The Canadian Investor - Stock Lending Programs and July’s Most Traded Stocks

Episode Date: September 11, 2023

In this episode of the Canadian Investor Podcast, we talk about 7 virtues of investors, TD’s investor sentiment index and the most traded stocks according to that index. We finish the episode by talking about Wealthsimple’s new stock lending program. Symbols of stocks discussed: TSLA, TRP, T, SHOP, ENB.TO, TD.TO, NVDA, MSFT, BNS.TO, BCE.TO Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense. TD Investor Sentiment IndexSee 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 in to the show. My name is Brayden Dennis, as always joined by the brilliant Simon Belanger. We have a great show for you all today. As always, we're going to start with seven virtues of great investors,

the investor sentiment here in Canada. And it's time for the Canadian science investor again, Simone. You're tuning in once again. You're going to like that. And then you can round us out with a stock lending program. All right. I'm going to kick us off. Do you know who Jason Zweig is? No, I don't. No. Jason Zweigason he writes for the wall street journal okay and uh he's wrote all these kinds of other books as well he's got tons of books and i've been on a rabbit hole on his blog on just like jasonzwig.com he's got some awesome uh some writer some awesome writings about investing you temperament, that kind of stuff.

And he has a post called The Seven Virtues of Great Investors. And I'm going to read each one and my favorite passage from it as well. And then we'll comment and discuss. So curiosity is the first one. It says, great investors are afraid of what they do know, because they might realize it might be biased, incomplete or wrong. So they never deviate from their lifelong relentless quest to learn more. So this is kind of like, they know what they know, and they know what they don't know. And that's why they keep pursuing and learning and being curious. It's like Buffett and Munger sit in their office and read all day long, infinitely curious. And I think that's why they've continued to have an edge for so long.

Yeah. Yeah. I think Twitter is great for that too, because you can follow the right people. And oftentimes, you'll be able to see some different thesis or some people might be bullish when you're bearish on a company and vice versa. So I think it's a great way to be critical about your own analysis. Check your blind spots, if you will. Yeah. Number two, skepticism. The main product of the financial industry isn't portfolios, Number two, skepticism. The main product of the financial industry isn't portfolios.

It's propaganda. And propaganda with numbers cloaked in jargon can hit investors like general anesthesia. That's really good. No, it's true, right? The world's always trying to tell us to do something. You go on a financial news site and it's painted in red. The market could be up 20% year to date and they have a bad news story to tell you. And things just never change. I don't see that changing ever either. No, and I think it's important to remember for a lot of people that a lot of financial institution or trading platforms, they benefit when you trade. So clearly they want that swing in emotions because

you're more likely to trade, more likely to get them some fees. So I think that's something for people to remember. Number three, independence. If you let other people do the thinking for you, you've traded away your greatest asset and made your results and emotions hostage to the whims of millions of strangers. And those strangers can do the strangest things. I like that last part. Those strangers can do the strangest things, right? Like you gotta be able to do your own thinking. You gotta be like, you can listen to this podcast. You can listen to other podcasts. You can listen to people you trust and respect. And those all might be really valuable signals and useful things.

And there's so much you can learn from other people. You bring that in, you boil it all together, and you got to be able to think on your own. I always say you can't borrow conviction. And I think that's so true because you don't know why someone bought or sold the security truly. You don't really truly know. They can say one thing. It could be personal. They could say another thing and it could be just portfolio management decisions that might be irrelevant to the business and your process. So you got to be able to do your own thinking. Yeah. Yeah, absolutely. absolutely i mean we've talked

about it time and time again if you don't know what's your own and are not able to think you know independently then you're probably gonna end up making some a lot of mistakes because you're you don't really know where you stand and then you follow people that you think are you know have your best interest but at the end of the the day, whoever you follow, everyone is looking out for themselves. I mean, they may still have good intentions, but that's the reality. You're your best advocate. That's right. Next one, humility.

This one's timely. You and I were talking about this this morning. We were texting back and forth about how important humility is as an investor, because you have to be open and honest about your mistakes that you've made, what you do know, what you don't know. It goes back to being curious. It's really hard to learn from mistakes without humility. I think that that's really important, right? Like we're all going to make mistakes. We've made several, we'll make several more. And humility allows you to think reflectively about those decisions and, and, and learn from them. Even if they were the, sometimes that's

even the right decision. There's a lot of learnings to be made from when you do things right. And so I think this one's important. Yeah. I mean, show me someone who says they've never made a mistake and I'll show you a liar. That's how I see it. Love it. Discipline. The late globe, the late globe, the late global investor, Sir John Templeton relocated from New York to the Bahamas, where he told me decades ago, the Wall Street Journal arrived days late. By reading the news a week later, Templeton told me he could put it in perspective and prevent himself from overreacting. This is an interesting little tidbit. Whether or even not like this, it's true, is irrelevant because the news when it's in the moment is always more emotional than in hindsight. Like if you were to read news from last year or read the news in March of 2020, some of those headlines. If you were to just go on like

the internet time machine and see like what these financial news sites looked like in mid-March of 2020 and read them now, I guarantee your brain activity is not going to react the same way as if you read it, you know, at the time versus now. So, I think this is really important. Yeah. Yeah. Nothing to add to that one. Patience. Patience is often measured not in months or years, but in decades. Readers added their own keen suggestions for how to extend your time horizons and look past short-term disappointments. I don't know how that part was relevant, but I copied and pasted it here into the document. Patience is one of those things where people think of patience as like, you know,

waiting a couple of days, a couple of weeks, you know stock for a couple of quarters. When in reality, everyone who has really executed this well has done it for a long, long time. And patience in decision-making, patience with companies, patience with management teams, patience across the board is so, so key for investors. Yeah. And it's easier said than done, right? I think it's for a lot of people, it's delaying this grad like instant gratification to, you know, later years. So rewarding your future self versus the right now. And it's not always easy because sometimes you have to make little sacrifices where, you know, one easy one. And I know you'd have to be in a decent financial situation for that, but it could be the difference between, you know, buying a brand new luxury car

versus a used car. And I'm using that because I'm kind of going through that right now. But, you know, it could be the difference between that. So, yes, you may not have the flashiest thing and the nicest thing, but you'll get the reward in the future and the patients will be rewarded. So, you have to see it that way. But it's not always easy. There's peer pressure. There's social circles. Some people just want to look good to others.

But you have to get in that right mindset. I'm going all cliche here with Buffett quotes, but the one that comes to mind, the Buffett quote that comes to mind is, the stock market is a device for transferring money from the impatient to the patient. This is brilliant, and I think that is very true. Last one, courage. You can be pretty sure you're manifesting courage as an investor when you listen to what your gut tells you and then do the opposite. The decisions that are difficult and courageous are the ones that go against the grain. They go against consensus. They feel bad at the time. Those are usually some of the best investments because you're going against the grain. You're thinking on your own. You're probably getting better value if it's not a

consensus name. And those types of moves take actual courage. And being contrarian at the time feels bad. You feel stupid. You feel like you need some sort of courage to be able to do it because the easy consensus company that everyone likes and loves it's easy to buy it's super easy to buy yeah but don't be a contrarian just to be a contrarian i think you have to have done your research um you know maybe i guess right now we talked about it last episode but you know backing up the truck on cibc might be something uh it requires a lot of courage i'll say that anyone who does it is a well place i don't know but i mean if they're right the bet could definitely pay out that's for sure yeah said. Don't be contrarian just

for the sake of being contrarian. Sometimes the market is very right on a lot of things. But if you have your own conviction to think otherwise, then that requires independent thinking and it requires courage. So those are seven traits of seven virtues, he says, of great investors. Most of them, you know, notice how none of them are analytical skills or ability to forecast and model, you know, those are things that all can be learned. These kinds of virtues or traits of your behavioral psychology and how you're going to be able to remain disciplined and act rationally for a really long time are usually more reflective of investment returns over time. Yeah. Yeah. I mean, totally agree. Temperament plays a

much bigger part in it. And I mean, at the end of the day, right, forget about picking individual stocks. If you have the right temperament, you could just put money in an index fund and just be consistent and just, you know, set it, forget it, be consistent, add to it. And just there, I mean, wouldn't probably make you a pretty good investor over very long periods of time. You don't need a PhD in economics or math or whatever it is. You just kind of add regularly, set it and forget it. You don't panic if there's a broad market correction of 20, 30%. There's a temperament. That's what I think most people should be doing, to be honest. 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. But Blossom Social in the App Store, and I'll see you there. So now we'll move on to the TD Direct Investing Index. So we've done this one a couple times. It's always really, like, I find it really interesting. So they'll look at the most bought stocks over a monthly period, the most sold and the ones that are held. And what I actually discovered is you can actually filter it. And one of the filters, I don't know if you knew that,

Braden, but you can do it by age group. So it's actually pretty interesting. So I did, you know, I played around a little bit. So the first thing, the index kind of looks at the overall investor sentiment. And this was for July of 2023. Obviously, there's usually about a month delay or so when it comes out. The investment sentiment was neutral. TC Energy was one of the companies that had a big, big jump. And looking back, I was kind of wondering, because that's one thing I find with this index, is it tends to, you know, some of the companies that were in the news, they may show up here.

So it's always interesting. But TC Energy came up to number two. And that one, I believe they had announced a sale of like $5 billion or something in assets in July. So it didn't really surprise me at first i was a little surprised but then i kind of remembered oh yeah that's right they did have that set in ass so i did a segment on it on the pod that's right yeah yeah so i mean obviously a lot of stuff happened since then but and millions of people are tuning into this podcast so that's probably we're moving markets, Simon. That's what we're doing.

Exactly. So no, that one was interesting. So this was the most bought. So number one, unchanged with Tesla. It's number two up from number 24 is TC Energy, like we just mentioned. TELUS is number three up from number nine. Shopify down from number three at number four. Enbridge is number five. Pretty much stood still. It was previously number four. TD at number six. Nvidia

number seven. Again, just some slight changes for these last two. Microsoft, a big jump from number 15 to 8 uh bank of nova scotia number 9 and then we have bce up from 14 to number 10 and like i mentioned like any other names before i kind of go show talk about the data for like million millennials and gen z which i find pretty interesting so what what age group is this one this is overall yeah oh this is overall. Yeah. Oh, this is overall. Okay. Yeah. Yeah. I want to see some Gen Z. Gen Z. I want to see some Gen Z YOLO bats. YOLO bats.

Okay. Well, let's filter that here. So you filter. And for those on Join TCI, you'll be able to see what I do. And you can actually- Oh, it's Gen Z and Millennials. Okay. Gen Z and Millennials. So we're in that bucket. And you can select like up to three filters. You can do regions,

trading style. So active traders versus long term investors. And then you can even go by sector. They do narrow it down to just five names, though, when you look at the kind of age group. And for Gen Z and millennials, it's tesla telus and bridge shopify and td which is pretty interesting it's a mix between growth and dividends pretty much huh it's kind of i have no comment it's it's just very strange it's quite the portfolio yeah and the other thing that i found interesting so the they you can actually do it by sector in terms of holdings so um again canadian bias if we look at gen z is still very present so canadian equities it's 44 percent u.s equities 34.6%, and just some minor changes. So I won't talk about the one month change. It's

negligible if you ask me. So those top two are actually the biggest for Gen Z and millennials, which I mean, I think it's good and bad. I mean, I think it's good that there's around, I would say, what, 80% in equities. I would say there's still quite a strong Canadian bias. That's the not so good, but it's kind of nice to see that there's not too much in fixed income at that young age because typically people will have much more time ahead of them. What did it say?

1981 and after. Yeah, that's correct. Yeah. For millennials and Gen Z. Yeah. I'm an old millennial. You're a young millennial. You're just on the border i think right yeah i'm on the border yeah uh but don't call me a gen z hey i will not uh i will not accept i will not accept that

no this is interesting i didn't know you could filter all this down i don't know if this is new or not yeah i don't know i just thought it was kind of funny to or just interesting to look at and then if we go back um let's do all of the population just because it gives us 10 names i i just find it uh you know a little bit more insightful when we have all the 10 names here it's to what was sold um so this one is pretty interesting so tesla number one td number number two, Shopify, number three, NVIDIA, number four, Air Canada, number five, Suncor, six, seven is AMD, eight is Bank of Nova Scotia. One that's interesting. So eight mining corporations. So it's a Bitcoin mining company that was sold.

The most sold. It was number 14 to 9. And then NIO ADR, which is, I believe, a electric car manufacturer in China. Am I correct on that one? That's the NIO. That's correct. Yeah. Yeah, that's right. So anything that stands out for you there yeah banks and electric cars again banks electric cars and semiconductors it's such a this list is just it cracks me up every time because there's so many of these like dividend yielder favorites that people just kind of buy all the time and then there's always the hot the hot stock so it's always like these staple canadian blue chippers that just are always popular and then the hottest stock of the year is sprinkled in you know what i mean it's like it's all and tesla is just remarkably persistent in this list i i don't think it's ever not been number one yeah the sold too which is interesting

but it's so it's just the most traded security by far yeah well because it's number one at bought and sold so you're right it's the're right yeah and then if you go at held um that's an interesting one at least to see what people hold surprise surprise look who's number one not tesla but it's funny that it's td the most held the most held on this at all is it even on top 10 i don't believe so so it just goes to show oh yeah it's number 10 yeah but that just shows you people are just trading it constantly yeah and it's kind of nice and maybe next time we do it i can do it like trading versus people old long term because i haven't dug it out what it actually looks like but i thought it's pretty. But in the most held for people interesting, you have TD, Enbridge, Bank of Nova Scotia,

Telus, BC, Royal Bank, CIBC, which is kind of funny. The top seven names are all big dividend players, Apple, Suncor, and Tesla. So essentially out of the 10 names- 80%. 80% is like high yielding dividends and a combination of financial energy or telecos. There's the TSX right there. Yeah, exactly. So congrats, TD Direct Investing.

You're invested in the TSX, but with individual companies. It's so funny. I mean, like these portfolio, like, like sorry i shouldn't say the portfolio the statistics on what's so held so traded so owned the the asset allocation it just feels like the blind leading the blind man like well my my point is why wouldn't you just buy the TSX index, an ETF, and you'd basically have the top 10 right there? Not quite, obviously, but I don't know. It'd be cheaper to do, in my opinion, too. You just buy it once and that's it.

I see the exposure and I think y'all need to just buy the S&P. Stop doing what you're doing. Y'all need to just buy the S&P and stop doing what you're doing. Y'all need to just buy the S&P or a global ETF like XUU and call it a day. Yeah. I know the listeners of this podcast have different statistics than this. I know it. Yeah.

I mean, possibly. I mean, obviously, TD is just one of the brokerages. So you have to, you know, I don't know what size is the sample size here. I don't know how many account holders they have in Canada. So I think we have to take that with a grain of salt. But it's probably big enough that it's, you know, probably relatively consistent across the board. Maybe not identical, but I'm sure you'll see some names that would repeat themselves if you looked at all the brokerages in canada are you ready for the canadian science investor let's do it yeah i don't even know if that even makes sense i think

we need a proper last time it was what superconductors yeah superconductors um i've done a bunch now i've done a bunch animals always kind of make it in here somehow and they're making it in here today this segment is called evolving into crabs okay so crab people is that what you're saying crab people no uh this is about business and evolving into crabs. So on today's episode of the Canadian Science Investor, I've gotten to know a startup investor here in Toronto who sent me this article to the Scientific American called, Why Do Animals Keep Evolving Into Crabs? That's the title of the post on Scientific American. And him and I were talking back and forth about how there's certain characteristics that entrepreneurs gain, certain

skills, certain experiences that they, you know, on their second time around or like things they would do differently, they go down similar higher leverage paths the second time around. For instance, here's a clear example. Entrepreneurs that have done tar pit ideas that are like, they sound really good, but they're really hard to monetize, or it's really overplayed, really saturated, you know, it's really overplayed, really saturated, you know, like the Airbnb for X, the Uber for X, or the social media for Y, you know, there's so many of these just like kind of crappy startup ideas and they require very difficult distribution or like marketplaces. They sound amazing. And if you pull them off, they're like the best businesses ever, like, you know, Uber, Airbnb,

And if you pull them off, they're like the best businesses ever, like Uber, Airbnb. But you got to fill two sides of the demand, right? You got to fill the supply of vendors and you got to supply the demand of customers. You basically got to build two businesses at once. It's really hard. Yeah. Yeah. And I mean, if you want, people want to have a look at the kind of ideas that fall into that bucket.

I mean, you just have to watch Dragon's Den or Shark Tank, right? Oftentimes, that's what it is. It's not necessarily a bad idea in itself, but it may require just crazy amounts of capital, and it might not even work. I think that's typically what you see. Exactly. And so, the second time around,, these entrepreneurs who have kind of evolved find themselves going into much lower churn, sticky business to business type businesses, B2B, working with less customers, but higher ticket sizes, that kind of stuff. And he sent me this article because it's kind of like this. In nature, animals keep evolving into crabs through millions of years of history. Animals keep evolving through evolution into crabs. Here it goes into the stats on here in Scientific American. A flat rounded shell, a tail that's folded under the body.

This is what a crab looks like. And apparently what peak performance might look like, at least according to evolution, a crab-like body plan has evolved at least five separate times among crustaceans, a group that includes crabs, lobsters, and shrimp. In fact, in evolution, it's happened so often that there's a name for it. It's called carcanization. Carcanization. That sounds like I just made it up.

Well, no, I mean, it comes, I guess, from carcass, right? Yeah, it's weird. I don't know. I was trying to figure out. Carcanization. it's kind of like crustacean but whatever yeah there's been all these different it goes into all these examples of like through evolution and survival of the fittest and natural selection all these like paths for animals evolving end up looking like crabs or being these types of crustaceans and you might see this kind of evolution and natural selection happen in business as well when i read this article my mind immediately switched off of startup mode and into this crazy phenomenon that happens time and time

and time again. The saying is, on a long enough time horizon, everyone sells ads. So that's the quote people say it around all the time. On a long enough horizon, everyone sells ads. Now, this is a concept because it's true. I'll go through examples, but large successful businesses will find a way to monetize their customers and data even further, and ads is the most obvious common example. Like animals have evolved into various species of crabs over time and time again, over millions of years, businesses, once they reach a certain mass, they all start selling ads. Amazon, the e-commerce store, what's a huge part of their business now is selling ads for placement. They even sell ads on their packaging now, like on the boxes.

They have huge ad contracts for that. Google started as a search engine. They got all this traffic and they're like, huh, what if we just start allowing people to pay to be at the top of the search engine? Mark Zuckerberg in the dorm room of Harvard building a hot or not game for students. This is just an obvious ads business. Uber and DoorDash, now that they have this marketplace, you can pay to be at the top and featured. Once you have this kind of distribution and traffic and whatever it is, bringing in ads is the most obvious extra monetization that every business can do. Apple does it on almost all of their services. Almost every single one of their

services, Apple has an ads business in. Think of the app store, think of their news business, think of, gosh, everything. They even charge Google, what, $25 billion a year to be the primary search business. That's a form of advertising. That is a form of Google getting distribution by paying money. And so there's little things that you'll notice over time that on a long enough time horizon, certain businesses will go after these like obvious wins and ads is just the most clear time and time again every business that has survived a really long time will eventually start selling ads and uh that's the it's the canadian science investor who knew crabs were so elite in their uh genetic makeup any personal trainer can turn me into a crab or what reach out to man if you just like do enough like rows upright rows and you just get like a huge get like a huge shell you know you'll have a nice rounded lats

you might look like a crab oh yeah i think it's gonna take some time need to be smoother everywhere but uh too much facial hair but uh a good whack a good waxing and uh a couple of lap pull downs and i think i think we can make it happen well another one i think is um auto trader so like i said i was you know shopping for a new used car and they have those promoted listing which i find very annoying because i usually go by price uh low to high and the promoted listing go at the top and i'm like man it's not even my price filter like remove that from there but uh they they do it too i think ebay started years ago as well like i mean they you're right they all get on the the bandwagon eventually they do that i think walmart's starting to do it walmart has a huge ads business

yeah so name the business i mean if there's an opportunity i'm just looking on like the largest companies by market cap oh i thought you were looking up the largest crabs in the world largest super giant crab i'm just looking here and like over half of them sell ads like over half of them it's become like a core part of their business if not just a small part i mean even netflix that said they wouldn't i mean obviously it's a it depends on now they sell yeah it depends on the type of subscription granted but i've noticed that with amazon prime we have an add-on like a cheap one for some reality shows that my wife likes to uh to watch and you pay for that add-on and there's still freaking ads in it i'm like that's the whole

point of paying is you don't get ads no way this is incredible the guinness world records records a japanese spider crab called i kid you not quote big daddy was the world's largest crab in captivity ever measuring 10 feet two and a half inches 10 feet wide big daddy was awarded the record for the longest crab leg on record ever as well with a four foot eight leg. Big daddy. The widest crustacean ever. That is incredible. Don't be messing with that crab because, yeah, I think I'm going to bet on the crab. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using

Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission-free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details.

That is questrade.com. Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage

you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, Blossom Social in the app store and I'll see you there. All right, moving on. What do we got last? I'm social in the app store and I'll see you there. All right, moving on. What do we got last? So couple, I would say about in the last month or two, had a few people asking some questions about Wealthsimple stock landing program, including Debra, who's one of our joint TCI subscribers. So lending out shares is nothing new in the stock market. Best known for what most people might think of it, it's used for shorting a stock, for example.

And for those who are not familiar with shorting a stock, essentially, you borrow shares from someone else. You take those shares, you sell them right now. And essentially, you're hoping that the shares will go down in time and you're able to sell them at a lower buy and back sorry at a lower price and you end up pocketing the difference so it is a way you have to be sure obviously if you're shorting a stock because technically the losses are unlimited but there are other reasons that people or companies may want to borrow shares they include use the borrowed stock as collateral to cover deficits or failed deliveries, for market-making purposes, or to have influence on corporate actions like voting. So you may want to borrow some shares because you're a large entity who's trying to influence the vote on a certain action that's shareholder approval.

a certain action that's a shareholder approval. Now, what is new with Wealthsimple is it's offering it to basically anyone without requiring a minimum amount of stock to lend out. So how it works, you can only do it in TFSA non-registered account. You retain ownerships of the shares so you can sell them at any time. So even if they're lent out, borrowers have to put 100% collateral against the shares they borrow. It's a revenue sharing model. So what this means is that if I have Apple shares to lend out and someone borrows Apple shares, then every Wealthsimple client who has shares of Apple available for lending will get some income. So for example, say Brayden and I both have 10 shares of Apple ready to lend out. Someone decides to borrow four shares of Apple. The revenue would be split

equally between Brayden and I, since we both have 10 shares of Apple ready to lend. The revenue is calculated daily and distributed monthly because there is a fee when you borrow the shares. distributed monthly because there is a fee when you borrow the shares they say there's no fees but that's a little bit of bs i think so there are fees they take 50 cut on the income you generate so no there's not a fee but they do take a cut that's how they make money on it so the sounds like a fee so yeah so just i think it's semantics, I think that they say. I view it as a fee personally. Yeah, like I have a new political platform. I'm running as prime minister of the country.

There will be no tax, but I will take 50% of your income. Yeah, pretty much. But it's not called tax. No, there will be no tax. There's just going to be a fee on your income. yeah that's how you do it i only i only charge fees i don't charge taxes on my political platform yeah yep that's right um some of the benefits is the biggest benefit here is that you can earn passive income on stocks that that don't even pay a dividend and you also keep ownership of the shares.

The downside is you give up your voting rights while the shares are lent out. You don't have any Canadian Investor Protection Fund coverage. This is called the CIPF, which is similar to the CDIC for deposit, for example, but it's for investment account. And maybe that is something we look at in the future because it's not something we've talked about in terms of insurance protection or protection for investments that are within your account. If anything happens with the broker, for example, you lose dividend rights, but typically the borrower would be required to send a payment equal to the dividend that to the lender of the actual stock note though that i didn't see on their website so it's something worth asking if you're lending out canadian paying stocks that if you're able to to do that because u.s dividend paying stocks are not

eligible for lending so that's something to keep in mind. So it is limited and they do say on their side that typically the higher volatility of a stock, the more you'll be able to get income on it because then, you know, one of the things is the more volatility, the more people will be willing to potentially borrow a stock. So that's where people, you know, that's where the demand might come from. So something to keep in mind. Obviously, anyone looking into it, make sure you do your research here. This is just an overview quest. Wealthsimple, sorry.

They have a decent FAQ, but there's a couple of different pages I had to rely on. I also relied on, let's say, non-Wealthsimple sources to get a better idea on typically how lending kind of works, lending and borrowing. But it's something people can do, but there are some downsides. I don't know what the uptake is. Maybe it's not even worthwhile to put it out there. I don't know. So if anyone has done it, has some experience, feel free to shoot us an email. I think it'd be interesting. Not something I'm personally interested to do right now. There's other ways to generate income, like buying actual good companies that pay a dividend. That is one of them. There's also something I talked to about in the past is doing kind of a covered call strategy. That is another way. So essentially, you can just sell calls of a stock that you own and be able to collect the premium. And then if the stock, you know, if the stock goes

below, then you could potentially get a call on it. But still, it is there's different types of strategies, all that to say to actually get an income from your stock outside of dividends, even if that's not the one you're focusing on. I like to keep it simple. I like to keep it unbelievably simple when it comes to all these other things you can do. You know, there's a million different fun little instruments you can use and guess what i use none of them i buy and hold great quality equities that i want to hold for a long time so uh this is well fascinating uh keep it simple folks Keep it simple, folks. Keep it simple. Yeah. I mean, the covered call, we've gone over that before. The issue with it is that it definitely limits your downside, but it caps your upside as well. Because a covered call means that

if you're selling, so typically you'll do that in 100 shares, you might say you have 100 shares of Apple, they're currently trading at $100. And let's say you sell the covered call for $110. So if the shares go to 150, that call is going to be actioned, or there's going to be someone kind of buying those shares because they can buy it at a lower price than they are currently at right now. So it's something to keep in mind. We've had a lot of questions about covered call ETF. We showed the differences between returns of covered call ETFs and the equivalent without that. And the equivalent always does better than the covered call.

So something to keep in mind, but it does offer some downside protection because you get that extra income. So I'm with Brayden. I keep it simple. And that's my strategy. But, you know, some people may like those strategies. Just make sure you're well informed and you do your research because there's no free lunch in investing. Wherever, you know, you think something might be a free lunch, there's always going to be a

downside. There might be an upside to it, too. Don't get me wrong, but it's never a free lunch. It's always some sort of catch, isn't there? It's like what we talked about, like what I said, one of the important characteristics of a good investor is just being a little bit skeptical. That doesn't mean not optimistic or doesn't mean not investing for the long term. It's just like a little bit skeptical because there's no, if something's too good to be true, it probably is. It certainly is when it comes to this stuff, right? And when I see, you know, the covered call stuff, you know, this kind of thing, I'm always like, hey,

do you want more complexity with worse returns yeah hey can okay can i offer you more complexity and worse and you make less money it's like where do i sign up folks uh it's just a it's just a tough tough or even those like you know 15 20 percent uh yielding funds or companies like we've had time and time again, people send us emails about that. And, you know, you zoom out a little bit. And of course, it's usually like clockwork. It's been a losing investment. Capital destruction.

Exactly. I mean, sometimes people do all right because their timing is good. But if your strategy is based on timing, good luck. Because it's hard. It's easy to get once. It's hard to repeat. All right, Simeon, we got to go. I am 30 seconds from being on the clock of, you know, what time it is.

Okay. It's a fantasy football draft, baby. It's time. We're back. We're back in the swing. That's a big meeting. Okay. You have fun. I'm like, dude, can't do the pod. We're back. We're back in the swing. That's a big meeting. Okay. You have fun.

I'm like, dude, can't do the pod. Too busy today. Got a fantasy football pod. Fantasy football draft. Thank you for listening to the podcast. We really appreciate you taking the time. Come to listen to us every Monday and Thursday. We talked a little bit about join TCI.com.

Go check it out. Support the show. It's $9 Canadian a month. You get our portfolios. You get us on video. we talked a little bit about join tci.com go check it out support the show it's nine dollars canadian a month you get our portfolios you get us on video and we answer your questions yeah do the dividend portfolio we try i'll usually try to go on every couple days to answer questions and brayden as well and if you know if you can we do hope that you you know you support us there at least give us a nice review on apple or spotify that's free it won't cost you anything helps us a whole lot so that would be great as well yeah good point that is the easiest free thing to do support the show

if you're on apple podcasts give us a little review five star rating and then on spotify you can just hit the five-star thing we truly appreciate it 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 Brayden and Simone may own securities or assets mentioned on this podcast always make sure to do your own research and due diligence before making investment or financial decisions