The Canadian Investor - What’s Considered Too Small of a Position in a Single Stock?

Episode Date: August 21, 2023

In this episode of the Canadian Investor Podcast we start by giving our thoughts on positions sizing. We then talk about game theory and investing and underperformance from actively managed funds. We finish the episode by discussing the book Easy Money by Ben Mckenzie which touches on the excesses that happened between 2020 and 2022 in the crypto space. Symbols of stocks discussed: AAPL 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.See omnystudio.com/listener for privacy information.

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

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Bélanger. The Canadian Investor Podcast. Welcome to the show. My name is Brayden Dennis, as always joined by the enduring Simon Bélanger, because my guy, we have passed 300 episodes on this show. We may have forgotten to talk about it on the 300th episode.

The listeners should know we recorded 300 and didn't realize until after. So this is us celebrating it together and with you. 300 episodes is no small feat. And thank you for being so consistent being uh so consistent with with me and then uh putting up with my hot takes and i appreciate it putting up with me butchering the occasional english word with my french accent but uh we do appreciate the support it's been uh pretty crazy 300 episodes that is nuts all right Today, you got some fire today, actually. I was doing my notes and I was looking at what you were doing. It's game theory. It just sounds cool. It just sounds

good. You sound smarter when you use words like game theory. I've been meaning to do that for a while, but sometimes I don't know if it's the same for you. I'll just kind of be doing something or I listen to another podcast or listen to an audiobook and then an idea comes up and I'm like, oh, shit, I have to write it down because I know if not, I'm just going to forget about it. And yeah, that was one of those. There are certain ideas that come to mind and you're right they come they come at the weirdest time you'll be like middle of a bench press set and you're like wow let's talk about game theory on the pod like you're like finish your set you're like i really need to write that down or else it'll never make it onto the pod before that you know even more exciting than 300 episodes i became a real adult last night and got myself a costco executive membership so uh how proud of me are you um i'm pretty i'm proud you'll

see that now your blood pressure will go up every time you go to costco and then you'll be happy once you leave because you'll have saved a lot of money um go with the list because if not it's easy to buy stuff you don't really need and don't come to the costco on merrillville road in ottawa because the ceiling caved in last week when we had some torrential downpours oh yeah i saw some footage that there's like a foot of water in the Costco. So I think it's going to be closed for for a little bit, which is pretty bad because we don't have that many Costco's in Ottawa. I think we have like five maybe in the region and they're always packed. So you can imagine if you remove one of them, it's going to be even worse. You got to embrace the chaos because that place is fully, fully chaos. But you know what? You're right. You got to have like a list because like I needed, I needed floss, right? Yesterday. I like, I need like floss and like deodorant and you're walking by the aisle and you're like, do you need floss or you, do you need 12 packages of floss?

do you need 12 packages of floss like you like you have to like really ask yourself what do you want here do you want 12 or do you just need some floss i mean that kind of stuff doesn't go bad so i think those it's pretty good it's just you have to be careful on this stuff that's perishable because then right yeah then it might not be such a good deal if you're throwing out half of it. Yeah, that's true. But I mean, I live in, me and my girlfriend live in a, you know, apartment, right? So you can't just, there's no room for 12 boxes of floss. Quick question of the day. Let's start the show with a quick question of the day off the cuff. Is there a position size too large or too small, Simone?

You want to take this one first? Yeah, I mean, I think it's a really good question in terms of too small. I've been guilty of that at times in terms of my total portfolio, although sometimes I do look at it from like just a TFSA angle, RSP angle. And then so but overall portfolio, I've been guilty of that because if you have too small of a position, I mean, you really have to have amazing returns for it to just move the needle. And we've talked about Warren Buffett a lot, but there's a reason why Berkshire, you know, doesn't do these like $10 million deals or $50 million deals. It's usually hundreds of millions or if not billion. It's because they just doesn't move

the needle for them. Like they'd have to do so many deals to make that work. While in terms of the larger position, I mean, we've talked about allocation before. Allocation is one of the best tools you can to mitigate risk in your portfolio. So clearly, I think for the most part, I would say like anything above 10% is starting to be a pretty large allocation. But if you're a self-directed investor, the beauty of that, you can really have your winners really let them run. And the advantage that that's an advantage you have over professional fund manager, professional money managers, by the same time, it does increase the risk, right? If you go over 10% for one

position, no matter how good the business is, you know, there is always a small, no matter how small of a risk, there's always a risk that, you know, there could be a significant change in that business, no matter how good the business is. And if it's a large allocation, then you're, you're really risking taking a big hit. So, you know, not to give you a non-answer, but this is usually the things I will consider. You just have to be comfortable with that risk, understand it, and just be comfortable with the downside. And obviously, we talk about the sleep test a lot. If an allocation or position is just too big where it's stressing you out all the time, that's probably the sign you need that you need to trim down that position.

I like the answer. I love it. And you're right. The non-answer is the correct answer because it entirely matters on you, the person, you, the investor, your tolerance, your ability to withstand volatility, and your willingness to understand a lot of companies will kind of dictate how many positions you should have. Or if you should just be owning the index, then go to the beach, because I think that that's a totally fair strategy as well. So the too small, I actually have a hot take on, so I don't really have an

answer on the too large because it really matters up to you. But the too small, I actually do have a stance on this. And I do think that there is too small. There is a real issue. And I guess I'll frame this answer with, we're talking about the do-it-yourself investor. Because if we're talking about a portfolio manager that has 50 analysts that can cover, you know, each analyst can just cover 10 names or five names, then they're good. They kind of have that coverage. But if you're the do-it-yourself investor and you're getting into like 40 individual positions, let's say they're equal weighted. I know they won't be, but you're getting into like 40 individual positions, let's say they're equal weighted. I know they won't be,

but you're going to have some like really like sub, sub half a percent, sub quarter of a percent positions. And you have to match your level of conviction with a position size. And you cannot borrow that conviction from anyone else except yourself. You have to do your own work here. And so if you're not really have a ton of conviction in the position, is there a higher conviction positions that you own and understand really well?

When we're talking about like 40, 50, I see these all the time, right? Individual investor portfolios that have like 60 stocks. I personally do have a stance on that. I think that's crazy. I think that's madness. And then is there a position size too large? Look at Nick Sleep of the Nomad Investment Partnership. He owns three stocks. He's done insanely well. It's like 57% Amazon, 25% Costco. And what's the other one? Nomad Nick Sleep. Oh gosh, I'm forgetting the other. It doesn't matter. It's like, they're, it doesn't matter. It's like, oh, and Berkshire, of course. It's like 25% Berkshire, 25% Costco, and about 50% Amazon, roughly. And so that's the portfolio. Obviously, extreme conviction in just three mega cap stocks. And he has the conviction and willingness to hold them. Do you? That portfolio, I think, is brilliant.

It's just three really high quality businesses. Does that portfolio match a lot of people? No, like hardly anyone. And that's why the position size too large is more nuanced in my view. Yeah. No, I think that's good. I mean, even i was thinking and i looked it up while you were talking um even have you ever heard of bill miller yeah oh yeah so he's got like it's even more extreme i know a lot of people like when it comes to bitcoin i know like amazon and bitcoin yeah it's like 50 50 i mean that's the last i maybe it's changed i know that was in 2022 but i know a lot of people might find that crazy i mean i, I think our audience in terms of Bitcoin is very polarized. So we have people that I've had people like say, you should talk about it more. And I have had people say like, Oh, you know, I don't really like Bitcoin. It's fine for you to talk once in a while. And that's about it. But that just goes to show that for a lot of people, that would be crazy to have 50-50 right there. But, I mean.

I love how he, you know, these guys came from such value backgrounds too. Yeah. And just kind of broke the rules a little bit. And did so well. Like, God, this guy's, I mean, look at the performance on Amazon and Bitcoin for the past five years. Yeah, I mean, I'm a bit like, obviously, I have strong conviction in Bitcoin and that would be too much for me anyways. Yeah, right? Yeah.

I'll leave it at this. You cannot borrow conviction. And you know what? You can borrow conviction. It you know what? You can borrow conviction. It's just a good way to lose money. Yeah, exactly. You can borrow conviction and the stock faces a 25, 30, 40% drawdown and you do what? What's your plan of action? Because you haven't built that conviction. You built it off someone else's conviction. And that's a sure way to lose money.

Well put. built it off someone else's conviction. And that's a 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. 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 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. So let's get through it. I'm seeing something about prisoners and game theory, and I am so intrigued. Yeah, so game theory and investing. So I'll just go over what game theory is.

So according to Investopedia, game theory is a theoretical framework for conceiving social situations amongst competing players. I actually learned about game theory years ago, maybe like 15, 20 years ago with poker because it's widely used in poker. Just because if anyone's played poker a little bit, there's a mix obviously of luck but also skills. And it's very easy. There's a term that people would say all the time i'm sure they still do you kind of level yourself into doing a move so you say oh you know the player i'm playing against he must be thinking i'm gonna do this i'm gonna do this instead but

what if he thinks i'm gonna do that and then you know you shift your there's always this kind of reasoning behind it now the framework in some, game theory is the science of strategy or at least the optimal decision making of independent and competing actors in a strategic setting. So essentially, by using game theory, you're trying to make the best decision for yourself by considering how your decision could be impacted by what the actions of other players or actors or whatever you call them. And that can impact your outcome and vice versa. The prisoner's dilemma is a classic example. You'll see this time and time again if you Google game theory. So you have two parties that are accused of the same crime.

So let's just take Brayden and I. We're accused of the same crime, but we're not in contact with each other. So we're in separate cells and we're being interrogated separately. And in terms... That's episode 300 coming out there. Yeah. Interrogated. Interrogated, exactly.

Yeah. Interrogated. Interrogated. Exactly. And each party can either remain silent or plead not guilty or confess, which is plead guilty and implicate the other party. So you have various outcome. So if each party remains silent, each. So let's say Brayden and I remain silent. We'll each get two years of prison. But if Brayden confesses and I remain silent, Brayden gets one year and I get eight years. And then if we both confess, we get five years each. And obviously, if I confess but Brayden stays silent, then it's reverse. I get one year and then you get eight years and that's where that's an easy example of game theory because you have to try and think what the other person will do and then try to make the best action you can based on that because clearly you know there are some different outcomes that you know very very widely and if you at it, it's probably the most optimal play is to both remain silent, but you have no way of knowing what the other person will do. And another example

to understand this is how companies price their products. And I think Apple is actually a really good example if you take the iPhone here. So just to give a little bit of history, the first iPhone, I don't know if you remember that, you were probably pretty young, but do you know? I remember it very, very clearly. Do you remember what year it came out? Without looking at the notes. Oh, 2005? Pretty close, 2007. Oh, okay. All right.

2007. I'm still thinking an iPod. Okay. That's fair. Yeah. And the first iPhone came out in 2007 and it was really a premium product. So it wasn't until 2013 that Apple came out with a less expensive version of the iPhone with the iPhone 5C. But even then, it wasn't all that cheap with the suggested retail price of US $549 at the time. It wasn't until 2016 that

Apple launched a truly affordable version with the iPhone SE, which retailed at just $399 US. So pretty, you know, especially if you factor in inflation and all that, you know, pretty affordable phone, especially if you start factoring in the discounts that you can have with various carrier now by the time apple came out with a cheaper version of the iphone there were already a lot there were tons of low-cost alternatives with android that had been available for years now the this is where game theory comes in they're probably like i'll go over some of the consideration that apple was probably looking at when they decided to come out with an affordable version of the iPhone or debating whether it was a good idea or not. And obviously, this is simplified.

I'm sure they did some market research and, you know, they thought about this and look at all the data. But the first one would be if we have a cheaper iPhone available in our lineup, will it impact the sales of our more premium, higher margin product? I think that's a pretty reasonable question to ask. Right, like will it cannibalize the regular iPhone? Yeah, exactly. Which are typically, you know, the more expensive models, typically they'll make more profits on them too. So you have to keep that in mind. profits on them too so you have to keep that in mind the second point here will our iphone revenues be higher or lower as a whole if we release a more affordable version the third one

which obviously can impact the stock price their ability to raise capital and so on there's all these different you know implications that you have to consider third if we don't have a cheaper version will we lose customers to android rivals will rivals aggressively reduce their price to get our customers so that's another thing they have to consider for will having a cheaper version of impact apple's brand negatively in the eyes of their customers because you know apple has a quite still today as a pretty premium brand. I mean, just thinking about the stores, right? You go into an Apple store. I mean, you almost feel compelled to spend. That's how good their stores are.

But that's something, you know, they would have considered because you don't want to tarnish a brand that's already well regarded. Five, does having more customer in our ecosystem positively or negatively impact our other segments such as services? And how will investors react if we have a cheaper phone? What will be the impact on our stock? So these are all questions, you know, that there are other parties involved. And Apple has to, using game theory, you can try and make assumptions and try to make some, you know, educated guesses, obviously using data. But that's a way, a framework of looking at a potential decision and what the impact it will have. Yeah, especially when competitors, you don't know their pricing plans, right?

plans right like and so you're kind of completely in the dark on that as well to go back to your you know confess or remain silent uh prisoner's dilemma uh yeah these are a good long list of questions and this is just like a to try to weigh out the 10 things and do my best of course you can never know the future right so you're just trying to do the right thing enough times for the for the best outcome that you can possibly control right because so much of it is out of your control. Yeah, exactly. And even when we look at investing, I think an interesting one to look at was just our, you know, the meme stocks, right? And I think recently the meme stock

picked back up with, I think, Tupperware. Did you see that? Oh yeah, that one comes and goes sometimes. But in the meme world. Yeah, if we think back about GameStop for example when it happened so you have kind of you know you can take two big actors if you'd like and you'll see there's kind of subgroup as well so you have the retail traders through reddit and wall street bets so their actions as a collective were driving the price of the stock up. But once the price was up, each individual

trader, so they're kind of separate actors here, had a decision to make. Do you take profits now or keep going? If you take profits now, you lock in those profits. But if you keep going, you may make more. However, other traders may decide to sell. And if we don't stick together, then it could impact the stock price negatively. And then on the other side of the trade, you have the short. So their decisions are dependent on how leveraged they are and what they think retail traders will do. Obviously, if they think the traders will hold on, then selling sooner rather than later is probably the best outcome. And if they don't, then holding on is probably the best outcome and if they don't then holding on is probably the best

outcome here because they think retail traders will falter and then the price will come back down and then their shorts will either lose less money or become profitable so it's there's just so many different way you can apply game theory you know this is just to sum it up if you there's books that go over it um it's still an evolving science i I think it's been out since the 1950s, if I remember correctly, the game theory. And it's something, at least from a poker background, it's always in the back of my mind a little bit. And I thought it would just be interesting to talk about it and make sense of it. Because if you listen to a lot of people who invest macro, whatever it is, you will hear that term come up, you know, every now and then. It's one of those very classic subjects that every like first year business student has to learn about. You know, it's like it's like what grade six math and trigonometry is to first year business students in game theory.

Like, it's just something that you have to learn and then everyone forgets what it is. But, you know, it's fascinating. And it's one of those things where people are actively participating in it every single day with decision making, whether they know it or not. No, well put. No, exactly. I think it's, I mean, it's a framework to kind of put it down, but obviously, just like you said, I think a lot of people use it without knowing it. Yeah. It's like the basics of decision-making is like kind of all those things you laid out there with the iPhone example. What was your first iPhone? Do you remember the model? to Apple. What was your first iPhone? Do you remember the model? I think it was five. Yeah, because I had Android for a bit. I was in Taiwan when it came out in 2007 and it was pretty

expensive. I got a fancy kind of phone from Taiwan that was a competitor with Apple back then. But I remember going on a trip and i was having some issues with my android and i came back i was like screw it i'm going and just getting an iphone and i've not looked back since i think i've had it probably 10 years now yeah that would make sense the five yeah mine was the iphone 3gs oh yeah. iPhone 3GS. Did it come, I guess it was the follow on on the 3? Yeah. Well there was the iPhone

then there was the iPhone 3G and I think the 3GS after that. Something like that. Yeah. Yeah so I had that one and then I've had a lot of iPhones. I was bad with breaking phones for a good, a good chunk of my,

my days early with the iPhones, but you're right. You know, get locked in. Yeah. And that services segment, if they did that game theory, it panned out pretty well for them because it's one of the,

the brightest spots in their, their earnings, at least in the last couple years for sure most profitable company in the world they must be doing something right all right shocking stats of underperformance is my segment uh every year s&p does you know state of active management and how it compares to passive management. And passive management just means like owning the S&P 500 and going to the beach for the rest of the year, which is a fantastic, tremendous strategy for a lot of individual people, individual investors. And so year to date, according to the data, they're at 51% of active managers have underperformed the S&P. So it's very like 50-50 if you've underperformed or outperformed. But that is not the norm. And

it's not the full year yet. So I'm sure it'll keep skewing from the average. But 2021, 85% of large cap domestic equity funds underperformed, 60 in 2020, 71 in 2019, mid 60s all through the previous four-ish years, 87% in 2014. And so very, very infrequently, there are years where active managers of large cap domestic equity funds outperform the S&P 500. And many people kind of know these stats. I'm going to go on here now for Canada because they do data based on each region. So I was just talking about the s&p 500 how about canadian equity funds that outperform or i guess in this case underperform uh the tsx composite the s&p tsx composite you were just sharing your thing for the beautiful people yeah so they were able to see and probably just a quick note is that it was as of June 30th, 2022. So the year to date is for last year. Oh, okay. Yeah.

Year to date was for last year. Okay, well. But still, I think very valid, very interesting data nonetheless. Yeah, here's some data for Canada. So I got 10 years, five years, three years, and one year. So let's go one year and then we'll work backwards. So in the past year, 51.9% of Canadian funds underperformed the S&P TSX composite. So these are Canadian equity funds. So they're investing in Canadian stocks and they're being benchmarked to just Canadian stocks. So it's the correct benchmark. So 51.9% underperformed in one year. You'll see as we go further and further out the

time period, we get more clear underperformance. Three years, 83.8% underperformed the S&P TSX composite. Five years, you have 93% and then 10 years, 84%. So very fascinating. Look at big 5%. Yeah, 5% and 10%. So it reverts the trend a little bit. Yeah. It reverts the trend a bit. So on a long view on 10 years, roughly only 15% of Canadian equity funds outperformed their benchmark of the TSX composite. So very shocking kind of stats of underperformance. You and I have been good enough investors, and I would say have the right behavioral psychology to see some pretty wonderful outperformance during these timeframes. But it's a reminder that investing is hard and professional investors often have very difficult incentive structures to perform well. They have to trade a lot. They're answering to clients.

They're focused on short-term objectives. And a lot of investors like you and I, and many of the people listening to this podcast don't have those same constraints and arbitrary demands to meet that can make beating the market an incredibly hard feat. Just look at the data, right? This isn't just me making it up. The data shows what the data shows. And so it's a reminder that investing is hard, but it's also a reminder to don't feel like as the little guy, if you are, or maybe you're very wealthy managing your own money, that you are at a disadvantage because it's just not true. I don't believe that's true at all, because it's just not true. I don't believe that's true at all, especially with the tools available now. Like you can use Stratosphere, which is a professional equity research terminal for 40 bucks a month. A Bloomberg terminal is 25 grand a year. And so the playing field has

massively leveled there as well in terms of the data availability and the tools that are available. leveled there as well in terms of the data availability and the tools that are available. Yeah, definitely. And I mean, I think obviously, I think there's some, there's obviously some really good fund managers out there that are able to beat the market. I mean, that 15% that beats it over 10 years is impressive. But it's also just 15%. And I mean, the biggest thing they've had going against them, in my opinion, is I'd be interested in seeing the amount of managers that would beat the index if they didn't have the fees or if the fees were equal to the, you know, index CTF version of, you know, what they're comparing the benchmark. Exactly. So I'd be very interested because it's probably closer to 50 50 across the board or something like that i don't know i'm just speculating but i'd love to see that data

because a lot of the underperformance is the fees yeah exactly yeah good point right because i'm assuming that's what this data is including right they're trying to sell their story on my passives great um i would love to see this data and maybe it exists somewhere it must exist can't be the first ones to have thought about oh no that's not where i was going with this i'd love to see the data on the difference in performance of these fund managers and how high their portfolio turnover is. Because all of the great equity investors I know, and I follow their 13Fs, and they've had tremendous performance, has been very, very low portfolio turnover because they've bought winners and held them. That's how you outperform. Break it down to its

very basic form of outperforming the market. You hold stocks in aggregate that do better than the average. And if you're in and out of stuff, that becomes a lot harder. All the great investors in the 13Fs that I know have massively outperformed the market on a long time horizon have bought right and held tight. That's the only, like, I don't see another way to have massive outperformance unless you are some expert level trader. I think that the easy way and the most accessible way here is to buy right and sit tight. Yeah.

I mean, that's what we do for the most part. I think, you know, at the end of the day, I think as a general philosophy, at least for me, and I think you're like that too, we try and buy and hold businesses for the long term. You know, I think it's fine to, at least for me, I'm still leaving myself some opportunities if I see that something is, you know, in value territory and it's something like a bit more of a turnaround play that might be a bit more short, medium term. That's fine too, but definitely the, let's say the foundation of my investing strategy is just to buy and hold some really good companies. 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. 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 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 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. Okay, so now we'll move on to my next segment here. I decided to listen to the audiobook because it's much easier for me to listen to audiobooks with a baby, with a podcast, everything going on. As a new father, you know, the mom does a lot of the work.

I try to help as much as I can, but one of the ways that I help is I cook clean dishes, clean the house and things like that. And, you know, it's much easier to listen to a book than try to read it while you're doing those things. What you don't, you don't have the book in one hand and the dishes in the other. The knife in the other hand trying to. Yeah, yeah, yeah. Lose a finger. Chopping onions with one hand. Yeah, yeah. Step it up, dude. There's always room for improvement. Yeah, so for those not aware,

so Easy Money was written by Ben McKenzie. And I'm sorry, there's a, you know, he also did it with a co-author. Maybe you can look that up with me. So Ben McKenzie is a starred in The O.C. oc and gotham so if people are not familiar with him just google his uh his name you'll probably recognize his face even though you might not necessarily be familiar with those shows and so i tried to like i knew this book because i had seen some of his interviews that he was very anti-crypto i think i'm not mincing any words here when i say

that but you but everyone knows, I've talked about it before, it has strong conviction in Bitcoin. But I also like to look at other points of view because I try to have a point of view that's nuanced and objective as much as possible. So I decided to go ahead. Dude, that's actually quite commendable because I know you're a Bitcoin bull and you're like let's read this really bearish review of bitcoin um that's commendable uh before before we get into this who hurt ben mckenzie why is he writing this book like what how did he get into this like i just remember him from ryan on the oc breaking marissa's heart uh back

in you know high school yeah so the reason he goes over the reason because he got introduced by a friend and he ended up losing some money but nothing crazy that he said he couldn't afford but he got concerned starting researching it because he which he states multiple times in his books and an interview that he had that economics degree that he did before actor being an actor he just had to let you know yeah he just like says it and also most like it becomes an eye roll almost um yes there you go ben mckenzie so people will probably can you see what i'm saying yeah ben mckenzie needs a hug the oc star crypto book is an ill-informed flop ben mckenzie needs a hug that is i think i don't i mean i think he's done pretty well with the book and yeah it's i think

it's uh silverman the other person that uh did it with him who uh is a reporter so um and i do apologize for the first name but regardless so i So I think, I mean, I disagree with that headline, I'll be honest. There was definitely some good in that book, and I'll talk about the good and the not so good and the bad, but I think he comes from a good place. I think I'll give him that. I think he did that book because he saw all the speculation happening in the crypto space, tons of scams those shit coins

that were essentially just insiders cashing out on retail investors all the frauds uh you know ftx with sandbank man free who by the way is back in jail i don't know you saw that yeah i did i did see that witness tampering but uh we'll talk about that another time um oh i'm shocked i'm shocked that this this biggest fraud guy since uh you know bernie madoff is is tampering with witnesses yeah color me surprised no but you know i i think you know there was a lot of fraud a lot of bad things happening it was for the most part unregulated so these are things to expect and a lot of people got in trying to make a quick buck and definitely got heard and i mean i'm actually happy for us because we you know

we got sponsored by shake pay but you know i had been using shake pay for years before they sponsored us on the podcast and you know from what i can see obviously we didn't have access to their financials but they're still operating today. ShakePay only has Ethereum and Bitcoin. They never got into all this kind of shit coin trying to have everything listed. And obviously, it shows that there are some good actors in this space, but not so good ones like we saw with Celsius FTX and without going all over the name. So the good of the book. So first of all, I have to give it to Ben.

He actually narrates the book, which is quite rare. So if you've listened to audio books before, very rare. Sometimes the author will have like one chapter and then leave it to a narrator, but he actually narrates the book. He's got a good voice too. I mean, he's an actor. He's a hunk of a man and he's an actor. So I'm sure he's got a good voice too i mean he's an actor he's a yeah he's a hunk of a man and he's an actor so i'm sure he's got a good voice for it which i think was great because it also

it really conveys the emotion because there's so much a narrator narrator can do right if you're reading out your own book clearly you'll be able to convey the emotion the tone that you really want your audience to know and i thought that was actually a really good part of the book. He also talked about his struggles with depression, which I think is important because especially for men, we're still seeing a lot of men having, you know, trouble talking about it or seeking help because of thinking they're weak. So he does talk that he struggled with that. It gives a really good overview of all the frauds and scams that happened during the bull market in 2020 and 2022. I found some sections where he recounts his interviews and encounters with SBF, but Alex Mashinsky, which is the former CEO of Celsius, which is he's a piece of work,

to say the least, if you've ever seen some videos of him like i knew that before the book but i thought you know he really did a good job of portraying that he just he shows how crypto was the wild wild west and how it wrecked thousands if not millions of retail traders who bought the kool-aid obviously we probably remember that matt damon commercial with fortune favors the Braves or fortune favors the Braves crypto.com I think it was crypto.com I think that was I remember seeing the peak of the the peak of the grift yeah and that's one thing and I'll talk about it a bit in the in the not so good is remember that Super Bowl I think it was was it 2022 yeah so coming off of 2021 where every other ad was either a online broker or a crypto ad do you remember that yeah so that was kind of the the peak and um i obviously it was just an a giant era of risk on exactly gambling ads that's it and. Like sports gambling ads and crypto gambling ads.

No, exactly. And he has some really gut-wrenching stories, including one where a grandfather got scammed out of his life-saving and home equity and eventually took his own life because of it. So, I mean, he does put kind of, yeah, yeah like a personal and i'm sure it's not the only story of that kind where people got scammed um they put their life savings i've heard of that happening with taraluna in korea where you had people put their life savings so they could get yield and that's um algorithmic stable coin and then ended up losing everything so he does kind of bring that to um forefront. And I think it is important. And on a few occasions, he does take the time to point out that our current

financial system is not perfect. And I think one of his main point is to say that we're replacing it with something that's also not great. So I think he's saying that the financial system disadvantages a lot of people, but crypto is not the solution. That's his main message. Now, the not so good or the bad, whatever you want to put it, he doesn't even attempt to give the other side of the argument in a lot of the books. Sometimes he'll mention it, but very high level. There's a few possible explanations for that. Either he did it on purpose because he clearly doesn't like anything related to crypto.

Lack of understanding for certain subjects. Lack of research. Unwilling to research counter arguments. I'm not sure which one it is. I'm just trying to guess. I mean, I do think his intentions were good. But an example of that is he compares Visa and MasterCard speed of transaction to Bitcoin. And I think he took Visa, but I don't exactly remember what's one of the

big two payment processors. And he's absolutely right. Visa transaction capacity is much, much greater than Bitcoin. But what he also fails to mention is that Bitcoin settles the transaction very rapidly. Usually within an hour, the transaction is completely settled. Whereas a transaction done on the Visa network on the other end does not settle right away. And it will be not settled by Visa, but by the different financial institution. And can take up to two to three days, sometimes even more, to settle the transaction. So you're not literally, you know, comparing apples to apples here. Or at least, you know, if you are comparing it, at least provide these nuances, which he didn't.

And he also doesn't talk about the Lightning Network, which is a second layer on top of Bitcoin that has much greater speeds of transaction than Visa. Which, you know, it's fine. You can criticize that all you want. That's fine. But at least mention it. That's where I took some issues with it. He only provides examples of the bad actor in the space, which, of course, was rampant during the crypto bull market.

I'm sure there are still some bad actors. There's just so many good examples. Exactly. Like, I'm not going to, I haven't read the book yet so i don't really know but i it's easy i'm with him on calling out the absolute garbage that this space had uh and still does have because it's like yeah you can't just categorize it all as all garbage, but there was a lot of it. Oh, yeah, definitely. And I totally agree with that.

And that's completely fair. But at least trying to make an attempt to, you know, provide a balanced view. And one of the examples that comes to mind, he never talked about Circle, who issues USDC, and has been following us regulations a circle even caught up in the whole svb thing because they had deposits backing their stable coin with svb and they were lucky that they were essentially svb god depositors got bailed out by the us government because they would have taken a hit but he focuses on t. Which has had you know to his credit. A lot of shady things happen. But he doesn't even take the time to talk about USDC. That's another example here.

He also doesn't talk about like the countless examples. That I've seen of people using Bitcoin. As a store of value. And being able to flee oppression in countries. Like we saw with Ukraine where you know banks were essentially like people weren't able to take any money out of banks and then were able to get away from Ukraine with essentially just a USB stick with their Bitcoin information on it and were able to bring that to another country and have some

money with them to actually spend convert Bitcoin to the local currency. So he doesn't talk about that. He also doesn't talk about countries that have hyperinflation, where people are using either US stable coins or Bitcoin to have a store of value, because even however volatile Bitcoin is, it's still a better store of value than their currency. But he does go at length to talk about el salvador and naib bukele which you know i think there's a lot of valid things that he said but to say that the it's a failed experiment after a couple years which he does say in the book i think you have

to give el salvador a bit more time towards that but i agree with him that naib bukele there's a lot of things that, you know, shows that he's borderline a dictator if he's not a dictator in terms of the way that he acts. So, you know, the credit goes to him for that, but at least trying to counterbalance that, not even looking at, you know, interviewing or talking to people like Alex Gladstein, who is a big human rights proponent with a Bitcoin lens and has done a lot of work. So it's just that's what really rubbed me the wrong way. And at the end where, you know, people listen to podcasts a lot, he starts talking about gambling, comparing that with crypto. And I think he has has a point but he's really not well informed

in terms of comparing online poker and crypto because he goes into a whole thing about how online poker was operating illegally in the u.s and then essentially got shut down with the department of justice it was actually more of a gray area. And the Department of Justice used the rails to shut down some sites. And, you know, to his credit, there was definitely some fraud going on. But there was a lot of these online poker sites that were also operating in jurisdictions that, you know, it was kind of a gray area because there was nowhere to operate legally. And now you've seen these online poker sites. Now they are legalized in most of, I think, all of Canada. In most U.S. states as well.

So you see the evolution of that. But, I mean, I got money frozen for several years. Close to $3,000, if I remember correctly, U.S. on Full Tilt Poker. When the Department of Justice in the US stepped in. I eventually got it back, but it took I think three or four years, if not more. And at the time, it was a decent chunk of money for me. So, you know, I'm pretty well informed of what happened. So he just kind of picks and chooses and tries to compare that to crypto and how they were both the wild wild west obviously uses the example of ultimate bet which was using

god mode to look at other players card so the administrators were able to see other players cards and then play against the players and make some money so um obviously not great but he definitely tries to use that to compare the crypto narrative and i think that could have been done a bit better and more research on that point too overall i mean i think it's a good account of what has gone wrong in crypto and the rampant fraud fraud and speculation that happened the last few years. You know, if you don't like crypto, you'll probably like this book. If you want a kind of a balanced view on the subject, you probably won't like it because he definitely, you know, you can tell he has one angle and one, you know, narrative.

And that's really what he's following. But I still figured I'd give it a fair shot and i think i was pretty reasonable in my view there's definitely some good things about the book but it's definitely not what you should listen to or read if you're looking for a balanced view on the space and the pros and the cons because that's not it uh if you read this book and take it at his word, you know, crypto is the next devil, basically. It's the devil. Yeah. It's the devil.

My only thought here is I can probably agree with a good chunk of the book because I have a deep disdain for scammers and uh crypto oh yeah in in in um in air quotes crypto right but i also love bitcoin and i don't even consider them the same things and i know i know i'm not alone there um but the old crypto thing, all these random useless projects, entrepreneurs trying to solve problems that don't exist. Dude, I'm so out on like 99.9% of it. So I might actually like, I might be, I might like 99% of the book. But yeah, to lump it all in one, I think is goofy, as you mentioned. Well. I was just on his Instagram because I was looking at the book

and I didn't realize he was married to Marina Bac baccarin or yeah i don't want to say her last name i know she i don't know the name but i know who she's married to she's been tons of stuff yeah i find her unbelievably attractive so good for good for you uh ryan from the oc yeah and look i mean i don't know i'm like You're like talking about the book. I'm like, yeah. But have you seen his wife? She's pretty attractive. No, but the last thing I'll say to agree with you on the, you know, all the scams happening

in the crypto space. And I would say, like, I've always been of the opinion there is, you know, obviously I'm the most conviction in Bitcoin. I have some Ethereum, but I kind of bought it where I didn't understand it as well than I do now. And if it wasn't for taxes, I probably would be selling most of my Ethereum position and, you know, putting that into Bitcoin. But having said that, I mean, I don't know if we talked about it before, but you know, that's the reason. The reason I had the blue checkmark and I pay for it with Twitter or X or whatever you want to call it now is because people would make fake profiles of me and then try to do some crypto spams on other people.

And I think it was one of your buddies or you sent me something where they had just – Yeah, your cousin. He's like why is simone or i was with him at the time yeah why is he sending me some like some stuff about crypto and stuff and it's the my all they did was change the i to an l yeah on your handle and you can't they look the exact same on twitter slash x no exactly even i was confused too i was like we're looking at the handle and it's identical that's it so that just goes to show that ben does have a point there where it was it was rampant i think it still is but it's not as successful because people just

don't have that much money now to to put in that stimulus checks or they you know that whole you know song and dance scam wise kind of played out yeah yeah but i mean look i think it's um i think there's some good parts in the book obviously take it for what it is if you listen to it uh but there's um i think there's some really good there's some not so good like i mentioned but i was you know it was a good listen i mean for a lot of the parts i i cringed a little at times but there was some really interesting i mean the interview with sbf the way he describes it is i mean it definitely sounds like sbf i'll just say that um do you watch the guy on youtube coffee zilla oh yeah i watch yeah he like uh calls out and calls out the crypto scammers among other scammers but a lot of crypto

i love that style of content like i i i think that there is a special place and you know where for these kinds of people right like scamming people for like i find that so much worse than like traditional crime in terms of like site levels of psychopath level that you have to be to scam people of like their hard-earned money um and take advantage of them to me that's like a 10 out of 10 on the socio-psychopath level compared to like like actual like traditional crimes that people go to jail for yeah well i mean just uh like for anyone who listens to it just when you get to the section about the grandfather who takes his own life, I mean, the son goes over, is able to access his dad's email after he passed away. So the son of the grandfather. So he looks at the last email interactions and the last one is just

basically the grandfather pleading to who was scamming him and that, you know, like he's in ruins and all that. And like, please help me. And, you know, implying that he'll take his own life. And the response you get is bye. Oh, yeah. That just kind of goes to show. And that really was gut wrenching. Like I, you know, it kind of hit me in my stomach um

yeah so i mean that's like i don't want to say that's a good part of the book but i mean i think it brings home the point that a lot of people were negatively impacted by what's happening but again i think we have to remember too there was a lot of crap happening on the public markets too um and there still is there still is and people to this day to this second right now companies lying to people i mean you hear about frauds in the financial society i think ubs just got slapped with like a 1.4 billion dollar fine for i think it was related to like uh money laundering or something like that so it's not like yeah you know i i think it's very easy to pour on. Look no further than the Toronto Stock Venture Exchange.

Yeah. Pump and dump. They should just rename it to the pump and dump exchange. Yeah, exactly. So, I mean, obviously, you know, I think we've gone on long enough about this, but there's definitely, I think there's good and bad. I think I'll leave it at that. Feel free to listen to it make your own opinion but um hopefully i did a balanced view of

it i don't know why but i i really love the content of like getting scammers like uh like scammer payback on youtube or coffee zilla like kind of bringing to light because no one is the government is not treating these people as regular criminals i mean how long has the issue of like white collar criminals not been dealt with the same way you know someone smokes a joint goes to jail for 10 years in the u.s like it's never made any sense to most people's brains and like you know people are like really into true crime i'll eat up these like documentaries you know we've talked about so many of them on uh on on netflix and stuff i think for the crime i i mean obviously it's probably a lack of resources and desire and obviously there's could

be a lot of reasons but at the same time too for a lot of regular people thinking about it it's harder to there's not that direct correlation right if you go and steal a convenience store at gunpoint like you know what you're doing like if the impact of your actions is right there whereas you know what bernie madoff did or whatever right people took their own lives but some a lot of people don't you know know that that's actually as a result of what the white collar crime did and i think that's probably one of the big issues is there's not that direct correlation there is indirectly and obviously the it's probably the main reason but there's not that immediate correlation where you commit a murder for example i mean you know you shot the gun the

person's dead like that's the action reaction whereas there's a different it's very easy to understand yeah exactly a very complex mastermind that's it the consequences are strengths as severe if not more but they're not you know as direct i would say yeah it's not as blatant yeah exactly even though it's even though stringing together all of those actions it makes it obvious is even more blatant yeah because you can't you it's not just oh one slip up it's like years and years and years of of of lying and defrauding and the burning the all those guys who used to do like, we'll say Wall Street crime. If any SEC regulator was in the room, you know, they would just put the thermostat in the meeting room at like 12 degrees Celsius. Like the interns and everyone would just freeze and then they'd get the heck out of there.

You know, who's going to do an investigation in your office in the boardroom and it's like 13 degrees celsius you're like frigid yeah that was just such a classic maneuver they would do oh boy this stuff is fascinating well thanks for uh you know the review i think that that's a balanced take and it and it shows the kind of guy that you are that you would you know you're obviously very bullish on bitcoin and yeah and i i respect it too and and read read some counter viewpoints and took them took them seriously so that's uh simone um episode 300 yeah maybe 301 you won't know 301 300 with an asterisk yeah pat yourself on the back thanks for everyone for listening to the show, the pod. We really appreciate you. We're here grinding this pod out. Apologies that the previous week we were, I don't want to say we, I was MIA, but I'm

back, baby. I'm so back. We're so back. And the show goes on here. So we are here Mondays and Thursdays. If you have not checked out finchat.io, it is the de facto chat GPT for finance tool that me and my team built. It is so cool. And there's 60,000 companies loaded on it now. of conference calls, earnings reports, KPIs, businesses. If you're just like, yo, what does this company do? It does a pretty good job. Because I have that question a lot with certain software companies. Splunk, Datadog, all these like cloud companies. Dude, what do they do? I have no idea. The cloud, that's it. Yeah, it's just in the cloud. It's in the cloud. It's in

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