The Canadian Investor - Should You Buy Stocks in CAD or USD

Episode Date: September 8, 2022

In this episode we answer questions about buying stocks listed both in Canada and in the US and dollar cost averaging. We then go over some recent news about Snap, Amazon and Apple. We also review recent earnings from Lululemon, Crowdstrike and Alimentations Couche-Tard.  Tickers of stock discussed: AMZN, ATD.TO, LULU, AAPL, SNAP Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast 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. How are we doing? Today is September 6th, 2022. My name is Brayden Dennis. As always, with the legendary dad joke filled, Simon Bélanger. We're recording this after Labor Day. Hope everyone had a great long

weekend enjoyed the fruits of their labors so when i saw the northern lights last night for the first time in my life in like just in muskoka too i didn't even know that was possible and it was pretty cool yeah i think it does happen canada like obviously the more up north you are it's more common but i've seen it i think once in Ottawa and I've seen it once in Iceland which is pretty up north so yeah. Oh, for sure there, yeah. But they're beautiful. Yeah, it's something I think everyone should get a chance to see at least once in their life.

Yeah, we're sitting around the campfire drinking a whiskey as one does celebrating the fruits of their labor on Labor Day. And my brother's like, it's not the Northern Lights? And I'm like, nah. I'm like, oh wait, that certainly is. And it's very bright and vivid. Simone, what is this screenshot here on the dock? What am I looking at right now? Yes, I just thought it'd be fun to look at. So So I think it was a thread that Dan from obviously the Canadian Real Estate Investor podcast, he had a thread saying that some people on TikTok, Canadian people were saying that the Bank of Canada tomorrow, which by the time you listen to this, you'll already know what they're doing. But people were saying that the Bank of Canada is going to be

cutting rates, which is really, you know, makes no sense at all. The announcement's tomorrow, right? Yeah, exactly. It's tomorrow. So, by the time, yeah, people listen to this, don't know. And I just got a tweet from Bridget Casey, who's a financial reporter, if I remember correctly, and she's on TikTok. And really, like, it sounds like people on TikTok live in their own little bubble when it comes to financial TikTok whatever you want to call it but that's probably why I'm not there because this is yeah you're reading this I just don't know what people are thinking and I do hope that people are not in the mindset of well you know have a variable mortgage or variable debt, so I'm fine because they're going

to be cutting, you know, the interest rates. And I read that Equifax Canada today, they came out with a report saying that the credit card debt is on the rise as well. It's not as impacted by higher rates, but does, you know, definitely raises some question as to the level of indebtedness of Canadians. Right. And I think that, you know, inflation is just moving the savings rate down. Yeah. Which is going to drive a personal credit card debt up. I think that's a pretty safe correlation to make. But I mean, that's just a good way to say, don't get your financial advice from TikTok, right? Like, people aren't

really getting their financial advice to TikTok, I hope. Even Twitter, right? Yeah, it's just, anyways, it's mind-blowing, especially when most experts will say they'll be, I've heard 50, 75. Consensus is 75 bips, right? I've heard like on 50 is pretty unlikely from what I've read, 75 or 100 seem to be the most likely, with 75 seems to have most people thinking that's what they'll do. I am never wrong predicting interest rates because I never predict them. Exactly. I don't either. I don't. And if I do, it's me just spewing nonsense because it's impossible to predict.

What we do know is long-term investors win regardless of the macro economy. Buy good businesses, hold them on for a really long time. Quick listener question here from Patrick. Hello, I love listening to you guys. I was wondering if I'm buying a stock on the TSX, but it's also on the New York Stock Exchange. So he's saying it's on the TSX, but they also have a US listing. Should I buy both of them? What's the difference? Okay. So we take this a number of ways. As always, non-investment advice, do your own research. And volume on the exchanges aside, these large caps typically have lots of volume. So I'm not too concerned about the exchanges here,

but we're talking currency, right? So we're talking, do you want to own this in CAD? Do Large caps typically have lots of volume, so I'm not too concerned about the exchanges here. But we're talking currency, right, Simon? We're talking, do you want to own this in CAD or do you want to own this in USD? Because the underlying asset is the exact same. So don't sweat the small stuff, okay? The more important decision is around which underlying security you want your capital to be in. Shopify on the New York Stock Exchange. Shopify on the TSX is still Shopify. Brookfield Asset Management on the NYSE or the TSX, it's still the same business. A good amount of Canadian large caps in the TSX-60 trade on both exchanges. I want to say

over 90%. I was looking at it with Adrian the other day. It's only a few outliers. It's like Constellation, a few others don't. Couchetard was another example, but most of them do. If I had a simple answer, I buy Canadian stocks on the TSX when I can, because you can avoid some of those currency fees associated with it, or you can do it in Robert's Gambit, the elite way. But that's only because I have a good amount of US exposure with US stocks. If you're too heavy Canadian and Canadian stocks, I think there's a general issue around Canadian home bias or country home bias more so than... That's more of a discussion around portfolio allocation. You should probably avoid home country bias no matter where you are in the world. And so, it's a roundabout answer to saying don't sweat the small stuff, but if you can avoid fees, avoid fees. How are you thinking

about this? Yeah, no, I agree with that. And I think probably just to make it clear, if you own a share, let's say, I think Enbridge is traded on both, in Canada and the US yeah if you own a share of Enbridge on the TSX or you own a share of Enbridge that's traded in the US you own a share of Enbridge so it doesn't matter yeah and you can journal them too yeah yeah exactly so I think just to just to make sense of it so to me it doesn't really make sense of having both Enbridge on the US and Canadian in your portfolio. I think you just do one or the other. And like you mentioned, there are some considerations, whether you want a bit more exposure to US currency or vice versa. But for the most part,

I mean, not to sweat it, I think what Braden said, and I follow that too, if it's traded on the Canadian Stock Exchange, I will buy it in Canadian dollars typically. And I think I'll just add that you rarely see US company listed, if any. I don't know if there are any. It's usually the Canadian COs are listed on the US market, but not vice versa. Unless there's some micro cap that want to list on the TSX or like a venture or something. That's a rare exception. Yeah, that's right. So I think we'll move on to the next one. So there's not that many earnings right now. Some news, but not crazy news, especially I think people are just waiting on what's happening on the macro side, both in Canada and the US. The markets are really, yeah, like we mentioned last week, the markets are really

waiting on what the Fed will be doing in the US especially. 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. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb,

but can still focus on enjoying your time away. Find a co-host at Airbnb.ca forward slash host. That is Airbnb.ca forward slash host. Now, some news here are earnings lululemon they came out with their quarter and it was a really good one for lululemon their stock was up 10 when the markets opened on friday although it finished a bit lower than that because i think just generally the markets were down on friday their net revenues increased 29 to 1 $1.9 billion. For North America, 28% of their revenues, while there was an increase of 28% for North America and an increase of 35% internationally.

And that's great because internationally has been a big push to grow Lululemon. Comparable sales increased 23%. DTC, which is direct-to-consumer, increased 30%. DTC revenue now represents 42% of sales versus 41% last year. So not a crazy, it's pretty much in the same range, but still nice to see a small increase there. I just think that it being flat is a very good result. Yeah. Yeah. I mean, it definitely shows that their model is doing quite well and how they're really trying to keep those margins high. And men's product is another bright spot here. Revenues increased 27%, another growth lever for Lululemon. Again, international and that, I think those will be the two main drivers going forward. But I mean, North America still up 28%. And women's product revenues also increased 24%. So it's really impressive

considering that that represents two thirds of their revenues. Now their gross margins were down 160 basis points to 56.5%. But the operating margins were up 140 basis points. So with costs of everything going up in today's world, as we know with the big I word, I'm paying more and more attention to the operating margins specifically because it includes more expenses than just the gross margins. And I think it's really important to keep an eye on those. Now, net income was up 39% to $290 million. They were free cash flow negative of $401 million for the first two quarters versus free cash flow positive for $355 last year. Now, the big reason here is they're bulking up their inventory to meet what they think will be strong demand in the last two quarters. At first glance, it may be worrisome to see that negative free cash flow,

but I think when you dig into it, it makes more sense. Again, there's a little bit of risk here because they are getting inventory, but if you know Lululemon and you've purchased their clothing before, they make pretty good money even on the stuff that they discount. It's not like the stuff that they discount. It's not like the stuff they discount is extremely cheap either. We made too much. If you're familiar with it, I do go on that specifically to try and get some deals. And the last thing here.

It's like, oh, this t-shirt is now $85 instead of $105. Yeah, pretty much. You're not joking like you're not joking and the cherry those are real figures and the cherry on top here i think why the markets really love these results is they actually increase their guidance so using just their mid-range of their sales guidance for fiscal 2022 they increase that by three percent so compared to 2021 their full year guidance now would be a 25% increase. So really solid for Lululemon. Obviously, they have to execute because if they don't, they're going to take a hit. That's for sure.

But I don't have any reason to believe that they won't. And you have made a little mistake on your interview with Adrian. I do own Lululemon. Oh. I've owned it for a while. Yeah, I've owned it for like a year. Yeah, you do. It's like I should subscribe to joint TCI dot com or something.

Yeah, exactly. I meant to tell you. So like I do own a little lemon. Yeah. Well, yeah. If you didn't know, this is now the the Canadian fashion investor podcast, right? Like the Canadian fashion stock investor podcast dot com is a domain we should buy given the content lately. Well, we don't miss a little lemon earnings report because they report at an opportune time for us to discuss. It's like Dollarama. You know, Dollarama has 37 quarters on this podcast, so we don't miss any of those. Dude, it's just more of the same. It's more slinging of high-margin yoga pants. You know, like that's obviously an oversimplification of this business.

And it just keeps on chugging along, growing at rates that seem impossible, to be honest. And it's just such... The unit economics are just unbelievable. And the DTC revs still holding strong off the back of, you know, that e-commerce explosion over the past two years is just really encouraging for shareholders. Yeah, yeah, exactly. And I think, you know, to get back to what Adrian was saying is I think for the most part, Lululemon, they don't have crazy colors generally. So, they're pretty kind of neutral colors. they tend to age well their quality is good so i think a lot of consumers end up buying their products i know i do because i know it'll last me like two three four years and i won't look like a clown in four years

wearing it because i know i will still be relatively stylish yep totally get that and comfy. Let's move on to CrowdStrike, ticker CRWD. CrowdStrike is a cybersecurity company. It is a software business and it is a cybersecurity giant reporting a very nice quarter, in my opinion. Annual recurring revenue. So this, I mean, this is a subscription based business, right? It's enterprise businesses subscribing to enterprise deals and ARR annual recurring revenue grow 59% year over year to 2.14 billion. So that is when I say the run rate, the run rate just means like, what is today's current recurring revenue? Because it's always going to be growing, assuming they have more net ads of subscriptions and more ARR over time.

So today, after their latest quarter, they have 2.14 billion in ARR, which I'll call the run rate. It means the same thing. They had record net new ARR growth in the quarter. So this is an interesting takeaway because yeah, you can have these beautiful subscription revenue, high margin software businesses, but many of them have not been growing as fast as they did in 2020 and 2021, right? Like most of them had a deceleration in growth. I mean, it kind of just makes sense given the environment, not CrowdStrike, record

net new growth. Free cash flow was up, you know, almost doubled at 84% to 136 million in free cash flow. That gross margin number at 76%, it's the stuff you want to see on software. Now, I have a screenshot here from stratosphere.io on the company search. You go to CrowdStrike, you see all their KPIs. Dude, look over time from 2017 to trailing 12 months, just number of customers, like number of subscription customers has gone from 450 to almost 20,000. And these are large enterprise. They're not like, you know, me and you subscribing to CrowdStrike. We're not in the market for enterprise cybersecurity. And ARR has exploded to, you know, from 59 million on the run to $2.1 billion. Dollar-based net retention rate exceeds 120% consistently, so their current subscriber base is spending more money over time. where things get interesting. Trades at 20 times sales today, but very high quality software companies can provide impressive resiliency against the macro factor of them all trading lower. Crowd is only down about 13% year to date, while the rest of software stocks have been

getting murdered, like absolutely destroyed. It sounds rough until you realize that the NASDAQ 100 today, that index is comprised largely of tech stocks, is now back in bear territory after that little rally down 26% year to date. And so I wish I could pull up this little consultant's report that I saw. It was one of those McKinsey type firms. And they put out a report showing that even in the economic downturn, And they put out a report showing that even in the economic downturn, enterprise spend on cybersecurity was one of the few line items that was actually accelerating, while almost every other technology line item, CFOs were actually pulling back on, on those expense line items. And we saw an acceleration on cybersecurity, one of the very few line items. So people are still recognizing it as a very important top priority spend for these large companies. Yeah, no, it makes sense. I mean, obviously, I know of CrowdStrike. I can just look at the numbers and say it's impressive i find cyber security a little bit

too complex for my liking or you know i'm sure i could probably learn it but i don't have the will and desire to learn it that's probably yeah and the time exactly but i know it's been pretty resilient and being down what you said 26 percent or 13 percent i mean the bonds are down that much this year for context. I mean, everything's down at least 10% pretty much. So, there's very few stocks that are not. So, that's pretty good even if you don't compare it to NASDAQ stocks. Yeah, it's quite resilient. I mean, I'd be hard pressed to find something trading at over 20 times sales that hasn't been taken to the absolute woodshed. It's very difficult to find. And it's because one of the few names that are not seeing a deceleration on basically any important KPI. And that matters to the market quite a bit. Yeah. And before anyone thinks it's a sure thing, keep in mind though, if there is

any inkling of slowing growth, even if they're still growing quickly, they will get shattered. Like the markets, that's how it's reacting. So they have to keep this up to be able to keep that valuation up. Agreed. Now, moving on to other earnings. So Alimentation Couchetard, obviously a Quebec company. I think everyone knows them quite well. Now, they had a pretty good quarter, I would

say. It's very nuanced because they get a lot of their revenues from fuel. So revenues were up 37% to 18.7 billion, mainly driven by higher fuel revenues. Fuel revenues on their own were up 52% to 14.3 billion. Merchandise and services revenue were flat. So that kind of gives you a bit of a better picture here of what's going on. Cost of sales expenses rose 44% while SG&A rose 9%. Gross margins were down 370 basis points. Now, they did mention that they are taking measures to reduce the growth in expenses and try to keep that below the rate of inflation and they had this adjusted metric saying that it was already lower than

inflation but I take the adjusted metrics with a grain of salt usually but like most businesses I think that's really important to keep an eye on you want to make sure those expenses are in check or at least not growing faster than your revenues. And operating income was up 13% to $1.2 billion. Net income was up 14% to $872 million. I think I put a B there by mistake because that would make it the most profitable company in the world. Almost a trillion in earnings. Nice. And free cash flow was down 15% to $750 million. So I think a good quarter. And on top of that, they continued repurchasing shares. They did so for the amount of $478 million during the quarter. So I think, you know, overall,

definitely some headwinds for Eddie Montagno-Cristal. But I think considering the overall markets right now, I think considering the overall markets right now, I think they're faring pretty well, especially when you compare them to other, I guess, I don't know. Would you call it a retail play? Yeah, totally. I guess so, right? Yeah. So, compared to other retail plays, I think they're doing pretty well considering the current environment. It is a convenience store empire. And I'm trying to pull up this graph here. I shared an interesting graph because we track CouchTard on Stratosphere

and we got, you know, fuel margin, or sorry, fuel revenues, on-road fuel revenues is something that is close. We tracked that over time over the last 10 years. On the backdrop of the EV worries, I think my best guess is there has been, it's kept their multiple so compressed, is what does this business look like in a world of electric vehicles? Where does the traffic go Like where does the fuel services go? Like in the traffic into their retail play, like that has kept the multiple on CouchTard compressed

over the years. And that's why it's been such an attractively priced stock given how fast it grows. Like any quant model in the world has had CouchTard as like the highest expected return on the TSX for ages. I know this because I've run it through every single type of math I can, and it always looks amazing. And this fuel service revenue is not just like, oh, it's elevated in this high inflation world. It has compounded unbelievably well because they have compounded the business and their reach and geographic locations and wonderful return on invested capital with a wonderful management team over time. I don't have enough good things to say about this company. As I hinted at before, I do have a lot of questions about what

the future of this business looks like, yet they keep kind of proving me wrong. Yeah, I think they probably, until they solve that issue, I mean, let's say they don't solve it and they become in trouble eventually. I still think they probably have at least a decade of runway. So I think that's the way I kind of see it. But clearly, I'm sure management is aware. So, I'm sure they'll try to find a solution because yeah, I mean, I'm thinking of myself like I pretty much would never go to one of their convenience store unless I am filling up the car. That's it, right? Right. Exactly.

You know, maybe I just I'm thirsty. I want to get an overpriced bottle of water and then I go in the convenience store because it's right there as I fill up my car, that's about it. Right. Have you... You see the stock chart I just put in for CouchTard? Yeah, like Google, yeah. The performance is actually bonkers. Yeah, oh yeah. This is one of the most impressive Canadian stories of bonkers. Yeah. Oh, yeah. This is one of the most impressive Canadian stories of all time.

Yeah, exactly. I mean, look at this. It may represent an opportunity, right? For those who believe that management will come up with a solution for the gasoline question or, you know, overhanging cloud, this might be a great time to buy a stock like them. I mean, they're repurchasing shares and they're paying a dividend. So, yeah. Yeah. And growing pretty much every metric that needs like the revs for sure.

Before I get a DM saying, yes, but have you seen what they're doing with electric vehicles in their Nordic locations? I think it's Norway that they have this pilot program with all of these EV chargers. And, you know, they're seeing that sustained kind of traffic to their convenience stores with that setup. I get it. I hear it. I get it. They're showing off that this model works with EVs and, you know, this pilot project.

And they really, they want to tell the whole world about it. I have my hesitancies and I have my questions about how that really works. I have not been convinced. It's not that I can't be convinced. I have not been convinced that that will work everywhere. And so I'm jumping in before the people slide my DMs about their Nordic pilot project because I've seen it. I get it. Anyways. 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. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going

to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host.

ca forward slash host. So let's talk about Apple. You ever heard of Apple? They plan to double their digital advertising business. And the estimates that Evercore Research has published on what this business could become is actually kind of scary. It kind of sounds the alarm bells on some of the positions in my portfolio because there's a big piece of pie at digital ad spend. And I tend to think Google's the best player in there. I have some questions I need to talk about here because I believe Google's core search advertising business belongs in the first ballot hall of fame of businesses in human history. And the largest risk to the business is that Apple increasingly owns more and more of the keys to the castle because they own the hardware, they own the software ecosystem, and these

businesses have to play in it. And Google and Apple have a very important agreement that Google will serve as the default search engine for the browsers on the iPhone. It's like $26 billion. They pay them a year to have that exclusive Google search for iPhone. And you have to play an Apple sandbox. And Apple is highly anti-competitive and monopolistic. Let's not kid ourselves. While somehow remaining out of the crosshairs of antitrust regulators like Facebook and Google seem to live inside of. We've all seen the video or the photo of Zuck drinking the water at the DOJ hearing. You've all seen that. Somehow, Tim and Apple are out of that conversation. Now, Apple's advertising business is so small. Well, it's not so small today. It's a $2 billion in revenue segment, but it's very

small compared to what it could be. Evercore estimates have Apple advertising segment hitting $30 billion in revenue by 2026, which is kind of insane, right? Another huge segment for this already gigantic business. As a note to myself and other investors, when it comes to investing, the forces of capitalism, no moat is impenetrable. And these are the pieces of signal that I'm paying attention to. Not only because I selfishly care about it with my own net worth and the positions that I own, but I think it's an important reminder to never become complacent on what the competitive landscape and the fierce forces of capitalism can do, right? No business can remain forever

especially at those margins unless you're a railroad unless you're and you have the government protection but no it's funny you did this segment because i did my notes before brayden and then he does his and i read an article on that today and i think they were saying that apple one thing they are looking to tap especially like with the app developers is a bit like amazon does for its sellers right so the sellers will pay to get their products way up so people see them on the first page because i think if you're not on the first page you're basically like your likelihood of getting a purchase goes way way way down and then they always say they hide the dead bodies on the second page of google yeah exactly and then apple is

looking at that same playbook for ad marketing for you know getting developers to pay to get their apps up there so they get eyeballs on it because developers are now noticing that it's worth paying a decent amount of money to get their ads up there because that can actually make or break their business. So if they start generating more and more revenue, they were saying that they could steal a lot of that business from Google because people will look and search up apps on Google, right? I've done it. You've done it, I'm sure. I've done it on App Store as well, but sometimes I will look up on Google.

So that is one thing they could start taking some market share in the article that I read. Totally. And I think the advertising segment on Amazon's e-commerce retail business is a very good comp and a very good thing that people can relate to because I think that

that's exactly what they're going to try to do yeah exactly i think it has a lot of similarities but yeah now to go on to another i guess this feeds in well yeah feeds in well so uh company that's not doing too well on the ad front is snap because of course they've been really affected badly by the privacy update of the Affirmation Apple. You know, if people are not sure what we talk about when we say that, you know, when you download an app and then it asks you, usually what the app will say first is like, oh, say yes to allow us to track you because it really helps us with that. And then it prompts you, iphone will prompt you and say

ask app not to allow or something like that right yours to option i always ask the app to track you it's like allow while using the app never or always exactly the three options yeah that's it and i don't know about you but i say never i always say sometimes i'll put in app if it's like i know they need to track my location yeah exactly that one i will do sometimes but that's the update basically that's what allowed facebook before this update to track what you were doing across different apps because they would do it without you essentially knowing i think you could still manually do it but now it actually prompts you and then brings it to the forefront. Now,

as a result, in part of that, Snap is laying off 20% of their workforce because they really want to focus on the augmented reality and some other projects that were not as profitable. They're just not going ahead with them. And it'll be interesting whether that strategy kind of works or not. I mean, one of the biggest issues in my mind for Snap is anyone looking to invest in them, just have a look at their share count. I mean, I think right there is the reason. The dilution is scary. The dilution is crazy. And dilution is one thing is you're really consistently increasing revenues and profitability and it outweighs the dilution, that has not been the case because Snap only had one profitable quarter and that was the last

quarter of 2021. So, I'm not looking good for Snap. Oh my god, they already scrapped the Pixie drone. Yeah. Oh yeah. Yeah, that's part of it. Yeah. They scrapped it on the 18th of August. I didn't notice it because I was looking at the videos promoing this thing. Yeah, that was one of the projects. Yeah, I remember. They just launched this thing. I thought it was stupid as hell, but they just launched this. They're already scrapping it. Yeah. And I mean, obviously, the share price of Snap would not be this low if it wasn't for dilution. It wouldn't have performed all that great, granted, but it would not be this low.

I mean, it's just cratered and I don't know if it's below its IPO price, but I'm going to assume that it is. So, Snapchat, when you go on their social media, they say Snapchat is a camera company. What does that mean? Snapchat is a camera company. Are they a camera company? mean snapchat is a camera company are they a camera company or you're a camera app on an iphone or you're a social media the vision is becoming confusing yeah exactly so i mean it'll be interesting just to see what happens but i think we're really seeing now the next couple years i would say two three years will be really interesting these like smaller social media plays how they actually evolve. Because I think we may see a few that are no longer standalone companies publicly or, you know, they've been privatized or they've been purchased by a bigger player. I am very bullish on Snapchat, the social media, because the user growth is actually really impressive.

And the under 18 high schoolers exclusively talk on Snapchat. That's how they communicate. So it captures this gigantic growing demographic. How they monetize it seems to be trickier and trickier as Apple kind of flex their monopolistic privacy plans. Here's where it's very funny, right? The confusing strategy for Zuckerberg and VR is like, yeah, but he can afford it. Snapchat can't say that. Yeah, we can afford this augmented reality labs. It's like, no, you can't.

can afford this augmented reality labs. It's like, no, you can't. So, they're very, very different situations from a cash generative perspective to be able to make these big bets. And yeah, it's kind of spooky. I mean, they could ask Twitter how to monetize it. Just ask Twitter. Just ask Twitter how to make money. I'm sure you'll get lots of good tips. Okay. We got a listener question. We got news here out of Amazon. Let's rifle through these.

We got a question here from Jacob. He's asking about, is there a difference or like a recommendation on dollar cost averaging at various intervals? Should I do it at the beginning of the month? Should I do it quarterly? Should I do it once a year? Should I invest in lump sums? It's basically asking, is there an optimal way to dollar cost average? I think it's a question that a lot of people have and it's a question we get all the time. It's me answering it here. Simone, give me your thoughts after.

The correct answer is a regular schedule that you can commit to. I know it's not the, yes, the most optimal scientific market returns is that on the third day of August when the sun is in a certain position and the moon's there. No, it is the schedule that you can commit to. For me, I have a bill payment that goes out to my brokerage on the 20th of the month. Why the 20th? Pretty much absolutely no reason other than I know it's going to be there for the next month. It's enough buffer there, right? I got 10 days, hopefully there's a couple of business days for that stuff to happen. There's no science, no math to it because I am not trading. I am not attempting to time the market.

I used to invest on the first Tuesday of every month for absolutely no reason, but it's a schedule I can keep up with. And it's part of my process. Now it's kind of random because I start the Norbert's Gambit process basically on that day. And then I go in there and when I do my join DCI.com updates, I make it all happen. But the takeaway here is that I have a trigger to do it. And I have a trigger to keep with it every month because you and I both do it, join tci.com. But the takeaway here is do it on the schedule that makes sense for you. It's like a good workout schedule. What's the best routine for your fitness? It's the one that you can consistently do for a very long time. It's not the one that, you know, you or I recommend.

It's not the one that, you know, beachbody.com recommends. It's the one that you can commit to. Yeah, no, exactly. For me, I mean, I usually have a set amount per month, but it will never be the exact same day that I'll transfer the money. So I don't have that kind of preset. However, with my defined contribution pension at work, it does it for me automatically on each pay, right? So I have that schedule right there, but I do buy a share of ITOD, the ETF, every single Friday. So that's where my DCA, you know, every single Friday, regardless of what it

is, and I always make sure that my investment account is properly funded for that. So that's where my DCA, you know, every single Friday, regardless of what it is, and I always make sure that my investment account is properly funded for that. So that's the way I approach it. But I also have the discipline to do it consistently that way. I think what you said probably makes more sense for a lot of people to actually have that bill payment set up because then you, you know, you do it automatically. I know like... I don't have to think about it. Exactly.

But some people like me have the discipline to do it.. I don't have to think about it. Exactly. But some people like me have the discipline to do it. That's fine as well. The other thing I'll mention in terms of lump sum versus DCA, I read a study. I can't remember. I wish I could give the study credit, but they did a bunch of backtesting over, I think, since the late early 1930s, I think, versus lump sum investing and DCA over 20 year periods. And it was very similar in terms of results. Obviously, what didn't work well was people trying to time the market that clearly underperformed the two strategies. In terms of the time of the month, I think it's hit or miss, right? Maybe for a 10-year period, you'll do better if you invest on the 20th like Braden. And then the next 10-year period, you'll do a bit better if you invest on the 10th. I don't think you need to worry about the small stuff. As long as you're

consistent, that's what will make the most difference. And this dollar cost averaging is so powerful because I think it's psychological, right? Because if you do a lump sum and you end up investing that lump sum at the peak, it can be really demoralizing to see everything go down 20% or 30% afterwards, where if you dollar cost average, you really average that out. So I think there's a psychological effect to keep in mind as well. Makes sense. With your total market ETF that you're investing in every Friday, it's important to caveat there that you're not paying a commission with your brokerage to buy that ETF. If you were doing that on like a $10 a trade platform, which many of the Canadian banks have, I'm going to assume you probably would not do that.

No, I do it once a month probably. Yeah. I'd buy like four or five shares because they're roughly, I think they're $90 or so. So I'd do it like once a month, I would say. Yeah. Instead of like, yeah, just throwing in a couple bucks and paying a $10 for the trade fee. No, I would not do that. Yeah, exactly. Yeah, that would be real goofy. So again, here, another reason that the right answer is what makes sense for you.

Exactly. Yeah. Let's finish it off here with some news out of another small cap company named Amazon. Yeah, another small cap. So, NWPVL International, I don't know what the acronym stands for, but they track Amazon's real estate footprint. real estate footprint and they estimate that the company has either closed and or killed plans to open 42 facilities which could amount to approximately 25 million worth of square feet in terms of space it's also delaying opening 21 location for a total of 28 million square feet so amazon is really looking to also sublease some of their unused warehouse space. And we've talked about this before. I think news starting coming out, I think in the spring, if I remember correctly, that

Amazon really went into like full on expansion mode for their retail operations because of the pandemic. And now they're seeing that maybe they expanded a little too quickly and they're trying to pull that back a little bit. I do own Amazon and like, look, this is just the realities of the current, you know, market situation we're in. You know, a lot of people are going back to shopping in person. They may still be buying from Amazon, but maybe before during the pandemic a year and a half ago, they were buying, you know, 75% of their stuff on Amazon. And now it's gone down to like 35%. So I think, you know, what we'll probably see is Amazon, you know, especially those that they're subleasing. I think what we'll see is that they'll sublease them for a couple years,

and then they'll, you know, reoccupy them afterwards as the growth catches up for their retail business. They went into complete overbuild mode, right? The CapEx spend was incredible. The square footage that we track on stratosphere.io. I don't know who this dusty MWNPL or whatever the hell they are. No, I'm just kidding. I'm just kidding. No, but it's obviously, of course,ifid.io does track the square footage.

Dude, look at the CapEx spend on Amazon, right? And that's kind of the bull case that I have had and thinking that why Amazon is going to have such a good year for the stock was they peel back the curtain to the actual cash generation when they slow down that CapEx spend. Because the CapEx is not going to look like – the next five years of their CapEx spend is not going to look like what it has for the last five years, at least I hope. Yes, you know what I mean? Like this is kind of expected as well but more so than maybe anticipated. But I do like how quickly they're pivoting. So that is I think what makes Amazon such a great business is – I think every business will make a mistake sooner or later.

But the best businesses are those who are able to identify that mistake quickly and try to, you know, make sure that they are pivoting. At least, you know, here, I think it'll be a short term pivot. I don't think this will go on for that long. I think the growth rate for the retail business will continue. It'll slow down. But when the growth rate still compounds year over year, they will have more and more customers, you know, two, three years from now, more and more orders. But I do like that they're able to pivot and not compounding problems. Like don't, you know, open a warehouse just to open a warehouse because

you don't need it right now. Yeah, good point. I'm looking here at, we track Amazon total square footage, X corporate facilities. So back out the corporate facilities and just look at the warehousing and operations square footage. It is at 550 million square feet as of their latest 10K. That is up on a 10-year basis from 2012 from 66. So they have near 10X their square footage in the last 10 years. And that number is basically 5X from 2015. And again, almost from 17. So you can see the Cappex spend from like 2017 to 2021 on like actual square footage for their operations, ex-corporate facilities balloon.

Yeah, exactly. And even with the numbers I just mentioned, let's just say that they're kind of scaling back 50 million square foot worth of space. It's not that big, it's 10% roughly. Right. It's not that big. It's 10% roughly, you know, so it's not- It's still gigantic. Exactly. So, I think people, you know, I think it's just smart of them. I think it's, you know, it's probably the smart play to do right now. And, you know, I will not be surprised if two, three years from now, we're having the discussion and they've actually, that space is now back and they're using it.

Yeah, true. Yeah, I mean, they're hoping, right, that that kind of catches up. They do the overbuild now and then hope it catches up. I don't see why it wouldn't, but maybe it won't. Thanks for listening to today's show. We appreciate you. If you're new here, welcome. We like you. We hope you stay around.

We release episodes on Mondays and Thursdays. One episode is news related, and the other one is our discussions. We're going to do a pretty cool episode that releases next Monday on 25 investing terms that everyone should know. We'll probably have to do a two-parter like you mentioned. Oh, God. It's going to take like hour four. Okay.

Here's number 20. Here's something you should know. No, I think we could maybe do a mega episode. I don't know. We'll figure it out. We'll figure it out, yeah. But I think that that'll be a good one for new and experienced seasoned vets of managing their investment portfolio. Because sometimes you don't want to ask the stupid questions like, what does that mean? We'll just tell you. There's all kinds of stuff that I did. I have all kinds of stupid questions I want to ask about financial stuff all the time too, even if I ain't on this podcast, so don't feel bad. Yeah, it'll be fun. It'll be a mix of some metrics, some just random terms you

hear in the investing world, a bunch of different things. So, I think it'll be fun for a lot of people. If you haven't left us a rating or subscribed on your podcast player, please do so. Last note here is just as a reminder, we put on join tci.com on our Patreon page, a template that you can make a copy of right in Google Sheets and upload and fill out your investment portfolio and you'll get a more accurate idea of your portfolio returns for your stocks across all your different accounts because you can just kind of put the number in there.

And I did all this math that it calculates it for you. I think it's pretty slick. And you can get a copy of that at joinTCI.com. And it is the exact template that you and I use because your brokerage, dude, I've used all, I've used so many of the Canadian brokerages. And every time, especially if you switch brokerages, they never keep track of your returns properly. Like when I switched brokerages before, it said that my cost basis across every single position was the cost of the day that I transferred them all over. Like my cost basis on TFI International was like 26 bucks or something. And then I transferred it over and it was like 110 or whatever the stock trade at the

time. Yeah, it did the same for me. It did the same for me. Same for you? Yeah, from TD to Questrade, same thing. Yeah. Oh, God. So there you go, right?

Like, you know, track it somewhere better and we'll give you a copy of that at jointtci.com. We'll see you in a few days. Take care. Bye-bye. The Canadian 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.