The Canadian Investor - The 10 Most Held Stocks in Canada and Real Estate vs. Stocks

Episode Date: October 17, 2022

Is putting your hard earned money in real estate always a good investment? We took a deeper look at the pros and cons of Real Estate and investing in the stock market to try and answer that question. We also look at some of the most popular stock holdings according to TD direct investing. Tickers of stocks discussed: USRT, TSLA, BBY, TD.TO, BNS.TO, SU.TO, AMC.TO, AMZN, ENB.TO, CM.TO, SHOP.TO, BCE.TO, AAPL, T.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.See omnystudio.com/listener for privacy information.

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

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Belanger. The Canadian Investor Podcast. Today is October 12th. Welcome into the show. My name is Brayden Dennis. As always, joined by the one, the only Simon Belanger. You're joining us here on a Monday release where we talk about what's on our mind.

Simone, are you pumped? Hockey's back now, man. Hockey is back. Yeah, man. I guess Montreal, how low are they going to finish? It's Leafs-Habs tonight. It is. It is. I mean, I'd be surprised if the Leafs don't win. It's the kind of year where you just want to see the kids do well in Montreal. the Leafs don't win. It's the kind of year where you just want to see the kids do well in Montreal. That's the kind of year. And you want them to progress, but not progress too much that they get a bad draft pick. Yeah, it's like progress, but don't you dare not tank for those draft picks. So when you're listening to this, you're listening from the future. So you'll already know what

happened, but that is okay. Simo, we got lots to talk about. We were just talking seconds before we just started recording about how, now I'm so curious how long ago it was when you would dial on either your cell phone or your home phone number and you needed long distance minutes. Like if I was calling you from Toronto to Ottawa, like if I didn't have long distance minutes on my plan, it would cost me like five bucks to call you. That like, that seems so archaic and stuff, but I feel like it was only like 10, 15 years ago. Yeah. Yeah. I think so. I think when I got my, one of my first cell phones when I was in universities, so probably, yeah, about, I don't

know, 16 years ago now. And it was the flip phones. And you had like, you know, the best plans had like a bunch of minutes, but data was not really that much of a thing. You had basically SMS, you had like, you know, 50 texts included for the month or something like that. Certain number of minutes, I think usually was like 100 or 200. And it was, I think generally just local minutes. I don't think it was even long distance. Yeah. You'd have to pay extra for those. And like, since you only had a certain amount of texts on your plan, it was like, you had to be really selective. Like you can't, you know, you know, when we do text back and forth, like I'm the worst at this. I spam like one sentence could be eight bubbles.

Yeah. I'm like the most annoying. You couldn't do that back in the day. That was using eight of your like a hundred precious text messages for the month. That would have been criminal behavior. Yeah, it was also very painful if you remember. It was at least the flip phones I had. It was like, you know, letter one.

It was like ABC and then. Yeah, T9. Exactly. That's what it was like, you know, letter one, it was like ABC. And then. Yeah, T9. That's what it was called. Okay, that's it. I think it discouraged you from texting. I never figured it out. I never quite figured it out. When BlackBerry came out with the keyboard, I was all in, man.

I was all in. Speaking of a Canadian story, which BlackBerry was, or should I say is, more so was, let's talk about Canadian home bias. You're going to talk about stocks versus real estate. It's been, you know, both asset classes have been important to discuss this year because they've both faced a drawdown and you don't see that very often in real estate. I was told it never goes down, right? And so you're going to talk about that. And then we're going to round out with what Canadians are holding in their brokerage account, or should I say trading? Because when you see the assets in there, there's going to be some face palms for sure. All right, let's get into it.

I'm going to talk first segment here about Canadian home bias. I wanted to slot this in because it's been on my mind recently. I've talked to some folks recently about this and I was like, we got to re-discuss Canadian home bias because this is so important, Simone. This is probably one of the most important segments or discussion points that you and I regularly discuss. Is that fair to say? Yeah, I think so. And it kind of ties into what I'll talk about real estate too, right? Because people will put money, buy a home or even people like Dan and Nick that tend to invest in real estate. Typically typically most of them

in Canada will do it in Canadian properties. So they're also very concentrated in Canada because of that. Not to mention like their liquid cash is probably mostly in CAD or entirely in CAD. Yeah, exactly. And I'm not speaking specifically to Dan and Nick. I was just saying like, you know, investors in real estate, those who invest in revenue properties, they tend to have most of their eggs in Canada. I know some will diversify outside of Canada, but that's something to keep in mind as well. No, that's a good point. It talks to how important this is, which is this segment you can throw in the hard to swallow pill category because a lot of us are guilty of this, including me. I believe I've done a decent job at course correcting. But all right, so let's go with first an important caveat. This is not me saying there are not great

businesses in Canada and that there have not been huge winners for publicly traded stocks domestically here in Canada on the TSX. There's a bunch. I've tried to own some of them. I do currently own some of them. And so just don't hear what I'm not saying. There are some real gems, but generally as a generalization, it lacks options in terms of quality businesses to own outside of banking materials and energy. Our index is so concentrated in those three categories and a few others, but it's really around those three main industries. Now, I want to fish where the fish are. I want to fish where the pond with better, bigger, greater fish, that pond exists south of the border on US exchange for investors. So let's talk some stats. This is just not my opinion. Let's talk some stats. You can look it

up. There are hundreds of posts about Canadian home bias, and you'll come up with a similar stat, which is about 60% of domestic equity portfolios in Canada are made up of Canadian equities. 60% of domestic portfolios here in Canada are holding Canadian equities, 60% is Canadian equities. So that's, call me an engineer, that's 10% more than half of the weighting of domestic portfolios just in Canadian equities. Now, if you compare that to on the global scale, Canada's weight in the global equity market is about 4%. So if you add up the market cap of all of our listings, it weighs about 4% of the global equity market.

Now, that's not much. So there's a huge disparity there. And Simon, first off, are you surprised by that stat 60% of weighting of these portfolios here in Canada are allocated towards Canadian equities? No, we did kind of touch on this a while back. And I mean, the numbers haven't changed all that much. And people, I mean, I see it on Twitter when I post things related to this in terms of Canadian home bias and even the fact I'm a big believer that you should diversify into the US dollar because it is a reserve currency. And if there's a lot of funky things

happening in currencies around the world, people will flee to the US dollar. It's that simple. And one of the common responses I get is, well, I just know the Canadian business is better. That's why I invest in Canada. And I mean, meanwhile, they meanwhile, they're holding their iPhone and Starbucks coffee in both of their two hands. Yeah. And I mean, I think my response to that is usually, well, learn the U.S. companies better. I mean, either that or there's index funds that can give you that exposure. So I think it's not really a good argument, in my opinion. There is a way to get that exposure. We're not saying to necessarily just hold 4%, okay, if you want to be a bit more heavy in Canada. But as soon as you, I mean, as soon as

you get more than 25%, you're starting to get pretty heavy. And I'm guilty of that. I do have more than 25%. Yeah, like I said, I think that a lot, many of us are guilty. And I think that it's human nature to have these kinds of biases. So yeah, I think that's fair. Okay. So let's talk some stats around this, right? And of course, here's the voice of public opinion, which is like, what about taxes? What about currency risk? While those are things to consider,

they do not outweigh the importance of what I'm about to say, which is Canadian equities versus the rest of the world in the sample size from 1985, you had higher volatility and worst performance in TSX versus the MSCI world index. You had a larger max drawdown than that index globally. And so you've basically had the worst of all worlds, which is more volatility and worst performance and larger drawdowns. That's the least ideal situation. Okay, now let's look on some specific terms. So this is data right up until today, okay? Right up until today. On a 15-year basis, the S&P TSX composite total return, so this includes dividends, includes those juicy dividends from some of these huge payers in banking materials and energy, you had an annualized return of 4.74%. That seems so low, but I'm not really surprised.

The US total market return did 8% during that timeframe. On almost every single timeframe longer than one year, the US has the edge on the S&P 500 total return versus the TSX composite index total return, which includes dividends for both categories. Other than the very short term timeframe of less than 12 months, you've seen outperformance across the board. Okay. Now, important disclaimer here, because you guys know we keep it real on the podcast. In the TCI court, in the podcast court, I sentenced myself, Braden, guilty of committing three counts of Canadian home bias in my portfolio. I am certainly guilty. And given the fact that the Canadian company Constellation Software, which trades only on the TSX, is a gigantic

holding on a percentage basis for me. And I've let a few winners run on the TSX like WSP Global, TFI International, and Brookfield. I am guilty on all four or five, depending on how the court sees this, of Canadian home bias. So mark me up, lock me up. But in percentage, in total holdings, I own way more US listings. And outside of Constellation Software, I've been allocating heavily, almost all fresh capital into US equities, not Canadian names. So none of this also includes any discussion on currency, which you hinted at, which could probably be an entire podcast episode on the pros and cons of diversifying your cash position outside of just CAD when the US has the world's currency. Yeah. Yeah. I mean, I'm guilty of that too. I'm definitely not 60%. Like what Vanguard's saying here? Yeah, exactly. So I'm probably around, I would say like 20, 25% in total, if I include my index funds with my work,

which is all S&P 500. And, you know, I do have Brookfield IQ, that's a pretty big part of my portfolio, a few other names. But yeah, I think I'd have to break it down. But just 20, 25% feels about right. And I'm looking to probably get that down closer to around 15%, to be honest. Yeah, I expect within the next five years for it to, outside of CSU, really change down to probably closer to 10%. And the only reason I think it's going to even be that high is because I've just let some of these things compound for, you know, close to a decade, some of these names, right? I mean, some of them have just been monster, like despite the pullback, like how much has TFI International gone up since I've held it? Okay, let's just pull up a five-year chart. Yeah, it's four times its value.

So, you know, a 3% position turns into, you know, without any fresh capital being added to like, you know, over 10, 12%, right? So I'm still not going to be making any moves where I'm selling things unnecessarily. It's more that new cash, new positions, existing positions are going to be prioritized and hopefully, you know, plead innocent to the court in five years that I've righted my wrongs of Canadian homebuyers. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online

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

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

Canadian home bias, I mean, I would say, first of all, don't freak out. Second thing is there's a difference between having mainly companies who derive most of their revenues in Canada versus companies that have a global presence or, let's say, have a strong U.S. presence. So I talk a lot about Lululemon, but most of Lululemon's sales are in the U.S. now, right? So it's still a Canadian company, but it may as well be a U.S.- company at that point, because most of their revenues are actually coming from there. But if you take a stock, like, I'm not trying to pick on it, but a Canadian tire, for example, or, you know, some of the Canadian banks are extremely exposed to Canada, some are a bit less, but overall, the Canadian banks are pretty heavily exposed to the Canadian economy, more so than other businesses. So I think that's something to keep in mind, that it really depends on the business as well.

You may have more of an exposure to Canada than others. Yeah. Thank you for saying that, because I also should very much so specify that. Let's look at my five meaningful Canadian stock positions, okay? So Constellation Software, Canada is a tiny market for them. They own globally these niche vertical market software companies that serve the entire planet. Okay. WSP Global, Canada is not a huge segment for them. It's a meaningful segment for them, but they're a global engineering powerhouse and most of their business

is done outside of the border. TFI International, meaningful Canadian business for sure, but most of their business is done in the US and Brookfield is a global powerhouse as well. So these are not companies that are underweight global scale, which is important distinction to make. All of the real gems, in my opinion, that I would be comfortable owning have scale outside of Canada. And also here, it's not just us that's guilty of it. Every single country in the world internationally is guilty of their home country bias. And the real term is home country bias. You know, Australians will own an outsized position of Australian stocks. And same with Europeans in their home country.

If you look across the board, I wish I could pull up this visual for us here. But we are not alone in home country bias that exists across the entire planet. Yeah, the only country where it doesn't really matter, in my opinion, is the US, because they can just, you know, you want to be biased in your home country, sure have at it. That's the way I see it. Yeah. They can go 100% in the S&P 500 and be fine. Yeah, exactly. Did you want to move on? Let's move on. Yeah, that's good.

So now, like you mentioned, I wanted to talk real estate and compare that versus stocks. Obviously, I'll talk real estate in general. I know typically real estate investing is a bit more like Dan and Nick would do in the Canadian Real Estate Investor podcast. They actually look for properties that generate cash flow. But a lot of people feel like they're kind of, I'll put air quote, investing when they're buying a home. And you're really just, you know, banking on price appreciation. At this point, you know, people have bought a home the last like year and a half or two. That's not looking great. Obviously, it could rebound down the line. But I just wanted to make kind of clarification here.

And the reason I came up with this pretty simple. So last Thursday, you joined in late, but we had a Twitter space with Dan that was hosted by Danny hosts a Twitter space every Thursday at 8pm Eastern. And the discussion was on real estate versus stocks. So both you and I were speakers, I had to leave a bit early because of daddy duties, but we didn't actually cross. No, you took my spot basically. The second you were leaving, I joined. But it was great. And it really made me realize there was a lot of great people there, some really smart people, both that are more investing in real estate and more

investing in stocks like us. But it also made me realize that, you know, there are a lot of people that are in real estate that don't have a lot of knowledge in stocks or really just gamble on stocks. That kind of took me by surprise a little bit because I really prepared for this and I actually overprepared, I think, because there was a lot of basics, I think, that we had to go over for some of the listeners. But just a little bit of context before I get started. Anything you wanted to add? And I think that that's fair. I mean, you and I run a stock investing podcast, and you know your way around real estate much better than me. So I'll just speak to me.

I, in no way, would feel comfortable speaking on a podcast about real estate investing. It's just something I don't have a lot of experience with. And also, I'm not trying to give myself another job. So, you know, I'll just own some REITs if I want exposure. So I think that it's totally fair. I mean, not everyone's going to be an expert in everything. And, you know, it's good to be well-versed in both. And I think I should probably do that. And I'm glad that we started the real estate podcast with them so that I can not be so naive. Yeah, exactly. So now I did about, I think, 10 points here. That would be a good title, actually, for this.

But yeah, dude, dude, pump that. Pump that. It's got 10 points. So the first one. The internet loves lists, by the way. I think the human brain just loves the list. So here it is. 10 points. The internet loves lists, by the way. I think the human brain just loves the list. So here are 10 points, real estate versus stocks. Yeah. So the first one is, I think this one is very obvious for me. Stocks are more accessible to more people. So I hear it on the podcast. A lot of people reach out to us and they say, you know, I can only invest a few hundred dollars every month or sometimes even less.

I mean, that's great with online broker. Even if you have a five dollar fee, I mean, some of them like National Bank offer no fee or even Wealthsimple. So you can buy stocks with whatever amount you want and you won't be paying a fee. But if you're looking to buy a home or an investment property, it will actually be even higher than that. But if you're looking to buy a home, you need to put at least 5% down. So depending on where you're living, I mean, I know Toronto or here in Ottawa, you know, you're probably going to need at least, you know, $25,000 to be able to buy any kind of condo, even a, you know, a one bedroom. So that's something to

keep in mind for a lot of people is just simply not accessible. And again, if you do put all your money towards a down payment, the big issue here too, is you're having all your eggs in one basket because, you know, you're saving that money. Oftentimes you might actually use stocks to be able to get that down payment. So I think the accessibility of stocks cannot be overstated here. That's a good point, right? Anyone with the internet connection can at least start dollar-cost averaging into the broad market with these super low-cost instruments like ETFs or individual securities. like ETFs or individual securities. And so I wholeheartedly agree, it's a lot easier to get small exposure versus throw up a significant amount of capital for a large portion of the

population to get into, especially if it's going to be outside of your primary residence too. So now we're introducing even more capital available if you're a homeowner as well. Yeah. And I think once you reach the half a million threshold, you have to sit down payment. Now, any portion over it is 10%, right? So it gets even higher. So something to keep in mind. The second point here is leverage in real estate. So this is also possible for stocks, not to the same extent, right? If you're using margin, but it's definitely can be seen as a, I guess, I don't know, a positive or a negative, depending how you look at it for real estate. So obviously, real estate, you can really supercharge your gains if you're in a bull market for real

estate, and you're buying with mortgage, whether it's a loan to value, you know, let's say 90, 95%. If you're just using that 5 or 10%, I mean, if the house just keeps, you know, growing at 5, 10% per year, you're gaining a lot of equity and money essentially in that home. But again, what we're seeing right now is it can also be extremely dangerous. I mean, you don't have to look far. If you go on Reddit, Personal Finance Canada, it's full of it. Now, people who got variable mortgages bought, you know, in the last year, year and a half. Now their payments are increasing pretty rapidly because they've hit their trigger rates and they're having trouble affording their home. If they sell, they may actually sell at a loss. So they're really between a rock and a hard place.

So that's, I mean, I guess it's a plus or minus. I mean, two, three years ago, people would have said it's only a positive, but we see now that it can also go both ways. Yeah, like leverage is not necessarily a good or bad thing. It is a tool. bad thing. It is a tool. And that tool can multiply the effect positively or negatively, depending on the direction you're moving, not just in real estate, but it is a more prominent tool in real estate by using leverage, of course. And that's why you've seen enormous sums of money be made in real estate investing, because you're able to do that refi, re-leverage, and just keep snowballing with numbers that you'd have no... moving around in a stock portfolio, given your net worth, right? And so that's this kind of like tool that real estate investors have to their advantage. But like you said, you know, there's

only three ways to go broke, liquor, ladies and leverage. So act accordingly. Yeah, exactly. And probably last thing I'll say is, you know, most people who are buying at least their first home, I mean, let's be honest, they have to use leverage. Of course, yes. No one's paying their home cash. I mean, some people may be doing it, but it's pretty rare. What if you're Donald Trump and get a small loan of a million dollars? I mean, that works too.

Now, the next one here is stocks allow you to diversify into U.S. dollars. So we talked about that in our first segment, but also away from that Canadian home bias. So I referenced that. I won't go into too much detail because we just talked about it, but it does allow you to do it very easily. You can just pick an index ETF if you want that's denominated in US dollar. There are ones that are traded in Canada, but follow the S&P 500. Vanguard has a few. I think BlackRock as well. So there's really some easy ways to do that. And like I mentioned, I think what happens to a lot of real estate investors is they tend to be very predominantly

in Canada. Yeah, this goes to our whole first segment, which is you got to get exposure outside. And so owning US listed securities is a super easy way to do that. And probably what, you know, where most people should think to do with at least some, if not most of their equity portfolio. Yeah, exactly. Now returns can be attractive in both stocks or real estate. So I know for those who actually invest in real estate, so in cash flow generating properties, it's not unheard of getting more than 10% returns every year. Keep in mind here, I'm talking about investing. So not just buying at home and hopefully it increases in value. And I'm talking here, again, if you're a good stock picker, you can get some double digit returns if you pick your stocks well. And if you're not, you'll at least be able to match the market quite well and get, you know, the S&P 500 historically has generated what just shy of 10% probably now if we include the bear market we're in.

So it provides some very good returns. And if we look, I saw a chart from Royal Bank. I should have added the source here. But they looked at the returns of the S&P TSX Composite versus select Canadian real estate markets. So this is just capital appreciation. So it doesn't include if people are investing in properties. appreciation. So it doesn't include if people are investing in properties. But I think for the most part, probably our listeners hear a good portion of people who do own their own. They may not necessarily have cash flowing properties. This is a better indication. So you have the S&P TSX composite over the past 25 years. Composite. I love that. It's definitely not how you say it,

but we'll give the French Canadian a break here. So over the past 25 years, this was at the end of 2021. So clearly there's been a downturn since then for both real estate and the S&P TSX. Returns are 7.9% for the S&P TSX. Toronto, in terms of housing market, 7.4%. Montreal, 6.8%. Vancouver, 6.5%. National average, 6.4%. And then our friends out east, Halifax, 6.3%. And then Calgary, 5.4%. So, I mean, still decent returns. But if you're just betting on the appreciation, you're probably better off

going into stocks. And that actually does not include taxes, maintenance, these extra costs that are associated with home ownership. This graph kind of tells you a lot of what you need to know, right? It's like, look how much more volatility there is in stocks, for one. I mean, that line bounces out a lot more, for one. I mean, that line bounces out a lot more, but it finishes at the highest point compared to any of these markets for real estate. So you have a higher expected long-term return from equities than real estate, which I think is commonly understood, but you're taking on a lot more volatility. And the only beef I have with this graph is that the S&P TSX composite has total return, which includes dividends, so includes that income piece. And you might not have included all the cash flow that real estate investors would have got

investing in these markets along the way. So it's not a perfect one for one, but I think that it's pretty good. Now, I want to add here in your fourth point here, which is that returns can be quite attractive for real estate investors. And I'm not seeing it here in your list. And I think that it should be brought up, which is the really smart real estate guys and girls who are buying these properties. They're not buying them hoping they're going up. They're buying them knowing they can put in the elbow grease, the right capital investments to make them worth a lot more than they currently are using their time and labor. Using the old elbow grease, you can monetize your time in this asset class. Whereas I can't just go to the CEO of this publicly traded company and go,

hey, can I work for you guys? That's not going to work. So I think that that needs to be kind of tied in here as well for the expected return of these asset classes. Yeah, yeah, exactly. I mean, a lot of real estate investors, though, like I know Dan and Nick, for the most part, they have, you know, professionals that they have kind of a circle, right, in terms of people they trust, and they can rely on. So I don't think they do the repairs, anything like that. But for sure, if you are handy, and you can do a lot of renovations, you can definitely bring a lot of value by just putting time into it. Now, the fifth point here is stress. Now, this will actually vary from person to person because some people may say

real estate is really stressful and you'll talk to someone else. They'll say, oh, my God, real estate is nothing compared to stocks. So if you own real estate, you know, it can be really stressful, whether you have an investment property, your tenant starts not paying, or even if you just home your own, I mean, you can get unexpected repairs. Obviously, you should have an emergency fund that's there to do those repairs. But sometimes, I mean, especially with people, how extended they've been, I'm going to go on a limb that a lot of people do not have an emergency fund to do, you know, change a roof or change that furnace if it breaks or anything like that. So that can be pretty stressful. Again,

large mortgages we're seeing right now, it's full on Reddit, go have a look, Personal Finance Canada. People are saying basically they're not sleeping at night because they're so afraid of their interest rates going up because they have variable rates. Now, stocks, on the other hand, can be stressful too because you see the value going up or down on a second to second basis when markets are open on your phone. So you can just open your phone, you can go on Yahoo Finance or whichever app you use. And you can see the value if you know the markets are down four or 5% in a day, which we've seen in the past two years. For a lot of people, they can start panicking, right?

Yeah, it's like you open up your phone. It's like, Oh, great. I lost $20,000 on paper today. It's like, like, in what world does that feel good? No, exactly. In real estate, on the other hand, you don't have, you know, you may have an idea that the value has gone down. Obviously, right now, I think most markets, most people know that the value of their home has gone down, but you still don't have that quote on a second to second basis. And that can be really stressful. And not getting daily mark to mark on the asset value of your home, which is probably the best thing ever. Yeah. That's why people like investing in private companies more than public. Yeah. And we saw that in this space. There was a

realtor I remember. I think he was a realtor. At least he was investing heavily in real estate. And he said it. He's like, I mean, he invested in like extremely risky stuff, but he told this like it stresses him out and real estate. He sleeps well at night. So I think this is it can't go both ways. I think it's a very kind of personal thing, obviously, depending if you have a large mortgage. You know, if you have a small mortgage, it's going to be very different whether you have, you know, you overextended yourself or not. So I think it's a case by case thing here. Totally. It depends on the person, right? Because I'll give you a personal example. Okay. So I today have almost all of my net worth in stocks, but more so than anything, my own personal business ventures as an entrepreneur. So that's where most of my net worth

is tied up to. And I'm hoping that, you know, my companies can be worth, you know, tens of millions, 50 hundred millions of dollars one day, if I keep, you know, continuing what I'm doing, I think that that is achievable. And so that's where I'm spending all of my time at Capital. is achievable. And so that's where I'm spending all of my time at Capital. And so because of that, I am a renter in Toronto because I have no interest in right now. I do have a plan in the future, but right now I have no interest in owning property and throwing up 500K to live in a shoebox. Yeah. So I don't have any aspirations of doing that. Now, my landlord in the past month, we had like all of our utilities stopped working in my house. The hot water tank broke. Dude, the long list and the poor guy, the poor dude, he's a university professor. The poor dude has

to deal with all this stuff outside of his job. And I can see his stress level and I feel terrible for the guy. Like I can't do anything about it. Like, I know I'm not going to go fix the hot water tank. Like it's not, it's just not what I'm going to do this weekend. Right. And so there's that. And then when I look at my portfolio and I lose, you know, 10 grand or something, I know I'm the person that zooms out and go, look, I've compounded my portfolio at way more than 10% consistently for close to 10 years now. I'm okay. I'm fine. And so know thyself is basically the takeaway here. Yeah, exactly. Now, number six. So real estate has a lot of additional fees. I think people tend to forget that, especially first-time homebuyer.

They'll forget, well, I mean, realtor commission, that's usually paid by the seller, but something to keep in mind if you're looking at price appreciation. Obviously, you can sell it by yourself, but sometimes there's definitely some pitfalls with that too. Taxes, I mean, property taxes are going to happen every single year. Trust me, they're coming. It's not factored in that data that I talked about, about Royal Bank and obviously maintenance, any repairs, you have to factor that in. So I think it's something that people don't factor in. And the last thing I'll actually mention is people move into a new home. They often forget that, you know, they may need a lot of

stuff, especially if they're moving out for rental. You know, if you have a single family home, you'll need a lawnmower, you'll need, you know, probably new furniture or get some used one. But there's a lot of additional cause that people tend to forget when they move in. So something just to keep your mind on. Yep, totally agree. Nothing to add there. Now, seven, I found personally with the calculations I did, and this will vary market to market, obviously, but I found that renting was cheaper and investing the extra money provided better returns than just, you know, buying a home, for example, and hoping for price appreciation. Of course, it really depends what your end goal is, but that's what I found from a financial perspective. That's when you're factoring

all the costs that I mentioned in the previous point. That's when you're investing the down payment. So that 5, 10 or 15, 20%, whatever the down payment is, when you're investing that, and then the difference between rent and owning, you invest it regularly. So these are things, you know, it will vary from market to market. But in this space last week, there was a couple of ladies that joined me on the panel for stocks and they are both in Calgary and they said based on the calculation, it still makes more sense renting. But to be fair here, there are a lot of advantages to owning that are not financial. So you're having the flexibility to do what you want. The intangibles, right? The intangible, exactly.

So you can do whatever you want with your home, obviously, assuming the city allows it. Owning a home is also a dream for a lot of people. So that's kind of a goal. They feel fulfilled when they do own their home. So that's something to keep in mind. And not fearing potentially being kicked out from your home, whether an owner wants to move back in or rent evicted. Obviously, we heard about that too. So these are all kind of advantages of owning that are not financial, but it's important to remember these are not financial. Totally agreed. It's like, how do you value the things you actually want? And people are obviously willing to assign a value to the things that people want. It's the same reason that I want to buy a fancy Porsche sports car instead of a Toyota.

Do they provide me the same utility? Yeah. Do I own that fancy sports car? No, because I'm poor. But you get it, what I'm saying, right? There is a actual value that you can put to wants and wanting the stability of your family not being able to, you know, being moved by a landlord's decision, how do you put a value to that? And people are willing to pay these kinds of premiums, but they need to be

discussed. You know, they're not financial decisions, they're life decisions. And that's totally fine. That's cool, right? Like that's chill. And I've seen pamphlets from realtors, and I'm not saying all realtors are bad here. I just want to preface. And I've seen pamphlets from realtors and I'm not saying all realtors are bad here. I just want to preface this. I've seen some very good realtors, but I've seen realtors say that some of these advantages that are non-financial, they try to spend them as financial. So just, you know, just be critical when you see that kind of stuff. Now, the next point here, point eight, real estate is not hands off. So you said it, it's like having a second job. I mean, Dan and Nick just say it all the time. It's basically

a customer service business because your tenant is your customer and you have to make sure you give them a good service to make sure you get paid on time, you have a good relationship. So whether you bought a home or are investing in real estate property, newsflash, it's not hands off. Even if it's a brand new build, stuff can break. It won't less likely to break, but it can break. And if you want to be hands off, it's going to cost you more money because you're going to have, I mean, it's still going to require to be a little bit hands on, but you're going to have to hire the people to actually do that. Or if you have, you know, cashflow generating property, you can actually have a property manager. So that will help you. But again, it's never going to be, there's always going to be a bit of a time commitment in there.

So I grew up with my parents owning many income properties. That was their thing. And we would move a lot because my parents would put in their own time and elbow grease to making our primary residence look great and invest, you know, try to buy some turnaround story with these properties in the GTA, live in them for a year, you know, dodge that cap gains, and then, you know, move across the street basically and make a lot of money on their time and making it look beautiful, especially because, you know, they have that skill. I have seen nightmare stories. I'm talking about, like, I can't even get into the nightmares that they have faced doing this. So it is not a hands-off business whatsoever.

And like you said, if you do want to make it hands-off, there goes a lot of your margin. Yeah. And I mean, my dad was a home inspector. I would actually help him sometimes like measure stuff when we I was a teenager. And, you know, the reality is like home inspectors need pretty expensive insurance because people will sue them because they can't, you know, notice things that they can't see. Like a home inspector cannot start opening walls because you're gonna buy the house. Like, obviously, they can't do that. So even if you do all your due diligence and try to make sure there's nothing hidden,

the reality is there's some stuff they cannot see. You know, whether it's aluminum wiring that can be really dangerous to cause fire, stuff like that. If they can't see it, you don't know it's there or asbestos until, you know, you actually start opening the walls. So I think that's something good to remember. You can do as much due diligence as you want. You may think that it's potentially there, but you'd never know for sure. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using

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

Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire. Find a co-host at Airbnb.ca forward slash host. That is Airbnb.ca forward slash host. The next one here, I think it's one of the most important. I have it as number nine, but stocks are more liquid. We're seeing this right now. I mean, most stocks, and I'll say here, most like, you know, stocks with a good volume, I'm not saying here penny stocks or pink sheets, those will tend to have not be quite liquid because they're not very traded. But you know,

the companies we talked about are very liquid. And that can be really useful if you need the money in a pinch. Obviously, typically, you don't want to be forced to sell, especially not if it's a bear market right now. But it's still an advantage to be able to be more liquid. On the other hand, being more liquid can also encourage trading. So maybe that's an advantage or disadvantage for some. But again, we're seeing it with real estate right now where people are stuck in really tough positions. And I bet you a lot of them wish that real estate was more liquid. And even when you're in a bull real estate market and your house sells after bidding war within a,

you know, less than a week, it's still probably going to take you about two months to get the money in your bank account. So even in the best of times, it's not very liquid. Yep. Well said. Totally agree. Now, the last point here, you touched on it a little bit with your parents. So capital gains is a big advantage for real estate if it is your primary residence. But as a stock investor, we do have some pretty awesome tools too. So TFSA is a great vehicle. Of course, there's a limit. So real estate, if it's your primary residence, that's different. There's not that limit. But TFSA, or if you're looking at RSPs, they're great investing vehicles that are there for investors.

And if you do it smart with your TFSA, and even if you play it a bit safer and start using dividend stocks because you really want to protect that capital, you can build quite the nest egg over long periods of time and all tax-free. Yeah, good point. I mean, the tax benefits here are certainly worth discussing on both sides of the coin and particularly real estate is one of the you know bullish points that a real estate investor will point to all the ways you can kind of creatively dodge taxes using real estate of course all legal and so that's a huge advantage now i look at this list and it's a list of pros and cons it's like you, you know, there's like a T chart and it's like pros, cons of both of these classes. And it really depends on you. And most people will do both. Most people will do both. I plan on doing both. I am not invested in real estate whatsoever as of today, but that doesn't mean that I won't. You obviously have exposure to both. And I think that most people will do that. I do think there is just really no reason, however, to not at least own some broad stock market exposure,

whether it's domestically, hopefully not too much, and hopefully globally have some stock market exposure, whether it's, you know, domestically, hopefully not too much, and hopefully, you know, globally have some stock market exposure for the first point that you mentioned, number one point being accessible, liquid, and anyone can do it with an internet connection for extremely low fees. There's just no reason to not have exposure. There's so many reasons to not have exposure, or's so many reasons to not have exposure or be constrained out of real estate as an asset class, whereas equities that a lot of those constraints just don't exist. Yeah. And don't forget, I mean, we really focus here on owning the real estate, but probably 11 point just right off the bat here,

and you've touched on it a bit is real estate investment trust. So REITs. So these are for those not familiar. I mean, these are essentially stocks, they're traded on the stock market, but they allow you to have access exposure to real estate. So some will be, you know, very industrial real estate, residential real estate, you can have index funds that will track certain indices for real estate, you real estate. You can have index funds that will track certain indices for real estate. You can even have diversified real estate investment trusts that will have commercial, residential, business property. I mean, so it is something to keep in mind here that stocks do allow you to do that. And especially if you don't have a lot of money to

invest, it's back to my point one, it allows you to get that exposure to real estate that you would not be able to without large sums of money. Yes, totally needs to be brought up here, which is you can get the benefits of both worlds with real estate investment trusts without giving yourself a job and a customer service job of being a landlord by owning real estate investment trusts without giving yourself a job and a customer service job of being a landlord by owning real estate investment trusts. Perfect example here. We're talking about mostly with cash flowing properties, mostly residential type investments, right? Let me present to you CAP REIT. Canadian Apartment Proper properties is a Canadian listed REIT under car.un. It is the largest publicly traded apartment landlord in Canada. They have about $18 billion in assets of apartment

properties. So they own and manage a gigantic portfolio of apartments, and they do all the work for you. You just sit there and own the shares. Not to mention, since IPO in 1999, not including the juicy dividend yield you've made, you've made about three and a half times your money, which is not going to shatter the earth over that type of performance. I'm sure it's less than the market during that period. But you've got a very stable, secure, and mostly uncorrelated asset paying you a three plus percent yield that grows very consistently every year without doing any of the work. So I don't think this conversation can go without finishing with, there are REITs. Yeah. And the last probably thing

I'll add here for people if they're looking for ideas. So ticker USRT, the iShares Core US REIT ETF, just because there's more diversification in US REITs in general. 0.08, you know, management fee, super low. And that will give you some broad base exposure. And the last thing I'll say is REITs are definitely trading a lot cheaper than they were recently. It's reflecting the real estate market. So you'll be able to find some pretty good yield in REITs right now. Yeah, rising rates just decimate these things, right? Because it's a double whammy, you know, like they're attached to the equity market correlation and they're attached to the real estate market correlation. And so yeah, it sucks to note. And yes, that was me just pointing out an example of a apartment REIT. I don't own CAP REIT, no plans of doing so. It's just one of the

options. One that I've always found super interesting, mostly undervalued and grows quite well as a decent strategy is called Killam Apartment REIT. That's ticker KMP.UN. Do your own research. This is me just firing from the hip on a REIT. These are just ideas. Make sure you do research. The iShare is one that's an easy kind of set it and forget it. Yeah, perfect.

Okay, let's round out today's show with a fun little segment I like to keep up with. Now, they only update it like a month and a half after the month ends. So now we have data for the end of August. So right up until September. But, you know, it's a month old. But who cares? It's going to be the same thing this month. So this is TD Direct Investing's platform and they publish what is the most bought, sold,

and held assets on the platform. Now this speaks to what we were talking about before. On the platform, 52% of portfolios are Canadian equities. So it's a little lower than the 60% that Vanguard reported in 2020. But I mean, if you add up cash and Canadian fixed income, yeah, you're getting pretty close to 55%. So the home bias is alive and well. So I'm going to list to you the top 10 most bought stocks on the platform in the month of august shopify at number one tesla bed bath and beyond up 82 82 spots i have it open i saw that one and stock yeah it jumped to mine like it jumped off the charts because of that 82 jump has it collapsed yet because this is this was august i think so because i think they're closing a bunch of stores right like it's super okay oh yeah yeah it's it's not going well yeah

i mean it's so in august it like shot up like a little bit yeah 50 percent and then it's gave back all of those gains and more one month later this is why you don't gamble this is why you don't gamble on the stock market, man. You're not going to time it right. And if you do, it's luck. It's not skill. I know you think you're slick. TD Bank, number four. Bank of Nova Scotia. Suncor Energy. AMC Entertainment. Again, more of the meme stock apes. Amazon.com, Enbridge at number nine, and CIBC at number 10. Those are the most bought. Now sold is the exact same, almost. It's like the exact same list. So it speaks to this, which is these things are getting traded. These are not the most invested

in stocks. So I think the more importantly here is held. Now this is on TD's platform. So number one is TD Bank. This speaks to the biases, right? I know the bank, I'm going to invest in it. So number one, TD Bank, Enbridge, Bank of Nova Scotia, Royal Bank, Bell, and then Apple, Suncor, Air Canada, Manulife, and Telus. What pops up to you on this list of 10 here on the most held securities on this Canadian brokerage platform, Simone? I mean, except I think one, right? It's all dividend payers. That's the first thing that comes to mind. Yeah.

Is it just Air Canada? Yeah, just Air Canada. Yeah, Air Canada. And then obviously a huge Canadian bias. I mean, they're all pretty much Canadian. Except what? Apple. Yeah, that's it.

Wow, man. You're right. Nine of 10 of them. And not just, let's go through this list. Not just are they in canadian listings their business is entirely in canada for a lot of these names yeah yeah and the sold you and when i say oh go ahead when i say all of it i mean like 90 plus yeah yeah i think just probably td and royal bank i guess enbridge they have a lot of pipelines in the US. I don't know what percentage, but still, it's predominantly in Canada. That's for sure. Yeah.

Air Canada, Manulife, Telus. Man, this is crazy. We just talked about how big a problem this is. We have to continue on this mission until the data really starts to reverse here because nine of 10 of the most held stocks on this large Canadian brokerage platform are Canadian boomer stocks. I'm going to go on a limb and say CIBC and Bank of Nova Scotia will be quite high for September. The reason is I've seen it a lot on Twitter, those two names, because they're yielding pretty much the most of the big Canadian banks. People get- Because people just follow the dev yield. Oh my God. They just love that dividend yield. And Bank of Nova Scotia, it's the

operations in Latin America have been kind of struggling and CIBC has them- CIBC is attached to housing. Yeah. The exposure they have is just crazy. Like 54% last I check, it's insane. A total loan portfolio, 54%. CM is down 30% from the high. Pretty much 6%, just shy of that. And Bank of Nova Scotia is over 6%.

So people just chase the yield. I think so. I'm going to go on a limb and say they'll jump on the list. I think they were both on there. Maybe I'm wrong, but that's kind of the, I've seen a lot of that and they're already pretty high, right? Bank of Nova Scotia was a bot, was fifth and CIBC was 10th. So I expect CIBC at the very least to be higher, maybe Bank of Nova Scotia around the same point. very least to be higher, maybe Bank of Nova Scotia around the same point. Wow. You're right. Yeah. No, I think that, I think you're right. People own a whole list,

a whole basket of the Canadian banks and look, this one's yielding 6%. I mean, it is enticing, obviously, because people, you know, you're kind of, they've done well since the great financial crisis. They weren't affected. But I'd like to remind, like, I don't, I think, obviously, they'll still be here in 5, 10 years. But, you know, this is not the great financial crisis. Like, we haven't seen a raise in interest rates like this since the 1990s, I think, is the last time. So, just, you know, I don't know what will happen. I don't want to be a doomsayer or anything like that. But just, you know, people will say, well, they were resilient then it's not the same thing. Yeah. Good point. I think that that's well said. Oh boy. This, this list just, I don't know what to say to, to it. It's I'm not surprised, but I'm a little,

I'm just disappointed. I'm just disappointed in this list because it's just like so junky there's no other way to say it it is yeah i mean there are definitely value plays so i'll just say that like for those name obviously the other ones like i don't even like bed bath and beyond and stuff these are just people trading but you know bns cibc you know looking at suncor and stuff i think that are just people trading, but BNS, CIBC, looking at Suncor and stuff, I think that's just people looking for value. So we'll see. I mean, hopefully it works out for those who are pouring money in there, but I don't know. I would not put my money into those things. There's a reason why they're yielding that much. I'll just say that.

Yeah. Good point. It's not us saying they're crap businesses or anything. It's more so just speaks to all of the things that we've talked about on today's show, which is too much Canadian home bias, too much exposure to banks, energy and materials, underweight quality, underweight pricing power, underweight global scale, among some of the things that come to mind right now, scale among some of the things that come to mind right now when I look at this list, among other things. And so, you know, what I see from this is that more people need to read our guide on how to do Norbert's Gambit so that they can buy US securities without having to worry about fees and currency and all that stuff that I think is a barrier for people making the leap. Yeah. Yeah, I think so. I think people just don't, I've seen a lot of people,

actually I have a few people asking like, oh, I don't want to change convert right now because the Canadian dollar is so low. Right. So I think, you know, I personally, I try not to think too much about that. I just want to keep a good amount of exposure to the US dollar.

Yeah, if you're going to do it and you have large enough amounts, definitely Norbert's Gambit. Yeah, anything over 2K CAD, I always do it. We'll put a link. We should just keep a link to the guide at this point in the show notes. Thanks so much for listening to the Canadian Investor Podcast. Today is the Monday version of the show. We have the podcast out on Mondays and Thursdays. JoinTCI.com is the Patreon to support the show and see our personal portfolios updated every single month. And so we're going to keep that updated every single month. And that is at

JoinTCI.com. If you haven't checked out stratosphere.io i think you are going to love the platform but also love the improvements that we are making over the next 60 days oh baby it's firing me up we're bringing on some really cool and amazing talent as well. And so it's been interesting and cool for me to, to secure not only funding for our next growth phase, but the right people to help, help me grow this thing to its next big milestone. And that way, Simone, we can turn your investment into the company into a little baby couple, a couple of nice vacationsations and then some. Maybe a couple of houses on the Malibu beach. I thought you were going to say a lifetime supply of dirt and ramen,

but that works too. I should send every one of my company's investors just a care package of dirt and ramen after this fundraise closes. Yeah, that'd be good. They'll appreciate it. Congratulations. Your shares have officially converted into stratosphere.io stock. Here is a care package of dirt and ramen. So, Simone, that's actually a pretty good idea. I'll send you that. I'll grab some soil from Hyde Park. Thanks for listening. We appreciate you. We'll see you in a few days. 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.