The Canadian Investor - Thinking rationally when investing

Episode Date: September 24, 2020

In this episode of the Canadian Investor Podcast we talk about how we stay rational when facing a volatile stock market and how we react when we see headlines or news affecting companies we own. Simon also answers a Pension and RRSP question from a listener.Tickers of stocks & ETF discussed : NKLA, NVEI.TO, ADSK, TCEHY--- Send in a voice message: https://anchor.fm/the-canadian-investor/messageSee 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 Pod, what's up? My name is Brayden Dennis, joined as always by my co-host Simon Belanger.

Simon, what's going on, man? What have you been up to? I've been just watching so much sports. I don't know if you've been doing the same. Yeah, I've been watching a lot of baseball since the Habbs got eliminated kind of lost interest in hockey a little bit but yeah just mostly baseball i know uh you've probably been watching football right i've been aggressively watching football i don't think i've missed like a single snap like all sunday i got like seven screens on i watch the primetime games it's getting a bit egregious for a guy who watches so much football i am currently oh and two in fantasy football so it's clearly not translating to uh to any skills and in that category invest in draft games just do

it blindly do it i should i should i should just soak it at this point. Just invest in DraftKings. The Stanley Cup playoffs obviously on as well, and then there's good baseball and basketball on as well. So that's a good point, though. DraftKings is – do they have an unlimited marketing budget? Because during every sports game, every sports podcast I listen to, DraftKings is pasting their name on everything yeah i mean i don't know i know they're the one name that you like even i don't do fantasy sports but even as someone who doesn't and yeah i do enjoy like playing poker but uh i've never

used draft kings but it's the one name if I'm thinking fantasy sports to me like automatically I think DraftKings yeah that's for like the daily fantasy gambling but they have a pretty good pretty good moat uh their biggest competitor being FanDuel but that aside before we get into this week's topic which is thinking rationally thinking long term we have a question from the audience about pensions and rsps do i need to do my rsp if i'm in a pension um our resident pension expert simon is going to handle this question yeah so the the question the question came from chris so thanks ch, for sending us your question. So he said that he currently works for an employer that contributes and he contributes

to OMERS. So OMERS is the Ontario Municipal Employees Retirement System plan. So it's a defined benefit pension plan. I'm very familiar with it because I used to be part of it. And my spouse is also part of that. And he's asking if there's a point to set up a separate rsp if you already have a pension like omers so um it's more it can be a little complex but i'll try to simplify it as much so typically defined benefits is what people will think of the traditional pension plans so it's usually based on a formula, based on your calculation. Oftentimes, it'll be your best three or best five years. And then there's a multiplier.

And then you multiply with your years of service. So that's typically what the formula will look like. Some of these plans are fully indexed inflation. Some of them are not fully indexed. It really depends on the plan. But that's typically what a defined benefit plan is. What happens with the defined benefit plan is actually it uses a lot of your RRSP room. So that calculation is done usually by the plan administrator and it's called a pension

adjustment. So they look at what your pension benefit, basically the pension benefit that you accumulated during the year, and they do an adjustment and basically that uses your RRSP room. You'll usually have a little bit of RRSP room. You might have more depending on your salary, also how generous the plan is or not. as the plan is or not. Having said that, because those plans typically guarantee you a certain amount of money based on that formula when you do retire, and that money that you start withdrawing when you retire is actually taxable income. So what happens is if you open an RRSP and you still have obviously some, let's say you still have some room and you start contributing to an RRSP. Well, when you do retire, you'll have at some point start drawing down on that RRSP, which will add to your taxable income. So you'll be taxed more. On top of that, it could also

affect some of your benefits like old age security, depending on what your taxation level is at retirement. Because if you reach a certain plateau for old age security, you actually start seeing a clawback with the government. I think it's in the 70,000s. And then if you make over 100 and something, then you're just not eligible for old age security. So if you have a very generous pension plan, you're probably better off investing in a TFSA. So, Omer's is a very good pension plan. So, that's why in Chris's position, I would probably invest in a tax-free savings account because then, obviously, you're taxed right now, but you don't have to worry as much about the contribution room. Obviously, you have to make sure you still have enough for your TFSA and you can find that out on your notice of assessment. But when you start withdrawing the

money, especially if you're using your TFSA at retirement, that money that you withdraw is not taxable income. So it really helps you out. And the whole point of an RRSP is that you want to put money in the RRSP because you're at a higher taxation level right now. So you can withdraw it when you retire when you're at a lower taxation level. But again, if your pension plan is really generous, it might not be a good idea. If you have a defined contribution pension plan like the one I have right now, it's a bit different. Those will tend to be a bit less generous. So depending on how generous or not your defined contribution plan is, you'll probably have

quite a bit more of RRSP room and your potential income at retirement may be lower. It really depends. You'll have to make some assumption there. So in my case, I have a defined contribution pension plan. So that type of plan is pretty simple. I put a certain amount, my employer matches a certain amount, and then I essentially manage those funds. And I basically retire when I think I have enough money to retire. So that's the essence of it. So what I personally do is I do have an RRSP and I do have a TFSA. I tend to put more in my TFSA than I do in my RRSP for the same kind of reasoning that I talked about. But in a nutshell, I mean, if you have a good defined benefit pension plan, you're probably better off putting that money in a TFSA.

putting that money in a TFSA. Okay. So question for you. Yeah. Cause yes, TFSA is the ideal vehicle for you in that case. Say I am a lifer in a pension plan, such as this one at Omer's. I don't see myself quitting. I, you know, I have many, many years of service that's going to help. And my TFSA is maxed. I'm fully tapped out. It's really not that much. And by the way, my pension is going to be a lot. It's going to be a fair bit of taxable income. Do I go into a non-registered account or do I use an RRSP? What do I do? Yeah, I mean, I would probably go ahead and use a non-registered account. You can always open an

RRSP a little bit and put a little bit of money in there, but a non-registered account will be taxed differently than RRSP. So it's taxation depending on your capital gains. But also there is a dividend tax. So typically those will be lower. So it might be a better idea in that situation to open a non-taxable account. Again, it all depends on your own situation. And if you're depending on how you're generous or not, the defined benefit plan is, but also your salary, right? So that will have impact on your contribution room as well. So I would be tempted to say that a non-registered account is probably the best option, but again, it will vary based on the situation. Yeah, that's the correct answer.

It does vary based on the situation. But if you are going to make a boatload with this pension and you are going to have RRSP withdrawals, your taxable income is going to be not good. So maybe it's time to start looking at a non-registered. That may be much more tax efficient. All right. One last thing, actually, I would add. Yeah, go for it.

Just before we move on, make sure you understand your pension plan before you decide what account you actually want to use. Because that will vary. And that's probably the biggest factor. And just as a side note for you, Chris, I don't know if you were aware, but starting in 2023, side note for you, Chris, I don't know if you were aware, but starting in 2023, OMERS will actually be doing conditional indexing for the pension plan. So you can always just look up OMERS and you'll see that effective January 1st, 2023. They call it shared risk indexing. What it means, it's conditional indexing. So if the money money in the plan if the plan can allow it they will index the pension but if the plan for its sustainability cannot allow it they probably

won't index it for a certain year or they may provide a lower level of indexation but that's just an example there's a lot of different you know variables and all a lot of different variables and a lot of different type of plans. So just make sure not only Chris, but everyone else, if you have a pension plan, whether it's defined benefits or defined contribution, make sure you understand it before you decide which account to open. All right. So now, you know, if you have a pension question, those are going to Simon. If you have a pension question, those are going to Simon. Keep me out of it. Keep me out of it. 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. All right, so let's think rationally the juicy part of this episode. Simon and I are going to go through some situations that happen. That happen all the time, by the way, sometimes daily. These are the kinds of things that you're going to face as an investor long term. And you need to know how you're going to react and how you're going to tell yourself to think rationally when these things happen. Because behaviorally, we are really bad. Humans are really, really bad with a lot of these things that happen, like behaviorally.

There's tons of books you can read about how even people who are just basic index investors still fail to match the market because they're irrational in times of when they buy and sell and when they contribute and when they pull out. And there's lots of books that can back this up. So these are the kinds of things that you are going to have to come across. You're going to have to think rationally about as long-term investors. So first one, big drops on a daily basis on different positions. So, for instance, company X you own falls 8% or even 15% in one day. You get some notification from your brokerage.

Did I hear Tesla? Oh, God, no. uh did i hear tesla assuming oh god no uh assuming you don't have some stop loss on your account which i never recommend stop losses i hate stop losses um but you get some notification on your brokerage or you go on your brokerage or you go wherever you track your holdings and you're like oh shit company X is down 15% today. What do I do? What's the first thing you do, Simon, when you see that? Obviously, probably with that much volatility

is some sort of news piece that has come out. Maybe it's earnings. What are you instantly scanning for? My first thought, I'm stealing your thunder right now but my first thought is did they release earnings today and i didn't know about it yeah yeah that's that would often be my first uh reaction as well the second one would be okay if there hasn't been um any earnings release and i forgot about it uh then there's probably a news piece um that affected the the stock for whatever reason.

Would that be the second one for you as well, Marina? Yeah, just some sort of news article or competitor. Amazon has decided to enter the space and your stock is doomed because they just divide and conquer every industry out there. These are the kinds of things that affect positions in a major way on a daily basis. So I'm curious, what do you do if the news is truly bad? Because these are the things that people are interested in knowing. people are interested in knowing if that earnings report is bad you know they had some big loss or you know they missed revenue by x percentage and the market hates it are you what are you doing like just what how are you approaching the situation yeah usually i'll just try to listen to the conference call just to get a better understanding of what created the big drop, for example, and to see if it's really something that's more short term or long term.

If it's something that's long term, then I will do some more research. But that's something I may reconsider my position in that business and could potentially consider selling. consider my position in that business and could potentially consider it selling but I will do some research make sure that my thesis makes sense and that I do agree that this will affect the company long term in a negative way if it's really short term then and I've again I've done my research listen to conference call look at the quarterly report and it's just going to be something for the next year or two, for example, I might look at it as just a buying opportunity to add more to the stock. So for me, it's really, is it short term or is it long term?

If it's long term, that's when the red flags start kind of going off in my head. Yeah, that's completely fair. And the other thing I would mention is, oh, the headline might be that your position missed earnings or missed revenue by X percentage. But sure, maybe it missed five analysts on Wall Street's targets. But what if those five analysts on Wall Street were completely off? But what if those five analysts on Wall Street were completely off? And this has nothing intrinsically to do with the business, but that the analysts were completely off when they were throwing their doubt. So look back, I know, comparable sales to a year ago.

How does that match up? If sales are still up 15%, but way, way lower than expected, analysts thought, you know, revenues can be up 25%. That's not bad news. That's the analyst didn't know what they were talking about, or they over estimated what revenue growth was going to be. So that's another perfect buying opportunity, because 15% revenue growth is nothing to sneeze at. Sure, it wasn't the 25% that they thought it was going to be. So maybe there's some multiple contraction happening. But short term multiple contraction happening on a stock you own is not a reason to exit a position. So this is really contextual in terms of how you want to handle that. If it is financial results-based, like an earnings report. And then what Simon said, is it long-term or is it short-term?

If it's something that's really short-term and is going to go away next quarter well it's nothing to nothing to freak out about and keeping this also sorry go ahead yeah go ahead no yeah so i was going to say the the wow we are way off right now i was going to say the the other thing is is if stocks are all down like all the entire market is down then don't lose any sleep over it because you know everything in the ocean all the ships are going down when the sea level lowers yeah yeah exactly and you'll see that like stock prices will move pretty intensely just on like an analyst like hiking the price target or lowering it which i mean oftentimes mean absolutely nothing. But, you know, the stock market short term will be affected by that. And another example, too, of what can affect a business short term, but can really be good

long term. And I know you're a big fan of that company, those company, actually, but a company switching from a more traditional model, like a tech company to a SaaS model, AutoCAD, or I mean, Autodesk, for example, that's a good example of that. So when a business switches like that, in the short term, for the next few, few years, you could see really a drop in sales or revenue. But when that new model starts kicking in, then you can really see growth pick right back up. So you have to keep, you know, keep things in mind, keep things in context, and really keep a long term mindset. Yeah, that's a that's a great example. Because

two, three years ago, when they're finishing their transition from the licensing to the SaaS model, that pivot wasn't easy. And revenue did stall out for a bit. Once that transition was successful, then you're seeing that acceleration pick up. And then that, again, speaks to the moat of the business because there's still demand for that. And during that transition period, they did not lose customers in the grand scheme of things.

So now that it's really accelerating again, speaks to the successful transition to a subscription based model, which has endless benefits that we could go into on another show. But that's a that's a good thing. So bad market drops in a single day, a flashback six months ago to March volatility. 10%, 5%, 7%, anything in between daily S&P down on the day. You and I are not selling positions. This is when we actually get excited. Do I like when individual

stocks I own are way down when the rest of the market is even or up? No, because that's usually a good signal that there's something wrong with the business. There's a bad report, a bad headline, blah, blah, blah, blah. If everything is getting punished in a bear market, is getting punished in a bear market. I get so excited because there's nothing wrong with the business and it is on sale and that's where real wealth is created. So what were you thinking back in March other than us texting back and forth about being excited? Yeah, I mean, I was thinking, holy shit, I've never seen a 10% drop in a day. But aside from that, I'm pretty much just like you said, I get excited because I have companies that are my watch list. And there's always going to be a few companies that I love

that are just a bit pricey in my view. And that's usually a great opportunity to start positions when you get those big drops. And I tend to like to have like, you know, like just have a plan, especially if I like a company and I'll have a price at which I want to start getting in a valuation at which I want to start getting in. And usually I'll do, you know, if there's another 10, 15 percent drop, I'll add another another installment of that investment and so on but that's that's the main reasoning I don't panic I just kind of stay calm if you know learn from

your past experience too if back six months ago in March if you were stressing out about the market going down and you were losing sleep over it I know Brayden and I tend to be fully invested in stocks and I'm fully invested in stocks, but I do have some cash on the side that I'm ready to pull the trigger on. But if you're really, you know, if it really stressed you out and you were, you know, you didn't handle that well, well, you might want to allocate at least a small portion to for example like bonds a bond etf or something like that um like you know all equities is fine if you can handle it but uh i think it was was it andrew the millionaire teacher that we had earlier and he was saying that yeah i think he had someone in his family that she would panic

every time this would happen so he said for her like it would be ridiculous to have all stocks because she's going to act irrationally when there's big drops that happen so for someone like that um having a better mix will probably help you out in those times yeah he does talk about those people who get get triggered by big market declines and how bonds can actually boost their returns because it'll decrease the likelihood of them you know going to their brokerage account and pressing sell on everything so in that case it makes sense to have a lower volatility profile and notice how i didn't say lower risk profile. I said lower volatility profile because those are not the same thing. Risk and volatility are not the same thing.

Anyway, so in that case, it makes sense for someone to have less volatility if they are going to act more rationally. So if you know yourself and you go, I am not going to act rationally if the market falls again. COVID numbers go back up as they are. I know myself, so I'm going to allocate some more of my portfolio into less volatility. That may boost your returns. But if you're like us, when you love when there's big market declines because you know high quality businesses will thrive through this and continue to do well, then you get excited.

And then you're in a different camp and you can be all in equities. So you have to know not your risk profile, but your volatility profile, because those are not the same thing. And be honest with yourself. There's no shame. If you think you're going to gonna react that way that's fine you can have a like brayden said just a lower volatile volatility portfolio and it will probably help you in the long run over you know you panic and you sell all of it so yeah and that would be not good all right i guess i guess back on March, the only thing that was annoying about all of it is that it rebounded so quickly and I couldn't continue to deploy capital. I think we had about

two weeks, three weeks, and that was it. So that's why you do try to catch a falling knife and keep dollar cost averaging. 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.

episode for full disclaimers and more information. All right, moving on. IPOs. How do you think rationally about IPOs? I have a term for IPOs called it's probably overpriced IPO. So I think about that most of the time and in an environment like this where it's IPO and SPAC merger IPO craziness, Snowflake launching up over 100% in one day with the big cloud IPO last week, how do you think about these kinds of things rationally? I know you look at positions for months, perhaps even years before entering them. So I know we don't have to talk to you about this, but how do you think about IPOs rationally when there's this FOMO seeming to go on right now? Yeah. So the first thing people need to understand is the IPO price is not the price you're going to pay. Like that's that is for sure. So the price

that a company say they price at a $25 share for the IPO, this is the price that institutional buyers will be able to get in, you'll get in at when it starts trading on the market. And if that's the case, in this current environment, it'll probably like, you know, and for something that's priced at $25, it might be $40, the price you'll get when it starts trading. So let's a lot of people think, oh, I'll buy it at the IPO price until unless you know, you're listening to us and you have like over a million dollars to invest or something like that. You're probably not going to have that available to you. And even then, so just to put that out of the way, IPOs in general, I would personally give

it at least two quarters, but probably a good year until I would start considering a position in the company. The reason for that is the prospectus is all nice and dandy and the company tries to really make everything look good. And the prospectus is what the company will file before going public. And one of them that I'm just started digging into is Nuvei. So it's listed on the Toronto Stock Exchange. I started trading last week. So it's a payment processing company based in Montreal. It's an interesting company, but I'm still starting to just dig in through the prospectus. But waiting a bit more to start a position just gives you so much more information about the company. When you invest really early, there's a lot of volatility,

especially right now in IPOs. But if you give yourself some time, you'll understand the business better. The hype might be a bit lower for that company as well. I personally think the good outweighs the bad in terms of waiting a bit longer than getting in too early. But just to get back at Neuve, and I'm probably butchering the name. So if someone works for them and they uh they know how to pronounce the name please let us know uh but it's um they do payment processing in various areas and we once i dig into it more i can go into do a deep dive on them but uh they do um they're present in online gaming social gaming online retail onlineplaces, digital goods and services, financial services and travel. I went and did a quick search on Glassdoor and not surprisingly, but I wasn't familiar with them.

The founder and the CEO, well, I believe it's the founder, but he's the CEO right now, Philip Fayre. Same guy. Same guy. It's founder-led. it's founder it's founder led founder led so he's employees like have a super high rating of them so that's very good so 93% of them approved of the CEO and 80% would recommend the company to a friend and in terms of payment processing they did 35 billion a bit more than that in annual total volume in the last 12 months.

71% from mobile and e-commerce. And the revenue is mostly volume and fee derived. And they did $246 million in revenue in 2019. That's the extent of my research so far, so I haven't gone fully in through the prospectus. But it could be an interesting play in terms of payment processing here in Canada. Maybe in the next few months, I'll be able to dig in a bit more and do a deep dive on them. But again, I would not start a position in them right now until they at least have a couple quarters under their belt, if not a full year. Yeah, like, look, I love payment processors

more than anything in the world. If you ever listen to this podcast, you know that. So this IPO, I'm very interested, and everything looks good. The growth is fantastic. The fact that Simon's main talking point was, we do like that it's founder-led, but the main talking point was that, you like that it's founder-led, but the main talking point

was that its glass door ratings are great. It means we literally have no idea, like a history of the financials of this company. It looks great. Everything looks very interesting. The business model is fantastic, but we don't know enough yet. So we're willing to sit on the sidelines. We don't know enough yet. So we're willing to sit on the sidelines. Say in a year from now, I'm like, holy, this business is incredible. It's $800 million in market cap. Amazing.

And it's doubled. So now let's say it's now $2 million in market cap. If it's a true 10-bagger, I'm not going to worry about missing out on that first bag if I now understand the business. So this is these are rational things to think about when you're seeing IPOs soar through the moon is do you understand the business yet? If not, take a little bit more time. There's zero rush. There's no rush. If it's going to be in a fantastic business, you don't have to get it at IPO.

Yeah, and you'll see the financials and the prospectus. And obviously, this was just a first glance because it's 300 and something pages. So I only looked over it. But again, like Braden said, you just have so much more information once a company has been public. At least, like I said, if you can wait at least a year that's great and i personally think that the the downside of buying in on the ipo day for example or shortly after it ipo'd is way greater than you know than the opposite so um that's kind of my view on it moving on the term all-time highs i see all the time that people are worried about entering a business or want to exit a position because of all-time highs or 52-week highs. This is complete garbage.

Let's think about this rationally. If a business is at all-time highs, they're probably doing well. If a company never got to all-time highs, it would never be going up. Think about that concept for a second. If a stock never got to all-time highs and continued to reach all-time highs, then it wouldn't be increasing in value. So don't get triggered by something being at all-time highs or at 52-week highs for reason to not enter the position, if it's a great business. Of course, things are going to at times be at all time highs. And you might think to yourself, wow, I could have bought it for 30% cheaper three months ago. Yeah, well, you didn't. And it's still good now. It's still a great business. The valuation makes sense. Do not let all time highs trigger you for not entering a position. Like, let's think

about this realistically. So Simon, how often or how many times have you entered a stock and you think that perhaps it was the highest it traded ever up until that point, the day you bought it? Because I know I have bought positions at its current trading day, it was its highest as it had ever been at that day. I mean, I don't really pay attention to all-time highs, I'll be honest. Which is the right answer. Which is the right answer.

I just speculate, I speculate that there have been times that that's happened to me. Yeah, I'm sure it has. I mean, usually, like, it's just, you gotta put the all-time highs in perspective too, right? So if they're hitting a all-time high, but their revenues are going down, I mean, that would be a red flag right there.

That would be probably bubble territory. But again, I don't really pay much attention. I tend to look more at different valuation metrics and if those make sense from what I think the company can grow in the future. That's kind of the simplest way to do it. I can't remember the last time I looked at the 52 weeks high and lows, to be honest. Yeah, it's a completely useless metric. Completely, completely useless metric. Yeah, it's a completely useless metric.

Completely, completely useless metric. And when you search up a stock on Google, let's see here. These are the things you get when you search up a stock on Google. You get the chart. You get its open price for the day. It's high for the day. It's low for the day. Market cap and P.E. ratio, dividend yield. Okay. Those three are useful. Previous close. So yesterday's close. And then 52 week highs and lows. Come on. So that

is one, two, three, five. There's nine metrics and three of them are useful. Like what is that? At Google, this is complete garbage. what's with the 52 week high and lows doesn't mean anything so when people ask me does 52 week high and low mean anything no it doesn't if it's at the low you might think and it's a great business you might just think it's it's perhaps a buying opportunity but that's it all right news headlines. Something comes out about the broader market. The stock market perhaps is... They love making ridiculous headlines. What was the headline today that you were texting me about?

Oh, yeah, this morning, the pre-market on CNBC was saying, like, oh, the is uh recovering from the the down streak of the past three weeks uh the futures look positive they were like positive for like 0.25 percent and by the end of the day it was down three percent or close so I'm like come on like it's yeah okay like it's just you know, that's what, I guess, sales, it's those headlines. That's what people watch it for. So, I mean, I get it at some point. But be careful with those, especially if you're someone, like we mentioned,

like if you know yourself and you might panic easily with those headlines, just don't look at it. Yeah. it yeah and those headlines are just a snapshot in in time on the shortest term possible because they're trying to sell daily news so that news headline is a snapshot in time for instance i saw a headline yesterday about how apple has fallen so much as of late, which is true. Stock is down about 20% from its high of maybe three weeks ago. This is true. And the stock is up 40% for the year still, given that. So that headline, you might think, wow, Apple's been just a horrendous performer. No, Apple's been an incredible performer. So it's a snapshot in time and it needs more context.

That's a prime example. If you have a stock that does 40% for the year and the news headline was that it sucked, you need to follow different news headlines because you cannot expect 40% returns on positions every year. If you're getting that, well, you're going to be compounding wealth at a supremely fast rate. And you should probably slide into my Twitter DMs. All right. fast rate and uh you should probably slide into my twitter dms all right actually there is one headline that will trigger my attention for a specific company um if i thankfully hasn't happened for any of the companies that i own but if i see a headline or if i would see a headline for a company i own and it says for example it's under investigation by the SEC in the States, that is something that I will dig into and keep a very, very close eye on because that's usually not a great thing and can lead to a lot of not so fun things if you're a shareholder of that company.

Very good point. And we also didn't mention if a short seller report comes out uh you know same thing with an investigation there might be there could be nothing wrong there could be completely nothing wrong could be the short sellers trying to profiteer uh it could be you know the sec is not right. That happens. But when there's smoke, there's fire. And yeah, this does trigger me, and I'm digging into it a lot. Like Nikola is a great example of this. Nikola. I mean, you and I could have sniffed out the fraud months ago

when this stock went parabolic. And, uh, but this short report comes out. Now there's an investigation and it's a complete disaster. Trevor Milton deletes his Twitter, resigns from the company.

It's probably going to zero. Yeah. Anyways, if you get a short and a sec investigation, you, you probably shouldn't consider selling that position. You've probably already lost. Yeah.

Maybe, maybe try to recoup some of that, that cost. All right, let's wrap this up. Simon, what's on your watch list? Uh,

yeah, well this week it was probably like I mentioned, it was new wages because, you know, it's an interesting payment company. So I'll be digging more in that prospectus. That's the one I'm kind of looking at. I've got a few buy orders from some limit orders for companies I've already talked about.

So Digital Realty Trust and a couple of other ones. But yeah, I'm intrigued by Nuve. It's kind of nice to have a payment processor in Canada. I guess Shopify could probably fall into that and a few other companies. But I'll dig into more and more into it. And at some point we can do a deep dive into them. How about you, Brayden? Yeah, I'm counting on you to report back because I'm a big fan of payment processors, as you know. And so I'm very interested

as this is listed on TSX. What am I looking at? As you know, and if you've listened to this podcast last couple episodes, I love Autodesk right now. For people who don't know my investing strategy, it's pinned at the top of my Twitter. I'm a Twitter guy now, by the way, at Brado Capital, which is a hilarious Twitter name. It's kind of a joke, but I like it. At Brado Capital, B-R-A-D-O Capital. And I mentioned that I don't care

about being too concentrated in some names. If I think that some names are incredible businesses, have great moats, I'm going to continue to add to them and then I essentially do nothing. And that's what I'm doing with Autodesk right now. I'm continuing to think it's a fantastic business. But what I will give you is something on my watch list is after seeing a deep dive uh yesterday on tencent and their market share in all of the revenue streams as they challenge the big behemoths on a global scale for cloud gaming payments e-commerce social media ads, the fact that they are on the scale against the biggest company in that category

for all of those segments makes it very interesting. And as we talked about before, there's a few people who live in China. Hey, join the club, Braden, join the club. I know you own some Tencent. This is a company that's massive that is going to become even more massive, in my opinion. So I'm still looking at it.

I don't love investing in Chinese companies, but I'm still looking at it. That does it for this episode, guys. Haven't even mentioned. Went the whole podcast without mentioning. Stratosphere 2 launches on Monday. We had 55 testers. There was a survey that went out today. Thank you so much to everyone who looked at it.

Starting Monday, stratosphereinvesting.com is an unbelievably good platform for doing all of your research in one spot. It's a company search. You can find everything you could possibly need to know about a business. And there's a stock screener, community forum, earnings calendar, my top picks all in one place, both US and Canada all in one place.

Subscription starts at $9.99 a month. Cheaper than Netflix. And it's going to help you out with your future. That does it for this episode, guys. We will see you guys next week. Bye-bye. The Canadian investor is not to be taken as investment advice. Braden or Simone may own securities mentioned on this podcast. Always make sure to do your own research and due diligence before making investment decisions.