The Canadian Investor - Simon’s 20 year investing learnings & Reddit SEO Juice

Episode Date: April 15, 2024

In this installment of the Canadian Investor Podcast, Simon reflects on the valuable insights he's gathered over two decades of investing. Additionally, Simon and Braden explore the significant impact of Constellation Software's spinoffs on the TSX Venture Exchange and discuss Reddit's advantages from recent updates to Google’s search engine optimization strategies. Stocks discussed in this episode: GOOG, RDDT, CSU.TO, TOI.V, LMN.V Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Sign up for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Belanger. The Canadian Investor Podcast. Welcome into the show. My name is Brayden Dennis, as always joined by the tenured Simon Belanger. Today, we are going to go through the last 20 years of learnings from Simon. I think after last week's episode,

I went through 10 years. Simone's basically exactly 10 years older than me. So you do the math here. He's got 16 lessons over the last 20 years. And then I'm going to talk later about Reddit's search engine juice because their traffic from Google is exploding. And I'm here to report some stats. How are you feeling? How was your write-up? I mean, did you go smell the fresh coffee at the shop or what? No, I did not in the end,

just because I've been fighting some back issues and I have a really good setup. I just, when my daughter was sleeping, I just got into it. It took me a couple hours, got all the points in, posted it on Twitter slash X. And like you said, a lot of good feedback from people, people just asking questions, a lot of people resonating with some of the learnings that I've done over that time period. So just always fun to see the kind of feedback you get from

people. And I wouldn't say it went viral, but 20k impressions roughly that's not bad that's not bad yeah that's solid i think mine got somewhere near there and i've just had some content pieces especially with finchat that i just know are gonna do really well like i just have a feeling before i post it i like especially i'm working on it with the team on a content piece. I'm like, you, we just look around like this is going to go nuts. Like there is a formula and you and I have talked about this before, but you know, Mr. Beast, the YouTuber, right? Oh yeah. Oh yeah. He's the ultimate midwit meme. Because if you listen to his podcast that he goes on,

he always just says, just make good content. Like there's no, there's no hack. It's just like, how do you, how do you go viral? He's like, I just make the best YouTube video in the world. Like that's it. A couple million bucks behind each one, but it's pretty impressive. Yeah. I mean, I agree. Like right. When you bring value to people, they'll come back, tell other you know friends and family about it and as long as you're able to you know bring some good content bring value to people i think you'll end up doing well in the kind of content producing space obviously getting started is the toughest part but once you get that traction definitely agree with mr beast there but again you know when you have a couple million budget you're probably

gonna do a bit better than the guy or the girl who has uh you know a hundred dollars to produce a video and that's it he has a video with like over a hundred million views that still gets views that he just counts to a hundred thousand i think it is he just sits there yeah he just sits there. Yeah. He just sits there on the camera on this like low budget webcam. He just counts to a hundred thousand. Like, let me look it up. Counts to a hundred thousand. I guess, you know. Yeah.

It's 20, it's 23 hours of the video on YouTube. He posted it seven years ago. It's got over 30 million views. Good for him. So if you don't have a lot of money or you can just be absolutely insane, He posted it seven years ago. It's got over 30 million views. Good for him. If you don't have a lot of money, or you can just be absolutely insane like this guy, one of the two. All right. So without further delay, you have your long segment. But before that, I wanted to bring up a quick statistic about how ridiculous the TSX Venture has gotten. So many of you guys will know the TMX Group here in Canada, which is a public listed company, owns and operates the

Toronto Stock Exchange, the TSX, and the Toronto Stock Exchange Venture, the TSX Venture Exchange. And the TSX Venture has a lot of smaller companies. Constellation Software, many of you guys have heard of, has spun out two companies on there. They used to be operating groups separately, you know, owned and managed, but under the Constellation umbrella, they publicly listed on the venture over the last couple of years. Topicus.com and Lumine Group, they combined, dot com and lumine group they combined which are the two largest by market cap on the exchange are now 28.6 percent of the exchange by market cap so everything else all the other small companies you add them up together and you're gonna get around 71.4 percent of the exchange And you're going to get around 71.4% of the exchange.

I would not be shocked if this is able to continue, that half of the exchange is the spin cos, because they're going to spin off more and they're going to grow. So I wouldn't be shocked if half the exchange is just Mark Leonard's umbrella. Yeah, and I think if it's allowed to continue, I think is the right way to put it, because obviously I'm not sure if the TMX at some point will kind of put rules in place. I'm sure if they do, they would give them notice, but put rules in place saying, OK, like if you're a company that has a market cap, you know, maybe the trailing 26 weeks or trailing 52 weeks that was above a certain threshold you have to list on the toronto stock exchange they clearly don't care uh consolation because i think they like being a bit more you know under the radar as like in general but and also paying less fees i think a lot of

companies want to go on the toronto stock Exchange because it provides them more exposure and easier to finance kind of secondary offerings if they do need to issue stocks in the future. But I don't think that's a concern for a company like Consolation. That's right. So one of the two, I think, is going to happen. is going to happen the exchange is going to be mostly csu spin cos or they're going to bring a new rule that like okay you got to go list on the on the tsx proper on the big boy exchange yeah because the topic is a you know a pretty large cap company all relatively for the canadian market no exactly and it's over 10 billion CAD in market cap. the whole point of having the venture exchange is to allow companies to be publicly traded,

maybe at a more affordable cost, and maybe eventually make the leap to the big brother exchange, if you like. It says it in the name. It's supposed to be like venture capital style investing with public companies. Topicus is not that. It is already 10 billion in market capital. Yeah. And the last thing I want to add here, I know you mentioned that TSX Venture, there's a TSX, but a lot of people don't know that TMX also owns the Montreal Exchange. They purchased it in 2007. So if you started investing in the last couple of years, you're probably not super familiar, but it's essentially a derivative exchange. So there's a lot of options. If you're buying Canadian options, they'll be coming out of the Montreal Exchange. For those familiar with the CME, so the Chicago Mercantile Exchange and the U.S., which is

massive for derivatives, I guess the Montreal Exchange is kind of the equivalent in Canada. And I think it's actually the oldest stock exchange in Canada. I think it was established before the TSX. Yeah. The first exchange in Canada began in 1832 as an informal exchange at the Exchange Coffeehouse in Montreal. That ended up becoming the Montreal stock exchange. And then I don't think they ended up merging with the TSX until the early nineties. It's okay. It says here that the acquisition was in 2007.

Yeah. Yeah, exactly. That I knew 2008, it closed. Yeah. I think they work closely with the TSX before that. I think, I mean, at the end of the day,

I think it made a whole lot of sense that they'd just be one. But I just figured I'd mention that because I think a lot of people are not aware that there's an actual like stock exchange in Montreal. Its roots go back to 1832. That is pretty crazy. That is amazing. Okay. Very cool. 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.

Bestrade.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 or investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers

and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. All right, Simone, hit us 16 lessons in 20 years. Yeah, and by all means, right, just chime in because there's quite a few of them. I think some kind of resonate with what you were saying, but I think also it shows that we have kind of slightly different approach and, you know, how our thinking has evolved over time, even though we agree on a lot of stuff. I mean, we've always said, you know, investing is also personal. So, you know, our approach may not be the right one for you. And the same thing for Brayden and I.

Yeah, it's like personal finance. It's like advice on personal finance to me is an oxymoron because it's called personal finance. Yeah, exactly. And I think, you know, when you're investing, it's the same thing. So the first one, investing in individual companies is time consuming. So again, if you've been listening to the podcast for a while, you've probably heard me saying that. What I've done over the years, I used to have like in the 20s in terms of individual stock holdings, even as high as 30 at some point. And I went from having that to having 11 individual stocks currently. And my ideal kind of range would be 10 to 15, I would say. And that's just what works best for me,

because I have a busy life. I have a young daughter. I have a wife. You know, I have a part time job, a regular job doing the podcast. Something's got to give right. I realize that if I had too many stocks, I just lose track. I'm not able to keep up with all of them. And at that point, why am I kind of doing that? Why am I not just buying the index? You know, have like for a lot of people I've seen you know even people saying they have more than 50 stocks in their portfolio and I do wonder when people have full-time jobs and they manage such a big portfolio like Brayden how do you keep up with those like 50 plus companies like I just feel like you know some just fall off the side and they kind of lose track on them.

And at that point, I mean, why do you have that many stocks? Why not have a bit more of a kind of hybrid approach like I do? So that's what works for me. But I've seen people with like 50 plus, even 100 stocks. And at that point, why are you just not buying the index? I think I said to you a few episodes, Simone, if you see me have 50 plus stocks in my portfolio, you get your butt down here to Toronto and we, by force, move my entire portfolio to an S&P 500 and never look at it again. No, exactly. And I think that's a great way to put it. So now the next one here

on the list is my answer to the picking stock versus index investing debate. Do both. So that's for me, that works best for me. I have a substantial amount of my portfolio in index fund, and I just supplement that with individual stocks. So the hybrid approach really allows me to, I can still have the fun of picking stocks, but I also get the diversification of index funds. And I just see a lot of people debating whether you should do one or the other. I mean, there's nothing wrong with doing a hybrid approach as well. That is a very classic Brad Dennis, my father quote, don't do one, do both. There you go. He's been banging the drum on that one since

my entire life. So don't do one, do both. Number three, diversifying is more than just diversifying your equity holdings. And that has evolved over time for me. So if you scroll FinTwit, you'll see a lot of people who only invest in equities. And when I say equities, if you're new, I'm meaning like stocks here or even certain types of equities like dividend stocks over the years I went from being almost exclusively into equities to having diversification and other asset classes my current portfolio is a mix of equities bitcoins short-term treasury bills also known you know you can see that more as cash and gold and a a little bit of Ethereum that I bought years ago. Yes, I said gold. I did buy some gold recently.

So that is new to my portfolio. On the gold, the main reason I own gold is for insurance. So unless you've been living under a rock, you know government spending across the world has gone out of control, including Canada, but, you know, down south as well. And if we can learn anything from history or fiat currencies, which is like the Canadian dollar or the US dollar, there is a high probability of leading to devaluation of our currency over the next, you know, medium to long term, I would say more long term, but gradual devaluation. And the reason I own gold

is essentially to have some insurance against that kind of hard money that can't be manipulated by governments and central banks. Obviously, a lot of Bitcoiners will say the same kind of arguments for Bitcoin. I do own both here, but I also wanted to diversify with some gold. I also wanted to diversify with some gold. Let me tell you about a publicly traded company that has perfect inflation built into it. Perfect inflation resistance built into it. In fact, you probably have one in your pocket at all times. That is Visa.

Okay, yeah. What about MasterCard? MasterCard, that'll work too. Hey, that'll work too. Hey, that'll work too. Those are my insurance, chump insurance, and they just happen to be the best businesses ever. So I have multiple ways to play the game. Yeah, exactly. And I'm not going to be putting a huge portion of gold in my portfolio, but it's something I'm comfortable with i've been thinking

about for a long time and i recently added it number four i think you had a point here that was similar to that so i just wrote it's okay to be concentrated it might seem contrary to contradict my previous point but the way i see it is i have positions that have grown significantly over the years which i don't intend on trimming. It's a risk I'm comfortable with as long as it passes the sleep test, which brings me to my next point. And I'm sure you'll probably add something after this one. Number five, the sleep test. So if I find myself thinking or stressing about a position, it's a sign that I need to either trim or sell the position. So if I'm losing sleep overnight, probably should be trimming or selling that position. Life is too short to be stressed about my investments.

I think the positions that it's okay to be concentrated and how that relates to the sleep test is it feels really good to own high conviction, high quality names in size that pass this test, even when they get to huge allocations. Like that's how you know you have a really, a lot of conviction in the name. And some of the best investors of all time

have owned just a handful of names. I mean, speaking of the sleep test and concentration, Nick Sleep is one of the best investors and he's basically owned Costco, Berkshire, and Amazon for the last 20 years in size. Let me just tell you, that's done pretty well. Yeah. But I think the important point you said is conviction, right? Because if you're really concentrated and you don't have conviction, that can be a recipe for disaster. Yeah, because during that time, even those companies look fantastic today.

They've had their rough patches up and down. They've had narratives, even for something like Berkshire. How many times they've said Buffett doesn't still have it over the last 20 years? A lot, a lot, yeah. How many times they've said Buffett doesn't still have it over the last 20 years? A lot. So many times. So even for names that everything looks great right now, they've all had a lot of volatility and a lot of points where it's had to test your conviction. Exactly. So number seven, recency bias is dangerous. So too many people look at the market essentially and what it's done recently and then make investment decision based on this.

I try to think about things in probabilities of what could happen in the future. So part of those probability will reflect what has happened recently and another part will take into account other potential outcomes. And an example of this in the last 30 years, where interest rates were steadily going down, globalization was increasing, which kept pushing the cost of a lot of goods lower. We also lived in a world where the US was the dominant force. It's also our neighbor, obviously, it's our neighbor down south. So how does that impact investing going forward? I don't know for sure, but I'll try to build my portfolio to be as resilient as possible in a wide range of outcomes. And it's

just acknowledging that yes, the past is, you know, you can learn a whole lot from the past. That's really important. But I think it's also important to acknowledge that the future may look very different than the past and trying to build my portfolio with taking both of these into account. What is the worst words a financial advisor wants to hear? What have you done for me lately? There's all that recency bias. It is so critical to zoom out just generally as an investor. If you can zoom out when it comes to volatility, see the big picture with businesses, the narratives that happen around certain companies,

I think it serves people pretty well. Yeah, yeah. And now number eight. So the bear case is as important as a bull case for an investment. So it's easy to only look at the bull thesis when you invest in a company and, you know, a stock, why a company, whether it's another type of investment as well. It's also very easy. And you see this all the time to get into that echo chamber of like minded investors. And it does take some, you have to be able to take a step back. And that's what I've done over the years is I've learned that it's really important to know the bear case and not

to outright dismiss views that go against my own. I think that's really important and completely dismissing it, I think will end up not being a good thing over the long run for like the investment portfolio as a whole. And unfortunately, you see this all the time, right? If you look on on Fintwit, I mean, you tend to get like I'll just say, you know, whether it's dividend investor only that look at dividend stocks or, you know, people that are Bitcoin maximalists that only have all of their assets in Bitcoin, I think it's important to just look at other point of views, whether you end up agreeing with them or not, that's beside the case, but at least trying to look at them with a critical lens and being open to them. I think that's really important to be a good investor.

If you don't understand the bear case, you don't understand the bull case because no individual company does not carry risk. The laws of capitalism are too strong for there to be no risk in any business. A lot of businesses are a lot safer or they have their future more secure or more easily, higher probability that they're going to be around in the next 10 years. But none of them have zero risk, not any publicly traded company. Yeah, no, exactly. And I'll get to that point as well in a couple of points in terms of risk, but I think it's important. And I think it's just really important to be open minded. I think that's the biggest point here that I've learned over the years.

Nine, valuation matters. So overpaying slightly for a great business probably won't matter over the long term. Because if you overpay slightly, you'll probably do just fine. If it's a really great business, you'll probably beat the market. Overpaying massively for the same business will likely result in underperforming investment. I've also learned that when the markets are extremely overvalued, it's best to at least take some profits off the table. I know it's hard to pinpoint when that happens, but I think, you know, we can probably both agree that, you know, end of 2021, you know,

summer, fall of 2021, it probably would have been good in hindsight to, you know, take a little bit off of the table at that point. I think it was as obvious that it could have been. Obviously, hindsight is 2020, but valuations were extremely stretched at the time. Now, 10, risk does not equal volatility. I think you're going to agree with me on that one. So risk to me is the probability of a loss. I view a loss as a loss in purchasing power over the period that the investment has been held. So obviously that's pretty wide ranging. But I think that's the actual proper way to look at risk. Wall Street might want you to think that risk is volatility, because you know what, if you do, they have a product for that. And they'll just make a nice little fee. And in

exchange, you'll probably get some nice underperformance. So I think I that's just my view of it. That's the way i look at things because at the end of the day like you just said and i'll say my next point every single asset has some risk every single asset has some risk and i have always found volatility to be piss poor measure of it so you you and I are both completely aligned on that. I mean, Mr. Market has a lot of external factors on how it prices equities in the short term. The Fed announcement, wars, a pandemic that breaks out. And not all the time those have any correlation with the risks, the fundamental risks of the business. Now, I think the market is actually really,

really efficient in the long term, but horribly inefficient in the short term. And so the volatility around Mr. Market and how it prices individual equities does not equal business fundamentals. However, the nice thing about long-term investing is it's eventually a weighing machine. In the short term, it's a voting machine. Eventually, it's a long-term weighing machine that does reward fundamental investors. Yeah, no, exactly. Number 11 here, every single asset has risk. So no matter what asset you look at, there will be some degree of risk. And let's just take cash,

for example. So a lot of people think about cash like, oh, I mean, you know, that's definitely risk free. Well, under my definition, the way I view risk, the real risk with cash that you're holding is that it will not keep up with inflation. It will continue to be devalued over time. It will lose value. It will lose purchasing power. To me, that's a risk. I mean, if I put money in whatever it is, whether it's cash, whether it's bonds, whether it's Bitcoin, whether it's a stock, whatever it is, you know, it's always looking at the probability that I will lose purchasing power over time. That's the risk associated with

the investment. And unfortunately, I don't think there's any asset out there that has zero risk. And I think it's just important over well over the years, I think I learned that you have to know how to incorporate those risks into your investment thesis. And again, that's why I think in probabilities, which is a little preview of my next point here. Yeah, probabilities and it being a scale or a spectrum when it comes to risk. But that spectrum never bottoms out at zero. There's always a positive number associated with it if you're to scale out every asset and their risk. Exactly. And that's why my number 12 is I think in probabilities. And this is how I incorporate risk in my investment thesis. I like to think about probabilities and the expected value of

an investment based on those probabilities. That is something I think I gained because I played so much poker when I was younger. And expected values are a really important concept. And I think I'll probably revisit that in an upcoming podcast. I probably could talk like 25, 30 minutes on that point alone. But to keep it simple here, expected value is just you take a certain scenario, so a certain investment, you basically try to do the best move you can by thinking if you invested in that same company, say a million times, well, what would be the overall expected outcome and the amount of money you'd make on that investment? That's the way it's basically looking at it. If you had a very large sample and then making the best possible

decision, you can knowing that it is a small sample, but the idea is if you make that best decision over time, you will come out a winner in the long run. 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, number 13, I try not to waste time arguing with close minded investors. You know, that's harder sometimes for me. I don't know about you. I think you had a point that was a bit similar to that, to not like waste time on ideas that

you're not going to invest in. I think if I remember correctly, was that it? That's right. Yeah. It's like the idea of wasting time on things that you don't have any capital on the line or, you know, or don't have any plans of having capital on the line in the future. It's like, just move on. No, exactly. And you know, sometimes I, it's, I guess it's like social media, right. And Twitter and X and,

you know, you kind of start, you know, you tweet something or you look at someone's post and then you kind of write a comment. There's back and forth. But I've noticed some people are just not open minded. They have a view and no matter how much like good data that you're showing them that maybe you should reconsider that view. They won't change their mind. You know, I'm trying to just stay away from those because it's just not productive. And I'm trying to just stay away from those because it's just not productive. Yeah, it's like when you get these really growthy investors that still are obsessed with AMC and GameStop.

And their portfolio typically has those, a little bit of Palantir and Tesla in there, of course. That's what those portfolios look like. And they just say, no matter what, short sellers are the devil. No matter what, right? Without having any real experience or any real idea on the value that is derived from people calling out frauds, for instance. I'm not saying any of those companies are those, but to just say short sellers are the devil. They're terrible human beings to roast them online. And it's just like very, very closed minded and very obvious their motivation on just they want number to go up. And anyone who disagrees with number go up, they equal bad. That's just like,

I just don't have time for that kind of thinking. It's just garbage, man. It's terrible. No, I totally agree. I mean, I think short sellers are a healthy part of the markets, right? I think you need to have people that are, you know, maybe have a different thesis than you do than the overall market. I think it's just healthy pointing out fraud or things that may be suspicious or even certain type of investor you said wrote the investor but also i've seen like i like investing in dividend stocks but there's like a corner of twitter where it's literally like you know people just look at yield based on portfolio on that yield only and then they just post whatever dividend income they're getting. But for, you know, little, we know there might be

their portfolio might be like massively underperforming the market, which is usually the case, but they are steadfast. I mean, you ask them what the payout ratio is and they don't even know what a payout ratio is. So that's's kind of that's also what comes to mind here people love the idea of passive income well and the more i the more i learn about income is the more i realize that passive and income don't go together particularly well and it's not to say that these companies can't pay dividends, but the idea of passive income has hurt more people than not, in my view. Yeah, you know, I totally agree. Number 14 here, Wall Street is great at marketing. Show me the hot newest trend from Wall Street and I'll show you fees and underperformance. I mean, I've been pretty critical of private equity and I think

rightfully so. That's just the latest example. I mean, you can think and we've been pretty vocal about that high fee mutual funds, how they underperform low cost index funds, how some of these high fee mutual funds are actually closet indexing and just charging two, two and a half percent versus, you know, 10 basis points for the same, pretty much identical or very close to in terms of index fund. That's what I've realized over the years. They're really good at making people think that this hot new thing will make him rich and is the best investment. I found also that usually when you look at those investments, you realize pretty quickly that they're pretty lucrative in terms of fees. Yeah, they certainly are. I can't believe there are still so many, you know, two and a half percent Canadian mutual fund fees off the top. They got other charges along the way, layer on some transaction fees, and they're holding like a S&P 500 for their client. It's just, it's,

you know what? At least they've realized those closet indexers, at least they've realized they can't beat the index by picking. You know, like we'll give them some credit, right? At least they've admitted all defeat here at this point. exactly and look at the end of the day it's probably better for people to be in those mutual funds than not invest at all so i guess that's probably an argument they can make but again you know it's just that's what i've learned over the years i mean i kind of knew that a while back but i've been noticing even other products i mean one we've talked about is covered calls, right? So they're sold as these like covered call ETF as these great products. And I mean, if you want income, sure,

it's a great product from that perspective. But then when you start crunching the number and think about the math behind them, you realize that the downside protection is actually quite small. It does give you a little bit of more downside protection but it actually cups cuts your upside by a much bigger potential than the downside protection it offers and we've seen i i should pull some numbers for those but the amount of covered call etfs my god over the last few years has just exploded yeah and i think one of my points was complexity is rarely rewarded. I have noticed. Now, that's not to say that complex ideas can't work

or complex strategies can't work. It's just that I have witnessed a much lower batting average and complexity just generally is not rewarded. It's simple ideas executed well for a really long time that usually are rewarded. Yeah, well put. Number 15 here, real estate is like any other investment. So if you don't pick the right real estate asset to invest in, overpaid, don't get the right financing, or overlook certain expenses, or even don't have the right tenants. I'm thinking more about the investment part here. It's not going to be a great investment.

I mean, I think it's fair to say that a lot of people learned that a hard way in the last four or five years. I mean, if you want to even add to the fact, you know, if people are thinking at their primary residence as an investment, although I think that's a little, you know, have to be careful with that because it's like it's a place to live in. Obviously, it appreciates in value good, but and for some people, it's just a way for them to save. So I guess in that perspective, it's not that bad of an idea. But at the end of the day, I think it's just like buying stocks like anything else. If you overpay for it or it it's not a great, it doesn't have great fundamentals, it's probably not going to end up being a good investment for you. And number 16

here, total returns are what matter for me. And I'll specify here because for some, depending where you're at on your investing journey or what you're, you know, in terms of how you react to fluctuations in the market, capital preservation might be more important. And that's completely fine. If that's your main goal, that's okay. For others, it might be dividend income because they want to have that income again for a psychological reason. Even if they underperform the market, again for a psychological reason, even if they underperform the market, that dividend income prevents them from making a rash move when the market is in a drawdown, for example, there might be merit to that. But for me, at this point in my life, total returns are the most important. When I get older, it's likely going to be a bit more focused between balancing

total returns, but also capital preservation. So maybe 15, 20 years down the line, I'm like, okay, I still want to maximize my total returns, but not at all costs. I want a bit more of capital preservation because I'll be close to 60 and I may be working less and so on. So I think that's really a personal thing. I think that's really important. Obviously, you and I at the stage we're at in our lives, I think I speak for you here that total returns are also your main focus. But I wanted to mention that it's not for everyone, but I think it's just important to know, to understand, and to have that internal discussion.

What are you trying to achieve? Yeah, and let's not kid ourselves here. We're trying to make money, right? Like, we're trying to compound wealth and investing is a pretty good way to do that. And it's worked for a couple of people, if you haven't heard. And it's worked exceptionally well for us.

And for our stage right now, I mean, total returns are what matter. I mean, you can get all on your high horse and say, I don't like this asset. I don't like that asset. And there'll be people who are completely unconstrained and run laps around your performance. You know what I mean? Like, it's at the end of the day, what are you optimizing for? If I'm optimizing for, you know, I just want to own companies I believe in, then that might be a strategy that works. But I think most people are optimizing for how can I compound at the highest total return possible? And whatever that is, that's the one I want. Yeah. And think of it too.

I was listening to another podcast. I'd like to give credit, but I think it was Brent Johnson that was talking about that because he's a money manager and he was saying, you know, like if you, let's say you have like $10 million worth of assets, right? Maybe, you know, your main priority is to make sure it doesn't go down to 2 million. Like maybe that's your main priority, that it doesn't go down to two million, that you achieve reasonable returns. But, you know, you want to reduce that volatility. And, you know, that's perfectly fine. You know, that's probably for a lot of people that were like, yeah, if I had ten million dollars in assets, I probably managing it that way. And my focus would be on capital preservation more than compounding at the highest rate possible. So I think it's just important to,

you know, for people to understand that because at the end of the day is what do you want to achieve? Yeah. It's like in your life, do you want to live amazingly and make sure that you never have to draw down below a few million dollars? Or are you trying to compound it? Or are you 32 and want to compound it to a billion? Yeah, exactly. Those are very different goals and aspirations. And I think either one are fine if you know with conviction on which one you want to do. So I'm with you.

So that said, those were my 16 points. So I'm sure we'll, you know, give us another five years. I'm sure we'll add in a few each of our own in there. Yep. Sounds good. We'll have to come up with in a few years, maybe our 20 and we'll do 10 each or something. All right. To round out today's show.

Thanks, Mel. That was great. To round out the show, we're going to talk about Reddit's search engine optimization and the traffic spike. search engine optimization and the traffic spike. So reddit.com has a domain authority rating of 95. Do you know what domain authority is, Simon, or is this a new topic to you? It's new. I'm going to assume that it's how valuable their domain is, I would say, but maybe I'm wrong. It's basically a calculation that a lot of third parties use to estimate the domain authority. Because at the end of the day, Google's domain authority

and ranking and algorithm is proprietary. So a lot of companies that are big in this space, like Ahrefs, SimilarWeb, SEMrush, they'll come up, Moz, they'll come up with their own score. And they'll all usually differ by a point or two. And this, I think it's SimilarWeb has them at a 95. And what that means is that they are in like the top percent of the top percent of the top percent of the top percent of websites globally because the scale is logarithmic in terms of like you know going from 94 to 95 is like the same as going from like 1 to 90 it would fund some basic rough math so it's it's it's logarithmic on the way up and so 95 is like immense one of the highest in the world. And the main way that Google ranks the quality of your website is by high quality backlinks. So it says here that 2.8 billion backlinks to Reddit

exist, which is an amazing number because that means that there's 2.8 billion places on the internet that points to Reddit, that links to Reddit. And a lot of them are really high quality resources. So say like CNN covers something and they link to Reddit. CNN has a really high domain authority. They're linking to Reddit and that's SEO juice for Reddit. That's like Google thinking in their algorithm. That's a really positive sign for this company. So if I remove some adult websites in the top 10 ranking, if I remove one of the adult websites, you get search traffic from Google top 10, YouTube, Wikipedia, Facebook,

Instagram, Twitter, WhatsApp, Pinterest, the Google Play link, and Reddit. So that's an immense list to be among. That's ahead of amazon.com,com ahead of apple.com ahead of tiktok.com so that that's that's the source here and i tweeted out a few months back saying or like a few weeks back saying has anyone noticed google is really ranking reddit on the top of search engine results pages, aka the SERP. The SERP means search engine results page. So when I search FinChat on Google, the search engine results page is what you see on that prompt. So you want to be as high up on the SERP as possible because there's a massive drop off on clicks you get as you go lower on the search, lower on the SERP.

Like if I'm on the SERP on page three, there's a joke in SEO that, you know, that's where they hide the dead bodies. No one will know. You can hide the dead bodies on the third page of the SERP and no one will know. Even the second page is usually... Even the second page. I can't remember the last time I scrolled to the second page of a Google search result. That's right. That's like so, so rare. And then like third page, like you never ever have done it. Right. Like that's like typical for most users. And so the Google

algorithm updated in June, 2023, and they're averaging like around 100 million pages ranking on the search engine results pages. That started taking off in June 2023. And it took off again when Google announced that they were going to increase the SERP ranking for forums, which is what Reddit is. It's a forum. which is what Reddit is. It's a forum. Since June, 2023, Reddit was around a ranking on around a hundred million Google SERPs, and they are now about to cross 600 million. So they've basically six X results on search engine results pages since June of 2023. So less than one year, we've seen this insane rise on that. And so the traffic growth from Google has been massive. And you get people who would not regularly go on Reddit or be familiar with Reddit going through the forums because they're being directed there by the most world's most popular search engine. So I thought that that was pretty

interesting that there was like actual data behind my, like what I thought was just anecdotal. So that's pretty interesting. And I found another little piece of information here that Canada little piece of information here that Canada massively out, you know, outshoots our weight here when it comes to search traffic from Canada to Reddit, 8.3% of Reddit search traffic comes from Canada, only a one decimal point behind the UK. And then the U S is the highest, but you know, population adjusted. Canadians are big users of Reddit. Yeah. I didn't see the title. I'm like, where's the U.S. is the highest. But, you know, population adjusted. Canadians are big users of Reddit. Yeah.

I didn't see the title. I'm like, where's the U.S. in here? But, okay, excluding U.S. Yeah, I don't know what it is if we were to include U.S., but whoever made this graph wanted it ex-U.S. So, sure. Then Australia, then Germany, then India, then France, then Netherlands, Brazil. So they've IPO'd. I don't have a whole lot to comment on the business. They IPO'd. It came out hot. They're trading just a few percentage points less than the IPO as of recording.

So it hasn't been a big debut other than maybe hot out of the gate. Gross margins are fantastic. They do expect, analysts are expecting revenue to basically double over the next three years and allegedly going to produce real gap profits over the next 2025, 2026. So it's a pretty damn expensive stock if you try to justify the 8 billion in enterprise value, but the network effect is legit. It's going to be like, this is a really hard to kill idea. Like the forum, it's become the forum of all forums. It's become the forum of every niche category you can think of. There is a niche category community that exists on Reddit for every single thing you can think of on planet earth. And that's really hard to kill because network effects are amazing. If you want to find people that are in the same niche or in the same interest

as you, and there's already a category that exists on Reddit, that's where those conversations are going to exist. And that's where those conversations are going to exist. And that's where they're existing on right now. By way of business, I don't know. Well, I think they're going to have to figure out the advertising platform a little bit better. But this is an extremely impressive network effect that all these years later is getting a massive boost in traffic. So maybe they're seeing this and they're like, let's IPO, let's capture it now. Yeah, I mean, I think it's as good of a time to IPO than any other time,

honestly, with the way the markets are doing. So I obviously I would expect them to try and IPO now. To me, like kind of two key takeaways. First, you know, what if google changes the algorithm and now they start dropping on the list i think that's a key risk for them uh the other are the moderators if reddit starts making a lot of money at some point you know these are volunteers they may want a share of the profits i think that's definitely a risk uh nor they can buy the stock yeah. I think that's definitely a risk. They can buy the stock. Yeah. I still think that's a risk worth noting. And then I think there's a lot of people that think automatically they'll be able to sell their data to train AI models. And, you know, at times I find, you know, some of the stuff coming from Reddit is questionable at best.

Obviously, you can be upranked and then the quality might be a bit better. But, you know, some of the stuff coming from Reddit is questionable at best. Obviously, you can be upranked and then the quality might be a bit better. But, you know, on the one hand, you know, the quality of the data might be an issue if that's an avenue they want to take to generate revenues. And on the other hand, I mean, sure, you can sell it. But then, you know, you've sold all your historical data going forward. You may have an agreement to sell your historical data going forward you can maybe have an agreement to sell it on a going forward basis but that's not going to be as lucrative at what you sold as a lot like a big chunk of your data already so i think there's definitely some big risk but i i mean i've used reddit i have an account on reddit i do use it for what you kind of mentioned is when there's

a niche topic that i can't really find you know good information anywhere reddit will usually be the space where you can find some some information on that again the tricky part is usually figuring out whether it's good information or not yeah i. I think the AI plays that the data and the way the forums work is that it's so question and answer. And that's typically how people today are prompting generative AI, like rethinking search with question and answer. And so I guess from an open AI type player that will want to consume a lot of that data or even a Google or whoever else. They're trying to license it for free, but it's still such a gray area around

what should be paid for, what should be licensed, what's free, what's available on the open internet. This is a giant gray area. So I agree with you that it is a massive risk to lean on that as like a lever that they can pull, because we have no idea that there's an,

even a case against someone just scraping mass on the internet and like GPT in it. Like there it's still really gray. I think that most people would say like, yeah, that data should be licensed. There's an IP around that for sure. But that's not a guarantee right now. I think the New York Times and OpenAI

have a huge suit going on right now. Yeah, they do. There's a lot to happen still. It'll be fascinating to just keep an eye on it. But like you said, I mean, the valuation implies like a lot of optimistic forecast going forward. I'll just say it that way. And whenever there's a lot of optimistic forecast going forward. I'll just say it that way.

And whenever there's a lot of, you know, a lot of things that have to go right for the investment to turn out well, that's where, you know, I tend to just be happy to stay on the sidelines and watch. That's right. And I think a lot of people who are Reddit users were very excited to jump on the... Because it's a passionate fan base. It's a passionate fan base. I mean, they see that it is one of those places that it's almost unbelievable that it exists. Like that this is a real thing that exists.

It's like a forum, but it's not a forum on anything. It's a forum for everything. This is a subcategory for everything. That's impossible to recreate, I think, in this day and age. It was first, and I don't think it's going to be last. Yeah, but whether it's a good business or investment, I think that's a real question. I agree with you. I don't think it's going anywhere soon. I just, I don't know,

maybe we'll, I'll be proven wrong and becomes a fantastic business in, you know, five years down the line. It's just, I don't know, have a hard time seeing it right now. It's kind of like Snapchat, right? It's, it's like my pitch for Snapchat is it's like, this could remain a clown car, terrible ad platform forever. It could. And that's the bear case. But what if they figure it out? What if the clown car figures it out? Because getting the traffic and the stickiness like Snapchat or like Reddit, that's the hard part.

Yeah, it is. But maybe not. Maybe YouTube and Instagram and google and facebook did such a good job and no one else can figure it out that there's more moat to this than they think but i i think it's more clown car behavior than anything i would uh probably agree with you when you think they have it figure it out they have a way to like slash your hopes i think that's what i've learned about them yeah i agree it's amazing like you did the hard part now stop fumbling the bag all right thanks for listening folks we really appreciate you we are here mondays and thursdays if you have not checked out FinChat, FinChat is the generative AI platform,

investment research platform that we do all of our research on for individual companies here. Of course, it is my company, Simone's Investor. So of course, we're very incentivized for you to be a part of it, but it is legitimately the best equity research platform on the internet right now. I can't think of a better platform for actual fundamentals. If you're looking for macro, can't help you. If you're looking for ETF data, can't help you yet. If you're looking for deep dive, yet, yet, yet, yet. Yet, that's coming probably this quarter. But if you are looking to dive into a specific company, get everything from their investor relations,

the graphing capability for every metric, it's just the place to go. And now that everything in from investor relations and filings and holdings are all in there, you don't have to flip back and forth between investor relations. So it's a bit of a one-stop shop now. So that is at finchat.io. You can get 15% off by using code TCI, Canadian investor TCI at checkout. You get 15% off. Hey, Simon.

Yeah, that's it. Yeah. How's the back holding up? It's good? Still in one piece. So I just came back from Cairo. So that's feeling pretty good right now. So slow but steady. That's what I've learned over the years. You're standing right now, right? Yeah, yeah.

I'm standing. How much of the day are you standing for work? I would say 95%, yeah. Really? Oh, yeah, yeah. 95%? I probably could sit a bit more right now, but yeah,

it's been like a month and a half. Literally like the first week I would like get around 730. I'd like, I have a mat to lie down to watch TV with my wife with when we watch. Cause I was just like. Just lie right on the floor. I like doing that too. Yeah.

Just cause my God, like literally, like I encourage anyone try standing for like several days in a row and sitting like literally like less than 30 minutes, your legs will get pretty, pretty sore. Yeah. It's a good. My feet get sore.

Yeah. I mean, I guess I got used to it. Yeah. Okay. One of my first jobs ever, I was a cashier at Sobeys, but my cottage, a summer job, like part-time. Oh, yeah. And I was the cashier.

I don't know why I was the cashier. All I wanted to do was go hide in the aisles and stock shelves, but I was a freaking cashier, and you had to stand there for eight hours in a row, and I found that to be extremely painful on the feet yeah but maybe i'm just a baby yeah you get used to it if you can get like a little kind of mat that helps too and you know i stand but i mean i'm i'm on my feet but i like standing still versus walking around it's not the same so uh you So walking around does help a little bit.

But no, I'm still standing. Wow, still standing. Still standing. There you go. There you go. That's the anecdote you need, still standing. Thanks for standing with us, listeners. We appreciate you.

We've been doing this a long time, and we're going to keep doing it as long as we can. If you can support FinChat, and then you can support the show at joinTCci.com. That is our Patreon page. See you in a few days. Take care. Bye-bye. The Canadian investor podcast should not be construed as investment or financial advice. The host and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional

before making any financial or investment decisions.