The Canadian Investor - What NOT to expect in 2023

Episode Date: January 9, 2023

In this episode, we look at the stock market historical returns and how the automotive sector could be in for a rough 2023. Simon shares an investing project that he will be undertaking to show that a...nyone can invest, even those who only have small amounts of money to put towards investing every month. We also discuss the new Tax Free First Home Savings Account (FHSA) that will be taking effect later this year. Tickers of stocks discussed: VEQT, XEQT, TSLA Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense. Register for ShakepaySee omnystudio.com/listener for privacy information.

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Starting point is 00:00:00 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
Starting point is 00:00:45 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 Bélanger. The Canadian Investor Podcast. Welcome into the show. Today is January 5th, 2023. It feels good to say that, Simon. I haven't seen your face in so long. I miss you, brother. How are you doing? I'm doing well. Yeah, it's fun to get our first recording of the year going,
Starting point is 00:01:48 although I did record with Dan from our real estate show, the Canadian Real Estate Investor yesterday, but that will be out later this month. But it's the first one we're doing for back to our regular schedule. You got any fun goals for the year? They're probably all dad related. Yeah, I mean, obviously, that'll be, you know, getting into daycare. That's actually we've already found daycare, which is a big thing, if you know some newer parents. But aside from that, a few financial goals that I'm sure I'll be talking about on the podcast in the next couple of weeks. Just I think it's
Starting point is 00:02:19 encouraging for people. And yeah, maybe looking for a new house towards the end of the year. So just that's it. Oh, wow. Yeah. The kid is crushing it. Congratulations. Well, welcome everyone back to the show. I mean, if you've been listening, you haven't missed a beat because we don't miss shows here on the Canadian Investor Podcast. We're here Mondays and Thursdays, no matter what. We pull absolute backflips to make sure that the show goes on. But here we are recording and fresh for the year. So I'm going to kick it off with our first segment of 2023 with something called what not to expect in 2023. I was fascinated by this data set.
Starting point is 00:03:02 The data set that I'm going to show you, it's almost unbelievable. The first time you hear it, you're like, I need to see this data set before you can really wrap your head around it. So I've always been fascinated by the concept of annual stock market returns because it's generally a pretty arbitrary timeframe, but it's the cadence of our planet naturally and is the human condition at this point. But typically on a 12-month time period, you're going to hear the 8% to 10% range for the stock market performance historically, on an annual basis. What do you think? When you think of the S&P and you're going to own it for the next 40 years, what are you conservatively pushing out there? 8%, 9%? What do you think of the S&P and you're going to own it for the next 40 years, what are you kind of conservatively pushing out there?
Starting point is 00:03:46 Like eight, nine? What do you think? Yeah, I think you know me well enough that I try to plan for kind of more conservative. So I probably would aim towards like seven, eight. I know historically it's probably closer to 10%. I'm well aware of that. It's just I do. After Div's total return, yeah, it's closer to 10,
Starting point is 00:04:05 but I get the conservative mindset. Makes sense. Exactly. I like to under promise to myself and then over deliver, which is a key. It's a smart man. It's a great thing to do in customer service for those of you in that industry. There you go. That's actually a good point. Yeah. So, you'll hear the S&P does historically 9% a year, 10% a year. And that is true. That is statistically what the S&P and the broader equity markets have produced, especially for US markets. And so that's totally correct. But statistically, you rarely ever get anything close to performance in that range. So from Ben Carlson's blog, I've gotten to know those guys. They all have their own blogs and
Starting point is 00:04:53 they're from, oh, what's wide? What am I forgetting? Ben Carlson, a wealth of common sense. Yeah, that's their blog. That's their blog. And those guys over there, they crush it. And he says, in fact, going back to 1928, there has only been one single year that falls between 8% and 10% in 1993 when the stock market, when the S&P 500 was up 9.97% in one year. was up 9.97% in one year. That is mind-blowing. There's only been one year since 1928 that the S&P 500 has produced a number between 8% and 10%, and it was in 1993 where the market was up 9.97%. He goes on to say, most of the time, the stock market is up big or down big from 1928 to 2022, 70% of all years have seen double digit gains or losses, including 2022. So you can see here with the chart that I've put up from his blog, kind of the distributions of historical performance in the S&P 500 since 1928. And it is baffling. I mean, it's true. The market's usually up big or down big,
Starting point is 00:06:14 but on the long run and historically, you're going to get those market returns. And I think this is statistically insane and an important reminder, right, Simon? Because what has been the common theme of this podcast is that volatility is the only thing that you should expect to be completely normal, right? People always say, oh my God, the market's crazy this year. It's like, that's normal. That's the only thing that you should come to really expect as normal. Yeah, exactly. And I think I remember when I see these kind of percentages, I always think of about Howard Marx and how he will say, I think it was one of his book on market cycles and the full
Starting point is 00:06:57 title I kind of forget here, but it always stuck with me because he says the market's like a pendulum, right? So it tends to overshoot one way or the other. It's rarely just kind of at the bottom type of deal if you think of a pendulum. So it's either too pessimistic on one hand or too positive on the other. So you have to try and make your investments with that in mind. And I think there's probably a case right now that, you know, it's too pessimistic. There's probably a case to be made that it's just about right. And I'm sure I've seen some people make the case that it's still too positive because
Starting point is 00:07:31 you're going to see businesses who will have their earnings reduced this year. So I think it's that's probably the hardest thing is identify where we are in that kind of pendulum. I was interviewed yesterday from Wealthsimple's team because they're asking a few people in this space. Obviously, they know about the podcast and this is for their newsletter. And they're like, we're just asking a few people in the space what indicators they're looking at or what they expect for 2023 in the stock market and in the Canadian stock market. And I'm like, let me give you
Starting point is 00:08:06 some statistics here. There is zero, zero correlation between the previous year's stock market performance and the next year. If you put out a scatterplot, there is literally zero R correlation that defines the data whatsoever that links the previous year's performance and as an indication for the next year's. It is a total crapshoot. The data tells you nothing and there is no correlation. So that's an important reminder, right? Here's another fun fact that Ben Carlson also pointed out. He goes, Here's another fun fact that Ben Carlson also pointed out. He goes, there is literally no statistical correlation growth, but it's a horrible short-term measure of earnings growth. So yeah, let's just round up this piece with one more thing he says here.
Starting point is 00:09:12 Most of the big moves have been to the upside with more than one third of all calendar year returns ending with gains of 20% or more. So we saw that last year, not last year, but the year before and the year before. 2019, I think I was up like 30% in 2019. But given all of that big ups, big losses, almost half of all years ended in the red with losses of 10% or worse. So yeah, I think this is a really statistically important reminder that, one, that there's no correlation if you put out a scatterplot of previous year's performance and next year's. Trying to kind of extrapolate that data is a sucker's game. And being up big or being down big
Starting point is 00:09:57 statistically since 1928 is the norm. And it rarely kind of comes in at that nice sweet spot that we all hope it would. Yeah, no, that's a really good point. And I mean, I like to look at the past year, not necessarily calendar year, because calendar years can also be affected by tax loss harvesting, right? Especially if you're looking at a pretty bad year overall. So there could be some downward pressure just because of that towards the end of the year. But I do like, and I've talked about it before, look at the past year or so, look at the different sectors and see which one have really been hammered. And there's been quite a few last year, definitely find oftentimes if you're looking at good value that'll be a good indication of where you can find it of course with the caveat that not all business are the same in each sector so there will probably be some value traps there but there's probably going to be some good businesses and that's what I talk with Dan in the read episode is I think
Starting point is 00:11:01 there's some good opportunities in the read space because it's been so hammered think there's some good opportunities in the REIT space because it's been so hammered and there's some really good REITs out there. Not all of them again, but that's something I like to do personally. Yep. Totally agreed. 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
Starting point is 00:11:45 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. Calling all DIY, do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building and people share their portfolios, their trades, their investment ideas in real time.
Starting point is 00:12:35 And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. All right, let's hit your first section, your first segment of 23. I'm all ears. Yeah. So the first segment, I think this one is going to be fun. So it's I titled it a New Year's resolution you can follow. Obviously, the caveat, this is not investment
Starting point is 00:13:30 advice, but I've had feedback and I'm sure you have as well, where people say they just don't have a lot of money to invest. Some people say with inflation, especially or their students, they just graduated. They don't have a lot of spare money, so they can only do $50 or $100 a month, something like that. Or with inflation, people's costs are rising, expenses are rising, so they have less money available. And I know it's easy to get into the mindset of, well, I can only invest $50 or $100, like it's not really worth it, right? So my goal here is just to encourage people to do it. I will be doing that for the very long term. I'll be doing it in my TFSA. So what I'll be doing is I'll put fifty dollars every month on January. I'll do it on the 20th of every month.
Starting point is 00:14:16 Of course, if it falls a Saturday or Sunday, I'll just do it the next business day on the Monday and I'll be doing it in the ETF VEQT. So this is a Vanguard. It's a broad-based ETF. So the other, I did a post on Twitter asking people for some suggestion. I think you responded. You said XEQT was one of them that you thought was really good. I think they're both very good options to be honest. The reason I decided to go with VEQT is because I like the allocation just a bit better, although it's quite similar. Those two ETFs are- Is it just a little bit more skewed to the US? Well, you'll see. So there's some exposure. So I'll get to the exposure a little bit here,
Starting point is 00:14:58 but it's slightly different. The US is actually quite similar here. So those two ETFs, the first requirement when I posted was that it has to be under $100 because that was what I had in mind here. They don't require a big dollar investment. So you can dollar cost average, even if you only put $50 every month, for example, you can do it. You can basically buy a share. Obviously, you want to make sure that for the most part, your brokerage doesn't charge any fees for ETFs, which is pretty common in Canada. Now, they both have almost identical US exposure. Where it does differ a bit is VEQT has more exposure to Canada and emerging markets, whereas XCQT has more exposure to developed countries excluding North America. So that's kind of the biggest divergence out of the two. I do like the Canada part a little more, even though we've been a bit critical about home country bias in the past. If people have been listening for a bit, they're aware of that, just because I think Canada should benefit in the next decade or so from its commodities. So I actually prefer that
Starting point is 00:16:02 over having more exposure to Europe, for example. That's kind of the big difference here. Now the expense ratio or the fees, the management expense ratio is almost identical, although slightly higher for VQT at 24 basis points. So that's 0.24%. Whereas XCQT is 0.20%. But it's a small enough difference that at this point, I think you should really focus on which one that you prefer in terms of allocation, to be honest. Do you agree with that? Four basis points? It's low enough? I actually disagree. I just looked at them. I think that they're close enough that I'd rather just try to save four bips on the management ratio because they're almost identical. Yeah, I mean, there's a 10% different if you look at the emerging markets, develop ex-US, Canada. So that's where the 10%, right? There's actually a 10%
Starting point is 00:16:53 divergence in the allocation. Wait, which one has more exposure to emerging markets? The one I chose. So the EQT. Yeah. Okay. Oh, it's 10%. Okay. I missed that. You're right. That's a little bit more. Well, when you factor in both that and the developed countries, ex-North America. Yeah. Okay. I understand. I still think I'd rather be more concentrated.
Starting point is 00:17:14 Again, here's an important little learning piece here is I see this so often. If you handed me both ETFs and you're like, here's VEQT and XEQT, and you're like, I gave you this one. I'd be like, oh, okay, that's fine. I don't really care. They're so similar. And the ratio is only four bips that I have more things to think about than the same product. They're like for like product. And what I see people do is like they'll hear this segment and be like, shit, I own XEQT. Someone's talking about VEQT. Let me swap them and like, you know, like do like all of this unnecessary trading and portfolio management when it's just like, man, they're the same thing.
Starting point is 00:18:01 Like don't sweat the small stuff. And this is totally the small stuff. Yeah, exactly. And I just, because I'm starting from scratch. So personally, I prefer VQT for the reasons I mentioned. And the four basis points was not big enough for me to not consider it. Obviously, if it was like 20 basis point, then it would be a different conversation for sure. But I just personally prefer the allocation a bit more. But for example, the US allocation is almost identical. I think it's like a percent different. It's really outside the US where it starts changing a little bit. But I'll just kind of stick to that. They're both,
Starting point is 00:18:36 like I mentioned, they're both very good options in my opinion. And the current price of EQT is around $32. Chances are that I will buy one share on January 20th, of course, then the remaining amount I'll just roll over to February. So for example, if I have enough for two shares on February 20th, assuming that's not a weekend, I'll be able to buy the two shares because at that point I'll add $50 plus 18. So a total of $68. So there's a good chance I would be able to buy two. And that's what you have to do, right? If you want a dollar cost average, because rarely unless you have access to partial shares, which is not common in Canada, you'll rarely have enough to buy,
Starting point is 00:19:15 you know, if your dollar cost average, like a set amount every month, you're probably gonna always have a little excess money or rolled over money from the previous month. So what I'll be doing is I will track the returns. I'll talk to it, you know, on the podcast, probably every couple months, maybe once a quarter. I'll do it as well on Join TCI for those who are members of that, probably a bit sooner, depending on when we post and when we talk about on the podcast, but I will talk about it on the podcast. So people can definitely follow along, especially those who don't have that much money to invest, right? So I think it's important. And if you're wondering, okay, $50, it's not much, what's the point? Well, I just did a compound
Starting point is 00:19:56 interest calculator. If you're doing $50 over 30 years at 8% return, which I think is fairly reasonable, like we talked a bit earlier, you'd be looking at a total value of $70,000 and actually $70,427. And that's starting from $0. So it's not like you had five grand already started put in there, you're starting from scratch from zero. So if you're, you know, you don't have much money, I think you can definitely do some good things if you're consistent, even if it's a small amount. I love this segment because it's so true. The barriers to entry here are basically zero, right? The key here, I think that you talked about, but definitely needs a double click on, is free to buy ETFs in your brokerage if you're going to run this strategy. That's a must.
Starting point is 00:20:50 Oh, yeah. Because you're paying like 10% fees or at least maybe more on a 20%. Look at my like more actually. Oh, yeah. If you do the math on a $50 share and you're only doing one share at once a month. So with that caveat, you're looking at basically next to no fees. You're going to pay, okay, 20 basis points or 24 basis points on VEQT. You get global exposure to the equity markets and you don't need to own anything else. Really, like you're more diversified than me by a country mile if you only own that one ETF. Yeah, exactly.
Starting point is 00:21:30 One million percent. It's like thousands, it's like tens of thousands of stocks held in XEQT, for instance. It's incredible. Yeah. And if I can do it, you know, you can do it as well, even if you have $50. And that there's a reason I chose $50 because I know it's not a big amount. I didn't choose $150. They're dominating in Canadian dollars, these ETFs as well, so you don't have to do any conversion.
Starting point is 00:21:54 You can just buy it, like Brayden said. Make sure you don't have any fees because it's not going to turn out very well. Yeah, that math doesn't work very quickly if you're paying 10 bucks a trade. All right. Let's look at the year that was the year of anti-ESG. For those who are not familiar with ESG, it's environmental social governance. And it is a buzzword across corporates, across financials. It is the buzzword of all buzzwords. And it just means socially responsible capital allocation in the investment business. And that's all fine and dandy. I think that people putting their capital behind things that they believe in is something I certainly believe in. I think that that makes sense. If you're going to put capital into something in terms of a specific business,
Starting point is 00:22:49 a specific sector, you'd hope you believe in that sector and feel good about owning it. That's all fine and dandy. 2022 was the year of anti-ESG. Let's look at the performance. the year of anti-ESG. Let's look at the performance. The SPY, the S&P 500 closed down 20% last year. Let me give you three businesses. Exxon Mobil finished up 74% on the year. British American Tobacco finished up 18% on the year, which by the way, having 18% performance on a year the S&P is down 20 is gigantic outperformance. Lockheed Martin finished up 37%. And so if you look at those sectors, weapons like Lockheed Martin, energy, oil and gas, and cigarettes. If you were all in on anti-ESG and sin stocks, gambling did pretty well. You crushed it. You had massive outperformance if you were long weapons, energy, and cigarettes. And just looking at this data on this table that
Starting point is 00:24:02 I have here on the dock, it's like mind bending how big of a gap there really was. Yeah, Lockheed Martin, I would say they probably got a big boost from, unfortunately, obviously, the war between Russia and Ukraine. So that's not a surprise. As you were talking, I just kind of looked at the returns for the past year for Brookfield Renewable Partners because I'm like it fits in. But they never really sold it as like they never really pushed ESG right because I mean I think it was just obvious that it's renewable energy they did actually you know I have it in my portfolio but they did decent they were down 18% last year excluding dividends so if you had in the utility I mean you'd that's
Starting point is 00:24:43 a pretty like brutal year for you too no no exactly I'm not saying but they you know if you had in the dividend- Yeah, it's a utility. I mean, that's a pretty like brutal year for utility. Oh, no, no, exactly. I'm not saying, but they, you know, if you include dividend probably down about like 14, 15%, I would say, which is, you know, for 2022 is actually pretty good, so. We'll take what we can get, my dude. Yeah.
Starting point is 00:24:59 Yeah, no, that's it for the segment. I just thought it was funny because it was literally like, if you were long anti-ESG and you were long sin stocks, you had quite the year. You could have passed out for the entire year, never look at your brokerage. And then you checked your statement, you're like, wow, stock market was rocking this year. Oh, yeah. Well, I mean, when we did the year in review, right? And that's why the Canadian market did so well is because commodities really performed quite well last year. So that's why the canadian market did so well is because you know commodities really
Starting point is 00:25:26 perform quite well last year so that's why canada and the tsx outperformed the s&p 500 okay so now i'm gonna talk here of something that's making a bit more news because it sounds like it will be happening on april 1st 2023 from what i've read So it's the tax-free first home savings account, the FHSA. I'll probably stumble a few times because I'm so used to saying TFSA, but the FHSA. So I wanted to talk about that because obviously people that are listening to us, I know there's some younger people. I know there are some people saving to buy a home. So I wanted to talk about how this account will be working. Essentially, it's a mix. It's a mash of an RRSP and TFSA together. So you kind of get benefits of both. To be eligible, you have to be a resident of Canada, be at least 18,
Starting point is 00:26:17 and it's a first-time homebuyer. However, first-time homebuyer is kind of a loose definition. It just means that you or your spouse must not have owned a home as a principal place of residence the year it was opened, the account itself, and the preceding four years. So between four and five years, depending on when you open that or when you last owned a home. And so that's something just to keep in mind. So if you had a home seven years ago, sold it seven years ago, you'd be eligible for this according to the eligibility criteria. This is a – dude, I'm just learning about this for the very first. It was part of the platform, one of the big things for the liberals. I know they got roasted pretty badly because people are like, well, I don't have any money to save. It's so expensive, right?
Starting point is 00:27:14 So what's the point of this? But I still think, I mean, if you're looking to buy a home, you'll see that it's a pretty interesting vehicle. So the account, like I said, it's a mix of RRSP and TFSA. Contributions to the FHSC will reduce your taxable income just like an RRSP. Income and gains inside the account as well as withdrawals are tax-free just like a TFSA. You can contribute up to $40,000 over your lifetime and up to $8,000 in any one year, including 2023, even though the rules or the accounts won't go live until April 1st, 2023. You can carry over up to $8,000 of unused annual contribution to use in a later year. The carry forward amounts don't start until
Starting point is 00:28:00 you've actually opened the FHSA account. And then as an example here, if you open an account 2023, and you only contribute 4000 out of the 8000 that you're eligible, that means that you'll carry over the remainder. So 4000 the next year, and you'll be able to contribute $12,000 in total in 2024 4000 plus $8,000. You can hold the same types of investment you would own in a TFSA, which could be a little bit dangerous for people, I guess, just depending, right? Depending how much money you have, because if you're kind of putting money in there in some pretty risky assets, I mean, I guess you're just trying like, you know, I guess going for a Hail Mary or something to try and buy a home. I think people will have to be kind of careful on what type of assets they put in there,
Starting point is 00:28:50 especially whether they're really close to having the money or they're kind of thinking of using this account like seven, eight, nine years down the line. Can I combine this with first time homebuyers in my RRSP? I don't know. That's a good question. I'll have to look into that. I don't want to tell people something I don't know. So I reallysp i don't know that's a good question i'll have to look into that i don't want to tell people something i don't know so i really don't know but that's a good no fair enough well and it's i wouldn't see why not i don't know i literally know nothing about this vehicle when they come out with their political campaigns and they say oh yeah we're gonna do this i literally just i just block out until they actually put something in because who knows if it actually comes in so if it comes it's actually coming in now it's time to do the work on it i think putting
Starting point is 00:29:29 like if you can combine it with first-time home buyers i think it sounds pretty interesting yeah no i'll have a look i don't see why not but again i don't know for sure so definitely do your research if that's something you're interested in now the withdrawals this is where it gets not tricky but this is where the too good to be true kind of comes back down to earth here. So withdrawals to buy a qualifying home purchase are not taxable like I mentioned earlier, but withdrawal must meet the following criteria. You must be a first-time home buyer when you make the withdrawal. You must have a written agreement to buy or build a qualifying home before October 1st of the year following the year of withdrawal you must intend to occupy the home as a principal place of residence within one year after buying or building
Starting point is 00:30:16 it if you have any funds left over after the withdrawal they can be transferred to an RSP or RIF penalty free and tax deferred so thatred. So that's where it starts to look a bit more like an RRSP. So if you don't use the funds, which makes sense, right? You got the tax credit. The whole intent here is to help people buy a home, save money for a home. It's tax free if you use it towards a home. But if you're just using it as a savings account for whatever reason, it's going to be treated like an RRSP. So that's what you need to remember. The funds must be used to buy a home within the following
Starting point is 00:30:50 time frame, whichever comes first, by the end of the 15th year that the FHSC has been open, or the end of the year you turn 71. Again, the RRSP kind of language kind of comes in here. And if you withdraw the money from the account and end up not using it on a home purchase, you'll have to pay taxes on it. So basically, it starts at income tax. Yeah, exactly. So it's basically just like an RSP, right? So if you have money in RSP, you withdraw it, you know, I have money in RSP, I could withdraw it tomorrow, it's fine, I can, but it's going to be added to my taxable income. And it's the same thing here. So, you know, I have money in our aspect. Could withdraw it tomorrow. It's fine. I can. But it's going to be added to my taxable income. And it's the same thing here.
Starting point is 00:31:27 So, you know, I'll hand it to you because obviously the government's announced it, but it's not them who create all the rules. I'm sure it's bureaucrats or people that are, you know, in this space. And, you know, it makes a whole lot of sense if you ask me. I think they seem to have covered any type of potential abuses of that account i'll just say that yeah so can we just go back it says eligibility wise here you or your spouse must not have owned a home as a principal place of residence the year it was opened the year it was open being the account right yeah so basically it's yeah the account exactly so the fhsa so basically if you you open the account this year so you have to make sure you
Starting point is 00:32:11 haven't honed them all home in 2023 and the previous four years previous four years yeah you or your spouse what if you've owned a home and your spouse has not in the past four years it's you or your spouse so it sounds like you'd be disqualified because one of you two have owned it. Oh, yeah, you, oh, that language, right? Dude, when I read this stuff, I go fully into a mental pretzel. Well, essentially it's just to be like,
Starting point is 00:32:38 you know, I bought a house last year and then my spouse has never bought a house. I'm kind of using her to be able to do that. I think they want to prevent that because then that would probably present some abuse opportunities for people. Right, right. Well, you will not be eligible, but my peasant ass will be 100% eligible for all this kind of stuff. 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,
Starting point is 00:33:19 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.
Starting point is 00:33:55 That is questrade.com. Calling all DIY do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building and people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo style education lessons
Starting point is 00:34:41 that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, Blossom the app store, and I'll see you there. Let's talk about Tesla. Let's talk about Tesla. We haven't talked about Tesla in quite a while. And Tesla's been getting hammered, to say the least. And I don't want to pick on Tesla. This is actually a big segment about auto as well. So I'll talk about Tesla, but then I'm going to talk about auto. And I think they could
Starting point is 00:35:25 be in for a real tough stretch in the auto sector, not just Tesla, just the entire segment, including used cars. I have been very historically bearish on Tesla stock for a variety of reasons. They are in a short version. I don't want to own any auto OEMs. I don't want to own any of them. And especially at that valuation that it had hit, that's no secret. It's gone from a very loved retail stock from retail investors, very popular and extremely overcrowded trade to say the least, hit $1 trillion in market cap. Remember that? It made no sense based on the fundamentals. And I'm talking about someone who lived and breathed in the auto sector as an engineer for a while. The margins are terrible. I think that going down the supply chain is actually better than owning the OEMs, like a Magna, for instance.
Starting point is 00:36:25 actually better than owning the OEMs, like a Magna, for instance. It just is what it is. The market finally agreed with some sort of reasonability here. And stock is down 70% from April of 2022, which is quite significant. And this is old. I think they have been getting smoked already in the first couple of trading days. Now, don't hear what I'm not saying. in the first couple of trading days. Now, don't hear what I'm not saying. In before the Tesla bro haters come after me, don't hear what I'm not saying. I love the cars. I think they're brilliant. I think they're amazing. If you've ever gotten a chance to drive one, they're a joy to drive. And if you haven't caught a chance, try one. It's a wonderful experience. It just feels amazing. Driving them feels amazing. The instant torque, it's wonderful. Say what you want about Elon Musk. He's the embodiment of many things I
Starting point is 00:37:12 believe in, which is build amazing things and don't be afraid to make some mistakes and fail, because he has already had so many fair shares of mistakes. What's the result of that? Building life-changing technology and every once in a while falling flat on his face. He's my kind of mistakes. But what's the result of that? Building life-changing technology and every once in a while falling flat on his face. He's my kind of people. People try to bend the world. And I certainly believe that he's doing that for the better with Tesla and SpaceX. Say what you want about the guy. I don't care. That's my opinion. And here's some credit. Investors have done exceptionally well owning Tesla. Even with this drawdown, you have made 7X your money since 2019. That is insane outperformance.
Starting point is 00:37:52 All right. So now that's out of the way. The Tesla stock fan boys, don't come after me. Y'all deserve your credit and don't hear what I'm not saying. I actually applaud your conviction. Here's where things get kind of complicated. They have only delivered 1.2 million cars in the trailing four quarters as of today. Silly Ark and their cult has a bull case model at them selling 17 million cars by 2026. Like, man, let's actually just not even go there. 17 million per year? Per year. Per year. Oh, wow. Okay.
Starting point is 00:38:31 I don't know where the stock goes from here, but I think the car market has a very rough go across the board. The auto market has a tough stretch, whether it's used cars, new cars, the OEMs in particular. I think that they have a rough time. Now, and this is a car company. Don't get it twisted. Tesla's a car company. The narrative around the energy storage, sure, maybe it has legs, but it only makes up 4% of the top line revenue today and has negative operating margins. So let's just shut that door right away. Higher rates get lots of discussion on how it's affecting the housing market. But oh my goodness, it crushes auto probably a lot more. Rates on car financing have gone from
Starting point is 00:39:14 next to zero to if you have a perfect credit score, here, sir, here's your 8% loan. And if you're on an alternative lender, like many people are, you're looking well into the double digits in financing rates on a new car, on a depreciating asset. That brand new $70,000 car just got a heck of a lot more expensive. Used car prices are falling off a cliff for good reasons, including the supply chain kind of being fleshed out, being fixed from the problems that we had. I don't see a world where auto doesn't have a really, really rough go over the next 24 months. That's what I think. Yeah. I mean, I think especially personally, I think we're going to hit a recession this year.
Starting point is 00:40:01 It just depends how severe it is. And I have no idea. At this point, we'll see. I think it's almost consensus, which is pretty rare around economists. And even, you know, if you talk to various CEOs, that's what they'll tell you. So clearly, if people need to make cuts, you know, delaying a purchase of a car is an easy one, right? Yeah. So I think that's something I've also I don't know if it's anecdotal, we have a used car dealership not far from our place, and I've noticed they have quite a few Teslas, and they've been sitting on the lot
Starting point is 00:40:34 for actually some time now. So I know used car financing is even more expensive than new cars in general. So I don't know if it's just anecdotal here, but I wanted to add that. And I actually had a question for you. I was listening to another podcast and do you know the Twitter account Doomberg? Yeah, yeah, I do. Yeah. So it's a group of, I think they're mostly, you know, people that have environmental or scientific backgrounds that run it.
Starting point is 00:40:59 And he was saying, well, one of the ones, they stay anonymous, but he was saying that in his view, hybrid cars are actually more environmentally friendly. The reason is because the extraction of the materials required for these batteries in these all-electric cars is super carbon extensive. And when you factor in with a hybrid vehicle that you can do, what, like 50 to 60 miles or 100 miles, depending of what the car is right and then you kind of kick in the gas if you need it you still gotta make a lithium battery for those you do but the fact that it's much smaller the view was that most of the time you'll only use the battery and it's much smaller and once in a while you'll use the gas for longer
Starting point is 00:41:41 travels so in his view is that it was actually more environmental friendly when you factor in everything, the extraction of those materials and so on for hybrid cars. And the other thing he was saying that I think you'll like is that in his view, again, the answer and he provided a lot of good data, but the answer for renewable or carbon emission reduction is nuclear. I love it. Yeah, and that he didn't really understand the push in the past like 10 decades or so of decommissioning some nuclear power plants. I think a lot of it was pushed because of the Fukushima or, you know, in Japan, what happened. 2014.
Starting point is 00:42:27 happened yeah but 2014 yeah i and just saying that a lot of the kind of nuclear waste you know issue that people kind of bring up where do you store it when you decommission it and so on it's overblown so anyways i thought you'd like hearing that because you've been saying that i could have a whole podcast segment agreeing with some of the with some of those statements especially around nuclear because i worked in the biz for a bit there. I'd have to see some numbers on the hybrid thing. I do think that plug-in hybrids are brilliant. That's what he was talking about, plug-in hybrids. Yeah. Yeah. I do think that they're brilliant for the reason of it really helps people go from having no confidence to, okay, I get it. And let me give you an example. I used to take one all the time for work to about 75 kilometers commute there and back to go to the nuclear, actually, ironically,
Starting point is 00:43:13 to go to the nuclear plant here in Ontario. And I used to take that trip from Toronto, and I would go there and back on this plug-in hybrid, which had about 80 kilometers of electric before it switched to the gas. So I would go there and back and just use the battery. I never burned any fossil fuels because our grid during that time, if you're off peak, you're not generating off of any like nat gas. It's like just hydro and nuclear. So that's good. And then I would go back and plug in the hybrid and the battery would get charged up. But if I had a change of plans, I'm not screwed because I would have like another 350 clicks of gas if I need it. And so range
Starting point is 00:43:59 anxiety is zero because I still have 350 of gasoline and I can hit any gas station if needed. But I would do that trip all the time and not burn any fossil fuels. No, exactly. It's brilliant. Yeah. I'm all in. I'm all in on it. I love it.
Starting point is 00:44:16 Yeah. And I think it's a great option for a lot of people who live around the city, right? They'll rarely do more than 50, 60 kilometers in one shot. So, and once in a while that you think about the savings man like it's so cheap yeah that's it so i think personally i don't know like he had some numbers and i have to go back right clearly the guy knows what he's talking about and i'm sure he can they provide some good content for those who kind of want to get into learning more about that energy space.
Starting point is 00:44:45 And at times a bit controversial because it may not align with, you know, what you hear all the time on mainstream media. Especially like the nuclear part, right? And I think the more I read about the nuclear aspect, the more I think it's definitely the solution going forward. It just takes so long to fire one up. It just takes so long to fire one up. Like start engineering now, start building in five years, completion in 10 or looking at net 15 years. You went 100% over budget. The public hates you.
Starting point is 00:45:21 It's not perfect. Yeah. His argument was that clearly they take more time to build, but if governments really put emphasis on that, I think a lot of the delays is regulation, right? And just kind of red tape going through the various governments and various regulatory bodies. I know you know them better than I do. So clearly it still takes time, but the decade could probably be reduced by a few years.
Starting point is 00:45:43 I'm going to get too into the weeds here, but 100% because for instance here, the nukes in Ontario are regulated by provincial, federal, and other bodies as well. You literally have the intersection of a bajillion bureaucratic processes, which the public probably appreciates quite a bit that the nukes are heavily regulated because we're talking about public safety here. But yeah, anyways. Yeah, sorry. Let's move on there. I know, dude, I love it. That's my bad. We hadn't planned about that. I just kind of, yeah, it was just on the spot. I love it. I love it.
Starting point is 00:46:22 Yeah. So, the last thing here I wanted to talk about is just a quick clarification on my 2022 bold predictions that we went over, whether we met them or not. Someone on Twitter mentioned I left out that I was wrong on the 150k Bitcoin prediction that I did last year. So to be clear, the reason I didn't talk about it is because I mostly referenced the notes we had done back then. I did listen to the episode, but just the beginning of the bold prediction, then I would fast forward because obviously, you know, it is time consuming to do the notes. And so that's when
Starting point is 00:46:54 I went on on it because in the notes originally, my plan was to just talk about the CPP investing 0.5% of their assets into Bitcoin. But then on the spot, I added that if they do that, it would hit 150K. So, you know, just want to tell people I wasn't trying to hide my prediction. That was not the case. I think people know me. No, I'm very transparent and honest. I don't want to, you know, hide anything. But the main, to be fair, the main prediction here was CPP investing 2.5 billion, which was 0.5% of its asset in Bitcoin. And if that happened, it would hit 150K. Clearly, none of these things happened. Take the L.
Starting point is 00:47:41 You know, I could just say I missed it by a zero. Just zero? Yeah, just remove one zero. Yeah, it's about like 16, 17. So, I got pretty close. Dude, what? You know, tomato, tomato. What's a 110x?
Starting point is 00:47:53 Yeah, what's a 10x difference? Exactly. I don't know. Nothing. No, nothing. You know, I mean, look, people know you and they know that we're not trying to spew a bunch of garbage and they know that our bold predictions are supposed to be bold and we're out here to educate and entertain. You got to have a healthy balance of educate or entertain or else, you know, once you listen to a boring podcast. Exactly.
Starting point is 00:48:20 I don't listen to a boring podcast. Hell no. And I don't know about you, but I almost enter these bold predictions. It would like, I'll say something that I know I'm like, I have a high likelihood of being wrong. Like that's usually how I almost. It's not spicy enough. Yeah, exactly. If not, it's not fun.
Starting point is 00:48:36 Clearly, I would have liked it to go 150k because I have a decent size allocated to Bitcoin, but it hasn't. And that's fine. I mean, I'm sure I'll have some bold predictions that come true and I'm sure I'm going to whiff on most of them anyways going forward. If you hit all of them, then you're either, yeah, you either have a crystal ball or you have, yeah, like we're reporting you to the Illuminati if they're all right, or they're just not bold enough. All right. Thank you so much for listening to today's show.
Starting point is 00:49:05 We are here Mondays, Thursdays. We got big plans for the pod. We got huge plans for the pod. We're talking video. We got on the call here, producer Mel. She's repping the show and she's going to be helping us out quite a bit and being in the background of these calls and potentially some huge interviews as well. Maybe I'm not going to say yet, you know, you got to keep listening, but there is going to be some really nice improvements to the show this year that we're pumped about. And better audio. So we're also investing in new mics. So I have a nice, not fully finished, but my podcast studio, I'm recording from there. You sound good. Yeah. I have a nice, not fully finished, but my podcast studio I'm recording from there.
Starting point is 00:49:45 You sound good. Yeah, I have a new mic. It's going to get better as I get more soundproofing, which I was able to do with the help of our Canadian real estate investor podcast sponsor, Sonopan. So a big thank you to that. Shout out Sonopan. Yeah, shout out to them. But I'll send a picture on Twitter when it's fully done with a nice picture of the Canadian Investor Podcast that I got for Christmas.
Starting point is 00:50:07 Your parents got you a big sign for the podcast, right? Yeah, exactly. So it's going to look really great when we start doing those kind of videos and for people to look at, you know, hopefully we'll have some charts. So put in some visuals as well. So people have a better idea what it were, the various charts that Brayden pulls from Stratosphere. Tons of charts.
Starting point is 00:50:27 I was showing Mel like, Hey, this is the document that we, we work off of. It's now on version three. Cause we broke Google docs already three times. And this one's on what page 406. There's just so many charts,
Starting point is 00:50:40 so many visuals. We need to use those because they're good content. So that's good. All right. Thanks for listening so much. If you have not checked out stratosphere.io, someone, have you tried out the dashboard yet? I got to show you the dashboard. No, I haven't, but I'm meaning to try it. Yeah. We just launched it yesterday and you can pull in a dashboard of like your portfolio or a watch list and it'll give you like a notification feed. So when go on here it says that we just got a new transcript for the home depot the quarterly report for a costco
Starting point is 00:51:10 oh nice a press release from adobe and it just brings it into one feed so i i don't have to like i feel like i i now have one centralized hub for like investor relations for like hundreds of companies just in one place and it's right in the app. And man, it's sexy. So that's it. Do you have it set up for a steer or also known as face dry? Yeah, I got to put face dry. Their press releases must be interesting. It's like, we've changed our corporate name again to scam investors again. Okay, you should just put that out there. So let's go check that out. Stratosphere.io.
Starting point is 00:51:45 that out there. So let's go check that out, stratosphere.io. It's free, but if you get the paid plan, you can see everything in one place, like everything you'd ever want. And of course, you can always use code TCI for 15% off any paid plan. We appreciate you. We'll see you more this year. 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.

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