The Canadian Investor - The Case for Only Investing in Canadian Dividend-Paying Stocks

Episode Date: October 7, 2024

In this episode, we tackle a listener question from Bob in Ottawa about building a strategy around Canadian dividend-paying companies. We breakdown some of the advantages and disadvantages of having a strategy solely focused on investing in Canadian Dividend paying stocks. Braden also goes over insights from the late great Charlie Munger on the ultimate no-brainer investments. Braden elaborates on the subject by looking at companies that may have some untapped pricing power. Tickers of Stocks & ETF discussed: RACE, COST, ABNB, UBER Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Sign up for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.  See omnystudio.com/listener for privacy information.

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

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Belanger. The Canadian Investor Podcast. Welcome into the show. My name is Brayden Dennis. As always, joined by Mr. Crystal Ball himself, Simon Belanger. Dude, i have two things i want to talk about this podcast before we get into the content one you know you and i were talking about the war on ad block that youtube is

waging right now yeah i could i capitulated today really i still use it i capitulated today i don't have a one that works anymore i've tried tried them all. I think I've lost the war. I've lost the game. YouTube's beat me at my own ad block game. That's fair. That's fair. I think it's maybe the browser I use because Brave is on the Chrome API, but they update it all the time. So I feel like they stay ahead of the game.

That's probably it. I got to try that out. And then second, I wanted to pat you on the back because Chinese stocks have rallied. You did a segment on why you think that they're too beat up. And you of all people said that, which was shocking to me. And I want to point out something. said that, which was shocking to me. And I want to point out something. You are not a momentum guy because people need to realize we record this show several days, like five days usually before the podcast comes out because we got to edit. We got four shows that come out. There's a whole thing and they've gone nothing but up x like to the up and to the right since you said that there was huge announcements this you we recorded the episode before any of this stuff happened that's why i called you mr crystal ball yeah i wish i would have pulled

the trigger i would have been up 50 on that k K-Web. I think close to that. I was looking at it before we started recording. It's amazing. I mean, obviously, I did not anticipate the Chinese government announcing stimulus and pretty massive package. And obviously, they're supporting markets in general. And, you know, I mean, it wasn't impossible that it would happen just because the Chinese economy has been struggling a whole lot so it's not surprising in itself but I mean yeah for me I was just looking at it from a pure valuation perspective and the pendulum had

kind of swung too far on one side when everyone was being so pessimistic but then obviously I think there was a bit of that but also the stimulus package that really ramped things up. I mean, it's crazy. It's been up since like literally 50%. Yeah, like Alibaba has been the dog of the year in global large caps to, I should say dog of the last few years to 53% total return year to date. That's just like that. It's insane. Yeah, no, I mean, it was just crazy.

Like, I think they announced it because there was about a 12 hour different. If you think about Beijing time, 12 or 13 hours. So I think the evening of which would have been in the morning there is when they would have announced. So we recorded maybe like seven or eight hours before that yeah well well done too late now yeah well you're i mean you're still directionally on it look like you've been the bear of all bears on these names and your ability to say okay has it gone too far? Because at some point, this goes for every public equity, all markets when they're in bear territory, when there's recessions or whatever, it's when the market loses all hope is when you typically find some bottom.

When there's essentially no excitement whatsoever is where the market finds the bottom of Mariana's trench, and from there, things can recover. Yeah, yeah, and I mean, I'm listening right now to an audiobook, Principles by Ray Dalio, so he has it book form. But the audiobook is nice because it's him actually talking. And I could listen to Ray Dalio talk for days on days.

I think he's just fascinating for a guy who's as rich as he is and successful. Very, very humble if you ever listen to him. Kind of acknowledges his mistakes. And that's one of the things he does say quite a bit time and time again is when, you know, there's so many people when things are so obvious and everyone's in the trade and it's the best trade ever. Well, usually, you know, the price is already baked in. And when you get the best opportunities is exactly that when something is either, you know, so hated or someone loves something so much, the market loves something

so much, sometimes just betting against the grain, whichever way is where you'll have some of the best investment opportunities. Dalio's 30-minute video on YouTube called How the Economy Works should be a requirement to graduate high school. All you got to do is sit down and watch that video. He was really bad at high school, like in school until he got university because he couldn't make sense of what he was learning and how it could apply in the real world. So he wasn't really interested in it. We're going to start today's show with a question from a listener.

Something we're mixing into the podcast a little bit more and more. Is it Bob from Ottawa? Producer Maya, you want to throw that audio into the podcast here and then we will discuss. Hi, Braden and Simone. Bob from Ottawa here. A long-time listener, first-time caller. My question is, it's no secret that you guys are bullish on high growth stocks, but as you know, the data shows that many Canadians invest in blue chip dividend paying companies. Just for fun, can I ask you guys to try and make the bull case for a strategy that invests in Canadian dividend paying companies? When might that be an ideal investment strategy? What factors should be considered when we are using a strategy like that? Looking forward to the discussion. Cheers.

factors should be considered when you're using a strategy like that. Looking forward to the discussion. Cheers. Well, Bob, that's a great question. The first thing is first, I would say, at least right now, I think you're probably more of a growth investor. I think that I would be because I do own quite a few actually dividend paying stocks that are Canadian. I'm definitely a bit more the way I've reorganized my portfolio over the last couple of years. It's targeted a bit more towards, I would say, not necessarily dividend payers, but kind of areas where I see a bit more value. So I can definitely, you know, relate to that question. I used to be a bit more growth oriented. I mean, it really depends, I guess, if you consider Bitcoin more kind of growth or not.

It's not a stock. I get that. But for the most part, I'm definitely trending there, aside from the index funds where I do own some of the big growth name, like to have dividend income from companies that have a lot of exposure to the Canadian economy, then they'll want and they'll want to adopt this kind of strategy. I mean, the first thing is, if I were to do this, the first thing is I would do is try to diversify the company as best as I can. And one of the big issues, and we've talked about it time and time again with investing in Canada. And I mean, it's not just specific to Canada. I think it's specific to countries that are, you know, for the most part, not the US. And it's just very concentrated. Why? As of September 30th, 2024, I mean, financials were 32.2% of the TSX, energy 16.7%, industrial 13%, material 12.5%. And

then next one on the list is technology at 8.5%. But those top four names are a quarter of the TSX. So it is, you're not, you don't have an abundance of sectors to choose from and also names in general. And I think that's something just to keep in mind when you're looking really at Canadian stocks, because just the reality is it's very limited. And sure, there's also utilities, telcos, obviously the big three there, real estate companies to choose from. But again, there's just not that many. If you look at telcos, I mean, there's what, there's three, maybe, I guess, Quebec Hall would probably be four. Like I may be missing one or two, but still, there's not a big, big chunk to choose from. The second, do you have anything to add? Or you'll just add your after I'm done?

I've looked at the three points that you've made and these are instantly where my brain went. So yeah, continue. And then I'll, I'll comment and pile on as well. Yeah. And then, yeah, the number two here is picking the companies. So here are kind of general guidelines and that's the thing you want to try and pick the best quality as you can. And I talked about telcos and not to harp on BCE again, because I think I've been beating the drum. But you have to make sure, even if you want to be diversified within the TSX, that you still try to invest in the better companies here. So I'd want a company, if you're looking just at dividends, to have at least flat revenues. I know typically I want to look at

companies that see their sales growing, but because the sample is smaller, at least flat revenues, preferably growing. I'd want a company to have growing earnings or depending on the type of stock you're looking at, could be growing free cash flow or funds from operation. If you're thinking of a REIT, for example, and I'm talking earnings as well when you look at banks because free cash flow is not useful at all for banks. I'd want to have a company that is growing the dividend, a company that has a sustainable payout ratio. And I think that's really important, especially if you're looking to invest in this company for long term. You want to make sure that dividend is sustainable if that's one of the primary reasons you're picking these companies. You want to have at least companies in, I think,

five different sectors. I mean, like I said, if you want quality, it might be a bit difficult for the TSX just because it's very limited. I'd want to have at least 10 companies in total because even 10, you're pretty concentrated. But again, I think that would be the bare minimum for me, probably more in the 20 companies or so, ideally. And of course, you know, you want to have the company to have a good long-term outlook, whether it's a secular trend for that type of sector or industry, good management, and all these different kind of more qualitative things that we look into companies. And I guess i'll finish here the issue with the strategy is you'll end up being very very concentrated in just a few businesses and sector if you want quality like i said you

might force yourself to invest in companies that you wouldn't necessarily invest in if you were choosing from a much larger basket of stocks, for example, the US or global, and you're going to be very dependent on the Canadian economy. And that might be a good or bad thing, right? We don't know what the future kind of, you know, has in front of us. I mean, you can make some a bull case for investing in Canada, for example, you know, Canada is rich in natural resources. So obviously, you know, going forward is there is a big global boom for demand for different goods and services. The economy is growing very rapidly. Then that should benefit

the Canadian economy or even if there is more, which looks like may be happening right now, but kind of more spheres of influence where you have kind of North America, you have Europe, you have kind of, you know, a bit more closed trade, but still you have these kind of group of countries trading together while Canada would probably be, you know, kind of a North America or America's group and could still benefit from that because of our massive natural resources. So there are some, you know, positive ways, there's some positive outlooks if you're overly concentrated in Canada, but you know, you do increase your risk by doing

that, especially if you have your income coming from Canadian companies as well. If I just look at the TSX capped composite index ETF from BMO called ZCN, for instance. This is a TSX S&P, kind of TSX 60, even though there's 220 stocks in it. It gives you an idea of the Canadian market on the TSX. And you're looking at 7% RBC, another roughly 5% TD. Then you have Shopify, Enbridge, CP. The top 20 represent well over 50%, or not well over, but more than 50%. And there's 226 holdings in it. And you can make that argument as well against the US market today too. It's so

concentrated in these mega tech large caps. But Google, Microsoft, Amazon are fundamentally different businesses than Royal Bank, TD Bank, and Enbridge in terms of diversification and what they do, geographies they serve, business lines they have, just raw, sheer size and dominance in the areas that they control. And so that argument does fall off a little bit. 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 a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host.

Now, I'll tell you the bull case for your question on if you're to go that way. Stocks are cheaper in Canada, objectively. You can get better deals on the TSX. That's why I like looking there. That's why Mark Leonard won't list Constellation on the US markets. He wants to keep the share price low because of how they incentivize managers to have to buy stock on the open market. And you find little gems like WSP and TerraVest that I think are trading at really reasonable multiples given their track record as of late. So that's the bull case. But those three points you laid on, I think are spot on. I think the big difference for me is I'm not a factor or thematic investor. And I don't think that there's anything wrong with playing factors or themes. I think lots of money can be made. Factor investing, for instance, is buying stocks

on quant factors. I'm only going to buy a basket of low PE stocks. It doesn't matter what the companies do. I'm strictly moving things in and out based on numbers, like valuation, like growth rates, certain thresholds. What the business does is completely irrelevant. And I see a lot of income investors do the same. They don't realize that they're actually factor investors of yield. And a lot of yield ETFs are actually just factors. They're buying dividend yields over two and a half percent above a certain market cap. That's very, very common. And this is basically the antithesis of what I do. I focus on the business first. And yes, I'm trying to find good value. And if they pay a dividend,

great, sure. Nope, that's fine. But I want the ones that are high quality. And I believe that those tend to be growing fast. So it's not that I'm a growthy investor or value investor. Long-term return decomposition of equities on the public markets, long term is mathematically linked to enduring moats and revenue growth. You're at like 90% of long term return decomposition there. And so when I look at the top 10 companies by market cap, or let's say top 15, Royal Bank, TD, Shopify, Enbridge, Brookfield, CP, Thomson Reuters, CN Rail, Canadian Natural Resources, Constellation Software, BMO, Bank of Nova Scotia, CIBC, CouchTard, and Manulife. Okay, that's the top 15 by market cap. Ironically, I know I own two of these companies in fairly

large allocations, but it's not a basket I'm eager to own. So if I look at my portfolio, Simone, on FinChat and I type in, I have all my allocations there, you can build out your portfolio statistics. So these are the portfolio statistics, money weighted. So this is weighted based on what positions are where. Revenue compound annual growth rate historically has been 18.41%. Same for cashflow from operations. Gross margins are nearly 50%. The return on equity is like 25%. One year performance is like near 50%. Yeah, it's a little bit more expensive. It's trading at forward seven times sales and trailing 32 times EV to EBITDA. These are more expensive stocks, no question. There's absolutely no question. But I believe that they're a lot more high quality. And if I'm trying to own

something for the next 10 to 15 years, the trailing PE is not the exact thing I'm optimizing for. And so blue chip is a bit of a, you know, it's a fancy word, but there's a lot of nuance in business. And a lot of blue chips historically have been large caps that have failed. You know, at one point, Intel was the blue chip of blue chips, right, Simon? Well, G is an easy example. VC still gets cited as a blue chip, which I think is completely fantasy land, but that's just me. Correct. These companies can be cloaked in a blue chip blanket when the underlying fundamentals could be deteriorating. And if the company's straight up not growing, like you said, it's not top line growth, it's actually pretty hard to make money unless there's

some sort of multiple expansion or they pay out a bunch of distributions via the dividend, buy back a lot of stock. So there's a path to return for these companies, but it is an uphill battle typically. I'm not a cigar butt investor. Yeah, and probably the biggest advantage that you can have for Canadian companies, if you're looking specifically at dividend stocks and you have a decent amount in your TFSA, clearly then, yes, the Canadian companies will have a pretty big advantage for you because you won't get taxed on that dividend where there will be withholding taxes if you have US stocks that are paying dividends in a TFSA. So that is a big advantage that you can capitalize on, but that's specific to the TFSA. I think what self-directed investors need to

recognize is they might be doing yield factor investing without knowing that. Meaning, who cares if the company has structural decline? Look, they're paying me a 6% dividend. decline, look, they're paying me a 6% dividend. Look, they're paying a growing, probably unsustainable 7.5% yield, whatever it may be. I think that they don't recognize that they're investing off of strictly yield factors and throwing away fundamentals and actual structural importance of the business long-term. it's not the way I invest. I haven't been ever proven that it's a good way to get total return in the stock market. No, I think that's a good way to wrap it up. But again, like I said, you can still find good companies in Canada, I think, to wrap this up.

But you do limit yourself a whole lot. If you're investing only in Canada and only in dividend stocks, the pool of companies shrinks up, the amount of sectors diversification shrinks up. And I think it's just important to remember that, that you don't have a whole lot to choose from. I think that that's my biggest, biggest issue with just focusing solely on Canada. And, you know, you've seen my portfolio. I have, you know, several, I think four or five names that are Canadian listed, not a lot, but I still have decent positions. And I just I don't necessarily invest because they're Canadian companies. It's because they're good companies and I find them a bit undervalued for, I think, what the future holds for them.

And they're typically, again, you know them, like Canadian Natural Resources is an example. Termaline, they're kind of more commodities play and they're high quality businesses. And if I'm going to play in commodities, I mean, we have some really fantastic commodity plays in Canada. I think there are some crappy ones as well, but there are some good ones. Yeah. There are some good ones. And it would be hypocritical for me to say, don't invest in Canadian stocks. Look at my portfolio. There's tons of Canadian names in there. I guess you know what it is. I just don't like the subset of Canadian large caps as a basket. There are some good ones.

Don't get me wrong. It's just that basket of large caps. I'm not chomping at the bit to own. I think there's some really good high quality more mid-cap. You have a lot of banks in there. Banks, telcos, railroads, and Shopify. Yeah, pretty much, yeah. Right?

So there are worse things you can do. Let me just, don't hear what I'm not saying. There are worse things you can do. All right, let's move on to a segment called No Brainers from Charlie Munger. Yeah, go for it. Charlie Munger has a investment memo called The Ultimate No-Brainer. Quote, there are actually businesses that you will find a few times in a lifetime where any manager could raise the return enormously just by raising prices, and yet they haven't done it. So they have huge untapped pricing power that they're not using.

This is the ultimate no-brainer. At Berkshire, Warren and I raised the prices of See's Candy a little faster than others might have. And of course, we invested in Coca-Cola, which had some untapped pricing power, and it had some brilliant management. So we could do a lot more than raise prices. It was perfect. You'll get a few opportunities to profit from finding underpricing. Yet there are actually people out there who don't price everything as high as the market will easily stand. And you have to figure that out. It's like finding money in the street if you have the courage of your convictions. of your convictions. So it's this concept around finding companies that you have a lot of conviction in are heavily underpricing. That like they doubled the price tomorrow and the market

will stand it. And so I've come up with a list of six or seven ideas here of businesses that I think fit this criteria. As a basket, sticky B2B enterprise software. They are notorious for raising prices. They do it because their customers will stand it. Trying to switch payroll providers is like trying to change the engine while it's flying, right? This is the whole idea of sticky B2B software. The Costco membership, it's funny enough, they just raised that price maybe a month ago. September 1st, yeah. September 1st. And let's be honest, it could have been higher, right? That definitely fits into this the market could withstand much more, but it's not their style. This one, I'm curious your take on this, because this might be a little controversial. Consumer streaming brands, I'm starting to come around to, like Netflix, Spotify, Amazon Prime.

I think they have a lot more pricing power than I would have said two, three years ago. I think I've changed my mind on this quite a bit, that they have more pricing power over consumers than I may have thought in the past. Yeah, I mean, I don't know. Maybe it's my personal experience. We kind of do a rotation. The only one we keep is Netflix because we got that account where you can add additional subscribers for $10 and they kind of piggyback on your account. And that's my parents and my in-laws.

So we don't have the flexibility really to stop that one. But the other ones, we essentially like we look and when there's deals, we'll subscribe or we'll kind of pick one. We'll subscribe to that one. Once we're done, we'll switch. So we'll do like between Crave, let's say, and Disney. When Crave stops, we'll start Disney. So we's say and disney when crave stops we'll start disney so we have kind of a set budget per month and we kind of stick to that you're very personal

finance savvy a lot of people don't say screw it you know they're gonna well usually my my trick right is i'll subscribe did that recently crave had like a deal for six months like it was like 10 10 bucks a month for six months no ad it was like 10, 10 bucks a month for six months, a no ad version, something like that. And I did it and then canceled right away. So I know it won't auto renew. So that's the trick.

You have to cancel as soon as they know that a lot of people won't. Right. No, exactly. Yeah. Yeah, it's true. So no,

you might be right. I, maybe I am too, you know, I don't want to pay for stuff I don't use. Yeah, your anecdotal evidence is, if everyone was like you, then definitely not. Infrastructure and toll road style businesses where there's no other options, right? This is very, very classic.

Physical infrastructure projects meet this criteria. Usually the only thing with those are usually highly regulated. So there is a limit. It's usually tied to inflation. So there is going to be a limit to what they can raise. Sometimes, yes. Absolutely. Sometimes, yes. Financial services, capital markets, businesses that have monopoly or duopolies, credit rating agencies, FICO, Equifax. This is a business I just love, love, love. Don't say Visa because the US government may take issue with that. Visa doesn't need to flex pricing power.

They're just death by a million paper cuts. Yeah, but yeah, I actually don't know if Visa has much power on interchange pricing these days. I wouldn't even classify them. No, no. But the DOJ with their antitrust lawsuit, it's interesting. It's more the practices because we talked about it, Dan and I, and it's more about the anti-competitive practices and basically punishing people for not using it. Right. It'll be interesting what happens there. This is one

worth keeping an eye on. Yeah. Good thing to keep an eye on. And maybe those things it's fair to go after, but I believe interchange fees going after those is completely baseless. So I don't know if they'll have anything there. It's actually the banks that take such a ridiculous fee on the banks that take such a ridiculous fee on the total 2.5%. All companies that do the classic, highly controversial gray area, potentially illegal. I mean, there's been lots of case law on this in the past, especially with Microsoft. The bundling, unbundling of business utility suites have a lot of pricing power. It's like, oh, Microsoft Teams is quote-unquote free, and you get everyone on it because you have the distribution, and then you jack up the price the following year on the new bundle, right?

It's free, quote-unquote, and then the bundle goes haywire on pricing. No, I think that's a good point, and those will be fascinating because, I mean, I don't point. And those will be fascinating because, I mean, I don't think, I'm sure you realize it, right? The Department of Justice and the US is the big one, the behemoth, right? Like, obviously, Canada can have antitrust lawsuits. I'm sure we have our own kind, the Europe can have them too. But the US is really the one where people take notice and i mean i i think big tech has to be careful because i think it's clear now that they are in their crosshair and no matter who wins the election i feel like it's good politics to go after big tech so i would be surprised if you know even if trump wins that they would put the brakes on that so it's just i find that pretty fascinating just this kind of shift and uh you know it's just yeah they're so big that it's

easy for governments to go after them from a politics perspective would it have been the late 80s or early 90s in that vintage microsoft was at war with the doj for the bundling and unbundling of the internet browser yeah it was late 90s i think it was late 90s yeah okay yeah and you know that that almost drove the company to to death i mean it was just this never- ending expensive lawsuit that like Bill Gates aged like 40 years and three years. He like, I think it's basically burnt him out. And then Steve Ballmer came in. But that whole thing is like, we're seeing that now happen with some of the other big

tech companies. And Mike, I feel like the pain that they endured during those two, three years has given them like a, all right, let's not mess with them for a while. Like, you know, like it was so brutal that I do see, you know, history doesn't repeat itself, but it does rhyme with this bundling, unbundling internet explorer, Windows machine type thing. We're seeing this right now happen in a major way. Yeah, they seem to be really focusing on just the actions of preventing competition, right? I think they focused in on that Google payment to Apple to make sure that every Apple device has Google as the default search. And it's the same kind of thing that they're focusing on Visa. So

I feel like they're really zoning in on this specific type. Obviously, they're two different companies and there's different possible outcomes. But it's just interesting to see what they're going for right now, which is a little different than the bundling, I think. Another thing that I think fits the, I got two more here, marketplaces with huge network effects like Uber and Airbnb, I think that they kind of flexed that pricing power in the last two years. They went from mega unprofitable to mega profitable via take rates doubling. So they doubled take rates overnight. Can they double them again? No, I don't think so because they're still competing against the traditional thing, which is maybe taxis in Uber's cases and hotels or what have you, other aggregating sites like Booking.com, Expedia, these kinds of things. So they don't have pure play monopolies, but they do have really, really strong network effects

that if take rates continued to climb up another 25% over the next five years, I wouldn't be surprised. In fact, that probably is a pretty good bet to make that they will. Yeah, no, that's fair, yeah. 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 you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at Airbnb.ca forward slash host. That is Airbnb.ca forward slash host. And last one here, anything that is ultra luxury or has a historic brand with a story. And it starts with handcrafted leather goods in Italy.

These have a ton of pricing power. Ferrari comes to mind here, a brand where they sell out all 13,000 cars that they're going to make for the year before they make them, before they even put a shovel in the ground. All of them have been accounted for, and they'll probably increase deliveries by maybe 2,000 a year for the next several years. But cars as expensive as they are there is a ton of pricing power still like it's it's mind-boggling how expensive these cars are but people will pay double i look literally i think people pay double yeah i'm sure they're making a lot of toronto condo developers very jealous like how are they selling all these units?

And we can't even sell all our buildings when they're completed. Well, they don't have that historic Italian motorsport brand. Yeah. Porsche is kind of in this category, but not as much because, you know, they make so many other daily driver cars but the the 911 uh line that they make is like that or maze is like that some of the lvmh brands some of these bags some like rolls royce would probably fit in that category rolls royce um yeah i don't know i haven't really last time i looked up their stock i realized that they're making most of their money from like aviation or something oh yeah yeah they do a

lot of engines but i feel like they still make uh some super expensive cars yeah i'm looking at their segmented results right now revenue from original equipment and revenue from okay wait we'll compare civil aerospace and power systems do they not have like auto they got civil defense power systems new market i'm gonna say civil civil aerospace obviously they're still selling cars but I've seen some. Maybe they were just like 5, 10 years old and I just didn't realize. No, they're still selling them. But they don't segment it out. It's all the civil defense and power systems. Very interesting.

But yeah, iconic vehicles. I don't like them that much, but they are very iconic. I don't like them that much, but they are very iconic. So yeah, I mean, these mega luxury brands that basically have some scarcity element to them. Scarcity breeds pricing power, right? Like Rolex has had an infinite pricing power brand, although they're not publicly traded. I think if they were publicly traded, I'd probably look to own some of it. Well, the Rolls-Royce Spectre, one of their cars, starts at a cool $495,000.

So I think they're, yeah. They're still going. They're still going. You don't see many. No, no, that's why. Is it the Aston Martin? No, sorry, not Aston Martin. Rolls-Royce Phantom. That's the car, right? The Rolls-Royce Phantom. many uh is it the no no that's what yeah aston martin uh no sorry not aston martin uh rolls royce phantom that's the car right the rolls royce yeah that one is probably even this is the

this is the car i think of when i think of a rolls royce yeah that one's like 593 so it's not you know it's a little more expensive 93 they're that much oh my god yeah i mean i knew they were expensive i just didn't realize uh yeah it's uh it's a nice car what's your dream car do you have one money's no object yeah i mean i've always been a big fan of uh volkswagen and audi it would probably be like an rs5 or something like that so i would like yeah i wouldn't go like massive expensive like i don't uh i just find it uh you know certain sports car i just find uh usually i look and it looks like a guy in a midlife crisis so i totally 100 yeah you're right yeah so uh no i think it would be that yeah i do want a porsche i was listening to the acquired podcast and they said something funny i think i mentioned it on

this podcast that they have porsche has a 40 year sales cycle meaning that kids or like you know the 12 year old who sees the 911 drive across the street, they're like, I want one of those one day. And they end up buying them and like, they're 52. So they have like a 40 year sales cycle. Yeah, no, that makes sense. I mean, they're not, they're not cheap cars. And usually, you know, you're pretty, you know, you're doing pretty well at that time, top earning years, that's probably 40s and 50s. So that would make sense. Yeah. top earning years that's probably 40s and 50s so that would make sense yeah so harry rosen's sponsoring the podcast and so i was in there doing doing the whole thing and i was actually in there and i met jan carlo esposito the gus fring from breaking bad the actor he's also like in mandalore

he's a bunch of stuff yeah he's a great villain anyways i go into this one section uh it's like all this like this Italian leather brand and my girlfriend and I are walking through and the first piece I looked at, it was a vest. It felt very nice. It was a very nice vest. I turn around the price tag, $18,000. And I was like, I think I'm in the wrong section. Gone out of there. They actually have such amazing stuff. This is not turning into an ad.

I really liked it. But there is a segment of the luxury market that continues to just, whatever you think is mega luxury, like there's always something more insane oh yeah and i mean we've watched sometimes i don't i'm sure you've seen them but uh my wife and i will watch these like million dollar homes like la and stuff like that and it's just the stuff i find like for me most of the time i just find it ridiculous because i'm like most of the time I just find it ridiculous because I'm like like I mean why do you need all this stuff like I mean once you're like beyond 3,000 square foot for a house and you have like a nice car like do you really need that stuff but it's crazy like you wouldn't believe some of the houses

it's like you know there are three people and there's 17 rooms and 15 bathrooms in the house. It's like, okay. Yeah. I mean, I hope you have a team of cleaners cleaning the house. Well, that's just it, right? You need now an entire team to manage your stuff. And now you have more problems. Have you ever read the book, The Art of Not Giving an F?

No, but I like the title. Yeah. It's a very popular kind of self-helpy book. But the whole idea is if you have that mega mansion with the 17 bedrooms, like life is just a series of problems that you have, like good ones and bad ones. Like there's always problems. You can't escape problems. So you're trying to coordinate your life around what are good problems and what are bad ones. There's always problems. You can't escape problems. So you're trying to

coordinate your life around what are good problems and what are bad problems. And people work their whole life. They grind this. They sell their company. They get a 17-bedroom house that they think that will make them happy. And now they have mega mansion problems. Now they are like hiring and firing maids or like they bought this mega yacht and now they have to spend around a third of the price of the yacht per year on the team that has to live there and like now you've just created a shit show for yourself you just created a big problem so i i hear you i think that that's a crazy thing to do, but people do it. Yeah, exactly. I mean, maybe they have like every day of the month they sleep in a different bedroom.

That could be it. The 12th of the month. Yeah, exactly. This one's got the theater and the home theater. This one has a pool. The other one has a fireplace. Let's switch it up. This one has a pool. The other one has a fireplace, you know, switch it up. Different vibes,

different vibes. That's going to have to do it for today. You and I both have to run. We have written here and ready to go. Stocks on our watch list for next week. So we will, stocks on our watch list presented by our friends, EQ bank will happen next week because we are out of time on the show here today. Thank you for listening to the pod. We really appreciate you guys for tuning in. We're here Mondays and Thursdays. If you haven't listened to the real estate show, they're there Tuesdays and Fridays on the Canadian Real Estate Investor Podcast. Really good stuff there.

podcast. Really good stuff there. Timely to tune in there if you haven't in a while with changing interest rate environment, lots of crazy stuff happening in the world of real estate investing, especially in some of these major markets. The mortgages too. So they did that with the new 30-year amortization. So if you want to understand a bit more what it means, those big announcement that will take effect December 15th, go back a few episodes and Dan and Nick do a great job breaking that down. I got to tune in because there's been some big hitters in real estate. In terms of news, Canadian real estate in the last 30 days. Especially with the rates changing.

So it's a good time to tune in. Thanks again. And off the top here, you saw the question from Bob. If you go to our website, thecanadianinvestorpodcast.com, there's a button on the right to leave a nice little voice message. As long as you don't ramble and the voice quality is solid, there's a pretty decent chance you get on the show. So that is at thecanadianinvestorpodcast.com. Go buy a $500 mic, record something, send it over, and it'll be good. Then return the mic. Pull a Simone, okay?

Get the intro deal on the Crave subscription, and then just bounce out of there. That's too good. That's the way to do it. That's it. I'll see you in a few days. Take care. Bye-bye. The Canadian Investor Podcast should not be construed as investment or financial advice.

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