The Canadian Investor - The Most Important Rule & Stocks on our Watchlist

Episode Date: April 21, 2022

In this release of the Canadian Investor Podcast, we cover the following topics: Cathie Wood saying that she expects 50% compound annual growth rate from her ETFs Etsy sellers announcing they are going on strike The one rule that makes winning stocks Bitcoin as an inflation hedge How monopolistics type of companies are like toll roads Stocks on our watchlist Tickers of stocks discussed: ETSY, ADSK, CP.TO, ARKK 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. Check out the Yes We are Open Podcast from sponsor MonerisSee 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 April 18th, 2022.

I'm back at 100%. We're ready to roll. I'm fired up. How you doing? I know today the episode came out and the fans are very happy for you on Twitter. Feeling very good that you're going to be a great dad, Simone. Yeah, thank you. I appreciate the nice words from everyone. Definitely very excited and looking forward to it. It's going to be a rock and roll summer to say the least.

Yeah, it's going to be a busy summer for you. All right, let's get right into it. First segment from me here out of the gate here is talking about Cathie Wood, her outrageous claim. I got some thoughts there. You're going to talk about Etsy's take rate changes. I'm going to talk about common stocks and uncommon profits, the book, toll road investing, and then we are going to round it out with stocks on our watch list presented by EQ Bank. All right, first on the slate here, I have a segment called Be Careful. So these days, there are a gigantic list of folks who are looking to get you hooked on their ridiculous claims and let them take your money on a story

that is just simply too good to be true, Simone. The reason I bring this up is because we have CNBC broadcasting, Cathie Wood saying to the world, she expects a 50% compound annual growth rate 50% compound annual growth rate on their ARK Innovation ETF over the next five years. This is outright irresponsible, in my opinion. I know several friends personally who own the ARK ETF. They have flashy promises and marketing tactics that work. Let's be serious here. This is just however pathetic, in my opinion. Let's just say they are even able to achieve this. Maybe they are. Sure, whatever. I don't think it's possible, but sure. Just stating that they expect a five-year compound annual growth rate of 50% is completely ridiculous. What do you think about that? Yeah, it's ambitious to say the least by Cathie Wood. I didn't even add the S this time.

No S on the Wood. After 15 times of pronouncing it incorrectly. But yeah, it doesn't sit well for me either. I think it's pretty common, especially in the YouTubers, right? You'll go on YouTube, you'll get an ad, and then you search some things about investing. And then the algorithm kind of notices that you're into that. They'll give you some ads about this trader bro promising you 100% returns in a few months or whatever it is. And it smells a little bit like that. I would have expected better from someone like Kathy Woods, which I've said it before. I don't agree with her on a lot of things.

I think she is interesting to listen to. She has some very interesting ideas, but I think you have to be critical when you listen to her as well to make sure you kind of weed out what's probably quite too ambitious. And it's too bad because a lot of novice investors will probably fall for this. Whether she achieves it or not, I do hope for her that she does. But if people are going into her fund expecting 50% year over year, that's really too bad. Yeah. There are many things online I see taking advantage of new investors. many things online I see taking advantage of new investors. Like join my trading discord and make 100% a year, 10% per day, like this kind of crap. Obviously that's impossible. It can't be achieved and simply has never been achieved. These types of fake gurus are hoping that their victims do

very little to zero research on their claims. Let's say this YouTube bro is telling you 10% a day. I see it on TikTok. It's a joke. A simple $100, 100 bucks, compounded 10% every single day for a year of 365 days, you would have $18 billion, $990 million. Obviously, this is not possible to turn $100 into $18.9 billion. Obviously, it's not possible. So just be careful out there. We're seeing more and more out of it as new investors come in. Just be careful. It's just a segment to remind ourselves if it feels too good to be true, there's a very good chance that it is.

Yeah, and I always come back to this simple question when I see this type of advertising. If it's true, why the hell are they trying to sell you a product? Because they would be so rich that they would not even need they could be on a beach doing nothing and be fine for the rest of their lives and their grandkids and kids and grandkids and so on so i always give myself this thought when i see that if you're this great why are you actually selling that product because you wouldn't need the money dude if i can compound my money at 10 a day you'll never hear from me ever again i'll be i'll be gone and loaded bye-bye yeah exactly now moving on to our next topic i'm

sure some of you saw the news that etsy some of their sellers were going on strike because of an announced rate increase from etsy they'll be putting their stores on vacation mode. Etsy is planning to increase transaction fees from 5% to 6.5%, which has caused this uproar from their sellers. And that's a subject that we actually discussed. I think when they had their latest yearly result, I mentioned that they have to be careful with increasing fees because at the end of the day, they want their sellers to be successful because the sellers benefit of doing that and Etsy also benefits from that. And if they have a higher volume, more gross merchandise sales overall, well, Etsy will benefit regardless of what their take rate is. And I think they're

playing a little bit with fire over here. So before I go on, do you have any comments here? The take rate is going to be extremely important. I think this is a real test in terms of like their ability to flex it. And I think that's all I know. Yeah, exactly. So the event organizers are saying that they're fed up with Etsy increasing its rates. It's not the first time they are demanding that they cancel the fee increase, crack down on resellers, which is pretty prominent on the platform, give sellers the option to opt out of off-site ads and increase seller support system. The opt-out they're asking for is because off-site ads are mandatory and charges sellers a 12 fee on all purchases related to those ads sellers are saying that this makes it very difficult for them

to run a business since it compresses their margins and makes it very difficult for them to make projections etsy on the other end of course is saying that this increase will allow them to add more value for sellers by reinvesting most of this additional revenue to marketing, seller tools, and creative world-class experience. I own shares of Etsy and I think like I mentioned before a bit earlier they have to be really careful. Etsy I think has arguably a moat in this space but they have to keep their sellers happy it's a dual-sided network effect but you have to be careful that you erode one of that side and we're seeing some tensions over here and the last thing they want to do is actually do that because you could see a competitor coming in that's already very powerful

in the online space and Amazon for example and trying to take some of that business from Etsy which they failed to do years ago when they launched their own kind of crafts good platform at the end of the day maybe a compromise from both sides would be the ideal option, maybe a lesser increase with all of the money going to help boost sell, which will in the end help Etsy as a business. It's really hard to say where this will go. I know news came out today that they were looking to form a union. I don't know if you saw that Etsy sellers. No, I didn't see that. Yeah, it's kind of funny because some of these sellers that are leading the way are saying that they're just exploring this.

They still don't know how it would work because you can only unionize when you're an employee. So I'm not sure either how this would work, whether like sellers on a platform. Yeah, this would be such a weird situation. Yeah, exactly. So whether they go ahead or not, I guess we'll have to see. But I hope they have some really good labor law lawyers because they'll probably need it because I don't think this is, I think, new grounds. I don't think this kind of stuff has ever been done before.

The most important metric, the one that I track and the one that we track at Stratosphere for Etsy is active sellers. That is the most important metric for the business is the number of active sellers, because it tells the whole picture that you need to know. I mean, of course, you need active buyers and active sellers in this online marketplace. But I think the best litmus test for the business is active sellers. And they do have to keep them happy. Moving the needle from five to six and a half percent, I don't really know how much that affects Etsy. But what I will say is a company like this in this story, I think they should be measuring their success in active sellers and hopefully that

GMV continues to tick up, like that GMV number continues to tick up over time and not flex take rates necessarily. They don't need to grow by flexing pricing power right now. So I don't know. I don't really understand the strategy and how much it actually moves the needle for their business while pissing off active sellers. So I don't know. I'm not the CEO, but it seems like a potential misstep. Yeah. Yeah, exactly. And we'll see what happens. And I think, like I said, if they did a half a percent increase and poured all the proceeds from that into helping sellers, I think it would go way differently. It would go way better than the increase that they're planning because they said most of it will go, but some obviously will go to

profits and probably maybe returning some money to shareholders. I think that's what didn't sit well with them. Yeah. The messaging has to be pretty clear. We're flexing our pricing power and feature A, B, and C. It'll allow us to build feature A, B, and C faster, which will help you grow your business on Etsy faster because of reasons X, Y, and Z. That messaging seems to be a must in this type of situation. All right, let's talk about the first point from Common Stocks, Uncommon Profits, 15 points. I've talked about this book before. I brought it on my vacation to just read over them again on the beach because I'm a finance nerd. So here we go. I'm actually just going to read an excerpt right from the book here. So I'm literally holding

the paperback in my hands. So this book, it's by Philip Fisher, and it's really around the 15 points, which basically says like, what do I buy in terms of like what stocks are good to hold for a long time? And so he has these kind of 15 rules. Point one, does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years? Okay, so that's point one. So it's basically saying, paraphrase, does this company have the ability to generate a lot more sales in the future for a long time and consistently. And I'm going to expand on that here, just a paragraph here. It is by no means impossible to make a fair one-time

profit from companies with a stationary or even declining sales curve. Economies resulting from better control of costs can at times create enough improvement in net income to produce an increase in the market price of a company's shares. This sort of one-time profit is eagerly sought by many speculators and bargain hunters. It does not offer the degree of opportunity, however, that should interest those desiring to make the greatest possible gains from their investment funds. So he's basically saying like one-off, special situations, short-term profit taking, an ability for a business to dramatically increase net income for a short period of time. Those are all good. However, if you want to make a lot of money, keep reading. Last part here, this gives a little bit more context. Neither does

another type of situation, which sometimes offers a considerably larger degree of profit. Such a situation occurs when a change condition opens up a large increase in sales for a period of a very few years, after which sales stop growing. He goes on to say, now that nearly 90% of United States homes are wired for electricity and have television sets, this is old data by the way, that number is definitely higher now, the sales curve is again static. In that case, a great number of companies in the industry, profit was made for people who bought early enough, then the sales curve leveled out. Okay, so I'll stop reading there. There's two main points that

I want to take here. The first one is pretty simple. Sales growth is absolutely essential for long-term winners. I know it's pretty obvious, you know, businesses that do well long-term generate more revenue in the future. There's nothing earth shattering here. However, you'd be amazed at how complicated investors like to make these things. The simplest things often are, okay, is the business going to consecutively grow their sales number? Okay, good. Check one. And number two is that neither Phil, myself, or yourself are not interested in short-term growth, profit-taking, or spurts. When a new trend comes out or a cyclical is in favor, it has its time to shine. But then what? A commodity, for example. A commodity stock looks great and the financials

look explosive when the cycle and said commodity price is having a good time, good macro environment. But what about when it stops working? Then what? This requires shifting your mindset from looking at a quarter or even a year to five plus years out. The real winners have longevity beyond just that short time horizon, not just a one time tailwind. So I think that this is an important thing for us to revisit. Yeah, no, I think it's really good. I mean, sales are just the basics, right? If you don't have an increase in sales, you're probably looking either at a value play where you're looking to, you know, buy at like extremely cheap valuation and get out in the short to medium term.

But I think for the most part, we invest, we want to invest in good businesses that will just do well over the long term. It helps to not keep in mind to not make it too complicated. Yeah, like it's incredible how people, I mean, people, investors want to sound smart, right? Like everyone likes sounding smart, using big words, investors want to sound smart, right? Everyone likes sounding smart, using big words, fancy valuation models, fancy DCFs. Those are cool and all, and they're useful. I'm not here to knock them. It's just, can't forget about the basics and what has derived returns. If you look at return decomposition, several investment banks have done these searches. They've done these surveys, or I guess research pieces, and come out with return

composition comes from sales growth. Like more than half comes from sales growth. It's pretty simple. Yeah, yeah, exactly. And actually, I put you on the spot here. I think I'll know your answer, but I saw that the book was a paperback that's bookshelf. But I, you can tell, like look how ripped up it is on the back here. I like kind of fold it while I'm reading it and especially like I'm reading it on the beach, I'm kind of like folding it. Like the spine just gets absolutely destroyed and so that's why I kind of like the soft cover but it doesn't look as crispy and i mean look at it now it's like beat the crap you can tell it's like been in the sand and maybe hit the ocean a couple times yeah i think i prefer soft cover just for the convenience because i'll put in my backpack

i'll putting it you know carrying it around the hard cover like you can't bend it or anything like obviously when you're done if you want to show it off in your bookshelf it looks better but that's right i'll go convenience factor as well. 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. is questtrade.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. That is Airbnb.ca forward slash host. Now moving on to our next segment about Bitcoin. I'm excited to say that this Bitcoin segment is presented by our new sponsor ShakePay. Like I mentioned before on this podcast, I've been using ShakePay for years now to buy Bitcoin and Ethereum.

So I had a question from Joe D on Twitter about Bitcoin being an anti-inflationary asset. And Joe mentioned that Bitcoin had crashed during the highest inflationary period in the last 40 years. And he's not wrong. The price of Bitcoin has not done very well especially since inflation has picked up so first I did some research I wanted to put things in perspective here so let's look at how inflation has played out over the past year in the US I'll focus a bit more in the US here because whether we want to admit it or not it is the world's reserve currency and arguably still the most important economy worldwide. So it has the biggest impact in terms of their inflation metrics. So U.S. inflation has been 5% plus since May 2021

with March 2022 figures clocking at 8.5%. Joe is correct to say that this hasn't been the case since the 1980s. So why is Bitcoin not taking off that inflation is really increasing? Well, first of all, obviously, it has a limited total supply of 21 million Bitcoin with about 19 million right now that have been mined so far. What's going on? Well, if we go back to May 2021, the price of Bitcoin was around around 60 000 usd but then crashed on the news of china banning bitcoin mining the price of bitcoin then reached another all-time height of 69 000 usd in november of last year and the price has been around hovering around like 35 to 45

000 for the past several months now, even as inflation has really picked up in the US, reaching more than 8% year over year, like I just mentioned. There could be a lot of reason why Bitcoin is not reacting as strongly as some might have expected in the face of high inflation metrics. And here's a few that I think will help put things in perspective. Before I get started, Brayden, did you have anything here to mention? It's a good question, right? It's the same question why people have with like, okay, so I'm seeing all of these headlines about inflation, everything I know about gold. Why isn't an ounce of gold skyrocketing like every other commodity? I think that it's a fair question. Yeah, it was more than just an easy answer. So that's why I didn't retweet back

to Joe. I figured I would just use it for one of our segments. So Bitcoin is up shy of 600% since April 1st, 2020. The reason I chose that date is because it's in April of 2020 that the US provided the first round of stimulus checks and I think pretty much everyone the US would receive one if they met a certain threshold for income so it didn't matter whether you had a job or not so it's also when a lot of investors started realizing that the US was on its path to rapidly increase the money supply to save the economy. The US was not alone here obviously Canada did similar things and I think you can make a case that a lot of investors started pouring into Bitcoin at that time as an inflation hedge and needless to say that those who did have done quite well. The

S&P 500 is up a bit more than 80% during that same time frame. The second thing to keep in mind is Bitcoin is still a highly traded asset. So according to Glassnode, which is a blockchain data and intelligence provider, 75% of the Bitcoin supply has not been used in a transaction for six months or more. So it means people are buying it and holding on to it. That still leaves 25% of the supply that has moved in the last six months. So to me, that means that there's still quite a bit of trading activity. That's a lot. I don't have any basis to compare it to other assets, but it seems like a lot. Yeah, what the 75%? And conversely, the 25% of the supply moving in the last six months. Yeah, there's a lot of trading, what the 75%? And conversely, the 25% of the supply moving in the last six

months. Yeah, there's a lot of trading. It's like stocks, right? Crypto, there's a lot of trading in crypto. So it's not any different. And the third reason leverage as compound did downswings in the price of Bitcoin. And that's especially true for Bitcoin and crypto because there's a lot less regulation. So the leverage can be pretty crazy i think last year you could get like you know 100x leverage really yeah yeah on some platforms i saw ads now it's only down to like 20 oh my god yeah even that that is like hopefully you're signing off on the right documentation that is an extreme sport man yeah so 100x leverage just means that if it moves 1%, you're wiped out essentially. That's what it means.

So and Bitcoin is very volatile and now it's gone down, but it's still 20x. So if it moves 5%, it goes down 5%. You could be just wiped out or you have to add funds. So leverage can really turbocharge your gains, but it cannot wipe you out completely, of course, like I just mentioned. And leverage has really exacerbated the drops in Bitcoin price in the past years. We've seen it time and time again. There's a rapid drop in the price of Bitcoin. Then it drops even further because margin calls when people are forced to sell to cover their margin. Fourth here, institutions are interested in

Bitcoin, but institutions are slow to change. Most institutions have strong governance in place, which means that changing asset types or asset allocations in the portfolio can take a lot of time. And I think increased adoption personally is coming. I don't know when it will start really accelerating, but the price of Bitcoin will probably start going up pretty quickly when it does happen. And institutions have massive amounts of capital available to them compared to the retail space. So just a small percentage of their portfolio can really make the needle move. And then the last two here is that Bitcoin is still seen as many as a risk asset. And I think this is especially true when it comes to institutions, like I just mentioned. If you don't believe me, do a little exercise, pull a chart of the NASDAQ

and compare it to the chart of Bitcoin over the last six months. And you'll see that it moves in very similar fashion to the NASDAQ index, a lot less for the S&P 500 because it's more well diversified. And the last reason here, there's still a lot of FUD out there. So FUD is fear, uncertainty and doubt that's being pushed, whether it's environmental concerns, money laundering, regulatory concerns, there's still a lot of FUD being pushed by the traditional financial media when it comes to Bitcoin. And to me, the reasons I just mentioned are just some things to keep in mind when you're looking at Bitcoin and wondering why it's not really gaining steam as high inflation figures are coming up.

Whether it eventually becomes an asset that increases as soon as inflation picks up, I'm not sure. But all I know is that it's a cap supply and decentralized nature makes it a long-term inflation hedge for me. Yeah. I think that you hit on a good point there, which is the correlation to other financial markets is higher than I was expecting for sure. But I just keep coming back to, you do these segments, I hold it and I just think it seems so silly to not pay attention to it. And that's basically what I'm going to continue to say. Yeah, that's definitely a good point. I mean, obviously, I'm a big believer,

but I think pretty much everyone should at least have some exposure, whether it's like 0.5%, whether you invest a company that deals with Bitcoin, you know, whether it's a square, whether it's a micro strategy, PayPal is already dabbling. There's ways to get exposure. And I think it's like you said, it's a bit silly to not have at least some exposure to it. All right. Let's talk about toll road investing. This is a topic that we've kind of touched on. And I wanted to discuss it more in investing in toll road type businesses. Now, I don't mean investing physically in toll roads, although they are really good businesses, actually. And you can actually own some of them by owning Brookfield Asset Management.

But I am not talking about the toll road infrastructure business. I am talking about a specific type of business. I'll sometimes call them a bottleneck business or a toll road type business, meaning this business is so entrenched in their industry and the world that consumers have basically no choice but to pay the toll. So deep competitive advantages are what builds these types of monopolistic toll road businesses. Let's paint an analogy I've used on this podcast before, but it's the best one that I can think of. I've used on this podcast before, but it's the best one that I can think of.

So if you want to ski in the mountains, there's one road to get there, okay, in our analogy, and they charge 10 bucks to get up to the mountains, okay? So all the ski resorts are up there. You got to go on this highway. It charges 10 bucks. There's no other road. There's no other option as a consumer. There's no $5 road. There's no other option as a consumer. There's no $5 road. There's no free road because there will never be another road because this one goes between two mountains

and they had to blast through the earth. They had to blast through this one mountain range to get to the other side. No new road is ever going to get approved. The reasons for that is the new one works. The current one works. It's far too expensive and risky to blast a new one. And so there's just no real reason to induce competition for the current toll road from a regulatory perspective, environmental perspective, safety, and just the why, the big why. So everyone pays the $10 if they want to go ski in the mountains. The other option is stay home. $10, it is what it is, right? And by the way, in our hypothetical situation, they keep taking it up every year. It used to be six and then it was seven and now it's 10. But the skiers want to

go to the mountains, so they pay the toll road. These types of businesses exist at a global scale as well. Now, if customers want slash need a service, they might have to just pay this toll I'm talking about. In many of these examples, there could be a few players in the space that's actually more common for like an oligopoly or a duopoly type situation. And chances are all of them could be investable if they're truly these toll road type deep moat, high competitive advantages businesses. I think this is the best way to talk about it with examples. If you want your corporate bond rated, who are you going to go to? It's Moody's and S&P Global. You're going to pay the toll. You got to do it. There's no other option. You got to get it rated. And so you got to pay the

toll. You want to buy anything? Visa and MasterCard rails control the toll. Want your goods shipped across the country in Canada? CP, CN Rail, you got to pay the toll. You want to fab semiconductors? Well, you're going to need lithography from ASML and you're going to need foundry from TSMC. Pay the toll. Want to sell your mobile game or app? You want to just be listed. You want to find customers on their mobile devices. You got to pay the Apple App Store toll. It is a useful mental model to think about these types of businesses and identify truly how durable their competitive advantages are. It helps you think about competition. It helps you think about competition. It helps you think about durability. It helps you think about unit economics. It helps you think about the actual business, what their service and value proposition is. So if you can find just a handful of these, hold them for a really long

time, I think you do pretty well. Yeah. I don't have too much to add here. The only thing I'll add is make sure if you're looking at these type of businesses, you also understand the regulatory environment, because sometimes it'll be a super strong mode, but sometimes it may be a cause for concern going forward. And I'm thinking about antitrust here for the Apple store or Google Play store, whatever it is. I have an Apple phone. So just keep in mind that yes, I totally agree with what you said, but knowing the regulatory environment for a lot of these is important. It works both ways. Sometimes they are entrenched as the only toll in town because of regulators. In my analogy, regulators are protecting them because there's no regulator that's going to give someone the green light to build a challenging toll road so the skiers can go to the mountains because they got to protect the environment.

Not going to let them blast through the mountain face for no reason. And so that protects them. And then on the other side, yes, like antitrust in your Apple app store example, it can go both ways. It's just definitely worth paying attention to. 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. All right, let's finish off. Let's round it out with stocks on our watch list presented by the

wonderful people at EQ Bank. You want to kick us off here first? I do because yours will be a surprise. I don't see yours on the notes, but for me... That's because, Simone, I didn't do them and I completely dropped the ball. And here we are. I'm going to be doing it live on the air. It's funny. So one of the names is one you actually mentioned in your toll roll analogy. Well, the name I picked.

So it's Canadian Pacific. And I didn't even know you were going to do the toll roll analogy when I did these notes. So it's kind of funny. We're on different schedules, so we're doing the work at different times. Exactly. So Canadian Pacific. So CP has been on a drawdown. It's dropped about 10% since the end of March as of this weekend. So I don't know if it's a little bit up today, but it's 10 percent of course still waiting to see what the outcome of the surface transportation board or stb in the u.s for the kansas city southern acquisition now it's in the a trust cp will be reporting q1 earnings at the end of april and it will be interesting to see how they fared year over year but I think it is as good as a time as any to start a position

in CP here because you don't get this type of business or even CNREL you don't get them oftentimes at a discount it's not trading super cheap to say the least but it's still a great business it's trading in the low 20s when it comes to their PE. And from what I've read, it seems like most experts think the acquisition will go through, although it's possible that CP might have to divest some assets to make sure that the STB approves the transaction. And I think it's a good bet to make here since even if the acquisition is not approved, CP will probably just turn around and start returning massive amounts of money to shareholders. So obviously I think I want the acquisition to go through if I'm a shareholder,

but I don't think it's the end of the world if it does not go through because I just have a feeling they'll increase their dividend and they'll start buying back even more shares. So it's something to keep in mind here, but one that I definitely have my eye on, I already own CN Rail. So I would like to have both of the rail companies in Canada. I like it.

You're right. I just talked about how pay the toll. It's one of these really protected regulatory-wise businesses. It's a high-quality one. They're in an interesting situation if you've been following the drama like we have over the past year and a bit. So for all the reasons that you mentioned, I like it quite a bit. Since I did no prep work on this, I just looked through my actual watch list, which is, by

the way, there's this awesome feature now on Stratosphere where you can type in your watch list. So I just checked it out and it'll actually give you curated news for the companies you have on that list, which is really key. The one I'm going to talk about here, because I see that it's under 200 USD for first time in quite some time is Autodesk, ticker ADSK, the computer-aided design software that Autodesk makes. Many people are familiar with AutoCAD, perhaps Revit. It is entrenched in the lives of engineers, primarily civil engineers, engineers doing manufacturing now as well. They're making huge gains in that segment. And architects, this is the bread and butter for these types of professionals. Now, their grip on the architecture, engineering, and construction industry is really strong.

Net retention rates still above 100%, usually at 110%. Revenue is up 16% year over year on their latest print. It is not a cheap stock on many metrics. However, it is down 40% off its high and really, really high quality business. Margin's well above 90% on gross margin. I don't really have much more to say other than their position in capturing global secular growth and infrastructure, computer data design, new industries. They're even giving a run for their money and making these 3D renderings that people can use in movies and stuff like that. It is part of this basket of computer modeling and like this next level of interaction with digital assets, grip on the AAC market, lots of optionality, not to mention they have like 7 million users that are active on the platform, meaning they have active sessions in the last 90

days that are non-compliant, like they're not paying for the product. Since this thing goes back to the licensing in the 90s, I think AutoCAD is made in the late 80s, they have some huge cohort of users that are still using the software illegally. The good thing is they know who they are and they know how to basically tone it off for them. But instead of just going cold turkey on them, they're trying to convert them over time. I think it's the right play. They don't want to just turn it off for some of these people who rely. Like it's so important for people's businesses that they have this software. But overall, I think it's a good thing and they're going to be able to continue to tap

on that in the future. Yeah, I did not realize that it was down that much like wow i was just 40 yeah when you were talking and then you said it 40 was looking at the chart just to have a look i i did not realize it was that on that much of a drawdown i i knew it was i just did not think it was 40 since what around august of 2021 was around the time it peaked? Yeah. Yeah, that sounds about right. Yeah, late August, August 25th. It looks like it was $342 per share.

Today, it trades for $197. Now, of course, that doesn't necessarily imply that the stock is cheap. I'm just saying that it is a much better entry point for people who want to own this thing long-term. It trades at the price it did basically in May of 2020. So a round trip on a lot of these software names. Now, they may have got ahead of themselves, for sure. I think that many of them did. On a five-year trend, investors still did great. If you bought the stock in 2017, you paid 80 bucks a share. You've done exceptionally well, but these are one of

the most high quality sticky software companies and really, really entrenched in industry. And that's why I think it's important. All right. Thanks so much for listening, folks. We really appreciate you. You guys rock. Share the show with a friend if you have not already. In the future, I guess a little sneak peek, Simone and I are building a Patreon page where we're going to disclose our full portfolios and additional content for you guys to support the show. It is in no means necessary to do it. It's not going to take away from any of the content. It is simply just an extra way for you to get access to our actual portfolios. We're going to keep them updated monthly, keep our thoughts there.

We will not gatekeep any information at all off podcast. It's not going to be a requirement. It's just another additional thing. Simon did his performance update. Since he's on Bitcoin for a long time, it's like, holy crap, you have made so much money. Yeah. I mean, it's been quite the process. So we do hope there's a lot of people that are interested and subscribe. But like you said, it's not going to take anything away from the show. You're not going to see any changes with the podcast we're still going to do the same type of content going forward but we did put some time into breaking down our portfolios how it evolved over the past two

years and for me just doing my returns for my cryptocurrency obviously most of it is bitcoin has been quite something i had had a general idea. I was kind of doing it just a year over year, but this will be more thorough kind of a monthly basis. So it's been a fun exercise to do. And I think people will enjoy that subscribe. I have clean returns in terms of data going back to 2016 before I switched brokerages. It's kind of messy before that and a lot of work to dig that up. Simon, you switched brokerages in 2020 or 2019? Late 2019.

Late 2019. So you got data up until then. But again, years of performance data that we can go there. I'm just looking at it. We've done well, man. We've done well. It's funny. You've done well, better in some years. I've done better in other years. It's, it's really interesting. 36.3% last year, 14 in 2020, 27.25 in 2019. This is not just to, you know, say how awesome we are. It's just to give full transparency and disclosure. And I think that that's helpful. And I know a lot of people want to see that stuff. So we will drop a link and keep hinting at what it is in the future. For now, we'll let it slide for another couple of weeks.

But just to let you know that we are building that. If you have not checked out Stratosphere, stratosphereinvesting.com, it is my startup that I really help you guys check out. It is the platform for financial data analytics and research. It's completely free to use all of the analytics platform. It's crazy powerful. That is stratosphereinvesting.com or getstockmarket.com if you can't spell that. Getstockmarket.com will bring you there as well. Take care and share the show. We really appreciate it. Leave a review. Thanks so

much. 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.