The Canadian Investor - TCI Index update and backtest

Episode Date: June 20, 2020

Braden gives his thoughts on a few TCI Index picks and backtests vs. other indexes.--- Send in a voice message: https://anchor.fm/the-canadian-investor/messageSee omnystudio.com/listener for privacy information.

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It's just me this week on a very short episode. We will be back next week, full-time, regular content. Back to the normal type episodes, talking about various investing topics. This week, I'm just going to give you a little bit of a deep dive into the TCI index, all the submissions of stock picks that you guys had. I've backtested it for 2020. I'd like to backtest it for all of last decade, but not all of these companies were publicly listed, as you can imagine. So that becomes quite difficult. Another thing that is

important in the calculation of this is that there are Canadian companies listed on the Toronto Stock Exchange, as well as US companies listed on the New York Stock Exchange and NASDAQ, but there is no adjustment for currency changes. So a company that is listed in Canadian dollars and then at the end of the test is listing Canadian dollars is looked at the same as U.S. dollar to U.S. dollar. So that is an assumption, which I'm okay with because currency fluctuations is completely out of our control as investors. And it's far better to focus on high quality companies that we're picking versus thinking about what's going to happen with currency. All right. So to give you some data, in 2020, the TCI index is actually up four and a half percent, which is quite, quite cool. I'm going to take a deep dive into why that is. The answer is actually quite simple,

but I'll get there in a bit um and during that time spy the etf that tracks the very very popular etf that tracks the s&p 500 is down three and a half percent so there's some pretty good outperformance there very very interesting so why is that? Well, Shopify, the Canadian darling that needs no introduction, is up in a major way, exceeding 100% return in 2020. It is up a whole lot this week on news of its partnership with Walmart. I was looking at their most recent report, and I was quite shocked at the amount of market share that Shopify is taking on a global perspective of e-commerce retail. Very, very interesting stuff from this Canadian company. And just when I think it can't get higher, it goes on another tear. And that keeps happening over and over and over again.

And you know what? This company is executing very well. Their total addressable market is absolutely nuts. And what works really well from my perspective about this company is their ability to get small businesses, solo printers, and very large customers all on their platform. So the total addressable market is huge from solopreneurs to the massive announcements in the last two weeks of doing the e-commerce retail for Facebook and Walmart. These are not small companies.

They are anything but. They're the exact opposite. So it's very interesting how they have been able to address the entire retail market and provide value for all of those customers, big or small. So it might keep chugging along. It's kind of crazy, the run that Shopify has had. So that explains a lot. Some companies doing poorly. The worst performer in 2020 is none other than Air Canada, down over 60%. Lots of good performers in the 20s, some down a little bit. Enchouse Systems up 25%, one of my absolute favorite technology companies in Canada. Lots of very interesting things.

And if you'd want to know the entire list, go back to our episode last week. We go through the entire one and a quick blurb, you know, a take from Simon and I. But it's very interesting to see all of the picks that you guys had. And a question from one of the guys, a very good guy, Max from BC. Max is one of my Stratosphere members on stratosphereinvesting.com. Great dude. Lots of, he's come a long way in his learnings. And he asked me, is this index for real or is this just for fun? Dude, it is so for real.

It's crazy. No max. This is just for fun. This is just for us to track. It's just a little fun thing for the community. And, um, yeah, we'll be back to regular content next week. Simon and I are going to be in full swing. If you guys want to suggest topics for this show, go on our Twitter. You can search the Canadian investor. The at is CDN underscore investing.

Simon's going to put up a little poll of topics that we can choose from. Not that we don't have heaps, but we just want to know, what do you guys want to know? We have such a broad range of investors who are just starting, who have been managing their portfolio for years, to people who are CFAs, manage money for a living. But either way, we love all of you. We will see you guys next week. As always, getstockmarket.com. If you did not get a pick into the TCI index and you want to be part of the fun,

I get it. It's a lot of fun. You can go on there and still submit and pitch me on a company. If the pitch is solid, we'll throw it in. If the pitch is solid. But it's got to be solid because you're late.

All right, guys. See you next week. The Canadian investor is not to be taken as investment advice. Braden or Simone may own securities mentioned on this podcast. Always make sure to do your own research and due diligence before making investment decisions. Thanks for listening to this episode of The Canadian Investor. own research and due diligence before making investment decisions.