The Canadian Investor - Why Every Investor Needs an Investment Policy

Episode Date: April 21, 2025

In this episode, we break down why every investor—no matter their experience level—should have an Investment Policy Statement . We walk through the key components you need to include, from setting clear investment goals and understanding your risk tolerance to creating a contribution plan and rebalancing rules that work for you.  Braden also shares a personal story inspired by Charlie Munger’s wisdom on spending money meaningfully and learning when to say yes to experiences.  Plus, we touch on why fewer companies are going public and how cash-secured puts can be a useful strategy when markets are volatile.  Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

It's the small things that make us Canadian. At BMO ETFs, all of our tickers start with Z. That's right, Z, not Z. From ZSP to ZEB, we know how to build solutions for the Canadian investor. So the next time you invest in ETFs, consider AZ instead. Visit BMOETFs.com for more. 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. My name is Bren Dennis, as always joined by the fervent, Simon Villanger. Buddy, we got a banger here. I have a story for you later where I'm the biggest schmuck of all time. It is actually tough to even remember this story, but there's a reason that it came up again,

and I'm gonna tell you about that. But first off on the docket here, you have why an investor should have investment policy, a plan, what it should contain. I love this topic, and I think that it's very key, especially when volatility kicks in, like what are we doing here? Why are we here?

Yeah, no, I think that's great. And I can't remember, I was listening to someone recently and they were talking about having, the importance of having an investment policy. Even as an individual retail investor, it's really important. It's pretty common, obviously, or it's a prerequisite when you're dealing

with institutional investors like pension funds, so they will always have an investment policy. But I think it's really useful as an individual investor, especially when we see a lot of volatility, just going back to that. I'm guilty of not having a concrete one. And after hearing that and doing this segment, I will actually be working on one. I have some like a written like a written you know. Like a written down one? Yeah, written down one.

So I'm guilty of not having that, even though I do have some rules in place, but I think it's really important. As weird as it may sound to some people, I think it's really important to write it down. Just like your investment thesis when you buy a company. If not, you know, memory fades over time, a lot of stuff happens,

you only have so much space in your brain, and you sometimes will just misremember stuff. It's just normal. So that's why I came up with this segment. So the first part would be establishing your investment objectives. So just some key questions here to ask and just to guide people and obviously there might be some additional things and you have to really customize it to make sure it applies to you but what's your primary goal? Are you looking to invest for retirement? Are you looking to buy a home with first home savings account for example? Are you saving for your child's education or something completely different? Do you have a secondary goal? Maybe your

primary goal is to invest for your retirement, but you also have a secondary goal of buying a new house in 10 years. So that's important because most people invest for retirement, but it's very possible that you at well, I think you're probably in that situation, right? You're investing, I think, for one retirement long term, but I know you want to buy a place eventually. I don't know what the timeframe is, but you know, speaking with you, I know you want to buy a place eventually. I don't know what the timeframe is, but you know, speaking with you, I know you have a first home savings account, for example. Yeah, no, it's a good point.

And I like the idea of like, after you finish this, we'll summarize like what you have written here, but I don't have this written down either. I have like a frame, I have my framework. I have my investing, it's actually a diagram that I've built and I have it like pasted right on my computer home desktop there. And I refer to it all the time and I created it years ago

and it's continued to adapt. But you're right, I don't have like objectives. I also don't have my cell rules solidified even though they're in my head to some extent. I think this is actually a really good thing for me to do as well over the next couple weeks to put this together. And it's gonna change.

I think that that's, like this should be a fluid Google Doc that you just kind of have handy. And you know, I think that that's, like this should be a fluid Google doc that you just kind of have handy. And you know, I think it should change because obviously if you invest for retirement and you created this 20 years ago and now you're like five, 10 years away from retirement,

clearly there's gonna be components of it that will change but having written down and I think as you make modification you actually think about Making those modifications and the logic behind that and why you're doing it now to get back here to establishing your investment objective What kind of annual returns are you targeting? What is the minimum rate of return that you'll need to achieve your objectives and how much money do you need? Do you think you'll need to reach your goal and Obviously, I think this part especially you'll need to update this on an annual basis That would be my recommendation is just doing a review especially of certain parts on an annual basis because you may think

Going back to retirement that based on your expenses now and your lifestyle and your projections You'll need $2 million. And then a few years down the line, you say, you know what, it's no longer $2 million, it'll be $2.5-3 million, or maybe it's less because something's changing in your life. So I think it's important to at least do a periodic review of this once a year. The second part here is what's your time horizon. So of course, it's going to be different, whether you need the money in a few years, in 10 years, or at a moment's notice,

if you have multiple goals, you'll need to figure out, figure that out for each goal. This one's so key. Like of course, this is going to be like, if you go to like a financial planner, it's like the first question they ask you. And that's why it's at the top of your list here. So many of my friends, so for context, I'm about to turn 30 this summer. Big 3.0. The big 3.0.

And so many of my friends obviously are kind of in that, like in going for their first home goal mode, just based on where the market is, where I live. It's just, it's a big goal and honestly, frankly, so unachievable for a good chunk of the population at this cohort, but that's- I would call it almost a Canadian dream for a lot of people.

Exactly. It's how their parents got rich. They bought something in Oakville, Ontario for a hundred grand and next thing, they sold it to three million and bought and retired in Muskoka. Like that's what my parents did. And so it's the Canadian dream that they saw their parents' generation do. It's the story. And I think that most people are gunning for that. And I was speaking with a buddy last week, and he calls me, he's like,

dude, I'm kind of freaking out. Markets down 15% or whatever, these Trump tariffs, should I be concerned? And I was like, well, what's this money for? Aren't you just kind of investing your like TSA or whatever for the next several decades kind of thing? And he's like, oh no, I'm gonna like use it to buy a house soon.

And I was like, whoa, whoa, whoa, whoa, whoa. Like nothing on the show is financial advice and nothing I'm giving you over the phone here pal is financial advice and nothing I'm giving you over the phone here, pal, is financial advice. But I'm not saying go panic sell all your stocks here, but you need to put all your contributions not back into risk on equity markets. Now don't go panic sell all your stuff, but you need to build a much different strategy for that money that you plan to use in the next two years. Yeah. That is not, the equity market is not a place

for that allocated funds. It's just not. Yeah. And I think we've had so many good years and I mean with the aside of the 2022 blip almost, we've had pretty much a bull market since what, 2009, 2010. And I think a lot of people just get complacent and just assume that stocks will continue to go higher without any blips on the radar. And they will likely go higher over the long term. They're not wrong on that but if you need the money on a shorter term basis like you said a few years out even within five years you should definitely start thinking about reducing your risk even if it's five years out and I'll take my

example for like a personal example we bought a house it's an older home very nice neighborhood but when we bought it we uncovered some foundation issues and we were able to get the the price down because they're repairable, but it's gonna cost about $40,000 and we put that money aside, we were able to get it lower, we set that money aside. That money is not invested in the stock market, I can tell you that right now because we will be doing these repairs this summer. It's all in Canadian treasury bills.

That's it. It's very liquid, so when we need the cash later this year, this summer, I'll be able to sell it and I was still getting about 3% on my money. So that's- Yeah, let's try to actually be pretty useful here. So with that money, you put it in your, you do that through

the brokerage? Yeah, through the brokerage. I mean, I could have put it in a savings account as well, but I was just... I could get a little bit more on the brokerage in terms of... Okay, got it. Here's what I do. So I have a portion of the money that I need to just be liquid. Like I got to pay tax at the end of the year and stuff like that. I put it in a mix of three areas, okay? In my brokerage, in a money market cash ETF. So that pays me, I don't know what that's paying right now, maybe call four and a half,

five percent, roughly? Probably a bit less, but around there, yeah. Around there. And then I will do a smaller, but some portion of it in a HISA, like high interest savings account inside of EQ Bank. And then the rest of it is largely in ladder GICs, depending on when I'll need it inside of EQ Bank.

So those are the two platforms I use. And it sounds like an ad, it's not. This is actually what I've been doing for a long time. And then, so you do kind of a similar, but you're also using t-bills inside your brokerage. Yeah Yeah, exactly our emergency fund is with the QBank So that one is just readily available so it's much easier because the brokerage is nice But there you always gonna get a few days delay with the brokerage between the time you sell the settlement time The time it's transferred to your account

So if you need literally the settlement time, the time it's transferred to your account. So if you need literally the money within like 24 hours, you probably won't be able to get it. You usually should give yourself three to five business days until you get it. Not that for most expenses it'll be fine, but just so people are aware, but just goes to show that this is the money

that we need shorter term, and we're not putting it in stock market. I'm not putting it in Bitcoin. I'm not putting any stuff like that. It's just in very highly liquid assets that there's no or very little risk to the capital. And that's the way to do it, in my opinion. If not, you can get some nasty surprises. and if not, you can get some nasty surprises. And that buys you the ability to truly think long term with your investment portfolio. I thought you were gonna say it buys me sleep.

I was gonna agree. Well, those are the same thing. Yeah, yeah. Those are the same thing. So yeah, any way you slice it. I do think it's extremely important to have the ability to buy yourself that peace of mind and ability to think long term with your actual investment portfolio, with the bulk of your wealth that you're going to try to compound.

All this stuff I'm keeping liquid, it's still a small part of my overall like holdings. It's a really small piece, but it's enough that I don't have to think short term with the things I'm trying to compound long term. Say I'm off by 5% in terms of optimized, like I'm not perfectly optimized, like I'm holding a little bit too much cash. I will assign the value of that in being able to truly think long-term with my portfolio. Like there's an actual opportunity cost in there

that's like, I'm possible to bake in and quantify, but I know that it exists. And so I like operating that way and sounds like you as well. Oh yeah, absolutely. And the biggest mistakes that you can make as an investor is not the biggest, but a mistake that is easily avoidable is avoiding being forced to sell. And that's another reason why I don't do leverage

because leverage can force you to sell where you don't have a choice and you have to liquidate or add some more cash, and if you don't have it, you're kind of stuck and you have to do a forced sell. And same thing, right? If you don't have that buffer with cash, you may be in a situation, you increase the chances that you'll be forced to sell.

Look, we could both have a situation where even despite the precautions we're taking, we're forced to sell because there's really a non-foreseen event that's super low probability that we could never have seen that just eats all of it and then some, but we're definitely lowering that risk way, way down. And you never want to be in a spot where you're forced to sell. No, a distressed seller is a position I wouldn't wish upon even my worst nightmare, my worst enemy I mean.

It is, it's not, there's a reason that the word distressed has so much, you know, kind of emotion around it. It's not a good position to be in. No, exactly. And now the next thing you need to ask yourself is for each goal, what's your risk tolerance? What kind of drawdowns are you able to sustain without panicking? What happens if you end up short of your goal by 10, 20, 30 percent? What's the maximum shortfall you can live with? That's really important because maybe you have an amount in

mind for retirement but you start mapping out some scenarios and you say you know what I'm good with the range here. So even if I don't hit the top of my range in terms of income, that's okay. I can still make it work. So for that reason, I can actually take a bit more risk than someone who will actually need that minimum to achieve where they may have to be a bit more careful

with taking risks. 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 on a regular basis to set money aside for personal income taxes in April or February. 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, EQBank's GICs are a great option. The best thing about EQBank 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. TCI listeners, you know that I'm having to constantly travel for work. One week you're up for meetings, next time in Montreal meeting potential investors. And while I'm away, my place at home sits empty. So I've been thinking why not put it to use, make some extra income by hosting it on Airbnb. Hosting feels like the smart thing to do, but it can also feel overwhelming to some. But Airbnb's new co-host network makes it a lot easier. I can hire a local vetted co-host to manage everything,

handling reservations, guest check-ins, and even cleaning. If you've been thinking about hosting on Airbnb as well, and you could with the right help, why not let your home work for you? Find a co-host at airbnb.ca forward slash host. As an investor I'm always looking to reduce my fees which is why I'm excited that Questrade now offers zero dollar commissions on stocks and ETFs. But Questrade isn't just about commission free trading. You can also get USD accounts so I avoid forced currency conversion fees when trading US stocks.

Plus get access to their advanced edge trading platform available on desktop, web, and mobile. I've been using Questrade for many years and so has Simon. And their platform makes trading seamless whether you you're managing a long-term portfolio or making active trades. Don't miss out, start trading commission-free stocks and ETFs today. Visit questrade.com to learn more. The next one here is asset allocation.

So what assets do you want to own? What percentage would you like allocated to each asset? You can do a set percentage here or a range. It really depends. It's kind of personal preference Rebalancing rule. Do you have a rebalancing rule? If so, is it based on the asset class or for a specific holding? For example, You will not have more than five percent in one individual company for example. That could be your rule. What's the rebalancing requirements? So say you rebalance based on asset classes and have a target of 70% equities and you have a rebalance rule of 5% divergence. So in other words,

if it falls below 65% of equities, your portfolio, or above 75%, you would have to rebalance to get back to your 70%. So there are some rules that you can put. I'm not saying one is better than the other. That's really personal. If you don't rebalance and you let your winners run, which I know you like to do, Brayden, that's fine, but you are taking on some more risk

because you'll eventually probably get some positions that get really outside. So you just have to be aware and having that in your investment policy is really important. And another way you can rebalance is actually you don't touch your existing investment and then you just do the rebalancing with new contributions. So let's say you're under your equities target, you're at 65% like I mentioned and then you say, you know what, until I get back to 70%, everything I'm contributing, it goes all in equities. And then once it starts being more balanced, then I continue

contributing with the breakdown that I had in mind, whether it's bonds, gold, Bitcoin, whatever you had in mind, you can do it that way as well. It's kind of what, it's your personal preference. I mean, at the end of the day, it's your investment policy, right? I see you nodding. Two thoughts here. I love that you said the second point around, you can rebalance via new contributions.

This is my preferred way to do it. That's what I was talking about with my buddy, he was about to add more money to his equities portfolio that he wants to pull out in two years. Like, you don't need to go sell your stuff and rebalance, but like new contributions coming through the door. If you have the luxury of having new contributions of stuff coming in the door,

then yeah, just allocate it differently. And I think that that's a good way to make the math work out. My second point is having, I actually have an intentional policy around not doing this. As you enter that. My policy is inherently that I don't have a policy. And I think that that's and that and that's legit too, because I do not like to sell winners. I'd like to let them run. Yes, you end up in a situation like me where you got 50% of my you know, portfolio still in one stock in Constellation Software. That happens. That's

been the you know, that rule breaks traditional portfolio theory and diversification and guess what? It's been the right move and I continue to think it will be. And so am I throwing new capital at that position? No, but I'm purposely, intentionally not trimming it and not rebalancing it. That is my policy that I don't have that policy. Yeah, and you just write it down, right? You say like, I don't rebalance,

I will just, when a position gets too large, I just start diverting my contribution to something else. So you write that down. In terms of contribution policy, this is the second to last one here, but I think it's, should be at the top. Like don't take it in terms of order of importance because the contribution policy I think it's very very important. So do you contribute

towards your investment systematically? If so, what amount and what frequency or do you prefer to look at it on a percentage basis of your income? Personally I would look at it on a percentage basis of my income but that's just my personal preference. What happens to your contribution if your income increases? Do you want to contribute more, keep it the same? Or I've seen a lot of people who have done very well with their investment, what they'll do is any increase in income, they pretty much put all of that towards their investment, as long as they can still obviously maintain their lifestyle with cost of living and things like that.

But you can make something that makes sense for you. What do you do if your income decreases? Do you decrease your contribution or do you cut elsewhere in your budget to continue making them? Because we're going to have some economic uncertainty. I think that's fair to say in the next year or two, some people may see their income, their earnings impacted. And I think it's good to just have a plan in mind

if you do get that, you don't want your income to decrease, I get it. But sometimes, you know, it is what it is, right? The big country next door slaps tariffs on your, the auto sector and you're laid off. Like there are just things that are outside of your control, but knowing what you would do in advance, I think is important. Last one here, the actually last two, I think they're really good. You have any prohibited investment or strategies, what investment or strategies you actually will not do maybe Bitcoin is not your thing and

You just don't want to invest in Bitcoin write it down. That's fine Or maybe you want to invest in Bitcoin, but you won't touch any of the other coins then you write that down Do you want to use leverage or not use leverage if you don't want to use leverage? Let write that down here in terms of prohibited investment Are there certain companies or certain types of companies that you will not touch? Put that in there. Maybe you don't invest in government bonds that are more than two to three years in duration. Put that there. Maybe you don't want to touch options whatsoever. Put that there. And I

think that's important. And of course, you can change that. Maybe you say, I will never touch options. And then you hear the second segment I will have later and you say, okay, you know what, I'll modify this option segment. But it's just some examples. And I think that's good to have there. It doesn't mean you can't change it. But I think it's a good thing to have a prohibited investment space too. I think it's a good thing to have a prohibited investment space too. Having some sort of framework in place for when things get sticky is pretty important. I've been pretty rigid with some rules around what I do and don't invest in. Those mostly have to do with my area of competence and them being in the strike zone of what I'm good at. And so I think that those are,

you're able to change those and you're willing to to review certain ideas and reserve the right to change your mind. I think that that's so important. I think that's important politically in your investing style, in your relationships and friendships, like being able to change your mind when like you have new facts or new logic

or new understanding or you've just gotten smarter is pretty key. That being said, you wrote this down before. So don't quickly flip things around. You're like, I don't day trade. You read some, you watch some YouTube article about how some guy's day trading is a way to wealth, some scammy thing.

Review that rule why you said don't do the day trade. A lot of stuff still is too good to be true. So, you know, don't flip-flop on it too much, but also reserve the right to change your mind. I think this is good, man. Yeah, and I guess the last couple of things here, policy review frequency. So I said personally, I think I would recommend

that people would do it at least once a year. Review it anytime there's a big life event that happens whether it's loss of income, marriage, kids, maybe you inherited a large sum of money. That's gonna change things so make sure you review that and then make sure you have an exit strategy as well. So write down when you need to start shifting your strategy from accumulation to focusing a bit more on the accumulation. I think those are the big parts. Some people may add some more components to this,

but I thought that it's a good starting point. And as I was doing it, I'm like, this is definitely something I will be doing in the next few weeks. And maybe I'll share it on the podcast a bit later on, and maybe I'll even post it on Joint TCI for the subscribers so they can see exactly in writing what it is and the changes that I make to it because I'm sure I will be making changes to it over time.

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 on a regular basis to set money aside for personal income taxes in April or February. 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,

EQBank GICs are a great option. The best thing about EQBank 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. Again, EQBank.ca forward slash GIC. TCI listeners, you know that I'm having to constantly travel for work.

One week, you're up for meetings. Next time in Montreal, meeting potential investors. And while I'm away, my place at home sits empty. So I've been thinking, why not put it to use, make some extra income by hosting it on Airbnb. Hosting feels like the smart thing to do, but it can also feel overwhelming to some. But Airbnb's new co-host network makes it a lot easier.

I can hire a local vetted co-host to manage everything. Handling reservations, guest check-ins, and even cleaning. If you've been thinking about hosting on Airbnb as well, and you could with the right help, why not let your home work for you? Find a co-host at airbnb.ca forward slash host. As an investor, I'm always looking to reduce my fees, which is why I'm excited that Questrade now offers $0 commissions on stocks and ETFs.

But Questrade isn't just about commission free trading. You can also get USD accounts, so I avoid forced currency conversion fees when trading US stocks. Plus, get access to their advanced edge trading platform available on desktop, web, and mobile. I've been using Questrade for many years, and so has Simon. And their platform makes trading seamless, whether you're managing a long-term portfolio

or making active trades. Don't miss out. Start trading commission-free stocks and ETFs today. Visit questrade.com to learn more. All right. Shifting gears onto kind of more personal finance talk, but I think you'll like this. So eating lunch yesterday, I think I'm all cool because I'm not on TikTok. In this, I'm like scrolling YouTube shorts. I'm still in it.

It's the same stuff. They've hacked my brain. But there was a clip. It was a quick clip of Charlie Munger's last recorded. You can see what kind of algorithm I'm on here. Charlie Munger's last recorded interview before his passing last year. Becky Quick of CNBC. Many of you will know Becky Quick.

She does, she kind of moderates the annual meeting. She's a mainstay, longtime, you know, person at CNBC. And I think she quarterbacks basically all the Buffett stuff at this point that he does in terms of media appearances. So she asked him the question, is there anything left on your bucket list? Age 99, Charlie responded, quote, I am so old and weak compared to what I was even at 96, that I no longer want to catch a 200 pound tuna. It's just too much goddamn work to get it in. It takes too much physical strength. So I would have paid any amount to catch a 200 pound tuna when I was younger.

I never caught one. And now, if given the opportunity, I would just decline going. I won't even go out after them. There are things you give up with time. Again, he said, quote, I would have paid any amount to catch a 200 pound tuna when I was younger. Better be some good tuna. Yeah. No, I don't know if Charlie's a fisherman. I actually don't know. I've never, I Googled it after.

I don't know. I've never seen him, any photos of him fishing. And this to me just screams a Charlie-ism of just, it's an analogy, it's a story about the bigger picture of something. And it's so on brand for him, like the way that he said this, the way he explained it, and he's just so big brain.

And it totally messed with me way explained it and he's just so big brain. And it totally messed with me as I'm meeting my lunch yesterday because I realized how many times I've cheaped out or just like not done some experience in my early 20s for an amount of money that is just completely irrelevant, honestly. And yeah, I have more money now than I did then, but I'm not talking about like obscene amounts of money that you need a lot of capital for. I'll tell you a story where I'm just like

the biggest schmuck of all time. Okay, so it's June 2018. I'm in Barcelona, Spain on a backpacking trip where I'm basically spending all the money I made on my co-ops and my summer engineering jobs, my internship jobs. I saved like a maniac to do this trip. So, if you talk to me, some of my friends,

like I was like, I'm living off $4 a day type of thing. Like I was going crazy because I knew that I wanted to save the money for this trip. I knew I needed like 20, 30 grand, right? I did the same when I went to Taiwan around that same age. You do what you gotta do. And so that's not the part that I regret. In fact, that was amazing idea.

I was very diligent, I was smart, I saved my money so I could do this amazing trip. Okay? We get there a buddy and I were 22. We meet these German girls at the hotel Things are going good. It's a Friday night and they're like tonight Barcelona FC vs Real Madrid. This is Prime Cristiano Ronaldo vs. Lion Messi, Barcelona, Madrid. You guys have to come.

I'm not a big soccer fan, but like, you know, Ronaldo, Messi, like this is the goats, right? In La Liga. So it was 80 euros for tickets. No, they were not good tickets. They were shit tickets, but they were 80 euros. And we didn't go like complete bozos. Probably because of my idea. I mean, probably because it was my idea to not go. Cause like, oh, I couldn't figure out how to spend money. And I had just spent all of this time saving like a freak so that I could do this basically, do this chip. And it was 80 euros and we didn't go like complete bozos.

And I already had an engineering job out of school for when I got back. So like I was gonna make money. I was saving like a freak just to get to make this happen. I couldn't live in the present. And looking back, this is probably the dumbest move possible. We had a great trip.

I'm not saying we didn't. But this Friday night in Barcelona, don't make this mistake that I did. Whether you're listening now, I know there's a lot of young people who listen to the show, early 20s. Don't make my bozo schmuck mistake. This is, you know, I'd pay 10 to 20 times in a second today to rewrite that.

And in the last year or two, I finally learned how to spend money on things that I can afford without guilt. And it's really hard to break out of this, Simone. It's really hard to break out of it. Yeah, I think at the end of the day, we've talked about that before. Just making sure you have a balance between being smart about your money, but also enjoying yourself. I've said this before, I'm 39, I'm going to be 40 later this year. You're going to be 30. I'm gonna be 40 later this year. You're gonna be 30. Yeah, I'm sure we have decades to live but you never know right you could go outside and

There's a meteor that just falls down exactly where you are Like it says super like the Brian Johnson who wants to live forever. He like he even says he's like I'm gonna Ironically get hit by a bus. I already have already accepted that Yeah, exactly. But it just goes to show like you have to make sure you do a good balance between enjoying things in the moment, but also saving for the future. And I think that's probably the best example where it's not a situation that you could realistically in your life will be able to do that many times.

Even if you remove like, obviously, I know they're not on their prime anymore but take whichever prime athletes and do it now. It's just not something that you have the chance to do very often. So you know if the cost makes sense obviously you're not bankrupting yourself to do it then it's probably worth it. Yeah. It was well within the budget. Yeah. it then 80 euros. Yeah, it was well within the budget. But that's like $300 or 300 euros now with inflation, right?

Yeah, probably. So this is an investing show and I strongly believe as you said, you got to act financial responsibility, responsible, you got to have a balance, got to invest in your future, don't spend more money than you make. Have good judgment and net you'll live a much less stressful life if you have your stuff together financially, 100%. That being said, I hope just one person learns from my $80 mistake here. Because when I heard that Charlie Munger quote as he sat there at 99 reflecting back.

I think that was his, it was kind of just, it was his reflection on like, even at 99, I've declined a lot since if you were to interview me at 96. Like I was still looking forward to the future of work every day. I've slowed down so much and in hindsight, I would have paid quote, paid any amount to catch a 200 pound tuna. And as far as I know, Charlie's not talking about literally catching a 200 pound tuna,

but more so the fact that he would give anything to make sure that he didn't miss out on the opportunities that he had when he was younger because he was so focused on making money. So I thought it was a really, really good interview. You can look it up. He's at the age of 99. He's sitting outside there with Becky Quick in his wheelchair and just dropping dimes of wisdom.

The fact that he was that sharp up until literally his last few days is just a remarkable life that he lived. Yeah, yeah, hard to disagree with that. Did you wanna do the next one or want me to do my next segment and we'll finish with that? Oh yeah, I have a quick one. We'll do that. Yeah.

Okay, I was talking with my team and we're like, should we put together an IPO calendar for the website? Like maybe get some more eyeballs on it. It could be like good little marketing thing. I don't know if people are gonna pay for it, but it could be a little marketing thing. And then I'm like looking at the IPO calendars that are out there.

And I was like, this is kind of true. Like who's going public that we're excited about? Just this past week, there's some of the big online brokers going public, Webull, eToro filed an S1 as well. So those are some bigger billion dollar tech-ish IPO, fintech IPO. So those are cool. But other than that, I mean, there hasn't really been that much. Like we're getting all excited about Birkenstock going public last year.

Like that really like, is that where we're at? And so I just wanted to dig up some data on why you're not seeing as much exciting IPOs. And there are a variety of reasons, but in my opinion, no other bigger reason than how much capital is in late stage venture or late stage growth equity, whatever you want to categorize it. So the number of companies going public declined significantly. In 2023, US venture capital firms invested over $67 billion in late stage deals, up $20 billion from a decade ago. $67 billion in US late stage venture, according to data from PitchBook. Traditionally, you would have gone public if you were looking for a $10, $20 billion valuation

when it comes to tech company, of course, those are big, big IPOs. Let's look at the Stripe example. They raised a $6.5 billion Series I. Series I, I didn't even know the alphabet went to that. Usually these companies have gone public by then, especially when you're raising six and a half billion dollars.

I think they raised it somewhere like 90 billion on the private market there. So the, according to Renaissance Capital IPO index, IPO activity in the US fell nearly 80% in 2021 to 2023. Of course, there's other factors here at play into why there is less IPOs. But you have companies like Databricks, Canva, other unicorns, like Stripe. It's not normal to see those types of valuations, those types of traction, those types of businesses, raising at a hundred plus billion dollar tech companies in late stage venture.

So because there's so much capital available for them, they're just going that route. They're just like screw an IPO. We're gonna stay private, we're gonna raise all this money, the capital's there. I'm still able to shore up our balance sheet, get some liquidity for early employees, take some secondary.

I'm able to check off all the boxes that I would have been able if I'm able to go public by staying private with Late Stage Ventures. So yeah, that's the segment. Yeah, yeah, obviously there has been, you know, from 21 to 23, you saw interest rates go way up. There was tons of liquidity in 2021.

The markets evaluations were crazy. So obviously capital dried up a little bit, interest rates go way up. There was tons of liquidity in 2021. The market's evaluations were crazy. So obviously capital dried up a little bit, but ever since and I'm not in the VC space, you know that stuff better than I do. But I'm sure some VCs were happy to be more selective when they could get four and a half, 5% on their cash and more selective with deals. I think that's probably played a part into having maybe a little bit of a slowdown, but sounds like VC is, it's still alive and running, even though we're not seeing that many IPOs. As long as you have the most two important letters

in the alphabet, AI. That's all you need. Yeah, it's hard to disagree, but we'll move on to my last segment here. We'll talk about options and not options trading. So this kind of strategy is actually pretty, there's not that, well, there is some risk, but it's not a high risk strategy.

I mean, it's pretty much the same kind of risk that you would get with owning a stock. Not quite, but I'll go over it. So it's called a cash secured put. So what is a put option? Because I know we have some new listeners, so I'll just give a little bit of background what a put option is.

So a put option gives the buyer the option, the buyer of the option to the right to sell the stock of a company at a predetermined price, which is called the strike price. So for example, you own stock ABC that is currently trading at $100 and you buy a put at a strike price of $90. If the stock drops below $90,

you could exercise that put option to sell the stock at $90 even if it's trading for less say at $85 or $80. It basically gives you some downside protection when you're buying a put option. In exchange for that right of course if you buy a put option you pay a premium that goes to the seller of the put option. So what if you're the seller? And that's what I'm actually going to talk about here. So selling a put option. So you can sell a put option, which would require you to buy the stock

if the buyer of that put option exercises it. So for example, you sell a put option for stock ABC at a strike price of $90. The stock is currently trading at $100. In exchange, the buyer of the option pays you a premium. If the stock stays above $90, the put option won't get exercised because it makes no sense. The buyer of the option can actually just sell the stock at a higher price than $90 and you could just collect the premium. If the stock goes below $90 then

the put will be exercised and you'll have to buy the stock of ABC for $90 even though it may be trading well below that. Now that's the risk of using a cash secured put is that you're forced to buy the stock at a price that is above what it's currently trading. But if you do it as a cash secured put means that you sell the put option and you have enough cash to buy the stock if the put option gets exercised. It's not complicated because you know what the strike price is and there's no leverage used because you have the cash to cover it. And I think this is a really good option for me at least it's something I'm looking at because if I like the business but I think it's still trading at too high of a valuation

currently what I can just do in this type of situation is sell the put option at a price at which I would be happy to buy the stock at if it dropped to that point. If the option is exercise I buy the stock at that it dropped to that point. If the option is exercise, I buy the stock at that price and I like the valuation to begin with so why not, plus I collect the extra money from the premium. If the option is not exercise, then I still collect the premium. The nice thing about this strategy is when markets are very volatile and sentiment is especially bearish, the price for puts, so the premium you'll get for selling these puts, tends to go up because investors get nervous and they want

downside protection. So you can really use that to your advantage. The last thing I'll mention here, because I'm sure there are some people that never dabbled into options and this is new for them, into options and this is new for them. A single contract of options, so if you just sell one put option, one contract, it's 100 shares. So if I sell, for example, one put contract of Amazon at a strike price of $150, it means that if it is exercise,

I'm on the hook for $15,000 because I'll have to buy 100 shares of Amazon at $150 each, which is fine, but you have to keep in mind that, you know, knowing that not all investors will have necessarily enough of a portfolio to be able to make sense of this without being overly allocated to that one position. I just wanted to make just specify that just so people don't get into trouble if that's a strategy that they're looking to look at. But it is definitely a strategy that I'll be considering especially if we see more

volatility and a more bearish sentiment and I start realizing that some really good companies people are willing to buy some put option at a pretty high premium and I'm able to sell them for a strike price that I actually think it's a really good purchase at that point. I think it's a really good strategy to get a little bit of income and take advantage of really volatile bearish markets. I have nothing to add. I will never do this. No? But you have to admit, it's not a bad strategy per se,

right? Like to be able to collect that premium. And if you like a company at a certain price, you know, you could just, just sell that contract and then you'll, you'll buy it if it hits that. It's, it's actually, actually, my comment is not on if I think it's good or bad. I think it's actually a comment to your first segment. Just, this just ain't in my policy.

It's ain't in your policy, okay. It's just so far out of my policy zone. Okay. No, I mean, I think it's useful for listeners, everyone to be educated around the different types of investment strategies that people use so that they can know if they have to pay attention to it or not. So I think that that can be a little bit of an intimidating factor or like, you know, you get a little bit of imposter syndrome when

you're new to the market and people are talking about complex strategies. They're talking about trading candlesticks and weird squiggly line pattern technical analysis of some sort of bearish cup and handle pattern. And you feel like an idiot, like, I don't know what that means. Yeah. Until you realize like what it is and you're like, I don't know what that means. Until you realize like what it is and you're like, oh, I know what that is and I'm glad that I never have to know what it is again.

You know what I mean? Like there is some sort of value in educating yourself on all of these things. So it's like, it's like, it's back to the, to monger. It's like the monger quote, you know, like tell me where I'll die so I never go there That's how I feel with a lot of this stuff. It's not that it doesn't have merit It's that it's just not for me, but but I like the explanation. I this is the it's helpful for me going through it

Yeah, yeah this and just so i'm clear too. It's you know options can get very complex And there are like this is a more this is definitely a very simple ways to use an option. And I think it's a way that long-term investors can actually use options to their benefit as long as they understand the risk. There are some risks, the primary risk with this, it's quite simple. You know, if you have a strike price at like

whatever the company is, but it's trading 100, strike price is 90 and then the company drops to 50 while you still have time on that options contract. Well, the risk is that, you know, you're going to have to buy the stock at $90 when you could have bought it on the open market for 50. So that is the risk that you're facing. But I think the way I like to see it's like, you know what, I'll make my assessments on a company. I'll establish a price that I think it's a good buy. It's a good valuation

and makes sense for the company. If it goes lower, then it goes lower. It's not the end of the world. I'm happy to own this company for that price. And that's the mindset I think you have to enter when you do a strategy, a cash occurred put, like I said, but again, it's not for, you know, it's not for small amounts of money. And I think that's really important for people. I gave the example of Amazon. Let's be honest, like to be able to do that, you probably need a portfolio that is well into the six digits to be able to do that and not be overly concentrated to Amazon.

So that's just an example. That's the reality that when you have contracts that are in lots of 100, you're gonna need a portfolio that's larger to be able to do those options. We're at the end of the show here, which means our weekly checkup on Polymarket tracking the election. We haven't done that in a while.

Let me pull it up. Yeah, pull it up. Okay, so it is currently, it is April 15th. It's gonna be a big week though for this. Yes, the election is two Mondays away. Two Mondays away, it's the 28th, right? Yeah, the 20th. I will be in Chicago for work. So I'm actually voting this coming Friday. I'm doing early. I've never voted early before.

Yeah, I need to figure it out for me because I moved right. So and I'm not in the same area for voting. So I haven't changed my address for everything. So I haven't changed my address for everything. So I don't know how that's gonna work out, but we'll see. Yeah, it'll be fine. It'll work out. I'm gonna vote this Friday, early voting. Okay, so polls on Polymarket.

So folks who are not familiar with Polymarket, it's not a poll. It is people actually taking an event contract with real money on if they think the next prime minister of Canada will be Mark Carney or Pierre Poliev. And right now the 74% chance on Mark Carney, you can buy that option contract, or event contract, sorry, or 27 cents on Pierre Poliev.

So that's today's math. Yeah, and the way it works is you buy, so if you buy Carney at 74 cents and he ends up winning, essentially that value will go up to a dollar. So it's always based on the dollar. And again, same thing. So if you buy Pierre Poiliev to win at 27 cents and he wins, the value will go up to a dollar and obviously your profit, you'll probably you'll like 3X your money roughly

if you do that. But there's other ways to make money you can buy for example Paulyev at 27 cents and then let's say he does really well in the debate and then his chances go up to let's say it's a 50-50 coin flip well you've pretty much doubled your money at that point if you sell then because then people will be buying out exactly if you cash out. It's a predictions market, so it's a bit like, I mean, it is kind of gambling if you'd like, but people will use a lot of different data for that. But it is different than traditional polls,

and I've seen people push back against it, but my opinion is always, look, it's one other data point. You don't need to rely solely on this. Look at the polls too. Look at this. Well, people get emotional because they conflate their political stance on the reality of this prediction betting market.

People are putting real capital in and call it manipulated, call it whatever you want. I'll still take this accuracy over a poll done by some pollsters. I mean, the US election, this was much more smart money than any poll. You saw that Donald Trump was like an 80% favorite when all the polls were saying it was a coin flip,

like the day of the election, basically. Yeah, yeah, as the polls were closing. was a coin flip, like the day of the election basically. Yeah, yeah, as the polls were closing. So, I mean, we'll see, I think it's gonna be fascinating what happens. And clearly there's not gonna be as much money splashing around for this one than the US election. That's very clear, but it's just a very interesting thing. No matter who you want to win,

I think it's really interesting and fascinating. And polls, right? Polls have some advantages, disadvantages. It's always hard to figure out if the sample that they're choosing for a poll is actually representative of the overall population. And I think that's always the tricky part. And then with our parliamentary system, even if they're 50-50 in the polls, while just the way that our system works, it could be a landslide win from one side or the other, depending on how the votes are actually spread out. So it's very difficult to even establish with polls too. Yeah.

This is shocking to me, these numbers, I guess. I'm very tempted to bet I'll be honest put some money on PI here because I think with the debates It'll be very I think the debates could make this make or break for either candidate. I think it's Seems like a pretty good Like risk arbitrage on 27 cents. Yeah. And this is not gambling or investment advice. This is just our personal opinion. You're at the end of the show, people.

Come on. Yeah, it's just I think Pierre is better versed in French. So I think he could have definitely an edge there just based on the language on the French debate. I haven't seen Mark Carney debate all that much. But he's not a career politician. Like Pierre has done this for like 15, 20 years. So I don't think it's a 0% chance that, you know, it goes up after the debate. I don't think it's, you know, it's an impossibility

or like it could be a wash and then it just stays like this afterwards. Like that's also a very possible outcome. So no, I just find it very fascinating to look at. I'll kind of state my case again here on my thoughts on here, which I happily stated last week, which is I fear Canadians have lost the script in an effort to be anything but mega. Do you know what I mean? Do you know what I mean by that? Like in an effort to be anything but mega. Do you know what I mean? Do you know what I mean by that? Like in an effort to be anything but mega,

the status quo is better than, you know, the status quo is better than change. In an effort to be anything but conservative mega, I think that that has been a trend that you've seen and you're seeing it in these numbers, you're seeing it on polymarket here with the Canadian sentiment on which way they think the election is going to go. And I believe that to be a big mistake, if Canada is going to come out the other side better. No single metric you can possibly be proud of in this country from an economical perspective at all. And I know that's not the only thing to life, but we should not be the worst G7 country

on almost any way you slice it across so many different variables, quality of life, economy, everything over the last 10 years. We should not, given where we are, the resources we have, the location we have, being right next door to the US, whether you like it or not, you talked about this last episode, Simone, whether you like it or not, you talked about this last episode, Simone, whether you like it or not, Canada and US trade policy over the next five years probably get closer than it ever has.

Yeah. And I know that is not what people think. They're like, ah, screw the US, we're gonna do it on our own. Get real, like honestly, get real, like come back to life. Like you had your little time, get back to real life, we need to work with the US and we need to be strong. Yeah, yeah, it's not gonna be an easy balance to do,

but I think the reality is that, and I think what the shift we've seen from the US administration, since we last recorded even I think we're seeing more and more I think what I was saying is that you'll see almost a block a North American block possibly a Hemisphere block that will be led by the US whether Europe joins in on that but, but it feels more and more where there's gonna be these closer trading blocks and it feels like also the US is trying to get most of the world against China and using its leverage again for that. I don't know what the endgame policy is, but that's kind of my perception on how things will evolve. And keep in mind, like Trump could be gone in three and a half years.

And I still think that we're going to see a more closer North American bloc, even if Trump is gone and the Democrats come in. I still think long term, we're probably going to see that. And the US is in a cold, what I call like a cold AI war with China and that's been obvious for you know many many years. Their strategic rollout, that's why I think their strategic rollout with the tariffs on all these different countries calculated on trade deficits was one of the biggest strategic blunders I can possibly think of. Like, you know, you get the,

his supporters, they call it the art of the deal. I'm like, that was literally the worst possible strategic role I can think of. And so- They destroyed a lot of goodwill that they had. They hurt a lot of goodwill with the people that are gonna be ex-China that they need to work with. Exactly.

Including Canada. Yeah, and I mean, look, I can understand why you want to do the art of the deal, right? You like kind of put the worst case scenario there so you can kind of come into, you know, a lesser amount or, you know, what you had in mind from the beginning, because you started so off on the extreme of the spectrum. But geopolitics is not, you know, running a real estate business. And I think Trump is realizing that, you know, countries will look after themselves. They may align for the US out of necessity in the short to medium term,

but they're also going to be starting to plan contingency plans that they would not have planned six months ago. And I think we're going to start seeing that. And like even Canada, like as much as I, you know, we just talked about it, but Canada should also have some contingency plans too.

And Europe should also have some because at the end of the day, there's that little seed of doubt that's in your head if you think about country to country relations. Trading partners like Canada, for example, probably didn't a year ago have what I'll call a plan B when it comes to some of these trading partner relationships. Whether or not we have to go with plan B, us, many of the other countries that have lost some good faith here are developing plan B.

Is that a fair statement? And that really hurts the US. Whether or not it happens or not, Is that a fair, is that a fair sense? And that really hurts the US. Yeah. Whether or not happens or not, developing the plan B is not good for their economy, I would say. Yeah, and it just hurts if you're trying to get people on your side that have traditionally been your allies that now you've eroded some of that trust.

And obviously there's back channel stuff that happens all the time. There has been, there always has been, you know, there's deals that never really come public and that will always happen but there's a big difference between doing some back channel deals under the radar and then going public and making this big show out of it. These leaders of these countries, a lot of them have egos. Clearly Trump has an ego. Clearly the leader, Xi Jinping has an ego. No.

I know. But when you go public like that, you really attack them in a way that now they can't save face anymore and they really have to come up with contingency plans. Like that's, yeah, that's unfortunately the result of it. And I think long-term it's going to hurt the US. How badly? We'll have to see, but I think it will. Yeah.

What I will say is, I think I've seen some irrationality from my fellow Canadians on US, the reality of working with the US and industry that we have and the realities of supply chains. I've seen some just really irrational behavior there too, as well. So like, we need to let's not lose the script here, right? Like we are big, large allies, defense, and trading partners with the US that needs to continue, depending on what you think of the next three and a half

years with Donald Trump, let's not get delirious here, right? Stay grounded, leave your emotions off the table, like come back to life. This is important for us to get right. And in an effort to be anything but mega, I feel we are losing the voter base. I feel is losing the script on what we need to do in Canada to get things back on track for the country.

And that means a lot of things. I don't think I really have to explain it. I mean, I don't really think lowest of the G7 GDP per capita is a trend that we want to continue. All employment going to public sector, no private sector, no self-employment growth. Is that the trend that I want? No, it's not the trend I want.

Well, probably just one last thing, maybe not on the investment side, but let's also keep our decency. Like I've seen some reports, right? There was, I read an article where this American couple were in Whistler for a ski trip and they got onto a gondola and then this Canadian lady just started like yelling at them saying like how could you do that to Canada and being super aggressive and stuff like that. Look, at the end of the day half the country voted for Trump and for those who voted for Trump a lot of them are not happy with what he's doing right now.

So you have to keep that in mind. A lot of them voted because they just want to change. And they just voted for the only option that was in the current administration. And now they're regretting their... I know I've seen a lot of people that are regretting their choice right now. And it's, you know, what he's doing, what Donald Trump is doing, what his administration is doing, it's not a reflection of all Americans. There's still very good people there.

There's still some nice people there. I have family there. I know you have a lot of connections there. And I think that's just important for people to remember is just, you know, let's keep our decency here. If you don't wanna to travel to the US because you don't, you know, you feel like, you know, that's a way for us to hit back, don't travel, that's fine.

But you don't need to, you know, berate the Americans when they come to visit Canada, for example. Yeah, well put. That is a loser move. It's like the, you know, it's like not going to centerize to shake the other team's hand after a playoff game. You know, like that's the kind of like, that's the same energy to me.

It's like just having no sportsmanship, no decency, no ethics to it. So I wholeheartedly agree. And it's not grounded in reality, is what it is. It's just not grounded in reality of the relationship that the two countries have. It's just so far from, it's short term emotionalism is what it is.

Anyways, I think we can leave it at that. Thank you so much for listening to the pod. We much appreciate you. We are here Mondays and Thursdays. For those who listened last week, I think next week's my last recording here for a bit, but I'm still gonna be around. Yeah, I think it is.

I'm gonna do the quarterly mastermind with you guys. We'll call it like meeting of the minds, Q1 or something. And my prediction is that maybe not every quarter, but maybe once or twice a year, I'm gonna get a takes from Breeden because there's a big event that happened. prediction is that maybe not every quarter, but maybe once or twice a year, I'm going to get a takes from Braden because there's a big event that happened. He's like, okay, can I come on like randomly? Yeah, exactly. I feel like I'm going to see a few of those texts between now and the end of

the year. That's just my suspicion. No, just knowing. Yeah. Yeah. You're right. And you know what? In six months, I might also give you a call and say, I really missed this. I don't know. I don't know. That's also a potential outcome.

And maybe eventually when I felt self in chat, I'm gonna wanna blab here all day, every day. So I don't know. Like I said before in the pod, I reserve the right to change my mind and I just appreciate you guys and I appreciate the listeners and no one more than you yourself, my man. So yeah, thank you for listening to the show. Thank you for support all through these years.

And it goes a long way. It really does. The Canadian Investor podcast should not be construed as investment or financial advice. The host and guest featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.