in the last episode in terms of having a pretty high short interest, they have around 12% in cash versus their total deposit. So they do have other assets and I didn't dig into their financial to understand how liquid their other assets are aside from their loans, but it's an example of a bank not having all the money as cash. And 12% might seem like something that's low for people who are not used to banking but that's actually like pretty good in terms of the amount of cash that they have versus the deposit but it just goes to show how leveraged banks are in general and I think the average cash that banks had in the U.S. I remember hearing that last month or so I think it was around 6% when the US, the great financial crisis happened.

So now they're better capitalized, especially the larger banks. But it's something to keep in mind. And the reason why banks are structured this way is essentially they work to kind of create money. So, you know, your loan is you expect to get your full money back but the bank like i said may turn around and loan 80 of that to someone else but they still owe you that full 100 so what they do in terms of loan actually helps to stimulate the economy and make it grow and that's probably one of the big reasons that the fed and the u.S. has denied licenses for full reserve banks, because they most likely fear that allowing a model like that would translate into people moving their money or the deposit away from fractional fractional reserve banks. What we have mostly to full reserve banks just for safety and a full reserve bank would most likely make its money on fees so they would charge people to keep their money safe and what we're seeing right now is that if you're not

giving people a decently high enough interest rate is people will start shopping for higher interest rates elsewhere and we're seeing a move into money market funds, but also banks that are offering better interest rates in the US. So there's been some pretty, pretty, fairly big changes happening there. I did look at some of that data. I don't have it in front of me, but I think it's about 6% more outflows towards money market funds from actual deposits in the past month.

So since the failure of SVB, and I think as a whole is just people trying to, you know, get some yield and probably also trying to shift some risk away from, you know, bank deposit to money market funds that oftentimes are backed by treasuries. That's a really interesting point. I think for the first time, maybe in at least a long time, maybe since 08, that banks are having like an actual customer churn problem that hasn't existed for a long, long time. I mean, and also when rates are at zero and everyone's offering me zero or if it's not zero, you know, the most competitive rate from a disruptor in the space is still less than a percent on my money. I'm not going to go out and, you know, get an extra 30 basis points on my cash and yield. But now when we're talking about like 4% or 5% in that wheelhouse,

the difference in the ranges that are being offered are a lot higher. And so I think that they might be having a customer churn problem for the first time in over a decade uh at least maybe more yeah exactly and i mean and what you're seeing a lot and we're seeing this at canadian banks too and i'll talk about in my next segment and uh the data for the money market fund actually was i'm like i'm pretty sure i pulled the data i wasn't sure if i kept it for a future segment in a future episode but i will talk about it later. And it was, I think, right around 6%.

But what you're seeing with big Canadian banks and larger institutions in the U.S. is they didn't feel compelled to increase their interest rates because their depositor base was not moving. moving but now you might start seeing some pressure on those earnings whether it's the big canadian banks or in the u.s the jp morgans and so on because now people are actually demanding to get more interest on the money they're leaving at the bank and if they're not then they're gonna go and look for short-term treasuries which don't have those interest rate risk of the longer duration their treasuries and are actually yielding more right now. So I think it just makes a whole lot of sense to people have their money moving to something that's yielding four, four and a half, five percent. So it's going to be interesting what kind of pressure it puts on bank until the rest of this year, or at least until

rates start easing up with uh the central banks i just got my eq bank card have you ordered the card yet oh i've had it for months yeah oh have oh wow i'm laggard here i'm reading those beautiful ad reads and uh well you know what i was waiting to to get it because i wasn't in the country so i finally i finally ordered it now i'm back in the country and had somewhere to send it to like an actual address oh yeah send it to this homeless guy that uh is now back in canada i swear i run a canadian investor podcast um no i got the card it's it's nice i like it it's uh it's a good concept so shout out to eq bank one of our main sponsors all right let right, we get to move on?

That was really good, by the way. Yeah. You just crushed that. And I'll kind of touch a little bit more on it on the next segment, but it'll be more focused on TFSC. But I'll let you do your segment first. Okay. Sounds good.

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. Let's do a segment on talking to investor relations. On my camera roll on my phone, I have random photos of books. I'll be reading a book and I'm like, this is really good. And I have a habit of just kind of taking a picture of it because yeah, I could put a sticky note on it but i'm never gonna look at it

again so i'll just take a picture of it and the iphone will actually like make an album of all the photos that look like that so i just have a bunch of like you know what i mean like it automatically does it for me so it's pretty cool that that ai tech um and i found this one on my camera roll from about six years ago like it was was dated literally six years ago. And it's from one up on wall street by Peter Lynch. And I thought it was awesome. It's around communicating with the company's investor relations. When you have a question as an investor or as a prospective investor, no matter how big, how small you could own 10 million shares or one share or not. And if you have, they're there to field questions from investors and they don't know if you own one share or 10 million shares.

And so that's, that's kind of the beauty of it. So in Peter Lynch's, you know, kind of cheeky way of writing, he has some, He has a good passage here. So it's called Calling the Company. This is a section from the book. Professionals call companies all the time, yet amateurs never think of it. If you have specific questions, the investor relations office. So keep in mind, this is pre-internet days. This is in the 80s. I think you wrote this.

The investor relations office is a good place to get answers. That's one more thing the broker can do. Get you their phone number. Also, pretty sure you can get their phone number and their email pretty quick now. But let's go back to the 80s here. Many companies would welcome a chance to exchange view with the owner of 100 shares. And if it's a small outfit, you may find yourself talking to the president. In the unlikely event that the investor relations gives you the cold shoulder, you can tell them that you own 20,000 shares and you're deciding whether to double your position.

Then casually mention that your shares are held in, quote, street name. This is also brilliant because you're like, make up some street names. Like there's bound to be some cat, like, you know, uh, Bredo capital, uh, street. Like there's, there's no, there's, it's completely made up, but you sound legit. So this ought to warm things up. He says, actually, I'm not recommending this, but fibbing is something that people might think of and increase the odds of getting caught. And the odds of getting caught

here are nil. So again, you don't need to do what he's saying about fibbing, about being a large shareholder. They won't ask that. And now in 2023, or for a long time in the internet era, go on the investor relations site and you send them an email. Their email will be there. It'll usually be investors at acmecorp.com. And it's super easy. They'll send you a response, usually in a business day or two. In all my experiences, it's been in the same week. And they usually come back with a wonderfully comprehensive answer. And very often, very often, it is the actual C-suite that answers if it's a good question. A lot of times, it'll just be someone in the investor relations department. But a lot of times, especially if

it's founder run, and it's not a huge company, they'll be the ones that respond. I have had large billion dollar company CEOs and CFOs respond to my questions. Now don't go on wasting their time like you know, is this a good stock to buy? You know, don't be asking them about like short term performance or anything like that. But if you have questions like one that I did recently, I asked about the Brookfield spinoff. This is before it was publicly traded. This is before anything really. It was basically just Bruce Flatt saying that they were going to spin it off. And I asked them, what would the structure look like if you did this 25% ownership spin out, or sorry, spinning out 25% of the business, like Bruce Flatt has said on

the conference calls, would that be, you know, then the mothership owns 75%. What would be the final ownership of all the subsidiaries for Brookfield after that? And then I sent them a screenshot of the one that I keep up to that. And then I sent them a screenshot of the one that I keep up to date. And I said, what would this look like after? And they responded with literally like a three page response, outlining everything that I asked. They filled out my little spreadsheet. And they linked to a bunch of diagrams that I hadn't seen on, you know, some filing with the government that was like, you know, hundreds of pages long or whatever it was. And I was like, that was so easy. They didn't ask me, you know, how many billions of Brookfield shares do you own?

Like that's not their agenda. Any shareholder can can ask these types of questions the same way, you know, one share of Berkshire Hathaway B-class shares can get you into the annual shareholder meeting. It's OK to ask questions and you'll be surprised at who answers. And I mean, especially nowadays with social media, I would say it's not to the advantage of a company to, you know, not answering you or giving you, you know, an answer where you're, you know, they clearly think you're not important or anything like that. You never know who you're dealing with. So if they start getting bad press, I mean, that's not good for them either. So I think they're probably cognizant of that as well so I wouldn't you know I'm with you on here I don't see why they would question that like who knows right they don't know who you

are and maybe you have a lot of pull maybe you know you have half a million followers on Twitter and if they you know they give you the cold shoulder or whatever it is I mean they could really pay the price down the line. So I think that's something that they're probably very cognizant about. Yeah, and I'm a big believer in you attract the shareholders you deserve as a company.

And great companies will take this very seriously, and they'll give you a good answer, and they'll take the time. Not to mention, all of these billion dollar public companies, they have an entire investor relations department. Whether it's one person or 50 people, there is a department dedicated to fielding these kinds of questions and press related to their shareholder base. to their shareholder base. So I just wanted to bring that up because I have used it. And every time I email a company about this to their investor relations, I'm always surprised. And I always ask myself, why don't I do this more often? Because I have questions all the time that I might just like post to the Twitterverse when I could literally just ask the exact question to the actual company. Yeah. And they'll give me the actual answer.

So yeah, it's a good little tip that I wanted to remind everyone of. Oh, definitely. Now, I guess last segment here, like I alluded, so TFSA and cash and holding cash in your TFSA. and i think holding cash in general i mean i did tweet something uh that got definitely quite a bit of comment so if you have cash in your tfsa and you're not getting at least four percent on it you're leaving money on the table and i actually believe that um right now if you're not getting 4%, there's definitely ways to be getting at least 4% and as high, I would say as 5%, even a bit higher than that. If you're going beyond that, then it may not be the safest investment. There might be additional risks. people are passionate about and especially the TFSA part where, you know, we hammer in,

you and I were people still old, a lot of cash in their TFSA. And I know we had someone comment, we had someone reach out, say, oh, well, you know, it's not, you know, for a lot of people, they don't have a lot of money to invest in a TFSA. And they're also using the TFSA to meet certain medium to short-term goals. So it would not make sense to put it in anything other than a GIC or high interest savings ETF like CSAV or PSU, PSA. I've talked about them before. There's a bunch of them. There's also money markets ETF. But what we talk about in the surveys we quote, and the one I pulled is one we talked about before from January 2022 from BMO. But all these surveys kind of have similar finding is that cash, and we're just talking about cash here, not ETFs that may be cash equivalents, but they're still not cash. Cash is the most popular asset. So the majority of Canadians, 56% have cash in their TFSA and 29% say cash makes up at least

three quarters of their holdings. And in that same survey, while 73% of Canadians considered themselves knowledgeable about TFSAs, only half of Canadians were aware that a TFSA account can hold both cash and at least one other type of investment. We're not saying to name all the other types of investment, just one. And the ETFs I just referenced, they are other types of investment. I will agree, though, they are very liquid. But the purpose of this survey was actually cash by itself because an ETF can hold all different kind of assets. Right. It can hold bonds, equity, you know, kind of be a cash savings account like this. It can hold different types of even, you know, covered call ETFs, things like that. So there's all different kinds of ETFs that you can get.

You can get a Bitcoin ETF, right? So it's just a type of vehicle. And within that vehicle, there's different kind of investing instruments. We love all the questions we get to our email from the website. And someone wrote me a letter or email and they're very respectful so this person is we love constructive yes yes you're you're amazing but i had to push back on on what they were saying they're basically saying brayden you know you're so harsh on people holding cash in their tfsa like uh i have two reasons why i think it makes sense. And the first one is, well, I can use a cash ETF

and get a good return. My response to that is, that's not cash. If I hold a cash ETF in my brokerage, I might be considering it cash. My broker is not considering it cash. That is not adding to the cash statistic. It is not cash. It's a security. You own it in an ETF. So I respect what you're saying, but that is not the data. The data is that that would be considered a stock because an exchange traded fund would be classified as so. So that's one. And number two is that people want to be holding cash for saving for a house or saving for this, saving for that. And I said, sure, but I don't agree that using TFSA contribution room to hold cash is a wise play. This is non-investment advice, but I firmly stand on my position that using contribution room in your TFSA for cash makes no sense.

I mean, it depends, right? I think it depends how much room you have. I think that's the biggest factor. it depends how much room you have i think that depends how much room you have but i have to have some sort of general opinion on this and that is my opinion that contribution room in your tfsa is so sacred it is like you know like it's so valuable your contribution limit is so valuable. And sure, of course, there's nuance to this. Maybe you have tons of room that you're not going to utilize what you're hinting at.

But generally speaking, I don't want to hold, I don't want to use any of that sacred contribution limit to hold cash for saving for something. I want to use that tax-free contribution limit to own high expected returns like a broad basket of equities or something I can expect a return on higher than inflation and especially higher than cash. That's end of rant. and especially higher than cash. That's end of rant. Yeah. And I mean, I have a more nuanced approach, I would say, just because right now, especially right now, the real return on cash, if you use an ETF, whether it's a money market ETF or a high interest savings ETF, I mean, that gap between the interest you're getting and the inflation rate is narrowing.

And it's getting to a point, in my opinion, where it starts being very attractive to hold some cash, whether you want to use it for, you know, dry powder, for example, just because there is that, you know, that volatility that's not as present with cash. So there is definitely some attractiveness there. I mean, I would not use the majority of my TFSA to hold, you know, cash or cash equivalents. But I mean, which is what this study is suggesting it's being used for.

That's where my like confusion stems from. I'm not saying don't hold cash. You're like, don't, don't hear what I'm not saying. And I know you understand that, but yeah. Yeah. And you know, the way I see it, see it because i have you know a decent amount of room i've used uh most of it but i would say i still have about like a quarter of my room left that's just my

personal situation and because i have so much room is i've actually been using for parking cash for paying my taxes. So I put money aside because, you know, we have a dividend. We have to pay taxes on that. So I put money regularly and I put in these instruments that are yielding money because I want that money to be there. You know, I don't want the stock market to be down 20% when I need to take that money out to pay the CRA. So it actually gives me decent returns. But again, if I was closer to my limit, I would probably, you know, use, look at, you know, high interest savings accounts or even just use it in a taxable account and just do use those same instruments. I mean, it'll be taxed at my regular income, but that's kind of the way I

would approach things. But yeah, that's... This is why everyone's situation's different and nuanced, and that's why none of this, of course, is financial advice. In your situation, that makes sense. If you're up against the ceiling, I firmly believe it should be not used for that but if but you have the room so you're using it for that the stat that i'd be interesting uh hearing about in this in this study because this frames the conversation for me personally is which person like you know of these participants that answered how much contribution, how much room have they used of their ceiling? I think most people are not even close. I think that same survey, I mean, I'll pull it up, but I think at the time, the average balance was like in the mid 30,000. So, that does imply,

I mean, obviously, it'll be skewed with those who have large balances and those who not, but let's just say that implies that most people are probably using just you know a portion of it but again i have more room than you for the main reason that i was 18 when the tfsa started and you weren't so i'll have accumulated more room and i've made some uh you, some good profits on money that I had to withdraw when I bought a house and things like that. So, you know, I have a very, I ended up having a pretty decent chunk of room in my TFSA. But all that to say. In those years that it was 10 grand, like I think I had two or three of those before. Yeah.

Switched. Yeah, exactly. And I think my main point here is that, you know, whether, you know, let's forget about TFSA for a second, but whether you're looking at TFSA or not, I mean, right now, there are just some really good opportunities that, you know, getting four and a half plus percent on your cash, whether you look at a GIC and you want to lock in those rates because you might think that interest rates are going down in the next year or so, which could happen. I really don't know where rates are going. That's an option. You have these high interest savings ETFs that are other options. You have money market funds that look at the US Treasury bills, for example, short term. So those pay a very high yield as well. There's just a lot of of option. There's even high interest savings account now that are doing a decent kind of return on money.

So, you know, if you have a bank and they're giving you like less than one percent, which I know is still the case for a lot of banks, you know, if you have a decent amount of money, it's definitely worthwhile exploring your options. Clearly, some of the options I talked about don't have CDIC insurance. And if that's really important to you, then make sure you look at options that do have that type of insurance, you know, with them, with the Canadian Deposit Insurance Corporation. So, you know, there's different options there. But if you don't mind not having that insurance or, you know, there's other options that are available that can give you a bit higher yield.

But 4% to 5% is definitely obtainable right now. And, you know, personally, I think you're leaving money on the table if you're not getting at least, I would say, 4%. I think that it's a good take. I actually agree with this because, look, it's out there. And it's not hard to achieve that rate on cash right now. So like kind of back to, if you are in a situation where you, you do want to get some yield on this, I'm in that situation since I have to pay taxes now from this business. Like, you know, I've only, I've been a T4 guy forever. I, you know, I investing in my RRSP,

I'm used to getting money back at the end of the year, this year, you and I got the fat tax bill. And so I've been using EQ bank and before they were sponsored too, by the way, like I, I like prefacing that because, you know, I don't like chilling out just things that we talk about as sponsors. And because,

you know, they're given those pretty solid rates. Like I don't want to throw it a number and to be wrong, but it's, it's high a lot higher than what I'm getting at another bank. And those options are available now. And I think this goes back to the banks have a bit of a challenge. There's a bit of a customer churn issue.

And when I can get this on an ETF from Horizons or whatever it is, all-purpose ETF, 4%, there's competition for my cash. Yeah. No, exactly. And I mean, we use EQ Banks as sponsor, but I use them too. And for the first four months of the year, every time we paid a dividend, I put a portion of that dividend in a one-year GIC because I do like the fact that it's locked in. So I don't touch it. It's all good. It's locked in for a year. It'll come to maturity before we have to pay taxes next year. And then, you know, as I get closer, I'm still putting money aside. Then I'll look at the other options that are more liquid, because then I don't have that one year term in front of me anymore. But, you know, it's the first time I remember investing, that there have been really attractive options for parking cash. And I think I think it's important for people to remember that because, you know,

for the whole decade, essentially since the great financial crisis, it was simply not an option. I mean, you were getting, even in real rates, you weren't getting really much on your money. And now it just gives people that option, especially, you know, if you're saving for, you know, a down payment on a home and you want to potentially buy in the next year or two, you know, it could be risky to put money into equities because you don't know what will happen. But having, you know, four and a half, five percent on your cash while you're waiting, it's not a bad thing if you ask me, especially if, you know, home prices kind of stabilize while your down payment

still growing without much risk and then you know you can start and pull the trigger when you're ready sure beats the uh you know traditional checking account few basis points they give you you don't even notice you could be a trillionaire and still not even notice the difference uh no you're right there's there's uh there's a new competition for cash and if you're uh one of these cash these heisa cash etfs you know the horizons the uh c-sav or uh the purpose one yeah psa is the canadian yeah psa and psu for us. It's cash from Verizon. It's literally ticker cash. There's a bill if you want to own treasury, short-term treasury bill, BIL, listed in the U.S.

So these are one to three-month treasury bills. The inflows on these things must be bonkers lately. The data I had was that it increased 6% to hit a record 5.2 trillion in the u.s in march since that yeah because people i think keep going yeah and i think a lot of it is short term uh money market funds because people are like you know what that bill i just mentioned please the treasury is backed by the u.s government right and they're short term so there's not those interest rate risk associated with it. Obviously, you're locking in higher rates for longer term, but you get kind of that safety.

So they've really seen a move to those money market funds in the US. What can happen with the value of the actual equity though? What do you mean? It's traded as an etf yeah i mean uh it shouldn't matter because the shares can either be created or redeemed right as necessary to keep the price in line with the the price of the so they just keep it at like 50 bucks or whatever yeah exactly i think it'll vary like a few cents when the distribution happens yeah and then it kind of like those etfs are kind of funny because it's like it goes looks insane yeah the the value of the um it's hard

to explain but it kind of goes up very very slowly for the month and then when you hit the cutoff date for the distribution it'll look like it goes down sharply and then the next month it goes up and then hits the same value it did the previous month and then goes down so just adjust a few cents based on where you're at in the month basically i know that it does that for the the hisa ones but does that is that is it the same exact yeah i think i checked the the t-bill one too yeah i'm pretty i checked last weekend because i was just curious uh i think it does the exact same thing it's holding bond that's why i'm yeah it does the same thing question yeah okay yeah it's just like it just go up down up down but never they're not big fluctuations like people may think it's a big fluctuation but if you look at bill um you know

at the end of february it dropped from it went up at a peak of 9171 and dropped to a whopping 9146 so it's just that small drop and then it goes up and then the distribution date happens and it kind of goes back down but these are like super small you know they what, 0.5% or whatever it is. I don't know if you know the answer to this. Operationally, how do they do that? Because they're holding bonds. Yeah, but they're short term. So they constantly come to maturity.

That's what I would think. So they're're just one to three-month bill, treasury bills. I think it looks different when you're holding longer-term duration because then they get influenced by the interest rate variation. Yeah. I don't know at what length this starts acting differently, but the one to three-month, I think, is just so short-term that it does not really get impacted by interest rates. And the maturities are all staggered too. Yeah. Yeah. Yeah, exactly. Yeah. If you look at the fun fact, they give you the maturity date, which are all, you know, there's probably daily maturities. Yeah. Those instruments are pretty intense to operate.

Oh, I mean, I would not want to operate it, but as an investor, it's a really great tool. The only thing with bill is if you own it in the TFSA, there's going to be withholding taxes. But it's an interesting one, especially if you're looking to own it in a taxable account, for example. Very cool. Back to here on the TFSA and cash. Was that all of your notes or is there more? No, that's it. Yeah, that's it. Okay, cool. Back to here on the TFC and cash. Was that all of your notes or is there more? No, that's it. Yeah, that's it. Okay, cool. Dude, it's good to have options, right?

Exactly. Yeah. It's like, dude, my buddy's dad, he's telling me, he was talking about when he was a big shot in Toronto for a fixed income market. And he was locking in some ridiculous, would that have been the 80s? When did a short-term bond yield like you know 18 percent ish am i yeah that would have been like late 80s i think yeah yeah i was just like wow you know things when it makes no sense to hold equities yeah yeah at that point it's like almost yeah yeah unless you're buffett getting 24% return in compound annually over 100 years, like, jeez, I mean, you got to be crazy

to think that you can get a better return than that. No, exactly. No, it's still a different environment than right now, for sure. But one thing that I'll talk about in a future episode, I'm sure people will want to hear, is I've made some high-level changes to my overall portfolio, how I see things. It's not going to lead to that much changes in the short term in the names I hold, but in terms of how I want to allocate money.

So, stay tuned for... Yeah. I mean, it's kind of in line with what I've talked in the past year, year and a half. So, you'll see it and you won't be overly surprised. But they're just kind of tweaks, I would say, in bigger buckets. Was this inspired by the like on the joint TCI.com? I was like, how I view my portfolio. In part, yeah.

I mean, it's a bigger kind of high level uh mindset i would say uh but just something i was slowly tweaking over the past year and a half so people have been listening they probably won't be overly surprised but um i'll talk about that it's changed a little bit but not to worry i mean the vast majority is still in equities so that's not gonna change right right uh that's a good handoff to uh to wrap up today's show and give a handoff to join tci.com that is the patreon where we have 178 patrons it's nine dollars canadian a month 178 patrons are supporting the show and they see our portfolio tracking performance spreadsheet our holdings and our thoughts kind of every month and my write-up this month was i don't have anything interesting to report that's more interesting than simone's like huge updates

here so i'm just gonna i'm just gonna leave it at that here's's a copy of my spreadsheet. Go nuts. But one thing that I did, I think three months ago or two months ago, I wrote in there, this is my portfolio by about my portfolio. And there's a separate table. And they're virtually identical, other than the fact that I was getting so many names because, you know, the spinoffs from Constellation, spinoffs from Brookfield. shares. And they're just part of the position that I already owned before. And I have no plans on making portfolio changes. So it's just like, the OCD in me is like, I don't want 26 positions. And then I scale it back and I'm like, there's actually only like 15 to 17 when you think about this logically. I hold MasterCcard and visa in a 10 position equal weighted that's one investment thesis to me in the way i view those companies or you know the moody's and s&p global pair trade you know like that's one the constellation lumine group topic is those are not three individual positions to me they're all under the operating they're operating groups underneath the constellation and i thought that was a very

instructive exercise for me personally no i think i did the same two that just to help people visualize a little bit but uh same kind of thing for me i think one that really comes like there's a brookfields but also um you know i have bitcoin but also i have bitcoin etf so that's kind of thing for me. I think one that really comes like there is a Brookfields, but also, you know, I have Bitcoin, but also I have Bitcoin ETF. So that's kind of one position. Right. I used to have it in two separate things. And then I also had some cash, not a lot, not in ETFs and also a decent chunk in those, you know, high interest savings ETFs. So it just made sense to combine those.

So there's just things that, yes, they added a bunch of rows, but when you kind of pull back a little bit, you're like, okay, these three rows, actually, they're the same thing, and then these two are the same thing. So I think it helps people visualize and also think, we don't have as many positions as it may look at first glance right yeah it kind of cuts through the noise uh as a viewer of joint tci.com but honestly for me it was really helpful for me to do it was kind of like long overdue yeah we'll try to keep

that updated yeah yeah exactly exactly. The spreadsheet. I had a little trouble with the formatting. Exactly. I had to do it manually because every time I sorted, it messed up all the things it picked up. So I'm like, okay, sorry, it's not in the right order because when I try to do it, it just messes up everything. There's a function or like a i know that i know how to do

in excel that doesn't exist in sheets okay that's why in the good so i i was trying to do it that way and i was like you and i are both in the situation we're like oh man this is gonna be a manual thing every month yeah yeah because i try to sort and then i'm like okay this doesn't make sense this is not these two positions together and then i'm like okay this doesn't make sense this is not these two positions together and then i look obviously it's picking up a different cell and yeah yeah yeah exactly it's like double counting stuff um and for that manual work you know us doing the stuff over there to make it better for you join tci.com go ahead if you're not already a patron go to join tci.com we answer the questions there faster too, just because, well, you know, $9.

You're spending the big bucks of $9 Canadian to support the show. We appreciate you very much. That is at join TCI.com. We will see you in a few days. Take care. Bye-bye. 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. an investor podcast should not be taken as investment or financial advice. Braden 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.