The Canadian Investor - Stock Market Sells Off After Tariff Liberation Day

Episode Date: April 7, 2025

In this episode, we discuss the “reciprocal” tariffs announced by President Trump. The tariffs were far greater than expected which led to the major north american indices shedding 10% and in some instances more in just 2 days. We go over the methodology behind the new tariff regime and how Canada and Mexico were exempt, and the immediate impact on global markets. We walk through the selloff in equities, rising credit spreads, and the companies most affected—particularly those dependent on global manufacturing like Apple, Nike, and Lululemon. We also explore the broader implications of this abrupt shift in trade policy: the risk of escalating retaliation, the potential for a global recession, and how investors can think about navigating uncertainty. Finally, we discuss the importance of discipline during volatile markets and why a systematic approach to investing may be more valuable than ever. Ticker of stocks discussed: RH, FIVE, W, NKE, LULU, ATZ.TO, BBY Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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be back on the Thursday release. We had to switch things up because we wanted to celebrate Liberation Day. Dan, are you feeling liberated or what? I am, yes. My portfolio especially. Liberated, yeah. Oh man. Liberated to the downside, huh? Exactly, yeah. I think the market did not really love Liberation Day as Donald Trump said it. For those who have been

living under the rock, Liberation Day was the weird term that Donald Trump was using for his reciprocal tariffs that were to be announced on April 2nd. Now just so people are aware because things are changing so quickly, we are recording this at around noon Eastern time, April 4th, Friday April 4th.

So if you hear this, when you hear this on Monday, when you listen to this, it's possible there may be some development later this afternoon for the markets, and obviously this weekend in terms of the tariffs that were announced. So I'll just recap here what happened. So on April 2nd, Trump announced his anticipated reciprocal tariffs.

The way he had been talking prior to the announcement was that they would impose actual reciprocal tariffs. However, he did say that there are certain things that countries were imposing on the US that were non-tariff barriers, so these are much harder to quantify. But what the markets understood and most people understood is that if a country was for example imposing 20% tariffs on US exports to this country, the US would be imposing 20% tariffs on that country making it a one-for-one which a lot of people can say that you know that's not fair and whatnot I mean to a lot of market

participant and investors that did make somewhat of a sense and a lot of market participant and investors, that did make somewhat of a sense. And a lot of people were pricing in those type of tariffs for the announcement. However, this is not what we got. And if we've learned one thing about Trump is how unpredictable that he is, and he definitely delivered on that unpredictability. So Trump did not do reciprocal tariffs

like the markets were expecting. He ended up doing something completely different. The way they calculated the tariffs is that they took the trade deficit between the US and pretty much almost every other country in the world, divided that by the total value of goods that the US imports from that country and then divided that by two to value of goods that the US imports from that country and then divided that by two to get the tariff amount, which makes not much sense.

Yeah. And it's very perplexing. It took a little bit of time until someone figured out the formula they were using. I like to give credit, it wasn't obviously us that figured it out. I saw that on Twitter. But just to clarify too, for those who are newer listeners, their trade deficit just means that the US imports more goods than it exports to a specific country. So when there's a trade deficit, if there's a trade surplus, then the US imports less goods than it exports to that country. So here's an example. So if the US had a hundred billion dollar deficit with that country and imported two hundred billion dollars worth of good from that country, you would get a

hundred billion divided by that two hundred billion, which is a fifty percent. The number you get is fifty percent. You divide that by two and then you get 25 percent, which is the tariffs that would be imposed on that country. Now the US does have a trade surplus with some countries. In those cases you would think that they would not impose any tariffs. Oh no, those countries still got tariffs but they got a 10% tariffs which if you're looking to make a fair balance for trade here, doesn't really make much sense. It doesn't make any sense at all. I mean, if his true logic there was to, you know,

level the field, like why would you tariff countries that, you know, you're exporting more to it, it doesn't make any sense. And I mean, even the calculation, there was a lot of people who were very puzzled as to how this calculation, like why they did it like this. Yeah. Like there's no, I don't know. It's it's puzzling. Like it's it's crazy what's going on right now. I mean, like obviously there's going to be a lot of countries that import more

goods to the United States and the United States exports to like, especially when you look to places that, you know, do a lot of that labor that is probably a little bit too expensive to do here that Donald Trump seems to want to bring back, but I've read some articles that they believe that robots will be taking control of all of it. I've seen that it It's, I mean, what a crazy time right now. Yeah, no, it is. It's on the one hand, it's crazy. On the other hand, I find it quite fascinating because we're essentially seeing global trade change

before our eyes. Global trade as we've known in over the last three decades. And one thing I should specify here, the 10% baseline tariffs for countries that essentially the US has a trade surplus with, those 10% baseline tariffs will take effect tomorrow, April 5th. So they will be in effect by the time you're listening

to this podcast on Monday. The other tariffs, so the ones that are higher that were done using that formula I just talked about, those are set to take effect on April 9th. Again the good there is some good news here so the first good news is that Canada and Mexico were not part of these tariffs so seeing what kind of tariffs are being posed on countries around the world it's looking not too bad for Canada and Mexico. Don't get me wrong there will be some pretty bad impacts for the tariffs

that are being imposed and we'll see how things evolve especially once the election is done here. Whether the US tries to negotiate even more for Canada, whether there's more terrorists. At point, who the hell knows because Trump is so unpredictable. And I think the reasoning that you use for these tariffs going back on these higher tariffs is that they wanted to factor in these non-tariff barriers to US exports. So barriers like high regulations or even countries purposely weakening their currency to make their export to the US more attractive.

But again, it still doesn't really make sense with the formula they use. Well, on the Canadian side of things, I mean, if you think about it, we do tariff a lot of goods that come in from the US. So why would Canada not be exposed to reciprocal tariffs? Like don't get me wrong. I'm not complaining, but I mean, the logic there,

you'd think Canada would have been hit. Because I think right now, the tariffs that exist right now are all primarily, he's still kind of harping on the fact that that's due to the border and things like that, is it not? I was pretty sure at least. Yeah, pretty, yeah, I think, I mean, I think so.

Yeah. Again, who knows? I was kind of surprised, like, to see all these other countries hit and Canada not get hit. It's very, very unpredictable and obviously the markets don't like uncertainty and that's why they're down what, as we're filming this, it looks- Around 4% I think. And what, 6%.

So the NASDAQ is down just under 10% in the last two days, which is that's crazy That is crazy. I'll strap on your seat belts and enjoy the ride as they would say because It's gonna be volatile. I've been saying that for several months now ever since Trump has been elected I said look you have to expect some more volatility just because he's unpredictable now Now I'll be fair, I did not expect that it would be this unpredictable. And just looking at what the market has been feeling, so just like you mentioned, I pulled in some charts here just to see a little bit how it's doing. So year to date, I mean, in terms of large asset classes, gold is just crushing everything. It's returned 17% and then you

go down the list. The second down the list so I compare the TSX 60, Bitcoin, the NASDAQ, and the S&P 500. Believe it or not the second down the list in terms of total returns so it does includes dividends is the TSX 60 that's only down 1.6% and then further down you have the S&P 500 down 8% year to date and then you have the NASDAQ down 11.5% and then you finish with Bitcoin that was that's down 16% and then if you look a year out it's still gold that's way above everything else but then Bitcoin comes in second because it had a nice rally in the past year. Third, you have the TSX 60 at 13 percent. And then you have the S&P 500 at 4.6 percent and the NASDAQ at 2.6.

So the NASDAQ is essentially flat. Yeah. Over the last year, which is crazy. Just to think where we were at. Well, and if you think about it, like what has been, I guess I would say, yeah, like kind of the most hated index over the last few years, it's probably been the TSX. Like a lot of Canadians were just fed up on, you know, lackluster returns from Canadian equity. So I like just dealing with, you know, a lot of investors just in what I do. I noticed a big trend of people just kind of getting tired of Canadian equities and kind of wondering what's the point in buying anything but US.

US. And I mean, now we sit here a year later and the TSX is the best North American index by a wide margin. So, I mean, who knows what it'll be moving forward? I mean, you know, the US has been thought of as, you know, one of the safest places to invest money. Like it's regulatory issues right now. They don't really persist. I mean, it's a safe country growing GDP.

And then you put something like this in, I mean, you're going back to like the 1930s, like we're talking like 100 years was the last time these types of tariffs have been put in place. And it was kind of a similar situation. I mean, obviously, like obviously I wasn't around then, but they were mostly done to protect. I was going to say, you age pretty well if you were around back then. But the fountain of youth there.

If you think about it, they did it to protect American businesses. I mean, they wanted to encourage domestic production. And it kind of went down the same line that time, too. Like a lot of countries just issued counter tariffs during that period, which pretty much just collapsed global trade and it just amplified that situation as well. Obviously the economy is a lot more complex now than it was back then, but I mean, who knows how ugly this is going to get?

Because I mean, you got the two biggest economies in the world going at it right now, like, because I believe Trump was on his truth social platform this morning saying that China made... It was a true thing. Yeah, he's saying that... True thing away. China made a huge mistake or something. They shouldn't have put the counter-terrorists back in. Yeah.

I mean, when you have two huge economies like that going at it, who knows? Mm-hmm. Welcome back into the show. This is the Canadian Investor podcast made possible by our friends and show sponsor EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income

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Start trading commission-free stocks and ETFs today. Visit questrade.com to learn more. Just to mention that, China did announce earlier this morning, earlier this morning, that they would be placing retaliatory tariffs of 34%, so matching the ones that US had imposed. And keep in mind, the 34% that the US is adding to China specifically was on top of the 20% that was announced, pretty much at the same time that he was announcing tariffs on Canada and Mexico. So you're facing like 54% tariffs on China right now and they imposed 34 on the US. Clearly, it's going to have impacts on the US as well. They may have a trade deficit with China, but one thing that China buys a whole

lot is farming products from the US. So that farming base that I think probably voted more for Trump is going to be feeling the impact of that. And if we go back on some of the companies that have been impacted, so one of the big reason we're seeing that big downturn right now is the Mag 7. So the Mag 7 that had been really pulling the markets up for most of last year and the year before, you're looking at some pretty significant declines here with Nvidia being down 24%. Just in the last six months, if you take actually the last three months, it's even more pronounced. So you have Nvidia down 36%. You also have Tesla down 40% and you go up the list. Google is

down 24% and this is all in the last three months. You have Amazon down 22%. Apple down 20% which Apple has literally been in the last few days. So they've really been hard especially hit hard on the China aspect of it because a lot of their products are made in China. And then you have down the list, I'm finishing here with the last one was Microsoft, that's down 13%. So a lot of that Mag 7, not surprising. Yes, they are very good quality companies, but they were trading very expensively. And it's one of the reason that I've really

minimized my exposure to the Mag 7 over the last little while because the valuation was so rich, very little risk was being priced into these companies. And now we're seeing what's happening when there is more and more risk happening and they were trading to perfection. Yeah, I mean, Apple already had a hard enough time selling the Vision Pro at these prices. Imagine it, imagine it 30% higher. I mean, it's pretty difficult.

Like I do know Apple manufactures a ton of its stuff in China now. Like does it cause a shift? Do they actually move manufacturing back here? I would imagine like either way you're getting hit with price increases. Yeah, because it takes time to it will cost money to do that. Like companies can't turn around on a dime and start producing products in the US like these take these factories will take time to build on the first and and we've talked about this time and time again.

Like think about it as if you were a CEO of a company. What like how hard is it to make these decisions right now? Because you have Trump who's I don't know what he's doing and no one really knows what he's doing. So there's all the uncertainty relating that. Do you wait a few years and just heat it it in terms of your profit margins and pass on some of the cost to your customer and then figure that what three, four years down the line, if there's a different administration, this might be reverted and then you'll make some decisions for investment.

It's so difficult for a business to be planning large capital expenditures right now because he's changing his mind every day. The little do we know is maybe this weekend he'll have a deal with China where maybe he decides to exempt certain things or he decides to take Apple for example. He decides that Apple is exempted or there's a lower tariff rate for Apple products because they've committed to investing $500 billion in the US. You don't know where this is going to go and that's why it's so difficult for investors right now to figure out what companies will be thriving and resilient because we're essentially seeing a big shift in the way trade has been happening over the last 10, 20 and 30 years.

Yeah, and I mean, if you think about it, if you have to move your manufacturing back here, I mean, you're seeing those price increases anyway, the cost of labor is just so much higher here. So I mean, do they, and then like you think about it again, the policy situation, like if you're a company and you have to spend hundreds of billions of dollars to provide infrastructure here, do you even do it knowing that it could all be reverted in four years? Like if, say, if Trump pisses a lot of people off

and the election goes a little bit different route, know four years from now all this stuff goes away like I mean I wouldn't want to be making those decisions right now no no exactly and some of the most impacted companies outside of big tech so you have a company like restoration hardware five below here five below is like a dollar store in the u.s. so five below like five dollars below is the name is like a dollar store in the US so five below like five dollars below is the name they get a lot of their products from some of the tariff countries so they were down 27% yesterday so I took that as of this morning before the market opened wayfair same kind of thing a lot of their

products are made in countries that are impacted by tariffs. So you can see what kind of companies here. Lululemon was another one that was really impacted, had kind of a double whammy with the earnings release that we talked about, but then the tariff announcement put even more pressure on the stock. You have Nike, which is sort of rebounding, I think, a little bit right now because of the potential negotiations with Vietnam that the US that Trump tweeted that they might be doing. Under Armour, Aritzia, these were all companies that were pretty substantially impacted. You have a firm holdings, the credit provider, the installments of pay down, pay now, pay

later. You're also seeing a company like Shopify, Best Buy, then companies I'm mentioning have a, had a drawdown of more than 15% yesterday. So when the first full trading day of the tariffs, the counter tariffs that were imposed by Trump. So it's just to give people a bit of an idea here of what kind of businesses are impacted and the ones that are the most

Resilient it's more that the defensive stock type of companies. So whether you're thinking about utility consumer stables What else Dan that's been doing pretty well Tells why you're probably looking at telco. Yeah telecom something like Lockheed Martin has actually done decently well. Costco, surprisingly well, especially considering how expensive it is. But yeah, it's I mean, another company on the Canadian side of things that took a big hit was Aritzia. They're rebounding a bit this morning to probably just based off that news.

But I mean, a lot of the like a lot of the companies that are getting hit are just the companies who pretty much need to manufacture this type of stuff internationally because it would cost way too much to do it here, especially when you think of stuff like clothing and stuff like that. First off, what American wants those types of jobs and just the overall cost of production here is just so much that they need to source it overseas. I mean I think Nike is like 90% of their production is exposed to tariffs which is just it's nuts. That's that's pretty crazy and in terms of the potential outcomes like first

again there could be some changes here on the weekend. They Trump and his administration gave like essentially seven days until the most impactful tariffs would go into effect. So we'll see, we already saw China, like we mentioned, counter tariffs of 34%, but now there's news that Vietnam is trying to negotiate something and we'll see some countries may play hardball some others may actually try to negotiate something and Canada could be an example for a lot of countries here because not to get too political but regardless of

who you're going to be voting for for the next election if you look at the polls and how they were going, the liberals were not doing good at all. I can't remember the exact percentage, but I think the conservatives were a 15, 20%. And then you add in the fact that tariffs started to become more and more front and center for Canada. Trump started making more and more that comment about Canada

becoming that 51st state, and then the Canadian government really, I think it's fair to say they started going a bit more hardball with the US administration to do counter tariffs and so on. Well, it's very possible that you'll see countries that will take the approach that Canada did for political reasons. I mean, they'll see how the Liber liberals did in Canada, how they were doing and how their fortunes have literally changed in big part because of Donald Trump and what he's done and what he's been essentially created more unity, I guess, with lack of better words for Canada and kind of banding together against a big mean neighbor down south. I'm sure there's gonna be politicians

in other countries seeing that and facing an election soon or wanting higher approval ratings that will say, you know what, it might not be the best thing for our economy, but I can leverage that from a political basis. So I can see some countries doing retaliatory tariffs. Like I can see some countries trying to negotiate a deal with the Trump administration.

I think we'll probably end up getting a little bit of both here, but the reality is it's a whole lot of uncertainty. And one thing that I think people are underestimating, and I've seen that quite a bit on Twitter, is a lot of people looking at the Mag-7. Well, if you want to target the US, what are the biggest companies in the US? So countries could start looking at targeting some of those US companies as a way to retaliate against those tariffs. I'm not saying that these will not be good businesses going forward, but it's very possible that the growth rate will slow down for these companies

because of the potential impacts of retaliation against the US specifically on those types of companies. I mean, we've seen it already with Tesla, more and more countries are removing rebates or tax break for Teslas and not other vehicles. So it'll be interesting what happens there, but I think there's just so many different outcomes that you can think of when it comes to these tariffs.

And it is making life for investors pretty difficult because you have to figure out which company will do well in this kind of environment and which company will come out potentially a winner five, 10, 15 years down the line. Yeah, I mean you even have to think of the fact that just, you know, if these tariffs stick in place, I mean it's almost a guarantee we'd hit some sort of recession. Like, I can't imagine. High probability, that's for sure. Yeah, like very high probability and you look at a lot

of these mag-7 stocks, well I mean not not a lot but a big chunk of them like Google meta Even do a certain extent Amazon. They rely a ton on advertising which ultimately is gonna be heavily Cyclical depending on the economy. I mean if it gets slower, you're probably gonna see ad spend come down we saw that a bit in 2022 especially especially relative to 2021. And ultimately, there's probably a lot of impacts to these Mag-7 in the event these stick around and we get some sort of recession. And it's pretty much impossible right now to predict forward earnings, especially because you never know what's going to stick around. I mean, if these stick around a long time, it's not going to be good.

No, exactly. And look, it's not an easy situation. And a lot of people may be thinking, okay, should I buy the dibs? Should I not? And that's a question that I've seen a lot of people ask right now. The first thing I would say is just don't panic. I think that's the worst thing you can do. The other thing that I think is very good for people to do right now, regardless if they had cash in their portfolio or not, and I tweeted about this,

I'll share this for our joint TCI listeners. I think this is really good advice. We don't really give financial advice and this is more knowing your own behavior. So I'll just read the tweet I did. So it's easy to say that you won't panic when a correction or bear market happens until it happens. And write down how you're feeling and what action you've taken so far, what action you'll be taking. It's easy to forget years down the line, but this information could really increase your returns by making investment decisions that will better align with your behaviors. And that's really important because I've seen time and time again people saying like, oh, I won't panic during a market correction or bear market,

but they've never gone through one. They might not, they may not panic, but until you're actually living it, you don't know for sure. So make sure you write down what you're doing. That way you won't, if you do end up making some mistakes or if you end up panicking and selling whatever you end up doing, down the line you'll be able to optimize your portfolio so that behavior is less likely to happen, especially if it's a behavior that ends up costing you a whole lot of money. Yeah, I mean, historically, your best odds for just long-term returns have just been

to buy at regular intervals, which a lot of the times is very easy to do during a bull market. I mean, every paycheck, you dump whatever you can into stocks and you do that pretty routinely. But then, when something like this happens, you either panic or you start thinking, oh, I better buy lots more right now because it's down 10% over two days. So you start shifting your strategy and then over two days. So you start shifting your strategy and then you might move more capital to right now, buy a lot of stocks right now,

and then say six months we're 20, 30% lower. It's just like, I mean, you just gotta stick to a strategy. I really don't think this will persist long-term. It might persist over the next year or two. There's no questions about that. But I mean, a lot of people during times like this kinda just deviate from strategies that have worked forever,

and they start trying to time things, and that's kinda, you know, I've had a lot of people mention to me that they're gonna, you know, they're seeing the Mag-7 draw down a bunch, and they're seeing, like, let's say, I'm just picking names here, but let's say a company like Lockheed,

they're gonna sell that right now because that one's doing well, they're going to dump it into the mag seven because they're down a bunch, right? You start making like a ton of decisions like that and you just end up in a big mess. So I mean, in my opinion, just stick to what you've been doing, which I mean, optimally, historically the best case in that regard has just been buying at regular intervals regardless of the market conditions and in the long run, you're gonna turn out fine. But if you start thinking that you gotta get more money in now because the market's down

10%... I mean, we're on day two right now. Yeah, exactly. We're on day two of the biggest slide we've seen since probably 2020. But I mean, I think that's pretty good perspective to take. Like this is day two of what could be a long draw, no process or could not be if, you know, negotiations are made or, or to be honest, if he just changes his mind, which makes it impossible to figure out.

Yeah. And I, I saw a tweet and I won't name the person because I don't want to put him on the spot but he's pretty well known in the Canadian investment space and he was saying, look, it's a good day to buy shares of high quality businesses and that tweet came yesterday. And yes, there's some concerns, some macro concern, but quality businesses have levers to offset tariffs and will gain market share in rougher times. And I think that's not that I disagree with all of that. I agree with some of it. Yes, there's going to be some high quality businesses that will be facing some drawdowns and will be coming out of this even more resilient than having a bigger market share. Don't get me wrong. But the reality is there will also be some very high quality companies that will never

recover from this. That's just the reality of what we are going through because global trade as we know it is changing before our eyes. And I think that's where investors have to make sure they understand and they factor in the risk with all the potential companies that they're looking at, where some companies will face more risk than others. And even if they've been very high quality over the last five, 10, 15, 20 years, whatever time period it is, you have to factor in what is going to happen in the future. And just think in probability. So I don't like these kind of pose because it's essentially saying like, oh it's been a high quality business, it will remain. No, not all companies will remain

high quality. Some will, some won't. Some will probably see things slow down a little bit but will still remain pretty good businesses and I think you have to think critically and just think about what the future will potentially happen and think in probabilities. That's the best you can do is try to think in probabilities. So that's kind of the way I see it. If you have money on the sidelines already, have powder, I mean, both of us, we've been putting money aside, so we're pretty happy with the prospect

of getting some discount on companies now, probably in the next few weeks or months. There's different ways you can do that. You can have some companies that are on your watch list that you're just waiting to pull the trigger if a certain valuation happens. You could also decide that you have certain companies or the index and say, you know what, I like a company like, for example, or let's say I like the S&P 500. I just want to do indexing.

I don't want to do anything else. I want to keep it simple. Well, you could say, you know what, I don't want to do anything else, I want to keep it simple. Well, you could say, you know what, I have $10,000 and I'll buy 2500 worth of the S&P 500 now. And then if it drops another 5%, I'll buy another 2500, another 5%, I'll buy another 2500, and then another 5% I'll buy my last 2500. You may not get to buy, it may not go down all that much, but at least you'll be able to put some money down while it's going down.

If it goes down further, then at least you didn't buy all of it just as it was starting to go down. So that's a good approach to be able to just level off your cause basis, kind of level off your risk too at the same time that either if there's more upside from here, if the market starts ripping, then at least you got in some good prices, not the full extent of it, but it's very hard to predict and that's a way to make it systematic and really remove the emotions out of it.

So for those of you who are feeling really emotional right now, that's a strategy you could be looking at. Yeah. I mean, I would, I would argue that, I mean, if you look historically lump summing, like investing, everything at once has outperformed, you know, at a dollar cost averaging strategy, but I would argue that like, ultimately that only is the case if you're comfortable with it. You know what I mean? Like there's a lot of human emotions at play of you know if you have

say that ten thousand dollars right now, I mean historically you've done better just buying it all at once but there's totally a human emotion to it and then there's also the fact that you know we haven't really hit a situation like this like I, and I mean tariffs you're talking like a hundred years I would argue on the ten thousand dollar front I mean if you're gonna do it and you don't want to lump some at all Which is a perfectly reasonable emotion to have right now just decide to you know I'm gonna buy a chunk of it every three months for a year or every month for a year or something Like you said just completely remove the emotional systematic element of it.

When you when you see stuff about like, oh, today's the best best time to buy high quality businesses. And I made that tweet that Simpsons tweet where Homer's like the best so far. I mean, it's like I said, day two into it. I mean, when you see tweets like that, a lot of people are like, oh crap, you know, the markets down. I got to get some money. I got to get some money. I got to buy it tweets like that a lot of people are like oh crap you know the markets down I gotta get some money I gotta get some money I gotta

buy it all now because today's the best day I mean there could be plenty of better days moving forward so I mean just recurring purchases set intervals remove all emotion from it and and you'll probably turn out yeah you'll turn out pretty well where you'll get in trouble is you try to time all this, like you spend all your money now and then six months from now we're 25% lower. Then you start, you just start making really suboptimal decisions where if you have

a set purchasing strategy, I mean, you're purchasing strategy realistically. I mean, I guess it could vary a bit. Now, just because of what has changed. This isn't just some random drop. It's actually like huge regulatory changes in a country that has been the safest on the planet effectively to invest in for a very long time. So, I mean, maybe that shifts it a bit, but I mean, what's the difference between buying at regular intervals during the bull market over buying at regular intervals now?

There shouldn't really be that much of a difference, especially on an indexing level. When you're talking about individual companies and it becomes like a lot more of you need to know what you're buying, how they're going to be impacted and like you said, whether or not it'll be permanent or not. But if you're buying on an indexing level, the mean, the S&P 500 is probably gonna be just fine over the longterm. What happens a year or two from now, that is completely up in the air.

Yeah, and that's a great point. So whether you do it at set intervals time-wise, or like I mentioned, another option would be, especially if you have some cash dry powder and you were kind of waiting for an opportunity. The other way to do it is like I mentioned, you kind of set some percentage declines where once you hit it, you just put it and or like you just mentioned, set interval. So I think they're both really great ways if you're looking to remove the emotions out

of it, you have a systematic approach. And if you're looking to be a bit more strategic, clearly that can play both ways, right? You can get burnt and not do it in time, or you can do it too early. So that becomes a little bit trickier. But if you focus on the businesses, you should end up doing well.

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Don't miss out, start trading commission free stocks and ETFs today. Visit questrade.com to learn more. One thing that is worth keeping in mind, just on the more macro front, but it's definitely more macro front, but it's definitely has a big impact for investors. So this is the US high yield option adjusted spread. So just what it says is basically for high yield bonds, so those companies that are below investment grade, the kind of premium that you have to that they have to offer in terms of those, the bonds that they would issue. And it's definitely going way up compared to US treasuries. So it used to be at extreme lows. If you're looking at even earlier this year in February,

January, February, the spread was much, much lower. And now it's spiked way, way up in the last few days. It was already trending up since the beginning of March, but now it's spiked way, way up in the last few days. It was already trending up since the beginning of March, but now it's spiked way up. And what that can tell you is that there's starting to be more stress in the bond market and clearly that can have impact on businesses, especially those that are below investment grade and that will need to reissue that refinance their debt. And you're looking at debt that was likely issued during the pandemic at historically low prices.

So you can see some more stress in the stock market as a result of these companies having to pay much more on the new debt day issue. So it's something to keep in mind. Again, we don't mean to scare people. I think it's just making sure you have access to the kind of information and just, I think this is just a good, it just shows pretty well that we're in for a lot of volatility, I think for the foreseeable future. And volatility goes both ways, right? I would not be surprised if next week or the week after the markets are up like 10% within a week.

That would not surprise me at all. It would not surprise me if we go another 10, 15% down from here. Yeah. I mean, it's impossible to predict. And I mean, the large credit spread kind of gives you an indication there's probably not a lot of confidence overall in the US economy. I mean, that's a pretty big sign right there. But I mean, again, like when you have somebody

who's making policy changes like this and trade changes like this, like things can change in an afternoon, like who knows what's gonna happen. I mean, I know a lot of retail investors seem particularly bullish because JP Morgan said yesterday was the highest retail buying activity in over a decade. So, $4.7 billion in purchases yesterday. So, they haven't seen that kind of retail purchases in over 10 years. So,

buy the dip is alive and well. I mean, I haven't checked, I wonder institutional how that's going, but yeah. I don't think institutional are buying all that. I haven't checked recently, but I know in the last few weeks, I think even before this retail investors were buying way more than institutional investors or professional money managers because they were essentially seeing what was happening. You're seeing all this uncertainty. You're also seeing valuations that were at historical high, no matter how you look at it.

And look, at the end of the day, I think we both tweeted about that a little bit, but Warren Buffett is crushing it. Skilling it, yeah. And what was he doing over the last while? Yeah, Warren Buffett. He was putting cash aside, exactly. And I'm just going to show this for our joint TCI listeners, but he's been essentially just crushing the S&P 500 over I think now it's five years pretty much like he's been he was behind for a while but now like it's it's definitely showing that he's done pretty well so if you're looking at total returns of Berkshire versus the S&P 500 so it's yeah it's in front three months, six months, one year, three years, five years.

Ten year, I think it's a head. All of it is in front. And I mean, the five year, the five year is a wide margin. He's pretty much outperform the S&P since the bear market hit in 2022. He's done quite well. Yeah. And he was behind when the big market, we had market craziness happening in 2021, but it just goes to show. And we've talked about this before on the podcast, when people start saying that, you know, Buffett has lost it, he's no longer that great investor.

It's usually a sign of market tops. And I, yeah, because I remember reading articles like that in like November December of last year people posting on it and People saying all buffett is getting old. He doesn't know what he's doing. Well, buffett has crushed ESN P500 over the last Like we said pretty much any time interval that you're looking at and he was warning people We talked about the biggest takeaways from his shareholder letters the most recent one that was published maybe a couple months ago and essentially voiced his concerns and if you looked at his balance sheet I mean he was having close to 28 29 percent cash based on his

latest earnings result the balance sheet held about, yeah, 27, 28% in cash. So don't be surprised if Buffett comes out in the next two, three months and has made some pretty large purchases. I would not be surprised because he's very well positioned and if there are some companies that he liked that he can pounce on, would not be surprised if he does that. Yeah. So Berkshire is my largest US holding. And I mean, I remember in 2021 as well, like all of it, there was a lot of talk about how he's lost it because he was underperforming. And even

at the start of the year here, I won't name who I was getting in an argument with, but I was getting into an argument again. And they were saying like, you know, he's lost it. I mean, he can't allocate capital anymore. And I mean, just look at it now. He's just, he's killing it. And I mean, his Apple sale looks to be genius at this point in time, especially if these tariffs persist and just how much Apple will be impacted. Yeah. if these terrorists persist and just how much Apple will be impacted. Yes. He's, he's still got it and he's in his mid nineties. It's pretty crazy. Although he's like, a lot of people still feel that it's him running the operation. I mean,

there's been a lot of other people running the operation for quite a while. I mean, it's not like it's just Buffett. I mean, yeah, it's, I like Berkshire. Yeah. Todd and Craig, right? What's that? Todd and Craig, if I remember correctly. Yeah. And he seems to have a whole lot of confidence in them too. So I personally, I don't own it, but it's definitely something that I would not mind owning. And I'm sharing here again for Joint TCI.

So you can see the large increase in cash and cash equivalents. It doesn't mean all that much by itself But just the sheer increase you can tell that they've been putting some more cash aside and I I couldn't pull the ratios here but essentially yes is cash compared to the total assets that they have it's nearing 30% and he's been really ramping that up in The back half of last year, I would say. Second, like mid 2024 is really when you started seeing Buffett and Berkshire putting a whole lot of money into US treasury bills, which is essentially cash.

And that level has stayed very elevated ever since. Yeah, like for in 2022 and like 2023, there was always articles about Buffett's cash file, like Berkshire's cash file. But in relation to their assets, it really wasn't that much higher than normal. Their insurance segment has done so well as of late. They've just kind of killed it in that regard, but now you're seeing it elevated. It's definitely higher than average. Yeah, I mean, he's made some smart moves.

He's one of the best investors of all time, arguably the best. So yeah. Yeah, exactly. And I've been pretty vocal. I've shared it on the podcast. I've been putting more and more cash aside over the last year and a half, I would say roughly because the way I saw it was, of course, I saw the markets being very elevated and hindsight is 20-20. And if I could, obviously,

I would have taken more money off the table. But I still, I think I'm in a good position right now. And the reason I saw it was markets were elevated and I could get 4% on my cash in US Treasury bills. To me, there were worse things than getting 4% on your US dollars in a very expensive market. And now it's looking like it's a pretty good spot to be in to have some cash on the sidelines, and I can be really strategic and deploying that capital. And I think it's a good lesson for those who may be a hundred percent invested. Again, don't panic sell or anything like that. If you take any decision, maybe take a step back before you make that decision just to make sure it's not an emotional and spur-of-the-moment thing. But I think

it's really important to have some diversification in your portfolio, not only stocks, but also different asset types, including, like I just said, cash. I'm a big advocate for gold as well, obviously Bitcoin. But having that diversification, we're seeing right now how it can really, really help your portfolio. And when these positions get too high, there's nothing wrong with trimming a little bit because when you trim, you're taking profits off of the table and you can trim without selling a whole position if you still like the company. And those are some of my takeaways from especially 2022. And I would have liked to probably take a bit more money off the table.

But again, I did trim some positions. I'm happy with where my portfolio is at right now. But you risk sometimes looking stupid because you're trimming essentially when the markets are reaching all time highs and your next door neighbor is just making a killing by putting half of his life saving in NVIDIA for example. Oh yeah, it's definitely, definitely difficult

in that regard. I mean, I hold the most cash I've like ever held in the entirety of my investing career, but I will admit I got lucky on most of it. Like I am usually a hundred percent invested, but my brokerage move over to Questrade, I had to sell a bunch of fractional shares, especially like I held Constellation Software,

fractional shares of it in like every account I own. So obviously that's a big fractional share reduction. And then, I mean, I would not be in this much cash if that wasn't the case. And then at the end of last year, I had some contributions I wanted to make to my wife's account. And then obviously I just didn't buy anything

because of what was going on. So I got a little bit lucky in that regard. So now I'm sitting on cash and it, it does look like a pretty good timing in that regard. But I mean, I could be in the same boat as a lot of other people who are a hundred percent invested because of all those conditions weren't around. I would, I would have a hundred percent inequities myself and be facing a little bit more. I thought maybe like, uh,

you would just like trying to shut me up with me saying I'm pretty happy in getting 4% on my US treasury bills and that's why you got it. Yeah, I'll take it though. Yeah, I did get a little lucky as well. So I had like built about 15% and we'll probably finish after this, but this is more obviously people wanting to know what we've been doing and so on. And we post these updates on Joint TCI along with all the videos for the podcast. But I had accumulated around 15% until two weeks ago.

And two weeks ago, I got it up to around 35%. And the reason is a bit of luck like you just mentioned. So for everyone knows knows I left my job so what happens with my pension fund is that I can actually move those pension funds to a locked-in RSP. But the way that the fine contribution pensions work is that you have a list of funds that you can invest in usually 10 to 15. We had about 15 different funds or 13. And you have some equities, you have some fixed income, there's a money market fund in there. And I used to be around for my pension about 80% equities,

20% market fund. It used to be higher equities but I'd been putting more and more money in the money market fund because of the volatility. And then it was on March 24th, I think the markets had a really good day, were up like 2% and I thought about it. I'm like, you know what? I think I'm going to put everything in the money market fund. And it's not because I thought this kind of crash was happening, like who could have seen this coming? I didn't know. The reason I did it is because I knew there would be volatility and I'd rather sell and put things into cash on my own terms versus the Company I well my pension funds were with which is Canada life them sell for selling my funds in the transfer process because The fun I had was mostly it was essentially a carbon copy of XAW.

So basically a global index fund minus Canada, so excluding Canada, but it's an institutional offering so you cannot do an in-kind transfer. So you have to do a cash transfer. And because of that reason, because I know I'll be transferring soon, I'm in the transfer process right now. I just figured it was a good opportunity, get it to cash and not have to worry with not knowing when they would be selling the actual fund. I mean, in hindsight, it was a phenomenal move. Don't get me wrong. But the reason I did it exactly, timing was good but the reasoning behind it is that if it wasn't for the fund transfer I probably would have kept it 80-20 and not be 35% plus in

cash. But that is some good timing and there's an element of luck in that no question about it. Obviously I'm going to admit it but that's the reasoning I went behind that is I wanted to have at least that control of when I'm selling versus now. And it looks like it's saved me so far some, a good chunk of money because it saved me more than 10% so far on that fund for sure. Yeah, I mean, Light Speed has been a company

that I've wanted to sell for quite a while, but I just couldn't. That's fun for sure. Yeah, I mean, Lightspeed has been a company that I've wanted to sell for quite a while, but I just couldn't. That's the other way. Because of my- So you're feeling it on the other end. My, like I put my transfer to Questrade in, in like early February, and it's not even there yet. It's close to being there, but it's not there yet.

So I've had to hold that, like I planned to sell that stock in like, I think it was like late, yeah, it was probably late January, but then I'm like, okay, if I make any moves right now, they're gonna reject the transfer and then it's fallen like 44% since. I mean, that's a little bit off talk, but man, that's frustrating.

So now I don't even know, I mean, with all this trouble, I might not even sell it now. I mean, it's taking such a big kick in right now, but yeah. To no fault of Questrade, our sponsor, it is the previous girlcruise that we will, that shall remain nameless, that is causing some issues. A lot of issues in that transfer. Okay, well I think that's a good point to wrap this up. It was a fun episode, It was obviously a bit different than

what we've done. We're switching over here the release date just because I'm sure there's a lot of people that wanted to know a bit our thoughts on what's happening, what we're doing with our portfolio. And I think there's just a lot of stuff. You go on CNBC right now, markets in turmoil. I think you know everything is red. Now we're looking at another 5% decline from the NASDAQ today. It got worse while we've been recording. And I'm sure, look, I think it's important to not freak out. You have to stay calm. These things happen. Hopefully things will recover. Maybe I'll finish on

this. Have you bought anything today or yesterday? No, I don't like, I wouldn't buy anything into this. I mean, that's my personal opinion. I know a lot of people love buying into this. I wouldn't, I mean, even, yeah, I don't know. I just don't think it doesn't make sense for me to buy into a 10% drop over two days. I mean, I would just let it settle a bit and then

buy. No, I've only made the only purchase I've made this year actually is Cargo Jet. That was one company I purchased and that was it. Okay. Yeah. Yeah. I made a few little buys today. I'm happy to share it with people. I'll provide some more information on my joint TCI update at the end of the month because I would not be surprised if I bought some more stuff in the next like two, three weeks depending how things play out. So for me, I added a little bit of in while I started position Nvidia just because it will likely be impacted by tariffs but I do not see the demand for these kind of chips

going that much down even if prices are higher in the next couple years. I think AI demand will remain significantly higher. So that's, it's a very small position and just a very kind of starter position here trying to be opportunistic a little bit. And the other one is I added to my Canadian natural resources position because I think they're just a fantastic oil producer and they had a 10% drop because oil is taking a big hit today. So I figure it was just again an opportunistic way but I'm thinking here for both it's less than 0.5% of my portfolio that I've put onto each so I still have over 35% cash. So yes, I did buy, but it's a pretty small buy considering so far.

So I'm pretty much like you, just waiting to see what's happening here. Yeah, it's, you know, a lot of people want to buy the dip, but it's also perfectly reasonable. It's a reasonable thought process to just kind of want to sit this one out for a few days until the markets stop moving 5% on a daily basis. Mm-hmm. But yeah. Yeah, and video's down from when I bought it. So, hey, oh, there you go.

We started the podcast, the NASDAQ was down almost 5%, then it got down to 3% and now it's back down to down 5%. So, yeah, this is, I mean, trillions, trillions of dollars in movements. But Canadian natural resources is up since I added. Really? Yeah, winner. I mean, trillions, trillions of dollars in movements. But Canadian Natural Resources is up since I... Really? Yeah, winner. A little bit, but yeah. Now, obviously I'm not doing this for short term anything,

just joking around here. But yeah, it was a fun episode. I mean, depending how things play out, if there's some wildness happening early next week, so when you're listening to this, if there's some wildness in early next week. So when you're really listening to this, if there's some wildness in the market, Monday, Tuesday, Wednesday, we may actually record an extra episode Wednesday to release it Thursday if there's some new developments, because at the end of the day, news and earnings, there's a lot of news happening. I know it can

be a bit of a challenging time for investors in general. So if we can be here and give you at least some entertainment while you're watching the markets being extremely volatile to the downside obviously right now, then we'll be back here to help out on that. Yeah, it was a great episode. Thanks for listening everybody. The Canadian Investor podcast should not be construed as investment or financial advice. The hosts and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.