The Canadian Investor - The 10 Most Traded Stocks in Canada

Episode Date: March 14, 2022

In this episode of the Canadian Investor Podcast we are back to our regular schedule. We discuss the following topics: The turnover in companies that are part of the S&P 500 over the past several decades The pros and cons of using a dividend reinvestment plan (DRIP) An overview of the bear markets over the past century The Volatility index (VIX) The 10 most traded securities based on TD direct investing data Stagflation Tickers of stocks discussed: BLK, ATZ.TO   Our Website Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital 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. Live from the great white north, 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 March 9th, 2022.

I am Brayden Dennis, as always, joined by Simon Belanger. We have an awesome episode today. I'm going to talk about competition. You're going to talk about dividend drips, and then we're going to talk about what's going on in the markets and some interesting stats posted by TD Bank, and then round it out as we do bi-weekly with what's on your watch list sponsored by our friends at EQ Bank. So out of the gate here, Simo, it is March 9th. I am pumped. It's a great day. I got my protein shake here, hit a workout, going to a concert tonight. I have been waiting to say the words that I'm going to a concert tonight for so long. I bought these tickets in December of

2019. I don't believe it until I walk my two feet in the venue and see the artist. Up until then, I'm just completely skeptical of the whole thing. Yeah. So you bought the tickets in 2019? Yeah. And I think four or five times it got moved, the date, and so here we are. This is why I'm just so skeptical. Report back. Yeah, good things happen to those who wait, so I hope you enjoy it. I'm sure it'll be fun. Yeah, absolute patience, which is required in a lot of things, including what we're talking about a lot today. So I'm going to start off on the slate here with competition is ruthless. Now, one of the best things of business is that the people who really want to change the world and do amazing things have to go up against the incumbents, the competition, the businesses who rule today.

And there's going to be businesses that rule tomorrow that we don't yet know about. And that's just a fact. Statistically, Simon, I know you can see my stats here, but if you were to just guess, what would you think since 1980, how many companies have rolled over out of the S&P 500? What feels right since the 80s? I mean, yeah. I can't look at my number. What feels right? No. I would say probably half of the S&P 500. If I didn't see the figures, just sounds about right. Half sounds about right, like 200, 250. Yeah, that sounds about right of the S&P 500.

Since 1980, there have been over 400 companies removed from the S&P 500, less than 100 of them. Now, it doesn't mean that all 400 of these companies went bankrupt, although some of them may have definitely gone bankrupt. It just means they're removed from the S&P 500, which has a committee selection process. Needless to say, though, there is a lot of fluctuation and competition is ruthless. In 2010, ExxonMobil was the largest company by market cap. And today it's 23rd. But if oil keeps ripping, it'll be like number one again. In 2004, the tech bubble popped and General Electric, GE, was number one in market cap. Today, it's 140th.

The point is, is that even the most dominant companies of the era have risks. And I sometimes make this mistake myself. I look at what I think is dominant today and is definitely going to be dominant in the future. And I'm like, oh, cloud computing. How on earth do these large, huge secular winners not become increasingly important over time? While right now that seems to be the case, over time. While right now that seems to be the case, and I believe that that is the case, believing with it with my own capital, I have to make judgment on that. However, if the facts change, if there is a dynamic that I didn't foresee, if there is a better way to manage storage and deliver content and computing power that comes out that the world just literally doesn't even know exists yet, I'll have to pay attention to it. So I don't operate

on the, I'll never sell my stocks no matter what, let them run type strategy. I operate on the, I don't sell stocks unnecessarily. I am not quick to sell stocks, but if the fundamentals change and I'm not waking up to it, that's just my fault, right? If the company is doing great and the path for them to continue to be great is clear, then I'll let those winners run. But if there is significant thesis change, there's still a correct time to sell the stock? Of course, this is easier said than done. My final thought here is the less you do with your portfolio, the better overall. I think that's something I live by. It's one of the only industries, and this is investing and even professional money management, where laziness and lethargic movements, less trading activity is probably the most

typical activity, which is good old sit on your ass investing. It seems so counterintuitive. What other profession is laziness rewarded? I can't think of one. It doesn't mean don't do the work. It doesn't mean don't pay attention, don't be lazy, don't not do the work. But in terms of actually doing activity, I believe that. And so I just wanted to highlight that because we can't become complacent on our portfolios. This does not mean reacting to short-term price movements. This means reacting to fundamental shifts in the business. I think it's an important topic to discuss. Yeah, I think you put it really well because at the end of the day, I think there's a lot of value in holding on to good companies for the

long term. But of course, you can't do so blindly. If there is a major change in the business, you have to pay attention to. Oftentimes Oftentimes signs might arise. What I like to do is just keep an eye on it. And as you get more data, then you'll usually have a good answer whether it's worth keeping that business or not. So that's how I would approach it. And a fun fact, while you were reading this segment, I googled a company that went bankrupt from the S&P 500, I googled a company that went bankrupt from the S&P 500. One that just came to mind. I wasn't sure if it was in the S&P 500, but it was Blockbuster.

So Blockbuster actually replaced Pan American World Airways on the S&P 500 in 1991. Right. I know you wouldn't have known that because I don't think you were born. No idea who that is. Yep. But Blockbuster. I've heard the name before, but clearly I was too young to remember that. But obviously, Blockbuster went bankrupt eventually and got replaced by a company. Obviously, everyone knows it, but Netflix is probably the one that comes to mind in terms of replacing

Blockbuster. Oh, yeah. I mean, if you were to look at the list of those over 400 companies since 1980, a bunch of them would have filed for bankruptcy, especially a bunch in 08, right? Think of those large financial institutions, a bunch of them were in the S&P 500. Those are really hard to foresee, like those kind of black swan events. But a lot of them take years to unfold. It's just a reminder that competition is ruthless, but it's actually one of the best things about human innovation. That's the beauty of the system, is that there's a chance for new incumbents and innovation to enter if it is truly a better solution. That's just the reality of our world. And I think it's a good one. Yeah. And I wasn't saying that Netflix replaced Blockbuster on the S&P 500. It's just the one that ate their lunch. Yeah. Yeah. Yeah, exactly. Just probably,

it will obviously cause that Blockbuster to go bankrupt eventually. Now we'll move on to our next segment, like you alluded to. So whether you should DRIP or not DRIP. So DRIP is Dividend Reinvestment Plans. They are pretty common for companies that have been paying a dividend for a while. And actually, if you have an ETF, some ETFs may be eligible as well for DRIPs. And I'll be talking about it as a DRIP just because it's the acronym. So the DRIP allows you to buy shares of the company you own every about it as a DRIP just because it's the acronym. So the DRIP allows you to buy shares of the company you own every time it pays a dividend. By doing so you don't

have to pay any of the trading fees associated with it. One of the issues with dripping in Canada is that you cannot drip partial shares. As far as I know it may be possible certain discount brokerages, but I haven't read anything saying it is. So I'll just go on the assumption that it's not possible. If it is, feel free to let me know on Twitter. I'll be more than happy to be proven wrong here. But in the US, people do have that ability to drip and buying partial shares. So the reason why I wanted to highlight this is you need to make sure if you wanna drip that your dividend payment is at least worth one share. So if the dividend payment is less

than the price of one share, you won't be able to drip and it will pay it out to you. So what will happen is you can enroll in the drip. Whenever you have enough, it'll buy the full share. If you don't have enough, it will pay you out. And if you have enough to say buy a share and a half, so it'll buy you one share and then pay you out the half of sharing in cash. So essentially, the drip is really a good thing when you think about it because it will allow you to keep buying shares of a company that

you own automatically. So it removes any of the thinking behind it. So by dripping, you just really get more shares over time and you get higher dividends as long as the company is at least keeping the payout stable because you increase your share count. So even if the company is not increasing its dividend, just the fact that you have more shares, you'll have a higher dividend payments. So you're essentially compounding even more and you're also automatically doing some dollar cost average by doing so. So that's one of the biggest advantage because it really it allows you I mentioned on the previous podcast, the easiest thing is inaction. So the easiest thing is inaction so the easiest action

is in an action and when you have that drip set up it just does it automatically for you another advantage but this is becoming less and less common is some companies will actually offer you a discount if you drip so you'll see that sometimes from companies. So if you are enrolled in the program, they'll give you a discount anywhere from 1% to 8%, 9%, depending on the company. It's becoming increasingly rare. But of course, if you do get that discount, it becomes quite attractive because it'll give you a discount to the current market price of this share. There are some downsides of doing DRIP.

So first, you need to have sufficient shares like I just mentioned. And also be careful of building a position just so you can drip. I think that's really important because if you don't have a huge portfolio, you may be tempted to build a large enough position. So every time you get a dividend payment, it drips automatically, but that might make you over concentrated in a specific company. So that's something that you have to be very careful about. I've seen that sentiment where it's like, yeah, if I can just raise this position another five, like sometimes a big amount in someone's portfolio so that they can drip a full bank stock share or whatever,

because we don't have that fractional trading. It's probably not a good way to go. Now, what I have seen real estate investment trusts do is like one for 20 reverse split, or like, I guess it wouldn't be a reverse split. It'd be a split. It'd be a normal split. One for 20 splits to get the monthly distribution to be able to drip for people who don't even know. Because you divide the annual dividend by 12, chances are it's not going to be a big chunk of change unless you're a huge shareholder. So I've seen that performed by REITs, for instance. Yeah, I've definitely seen that as well. And that's one of the points I wanted to talk about is one of the advantage for a drip from a company standpoint is it's actually a way for them to get financing because when you

drip, they just issue you a share in exchange, obviously more than one if you have enough money to buy more than a share. But it's a way for them to get like a constant little bit of financing cash flow in by issuing these shares through the drip. So it does have an advantage. And that's why some companies do offer that discount because they want to encourage people to keep buying shares in the company. The added benefit here, too, is if you're dripping, I think a lot of people will also be more loyal to the company. So I think there's kind of it creates that extra stickiness aspect. It can work for a lot of people. I think one of the downsides is also the upside of this is that if you don't drip, you get the money paid to you in dividend and cash

and then you can make the decision on what you want invested in. So some people will prefer having that flexibility because the company that is paying the dividend, they might still love the company, but they might not love the valuation at that point. So they may prefer taking that money and investing it into a company that they're finding more attractive from a valuation perspective or prospect at the time. So there are some advantages and disadvantages here, but I think one last one that just came to mind here as I spoke about creating loyalty, well, recently we've seen a lot of volatility, right?

So having that drip on, if you have some dividend payers, I think for a lot of people, it helps them stomach that volatility because they know that yes, stock price might be down, but the advantage is they might actually be able to get an extra share by dripping. So bringing that cost basis down. So that's probably a psychological aspect as well to consider here. Yeah, I think that many people have done extremely well by letting some of these stable blue chip dividend aristocrat type businesses continuing to drip over time. I think that that's created this double compounding effect. I just want to double

click on what you said before about you're still reinvesting it. Say you have a regular bill payment of like 500 bucks, it goes to your TFSA. And I choose that number because you do that for 12 months and you hit your contribution limit for the TFSA. So say we'll use 500 bucks. But when you go buy shares with that 500 bucks of whatever you're buying, you might have 548 bucks in the account because of the distributions, the dividends that you just got. And you're still going to reinvest it into what at the time is probably your best idea. And so you're still getting that reinvestment, but the drip is like forced reinvestment. And that's, you know, we got to fight our own behavioral mistakes.

Humans are terrible with volatility. Our brains are not wired to handle it correctly and to act in a rational way for most people, including the best investors in the world. And so you can kind of strip that away. It can yield some really good results, man. Yeah, I think it's really temperament based, I would almost say, right? If you think you're gonna sit on that dividend payment and not reinvest it, or you might be like trigger, kind of shy to pull the trigger

because you're trying to time the market. I know the urge sometimes can be quite strong, then the drip might be a good idea just based on that. Personally, I do have drips on for a couple of companies. They're actually Brookfield. So the two Brookfields that I have, I have big enough positions that I can drip. So I do that. I know they're great businesses. I'm more than happy to just automatically drip. And usually I'll buy a share and then through the drip, and then I'll get a little bit extra cash on the side that I can invest in something else. 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, 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. That is questrade.com. So not so long ago, self-directed investors caught wind of the power of low-cost index investing. Once just a secret for the personal finance gurus is now common knowledge for Canadians, and we are better for it. When BMO ETFs reached out to work with the podcast, I honestly was not prepared for what I was about to see because the lineup of ETFs has everything I was looking for. Low fees, an incredibly robust suite, and truly something for every investor. And here we are with this iconic Canadian brand

in the asset management world, while folks online are regularly discussing and buying ETF tickers from asset managers in the US. Let's just look at ZEQT, for example, the BMO All Equity ETF. One single ETF, you get globally diversified equities. So easy way for Canadians to get global stock exposure with one ticker. Keeps it simple yet incredibly low cost and effective. Very impressed with what BMO has built in their ETF business. And if you are an index investor and haven't checked out their listings, I highly recommend it. I bet you'll be as pleasantly surprised as I was that BMO, the Canadian bank is delivering these amazing ETF products. Please check out the link in the description

of today's episode for full disclaimers and more information. Let's talk about bear markets. Now, I think that this is timely to discuss because there were over, Simone, this is crazy. There were over 2 million brokerage account openings in 2020 alone in that pandemic fueled era. This is according to IROC data, by the way. So it's as legit as it comes. I am curious to know what the 2021 number is and I'll share it when I find it. I haven't seen anything posted yet. I've been looking for it. There are 256 million self-directed brokerage accounts in the US alone. And that is using the 10K filings from the public ones. So if you look at Robinhood, if you look at Schwab, if you look at Ally,

TD Ameritrade, whatever, all those 10K filings have those numbers. And so it comes up with 256 million just for the public ones interact i don't know if interactive brokers is that a that's a publicly yeah it's a public company yeah it is i'm not sure if it's yeah it is probably i know it's in the states i think ibk do you know if that number includes so if someone has more than one account is does that factor into that number or is it you know if you have a u in the u.s if you have like an ira if you have a taxable account those count as two even if you're the same person that is a question i would love to know the answer to and i'm not sure i'm gonna look that up okay

but yeah yeah interactive brokers is public i've kind of forgot about them. I will find that out though, Simon. And so I wanted to include this for context as we have a record number of new investors, some of them who may listen to this podcast, who are now managing their own money in some way or another to remind them of this. So here are a list of US bear markets. I'm using that because the S&P 500 is the easiest index to track, the best data around the S&P 500. So let's look at some of these bear markets, okay? So 1929, you ever heard of the Great Depression? Yeah, that sucked.

Stocks came down 86% from their peak. Oof, ouch, man, like that sucks. That was a long one. 34 months in duration, longest one in the US market. That would have sucked. Oh, wait. No, no, no. There's a longer one actually, just not nearly as bad. In 46, so basically right after World War II, there was a 37-month, this is the longest one, a 37-month drawdown. Stocks only finished down 30% from the S&P peak though. So not nearly as bad as the Great Depression. The Cuban Missile Crisis in 61, it was a six month bear market.

Stocks fell 28%. Inflation slash the Vietnam War, 36% starting in 68 for 18 months. The oil embargo slash Watergate started in 73, lasted 21 months, and stocks were down 48%. Oof. And then there's the 80s, right? There was that 1980s, 20% Fed rate, high inflation, 21 months of a bear market, stocks were down 27%. There was the good old dot-com crash that started in 2000, lasted 30 months, 49% off the S&P. That didn't feel good. In 2007, the old 08 financial crisis housing bubble, stocks fell 56%. That's more than I thought. I thought it was high 40s. That's interesting. And that was 17 months. And the most latest one is COVID-19 in March of 2020. Well, yeah. So you were going to say lasted one month, but it was very rapid. Yes. That's one thing. Remember? Yes. It had 10% a day. 10% a day.

Yeah. Stocks drew down from their peak during March of 2020 during the COVID crash of 34% on news of a global pandemic. It lasted one month. Stocks were back at an all-time high, not shortly after. So on average of all of these, you're at 20.6 months in duration and stocks were down on average 43.91%. That is more than I expected. And the reason for that is because arbitrarily, investors have drawn a line in the sand and said that a bear market is a 25% drawdown from the peak.

So all of these to qualify had 25% drawdowns. I thought it was 20%. Those are the figures I thought I read. 20%? It doesn't matter. It's like so arbitrary. Maybe I'm just dumb and it's actually 20, but I thought it was 25. It probably is.

Probably is 20 actually. Now it's actually 20, but I thought it was 25. It probably is. It probably is 20, actually. Now, it's very arbitrary. In the midst of that, we've had tons of drawdowns like high teens that didn't make the cut. Volatility is so normal. If you are in one of those 2 million new investors here in Canada in 2020, first of all, congratulations. Keep it up. That is awesome. If you stick to your plan, you'll do extremely well. However, right now, as of recording March 9th, we are on a 17% drawdown on the NASDAQ, on the QQQ. It feels like pain, especially if you've never lived through one of these as an investor. I'm sure you've all lived through these. I mean, look at the dates. However, you might not have lived it with your wallet and with your attention. And so if it touches that arbitrary bear market

drawdown percentage, what can we call it? We're going to call it what? Inflation slash COVID hangover slash Ukraine crisis slash somehow still low ass interest rates. What on earth? Two main things to remember here before I wrap this up. Number one, stocks falling is completely normal. Number two, bear markets are when money is made. Even though you feel like an absolute clown in the meantime, buying stocks when they keep falling, you buy something, it falls another 10% Shopify. And then the next day it falls another 10% Shopify. And it keeps happening. And you're like, oh, I feel like an idiot. We'll see who's laughing. Five, 10 years down the line, more down the line. I think it was

dollar cost averaging, unity, sub 100, ran up to like 180. Thank God I stayed the line. I think I was dollar cost averaging unity, sub 100, ran up to like 180. Thank God I stayed out, but I think I bought some shares like 130 or something as it kept falling. It's really easy to feel like an idiot in the short term. The old Warren Buffett, be greedy when others are fearful. It might be cliche, but it absolutely does work. Yeah, I think it's a great reminder. I mean, valuation is also a very subjective thing. You can't really, people can debate all day, I think, for the most part. Yeah, when you have something that's really dirt cheap, I think you can get some pretty wide consensus on it, but that's pretty rare, right?

So a lot of the time it's just, you know, is it a good price based on future prospects? And future prospects are always, they always leave room for interpretation, right? Companies can give guidance, but usually the guidance will go one couple years out. The most progressive companies, to put it that way, will give it on a longer term basis, maybe three to five years, but you'll rarely see anything beyond that. So a lot of it just comes down to your analysis and based on the information you have, putting the pieces together, looking at the valuation and then making a decision whether you think or not that the company will grow into that valuation. I think it just comes down to that. OK, so now moving on. So I wanted to talk about something that financial media tends to talk a lot about. And I want to

talk about it just so people can make sense of it. So I'm sure a lot of people have heard the volatility index, especially recently. It's also known as the VIX, V-I-X. So first of all, like Brayden mentioned, volatility, you know, with the bear markets that you talked about, it's nothing unusual. It does happen. And it's something you just need to get comfortable with if you're investing. You have to be at ease with that. But if you keep an eye on financial news, you'll probably hear about the VIX index quite a bit, especially when there's a lot of volatility. So the VIX index quite a bit especially when there's a lot of volatility so the VIX index was created by the Chicago Board of Option Exchange or CBOE and is maintained by CBOE Global Markets it's essentially important for traders which of course is not something that

Brayden and I do nonetheless I thought it, I think it's important to at least understand generally how it works, even if you don't use it for investing. I think it's just good to know what it is. So when you do hear the name, you actually can make some sense of it. So the VIX tries to measure how large the price movements of the S&P 500 will be. And I did say will be here. So it's a future-based tool. So the more the VIX index swings, the more there's volatility.

And it actually works in opposite way to the S&P 500. So if you pull a five-year chart of the S&P 500 and you compare it to the VIX, it's still pretty interesting to look at. Whenever there's a correction, there's pretty much always a spike in the VIX just beforehand, very shortly before. And it's spiked quite high in March of 2020. So you can see if you pull the data online, you'll see that just before the market or the bear market of March 2020 you saw the VIX really shot up and the VIX is actually a different way of calculating

volatility so the traditional method is using metric like variance or standard deviation which is essentially just based on historical time periods and measuring the volatility in the past. The VIX, like I briefly mentioned, is a forward-looking index which uses options pricing to gauge volatility. So essentially, it represents what the market is expecting in terms of volatility for the S&P 500 in the next 30 days. So that's why it's more of a use for trading and not for people like Brayden and I who focus more on investing for long periods of time. I won't go into detail how it's calculated, but it does provide some insights on where the market thinks the next 30 days will go in terms of volatility. If you look at a historical VIX chart,

it is the most random and sporadic thing and it moves on huge jumps, especially like that peak in March of 2020 is terrifying looking. And me and my buddies in university, we used to say shorting the VIX is an extreme sport. Because look at how much your entire portfolio would get. Like you would be, say you ran some bud options on this thing. You would got margin called like so hard. Like you literally, it's the most sure way to go broke. And so we used to always say shorting the VIX is an extreme sport. Just out of like tongue in cheek. But the action on this thing is nuts oh yeah yeah it's crazy and like you mentioned

the vix so it moves in opposite direction to the s&p 500 so if the markets are very volatile and about to experience a drawdown you'll see the vix shot up like you just mentioned in March of 20 or kind of late February, early March is when it's really started peaking. If the markets are doing well, then the VIX actually tends to go down. So if you compare it to the S&P 500, again, you'll see that trend going on. And for me, like I mentioned, the VIX is just a short term indicator amongst many other indicators. I think it's just important to know what it is, to at least understand on a high level what it is, because you may hear that listening to financial news and you hear it over and over.

They kind of reference the VIX, the VIX at all-time highs or whatever it is. It can really make some investors panic when they really shouldn't be panicking if they understood what the VIX stood for. It's just a short-term volatility index, which essentially just shows what the trader sentiment, if you like, or the global sentiment or psychology is behind the S&P 500 for the next 30 days. I think that's just the best way to put it in my own words, at least. It's something that catches a lot of headlines, as you said. Oh, yeah.

And I have spent historically 0.3 seconds. I think all the time historically I've ever spent time thinking about it has been how long this segment has been on the podcast. Yeah. That's the extent of it. You probably said stuff that doesn't even make sense with the VIX because it's just so irrelevant to me. Yeah, but I think it's great that you mentioned that because they will say that term so often sometimes. Yeah. And if you don't at least know what it is right

on a high level you're gonna think it's important oh exactly and you could very well panic just listening to jim kramer financial experts on tv yeah it's so man that's so true because when you're inexperienced and new to managing your own money, you're going to hear terms that you're allured into thinking that they're really important when, one, they could be synonyms with something else. They could fully be synonyms of something else. Like, oh, I'm using earnings yield instead of the P-E ratio. Just invert them. Or like, I'm using free cash flow yield instead of the free cash, like price to free cash flow. What are some other good examples of that? But the point I was saying is, if you don't know what it

is, you can be roped into thinking that it's something you should be thinking about constantly. And most of the time, it's just really not. That's why we try to speak in simple terms, although it's hard to do all the time, it's just really not. That's why we try to speak in simple terms, although it's hard to do all the time. 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. So not so long ago, self-directed investors caught wind of the power of low-cost index investing. Once just a secret for the personal finance gurus is now common knowledge for Canadians, and we are better for it. When BMO ETFs reached out to work with the podcast, I honestly was not prepared for what I was about to see because the lineup of ETFs

has everything I was looking for. Low fees, an incredibly robust suite, and truly something for every investor. And here we are with this iconic Canadian brand in the asset management world, while folks online are regularly discussing and buying ETF tickers from asset managers in the US. Let's just look at ZEQT, for example, the BMO All Equity ETF. One single ETF, you get globally diversified equities. So easy way for Canadians to get global stock exposure with one ticker. Keeps it simple yet incredibly low cost and effective. Very impressed with what BMO has built in their ETF business. And if you are an index investor and haven't checked out their listings, I highly recommend it. I bet you'll be as pleasantly surprised as I was that BMO,

the Canadian bank is delivering these amazing ETF products. Please check out the link in the description of today's episode for full disclaimers and more information. Let's talk about the TD index. So I was reading TD Bank's management discussion, report to shareholders, whatever they're calling it these days. Because all the banks reported somewhat recently and ain't nobody got time for reading all six. I typically read like one big bank, unless we're doing a podcast segment, maybe I'll read more. One big bank and then the EQ bank one. By the way, this is not like a plug because they sponsor the show, although they do sponsor the

show, shout out to them. But because I've owned this stock personally for multiple years now, and I think it's an interesting one to follow. Anyways, back to TD Bank. They pointed out that they're pushing their TD Direct Investing Index. And I thought, oh, that's pretty interesting. I'll check it out and see what people are trading a lot on their platform. Because they've done some new brokerage platform. I'm not sure of all the details. But TD Direct Investing posted this, okay? They did the top 10 most popular traded in order.

Now, I'm sure we're going to have some hot takes on this, but a couple of them I'm surprised about. I'm surprised on the first one, actually. Number one, Tesla. Now, I'm not surprised because it's Tesla. I'm not surprised because Tesla, if anything, that seems like an obvious choice. I'm surprised because it's not a Canadian listing and it's like, what, like 800 and something USD. It seems like there's quite a lot of money. Yeah. It seems like there's quite a lot of friction for people to trade Tesla at 800 and whatever bucks USD per share. So I'm not surprised on the top 10, but I am surprised it's the number one and same goes with shopify right there's no partial shares here that's number two td bank of course people on the

platform trading td bank makes sense makes a lot of sense suncor and enbridge four and five suncor i can understand because it's a cyclical place so people try to yeah the commodity cycle a bit more so that that i can understand more and bridge i mean i don't know are people trading to get the dividend like i think people are just trading what's working right now and as of working right now i mean energy's been working right now. I think people follow into stuff that's working. All right, NVIDIA, ticker NVDA. Apple and Microsoft at number seven and eight. No big surprises there.

Biggest companies in the world. They're going to get a lot of volume. Our beloved Lightspeed at number nine. And number 10, Royal Bank. So we got the two biggest companies in America on the top 10. We got Tesla and Shopify, which I'm not surprised at all that they're in there. I am surprised that they're number one and two just because of the share price. Just seems surprising to me. And two of the biggest banks and some energy. So I think NVIDIA is a bit of an outlier, a bit. It's kind of the one that just one of these doesn't fit and it's NVIDIA.

Yeah, I'm surprised there's not one of the stonks in there. Yeah, I mean, I think people are kind of bored of AMC or whatever. I know we're still a bit removed from that. Yeah. I mean, if you did this in, what was it, January, February of 2021? Was that January or February? Yeah, it was last year. Yeah, 2021 was that was that january february yeah it was last year yeah it was last year yeah but like okay it doesn't matter january february you would have seen that you know like gamestop blackberry and amc those would have been the top 30 right

so i just think it's interesting and me and my team are looking at it's like ones that we should cover for stratosphere like not necessarily the best companies that we think, but just like ones that people are curious about. And the ones that people are trading a lot, clearly the volume is there. So I don't know. I thought it was interesting. Oh, definitely. Now moving on to a different subject. My headline here, my topic is actually WTF is stagflation.

So it kind of goes back a little bit to what we were talking about with the VIX is I've been hearing stagflation a lot more recently in financial media once more. And I wanted to just kind of explain to people what it is just to make sense of it when they do hear that term. So first of all, it's a combination of stagnation plus inflation. just kind of explain to people what it is just to make sense of it when they do hear that term. So first of all, it's a combination of stagnation plus inflation. And obviously, at this point, you've probably been living under a rock if you haven't heard the term inflation because it's everywhere. I mean, we've talked about it on this podcast at length. And one term that's been a bit more frequently is stagflation, like I just mentioned. So essentially is stagflation like I just mentioned. So essentially stagflation is high unemployment accompanied by inflation. So inflation on its own, it's not necessarily the worst thing if salaries are actually keeping up to inflation. An easy way to understand

stagflation a bit better here is just to think it as the economy being in a recession while prices are rising. So if you're in a recession, unemployment usually goes up. If prices are raising at that same point, then you kind of have a double whammy here. And in a normal recession, you'll usually see prices rise very slowly, a little bit. Sometimes they'll remain flat. It's pretty rare that they go down, but then price increase kind of increases as the economy recovers. But stagflation would be essentially a recession and some significant price increases. So you may now be asking yourself, what causes stagflation? Are we going to enter a period of stagflation? What's going on? Are we going to enter a period of stagflation? What's going on? Well, it's hard to say because,

again, this is kind of macroeconomics here, but it's probably a mix of the causes historically, economic shock, like a quick rise in energy prices. I'm thinking here in the 1970s with the oil embargo that you talked about earlier, with a combination of poor economic and monetary policy. So those are probably the two big constants. Again, it's easy to try and say that we're entering a period of stagflation, but I think no economist can actually agree on what causes it. Of course, that's something governments will usually want to avoid at all costs. Like inflation is one thing. But like I said, stagflation is that it's probably the worst case scenario when you think about it, because people, a lot more people are unemployed and prices are increasing very rapidly. So it's a very poor combination. But if you hear that term,

that's what it means. Economists can't agree on anything did you say that yeah i know it's breaking news right here yeah you're here first economists can't agree on anything back to you it's a bit of a i was gonna say something that's not family friendly but it's a it's a cluster of some sorts of all these different uh you can fill in the blanks of different. That's what I'll call them. Economists will try to come up with some new fancy term for what all of them can cause. Yeah. And I think in our recent release, I talked about the Bank of Canada increasing the interest rates. And I would venture to say they did not mention that specifically, but I would venture to say they did not mention that specifically, but I would venture to say that the Bank Canada is increasing interest rates because I think that

would be their worst case scenario for them is stagflation. So they view at that increase of interest rate and trying to curb inflation is to reduce that probability of stagflation happening. So I would venture to say it's probably one of their big driving factors here. Let's pivot to our last and fun segment of, drumroll please, what's on your watch list presented by EQ Bank. If you haven't checked out EQ Bank, go ahead and do that. On the show notes of this podcast, this is a show notes section. If you've never checked out the show notes, it's available on your podcast app. You might have to press like see more, depending on what app you're using. And there are links to, first off, if there's links to stuff that we're talking about in the podcast that might be pertinent and relevant, we can say, oh, we're going to put it in the show notes. It's down there.

We've never even talked about the show notes. It's down there. If you want to hear what we're talking about, kind of in order for the podcast, it's down there. And there, what you'll also find there is a link to sign up through EQ Bank with our link, which supports this show, by the way. So if you're interested, click that link. It's in the show notes. All right. So what is on your watch list? I'll go first. BlackRock is currently on my watch list, BLK. BlackRock suppressed 10 trillion in assets this year, or I guess what it would be last year. Asset management is a great business model. It has the characteristics that I really like. Yet there are tons of headwinds moving forward

for like professional money managers, but not BlackRock. BlackRock saw record inflows in 2021 with almost 540 billion coming into its investment strategies. Really interesting, Simone. More than half of those inflows were towards passive ETFs, the iShares brand, the iShares by BlackRock. If you hear us call an ETF by BlackRock or by iShares, same thing. They own it. They were early innovators in this ETF boom. They challenged Vanguard right out of the gate. They've been ahead of the curve on a movement that could have easily eaten their lunch, and they have turned it into a gigantic profit center. And you know what? Pricing power is probably not a thing here because it's just this race to zero.

However, it's actually a really big net benefit for investors. So it's not like they're like some big evil, bad asset manager. ETFs has been something good for the investment community. The stock is on a rare drawdown right now. It's on a sizable one. In fact, 28% down from the high should be a good, another good decade of inflows for this beast of a company. You know I like the asset management business. It has these characteristics of just like this recurring revenue, high margin, sticky. It's almost like software in a way. I like it a lot.

I like Brookfield. I like BlackRock. BlackRock looks tasty here. It's high on my watch list at the moment. And for people saying we don't like dividend stocks, it pays a nice 2.88%. That's good. That's higher than normal.

They're pushing 3%. Yeah. This is a perfect dividend stock. Okay. Hear me out. 2.8%. That's great. That's good.

They're growing it at 10 plus percent consistently. The business is actually firing on all cylinders. You can't say that about a lot of 2.8% yielders, I would say. No. Yeah, exactly. Yeah. So I think just wanted to point that out. I mean, we really love dividends like anyone else. It's just we don't limit ourselves just to dividend stocks. And I think that's just important to remember here. Yeah, we were getting some flack after the last episode. It's like, don't hear what we're not saying, okay? I love getting paid dividends.

It's more so if you screen for just dividends or screen just for high yields, that is set up for absolute disaster. And I strongly mean that. I strongly mean it. I back it. You can't talk me off of it. No, I've seen it. I've seen people screen on like 5% minimum yield. Yeah.

It's one thing to screen on dividend having some kind of dividend, but screening like high dividend yields, I personally think you're in for trouble. There might be some good companies, but there is oftentimes a reason why they pay. Your chances of underperforming is so high. That's what I'll leave it at. Yeah. And just that to say, look, I think I'd have to check, but I think a majority of my portfolio pays a dividend. So I do like getting paid for sure. Yeah. A lot of the best companies in the world pay dividends. It's true.

Some of them don't, but a lot of them do. Yeah. Yeah, exactly. So the one on my watch is Aritzia, ticker ATZ.TO, or for our American listeners, ATZ. I like that you said Zed there. Yeah, I know. Or for our American listeners, I like that you said Z. You said Zed there.

Yeah, I know. I kind of, because I've been watching some Netflix show and recently, and I recognize when they say Z, because Canada is Zed, right? That's what we say. Yeah, but I always say Z, even though it's like, I think you're right. Yeah, it's like color. We have a U. Yeah. They don't.

Yeah, that's right. Anyways, I digress. So Aritzia, for those not familiar with it, Aritzia is a clothing brand specifically for, I think, just women, right? That they sell clothes? I went on. Mostly women? I was there with my girlfriend and they sell a couple of men's coats, I believe. But that is it.

So let's just say mainly women's clothes. They are a small cap, 5 billion Canadian market cap. They are experiencing a drawdown right now around 20%. We did touch on them. I think it was in January. I had a segment, well, a segment was our earnings episode. They had a really good quarter, their Q3. So it's a bit like it's weird reporting schedule, but really good quarter. I'm going based on memory here, but I know their US sales really increased. They're actually becoming close to what their Canadian sales are. So they're really expanding well in the US. It's a company I need to do more research on, but it has had a pullback. I mean, it's still been a really good

investment if you've owned it for more than a couple of years. They've had a really, really good performance. Some of the things I'm not sure, and as I dig into it more, I'll know more about it, but I think it's just the staying power. And when it comes to clothing, there are very few companies that are able to stay dominant and have the brand power over extremely long periods of time. I know we've talked about Nike, Lululemon. I think Canada Goose is starting to enter that space as well to have some really strong brand power. They have a bit more of a niche market, Canada Goose, when it comes to luxury goods.

But Aritzia is definitely a very interesting name, something I want to review because I know a lot of our listeners have asked for it. It's on the to-do list. I know I've talked about it a lot of our listeners have asked for it. It's on the to-do list. I know I've talked about it a couple of weeks ago that I would do it. I've not forgotten about it. It's just there's been a lot of developments, obviously Russia and Ukraine recently. That's taken some of my time with doing some research for the shows, but I'll definitely be doing it before the end of March. That's one I want to look into. And hopefully you guys all enjoy my take on it. I'm looking forward to it as well because it's definitely one worth paying attention to.

It's just so, I'm calling it now. You're going to end it with great company firing it on all cylinders. But it's a clothing business. I can't wait for you to come to that conclusion yeah probably i mean i i'm already kind of doing it before i start reviewing it yeah i'm definitely open-minded i just yeah it's very it's very hard for these clothing companies to have staying power i mean one that comes to my right is Gap. Yeah. I mean, it used to be really popular, a go-to if you'll think about 10, 15 years ago. Obviously, they're still publicly traded. I think

they're, I don't know if they spin off some of their brands. I know they were talking about it a few years ago, but it's really fallen from grace to compare where it was. And Gap used to be a go-to when I was younger. So that's just kind of a reminder and you can think of a slew of businesses that were a hot thing when it came to clothing and then a few years later, it was like they never existed. You go to the mall and you're like, remember when that place used to be packed? Or like you go to the mall and you're like, remember when that place used to be packed? Oh, yeah. Or like you go to the mall and you're like, shutting our doors forever, clearance sale. And you're like, wow, that place used to be the shit.

Reebok in the early 2000s had all the NBA contracts. Everyone was rocking Reebok. Like just having the NBA contracts alone. Like think about that. That's huge. They eventually kind of lost their mojo and then Adidas bought them or something. I might be messing up this whole story,

but Adidas bought them and then laid them to their grave essentially by just focusing mostly on the Adidas brand and not caring enough about Reebok. But what's hot now might not be hot tomorrow. It goes back to my first segment. The only thing we can expect is change, right? Like nothing stays the same, especially on a long basis.

Like nothing stays the same. Yeah, I think so. That's why like I always come back to Canada Goose. I just, there's something about that brand that is very powerful. And I don't know, I may peel the, maybe I should have put them as my stock. Yeah, seems like it. Seems just like clothing, beat up Canadian clothing stocks are on watch, are on Simon's watch list. Hey. Yeah, apparently so. Even though I don't wear their clothes at all.

All right. So we just did two examples. I did BlackRock. I did E-Data Ritzia. Two companies that reported their best financial quarters ever, both respectively. And the stock's down a lot. If you look at Google, remember us reacting to Google's earnings release? Oh, yeah. It was like jaw-dropping type numbers.

Yeah. Didn't it go up like 10% when it came out or something? Yeah, it did on the news. It was up well over 10% on the news. The revenue growth is absurd. Search business killing it. The ads business is gushing cash. YouTube is a monster.

Just so much good, right? Like one of the best quarterly reports I've ever read. And the stock was up a bunch. Hey, it trades for well below the price that it did before it released those earnings. This is the best part about large market drawdowns is that even the best companies fall with the tide. That's the best part, man. I love market drawdowns. If you're a long-term investor, you should be waking up every morning and hoping stocks are down. I know it sounds ridiculous. I know it hurts in the short term. Yeah. You know what will be interesting to keep an eye on during the next earnings release

is how companies talk about the whole ukraine russia situation and specifically the companies that either reduce their operations there or pause them or stop them completely i'm just very interested what tone it's going to be on every call right because it's going to be on every single call just like covid was on every single call after march right and it's like this very generic statement, like I can already hear it in my mind right now. Yeah, I know. Snooze fest. No, but I think there's going to be some outliers. It's just going to be interesting, just the tone that various businesses use. I'm sure some of them will be very generic, but I feel like some will actually explain the

reasoning behind it. And that's what I look forward to hearing. Yeah, agreed. It's going to be the start of every call. I'm already hearing it now. All right. Thanks so much for listening. Two main reminders. If you haven't rated the show, we'll go three reminders.

First reminder, if you haven't rated the show, do that. We'd really appreciate it. Two, I was just talking about the show notes. For some reason, I never talk about the show notes. Go in the show notes. If you're like, I've never even looked at the show notes, for some reason, I never talk about the show notes. Go in the show notes. If you're like, I've never even looked at the show notes, go on your podcast player and you click the episode. Maybe you need to press show more depending on which one you're on. And you'll have links to all the stuff we talk about, including supporting our sponsors. When

you support our sponsors, you support us. And that's just the reality of it. Go ahead and check that out. Give them the click so that they come back and keep supporting the show so we keep talking in your ear. Because we don't get the support, we can't keep talking in your ear. So really appreciate it. You got to get that ramen for Braden. It's a struggle out here, boys. It's a struggle. Go check out Stratosphere, stratosphereinvesting.com. What we just did, Simone, is we merged the company search and the research. So when you type in Microsoft, you're going to get all Microsoft's analytics, but you're also going to get our report.

We had like two awesome products. For some reason, they weren't talking to each other. We just released, being pushed out right now as we speak by my dev team. They're going to start talking to each other. It's a beautiful thing. So go ahead and check that out. That's stratosphereinvesting.com. If you can't remember that, one, go to the show notes, or two, type in getstockmarket.com. It'll bring you right there. Thanks so much.

I'm going to concert shortly here, Simon. I'll report back if it even happens because I still don't believe it. We're out of COVID. Once I step foot in this concert, I'll believe it. You should try to sneak in some ramen noodles. Hey, I might try to sneak in some liquids of some kind. I don't know about ramen noodles. Okay, okay, yeah.

But maybe a flask of some sort. Actually, you know what? Scotiabank runs some tight security. I've waited too long to mess this up. Yeah, don't screw it up with that. I've waited way too long to mess this up. Thanks so much for listening. We really appreciate you guys. We'll see you in a few days.

Take care. Bye-bye. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.