The Canadian Investor - Year-End Changes We are Making to our Portfolios

Episode Date: December 9, 2024

In this episode, Simon and Braden explore the nuanced debate between growth, value, and quality investing. Braden shares his perspective on how these styles overlap and differ, emphasizing the importance of understanding your own "order of operations" when analyzing investment opportunities. Whether you're starting with business quality or valuation first, this discussion will help you refine your approach. They also dive into a fascinating research piece by Lyn Alden and Sam Callahan, examining Bitcoin's strong correlation with global liquidity. The piece also looks at how global M2 influences equities, and other assets, and why liquidity matters more than you might think for long-term investors. Finally, Braden walks through recent moves in his portfolio, including trimming winners like TFI International and reallocating capital to Canadian growth stories like Terravest and WSP Global. Simon explains recent adjustments he has made to his strategy, including increasing cash allocation with US treasury bills to balance risk and take advantage of future opportunities.  Tickers of stock discussed: TFII.TO Bitcoin: A Global Liquidity Barometer 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 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.

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 Belanger. The Canadian Investor Podcast, welcome into the show. My name is Brayden Dennis, as always joined by the thoughtful Sir Simon Belanger. It's good to have you back, sir. It's good to have you back, sir.

I'm very glad you're back, back in the saddle, back on the pod here. And we got some stuff for the listeners. Yeah, it's good to be back. I'm sure they're glad you're cooking again too. Yeah, no, it's good to be back. Like I mentioned on previous episode, had some things happen on, you know, personally I had to step away to spend time with my family but i'm back now i love doing this so it's a good distraction at the same time yeah yeah and i think you know we're coming close next year we will hit episode 500 on this show earlier than later in the year

mathematically here and you know you can't do that by just kind of liking it. You got to really love this shit. You got to really love this shit, man. It's a lot of content that we put out, but we appreciate the nice messages. I've had several people in Toronto stop by, say they love the show. So it's good. Did I tell you that I had a Uber driver? No. That listened to the show and like showed me on his Apple Play that he was listening to the pod, like literally 20 minutes before he picked me up.

Oh, wow. Okay. That's funny. I was thinking from his perspective, like that would be pretty odd. You're listening to some guy's pod and then you pick them up. This is on the way home from the Billy Bishop airport like two weeks ago. Oh, that's pretty cool. It's so funny. I forgot to tell you that. But yes, today we got full slate. We have

two segments that we're going to go through and then you and I are both going to open up and talk about things we're doing in our own portfolio. Coming into the end of the year here, recording this in December and looking forward to next year and then what we've kind of done in our own portfolio as of late. Of course, we expose that for our listeners and our subscribers on joinTCI.com right on the first of the month. But here we go. We're going to open up a little bit about what we're doing in our own portfolio all right who wants to go first we both got some some content yeah you go for it yeah and uh i just finished recording with dan so i need a little breather and then i'll be good a breather all right good good yeah you get the back to backers okay so I'm going to talk about a segment that's been

on my mind. A guy on Twitter wrote a thought-provoking tweet called Long, his name is Long Equity on Twitter. He goes, what do you see as the main difference between quality investing and value investing? And so I think, how do I spin that on the pod? What's the difference between quality, growth, and value? There's been this kind of never-ending debate around growth versus value investing, right? It's like they're somehow very different and somehow not attached to the hip. And I think that they are, if done correctly, that they should be very much so attached at the hip. I think it's fair that everyone has their own style. And ultimately, everyone's going to have their own circle of competence. If you're an expert in the oil and gas business and someone else, your friend's an expert in the medical device technology business, it makes sense to

play to your strengths. It's like the old Peter Lynch thing. Don't throw away your biggest competitive advantage that equity analysts who work on Wall Street wish they had your knowledge in some of those sectors. If you are an electrician and you see which devices are Schneider's way better than this one, play to those strengths. But when it comes to value versus growth or even quality investing, you're seeking to buy companies with the objective that they're going to be worth more as you hold them, right? It's pretty simple. So whether you're buying them value stocks or growth stocks, it's the same objective. Growth investing done well is value investing. Just because the stock trades at high earnings multiples, it could be extremely undervalued to future prospects. I know easiest like survivorship bias one to pluck out right now with NVIDIA being so hot, but it was trading at 100x earnings three years ago. 100x earnings. And of course, that's an expensive multiple by any measure, but it had a very bright future, probably brighter than anyone could have expected. Even the most optimistic bulls with how large language

models played out and how they kind of really won that and all the CapEx spend to go buy NVIDIA GPUs. That's neither here nor there. But again, 100x earnings multiple, Simone, when you see that, when you're screening for an idea, what comes to mind? Yeah, I mean, usually, obviously, you'll see that when a company is going quickly, where I always have trouble with these valuation metric when they're sky high like this. And of course, hindsight is 2020. And back in 2021, three years ago, you wouldn't have known. I think Chad GPT was November 2022, if I remember correctly. Correct. So, you know, that it was definitely a stretch back then. If you could have seen, you know, LLMs come to fruition and the uptake that hyperscalers, especially, you know, how aggressively they've been building out their infrastructure, then clearly it could have made sense. But the problem with these valuations when they're that high is that, you

know, you have to think about the future and what has to go right for them to grow into that. And basically, you know, I think it's fair to say that the way NVIDIA was training back then, the outcome that we're seeing right now was probably one of the very few number of outcomes where they could actually grow into that valuation and it ended up happening. Everything has to go right when you buy high multiple growth stocks. And that's not lost on me. That margin of safety element of buying low multiple stocks versus high multiple stocks, whether it's whatever multiple you want to use, depending on the stage of the company, whether it's just a traditional PE, Ford PE, price of sales, whatever it is,

everything has to go right. So that's not lost on me. But in essence, you're trying to do the same. on me. But in essence, you're trying to do the same. You want the same outcome. And I think to answer his question around like, what do you see the differences? For me, it just comes down to the order of operations that you're looking for. So for me, I consider myself like a quality growth at a reasonable price. GARP is like the term for that. That means I need to satisfy that the business is extremely high quality and can grow at reasonably above average rates first. So I need to see that first. And then I'll do my valuation work. I think a deep value investor would do that literally in just the reverse order. It's like, here's a bunch of stuff that screens pretty cheap.

literally in just the reverse order, right? It's like, here's a bunch of stuff that screens pretty cheap. And now I'm going to look into the quality of the business, going to read some earnings call transcripts, going to look at the financials, maybe read a Q and K, the traditional head to the IR, those kinds of things. So those are just very, they're the same thing, but you've reversed the order of operations. So that's how I see it. Both are fine, but I do think that having an order of operations that suits you best, where you're going to be the most comfortable makes sense. Some people feel good about screening for those cheaper names so that they know that they're not going to get smoked if something goes wrong and it's priced for perfection. Whereas for me, I need to see the quality first,

and then I'll do the valuation work after. So it's not like one is more important than the other. It's more so just literally the board of operations. I'm curious how you think about this kind of age-old debate growth value? Yeah, I mean, probably not surprising because I'm very nuanced. I think people know that. I mean, I think I use it. I kind of use a two prong approach, like certain types of business, you know, that are high quality, that I've proven year over year how good they are. I'm definitely willing to pay a higher price for that. You know, there is a limit to what I'm willing to pay because again, they have to be able to keep growing and, you know, the valuation

has to make sense. One that comes to mind that's highly valued right now. I still love the business, but I think it's a bit too expensive. But I guess I say that every year is Costco. It's a more traditional business, but I think the business is a great model. But I also have the other side of me who likes to look at, you know, sectors of the market that are hated. And then I try to go and pick the best companies within that sector if I believe there is a bright future for that sector as a whole. And, you know, I think people have been following me, probably know and join TCI would see it like definitely one thing I've been, you know, I think people have been following me, probably know and join TCI would see it. Like definitely one thing I've been, you know, dabbling into is oil and gas.

But I own two companies in that area, you know, Canadian Natural Resources and Termaline. And those are some pretty strong companies in that sector. But it's generally it's been for now better part of a year and a half, two years, like not really love sector. So you can still get some pretty good value in terms of the cash flows. And, you know, if things get a little better, you can just imagine how well these companies will be doing. So I kind of yeah, I I do, you know, a hybrid approach, I would say. So that's why I do have some more kind of growth quality names in my portfolio. And I do have some companies that are a bit more cyclical that could be a bit hated by the market currently.

Yeah. And that's another point too around cyclical names. Because they don't screen on many quality investor radars. names because they don't screen on many quality investor radars. And that's the ultimate go against the grain when things look the worst. And sometimes the multiple is the most expensive because earnings are depressed. So those ones are always interesting. I think that people who know what they're doing and know the industry really well can crush it with cyclicals. Yeah, because they'll probably be able to dig into names that are not as well-known. I tend to stick with the better-known names,

the ones that are generating gobs amount of cash flows. But again, there's going to be more capital in CNQ than a $4 billion market cap oil and gas company that most people outside of alberta have never heard of something like that right yeah and then that's an interesting point too which is looking for non-cyclical or or at least less cyclical than perceived in a cyclical industry those are good fantastic plays like i think I think you've been pretty keen on those with streamers in the past,

both on precious metals and in oil and gas. That's a good place to look to. So it's one of those things where it's like, in those cases, you can get the perfect blend of business qualities, very reasonable prices and some modest growth in the mix. So to wrap up this segment, when done well, they're indistinguishable from each other, I think, is the way I look at it. And you don't need to put yourself in a box about what type of

style you go for, but it does make sense to have a specific order of operations that fits your style is my opinion on the matter, because that's going to be what you're most comfortable and the most repeatable for finding new ideas. Yeah, no, I think that's great. And, you know, I'm probably the best example. I'm kind of pretty nimble when it comes to that, but, you know, I do have what I feel comfortable with. I like to look at the macro environment too. That's definitely a big part of the way I approach things. 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 or 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. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty,

it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host. Speaking of macro, there was a very interesting paper. I think I referenced it.

The last episode we recorded two, three weeks ago or so. So it's called Bitcoin, a global liquidity barometer. And I know some people, you know, are still not sold on Bitcoin. And I do encourage people to read this, whether they own Bitcoin or not, whether they're interested in it or not because it's about more than just bitcoin it's about asset classes as a whole in terms of global liquidity it's a great piece um it was done by sam callahan and was commissioned and advised by lynn alden who's uh i you know i tried to listen to lynn or read some of her stuff as much as I can because she's one of the most level-headed macro analysts out there I think she will look at the at things very objectively regardless of what it is so where you've I find sometimes you'll you'll listen to people and you

can clearly say like oh they're just like 100% Bitcoin bull, right? And nothing else matters or gold or whatever it is. I find her very, you know, just yeah, very objective when she does her thing. So in this piece, Sam and Lyd measure how Bitcoin as well as other assets moved in terms of global liquidity, and they measured global liquidity as global M2, which is a broad measure of money supply. So M2, for those not familiar, includes physical currency, checking accounts, saving deposit, money market securities like money market funds, and other forms of easily accessible cash. Now, Global M2 includes the M2 of the eight largest economies in the world. So you have obviously the US, China, the Eurozone, Canada, Australia, Japan, Russia, and the UK. And Global M2 is denominated in US dollars. I won't go into detail

but the reason why it's useful for this measures but I do encourage people to read the piece they go into detail why it's a good thing to use the Global M2 and why it's denominated in US dollars in terms of looking at global liquidity. What they found is that Bitcoin had the strongest directional alignment with global M2 on a 12-month basis with an 83.2% correlation. That means that if global M2 is increasing, which tends to happen over time, is increasing which tends to happen over time if you you know you don't need to be into macro a whole lot to know that you know that the money supply has increased over the decades and the price of bitcoin is the most likely to follow the same direction and vice versa so if you get a contraction because the global money supplies can contract although over long periods of time it's shown that it will increase it was followed by the snp 500 at 81.2 percent total stock market vanguard which is 72.3 percent

gold at 68.1 percent and emerging markets equities at 59.9 percent and the least correlation was actually bonds at 45 percent now an interesting finding was actually bonds at forty five percent. Now, an interesting finding was that the shorter the time period, the less the direction alignment was present. Another important caveat for Bitcoin is it is very volatile and can also have some big short term swings or, you know, upswings, whether they're downswings or upswings because of unexpected events. So one that some that are cited are things like the crypto centralized lending space

implosion in 2022. So think Celsius, BlockFi, Terra Luna, and the fall of FTX, of course, those can have a large impact on the price of Bitcoin, regardless of what is happening to M2. So these can kind of override in the short term what will happen there. And another interesting thing that many will find useful in this article is how closely the S&P 500 has actually followed global liquidity in the last 11 years. And they have a chart that shows both the S&P 500 along with growth of Global M2. And I'll share this for our joint TCI subscribers here.

And it's pretty astonishing. Like, Brayden, you can see this, obviously, how the line is, I mean, it's almost like tracking, not exactly, but very closely. So you have Global M2 in orange and the blue you have the S&P 500. And from 2013, basically, it follows the Global M2. The only kind of divergence is what we've been seeing over the last year or so. This is what you would call a statistical correlation.

High R squared. Yeah, and I think it shows the importance of monetary policy on a global basis. Obviously, we looked at companies, we looked at earnings, and if you look at a company specifically, of course, it can act very differently than this. Like that's non, you know, that's that will happen. That's where you start seeing that Global M2 probably has as much, if not a greater impact than the aggregate earnings increase for these companies. Of course, earnings will increase, but a lot of the time, you can make the case that the increase is probably, there's a good portion of that increase that's just due because there's

just more money in the system available, therefore translate to the bottom line for a lot of businesses. But it's really interesting. I'll put in the link for the article in the show notes. It is decently long, but they go in really great detail if you like this kind of stuff. And like I said, even if you're not into Bitcoin, yes, it does focus a bit more on it. But it does talk about a bunch of other asset classes than the correlation with Global M2 as well. So there's obviously this correlation. The price of Bitcoin has obviously gone parabolic, but is there a statistic-

Has it? I haven't been paying attention. i've been asleep at the wheel uh you're you know asleep at the wheel in a in a bag of money being a bitcoin owner but the is there i guess one of the things that people have said is like there hasn't been that as much correlation to the price of Bitcoin to these macro factors you're talking about as like the NASDAQ 100. It's been more correlation to those like what I'll call risk on assets in growth equity. So what does the smart Bitcoin folks say about that piece? I'm just asking because I don't know. Yeah. I mean, the what is the smart Bitcoin folks say about that piece? And like, I'm just asking because like, I don't know. Yeah, I mean, the correlation is pretty close to the S&P 500, at least from a directional basis. Right. It's 81 percent. I think what I mentioned from the article here and you're at 83 for Bitcoin.

And, you know, let's forget about Nasdaq for a second, because let's be honest, the S&P 500 is almost a NASDAQ at this point with how heavily weighted. So there was a correlation. I mean, over the last, you know, since the Trump election, or at least when it was starting to be more likely, we can, I think we can pretty confidently say that that correlation has broken a little bit, but it's a very short amount of time because the price of Bitcoin has gone way, way higher than the percentage increase that you've seen from NASDAQ or the S&P 500. I think to me, it's more of a reflection, again, I think with global liquidity. I think the best way to say it is there is more and more money in the system and the assets that are available are not increasing as quickly. There is less companies

that are publicly listed in the US than there was 15, 20 years ago. So you have more and more- I guess let me rephrase my question because there's obviously statistical correlation with equities and this money supply and the global liquidity, and Bitcoin as well too, but the correlation between Bitcoin and equities is way, way higher than Bitcoin and money supply in terms of they're tracking each other in your data, like 83 and 81% to the global liquidity. So I read that as like, okay, that's interesting,

but like actually those two things are tracking each other really, really closely. Yeah. And I think that's been kind of a talking point against the asset where it's like, this is just moving with risk on investments. Yeah. I mean, I think that would be a fair point. Again, I think it's all being driven by the global liquidity and because those are riskier asset and more in demand assets, I think that's why they're tracking similarly. But I'd have to look at the data.

I think it's been more in the last four or five years where they've been closer in terms of tracking. I don't have the data in front of me, but that's what I vaguely recalled that it's been more in the recent four or five years, especially since the money printer really went off big time with the pandemic. Your chart, it's crazy there what happens right at the beginning of 2020 there with the money supply. It's staggering, really it is and look i think it just comes down like i don't disagree with it there is a correlation between the two at least

for the last four or five years whether that will keep happening or not i guess we'll have to see it's still a pretty young asset when things all things consider of course it's been around for over 15 years now but i would say it's probably more 10 years where it's starting to be more like mainstream and even more so in the last like you know four or five years that it's been more well known in terms of bitcoin specifically but yeah the global m2 is definitely the one that is fascinating just because like i was mentioning earlier it's you have more and more money in the system and you know assets that are not there's not as plentiful so you have a more limited amount of assets yes they are growing whether i'm talking

about you know stocks bitcoin gold whatever it is but the money available is just growing much faster that it just ends up leading to you know more people bidding on a finite amount of assets. And I know it's not finite for stocks. You can issue more stocks and stuff like that. But let's just say a set of assets that are not growing as quickly. Yeah, it makes sense. Well, you know what? I'm just glad I'm not on the sidelines.

I mean, even stocks. What is it, like 135,000 Canadian now? Something like that, yeah. But even... Or funny money? You know, whether you invest in stocks, Bitcoin, combination, gold, whatever it is, I think this is just a good reminder

that if you are not investing in something that can, you know, keep its value and increase in value in real terms, so when inflation is factored in, over time, you just lose purchasing power. I mean, there's no other way to put it. What started as a Trump insurance allocation for me has turned into like a full a full position it's like five percent nearly now which is like asymmetrical that's what it is yeah in line with visa and mastercard which i kind of keep it around five percent each so call it the trifecta of payments global payments i would call two to the two of them the global payments and one of them the

Trump insurance on global payments. At least the way I'm thinking about it. I know that's idiotic, smooth brain approach to it, but that's my approach and it's worked out just fine. 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 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 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.

Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host.

All right, let's get into the nitty gritty things that we're doing. Let's do right into things that we're doing personally here. I think that these kinds of things are helpful. We can sit here and talk about all the hypotheticals, but it's like, okay, what are you really doing? Of course, whenever we do these segments, none of it is financial advice. Always do your own due diligence. Always look at your own situation. It's going to be different than our situation. So don't be silly and take your time, be patient. None of this is investment advice. Okay. So I'm basically just kind of, I copied and copy pasted my joint TCI write-up on what I did with some TSX stocks, some Canadian stocks that I own. So I shuffled some capital around

between names that I own and one of them was sold. Anyway, so I rarely sell winners, but in this situation, I just felt like it was the best use of capital. TFI International, TFII on the TSX has been such a gem of a stock for me. I've made many, many times my money. I think it's an eight bag based on some quick math. And I sold the full position and it was a very large, it was a top five position. I think it's important to remember some context here. I was buying TFI, which is a cyclical, back to our discussion before, a cyclical macro sensitive trucking business at around five, six times operating earnings. Now it's nearly 20. And I think trades at reasonably fair value compared to the US peer, for instance, ODFL, Old Dominion Freight Line,

which is probably like best in breed trucking consolidator in North America, has traded at way higher multiples for a long, long time. And TFI, even though they had the US listing, was not anywhere near that. And my thesis was, this is a decent business. Trucking is not the best business in the world, but it's okay. But it has a fantastic management team and very undervalued. Again, this is actually really pertinent to our first topic today. Very undervalued compared to the opportunity they had in last mile delivery. It's like, you have this huge growth in e-commerce happening. Those stocks are wildly expensive. Couldn't really get comfortable with owning any of them. And then you have this company in the

ecosystem delivering the package in that last mile delivery. Of course, they do less than truckload and other freight opportunities, but that was a really big part of the business that was catching a lot of growth and trading here for six times operating profits. here for six times operating profits. And so I think I've squeezed most of the juice out as this thing has re-rated nearly 3X up and grown cash flows exceptionally. The UPS freight carve out far surpassed my expectations. It was a brilliant move. And from here, the stock is probably fairly priced, but not screamingly cheap for an economically sensitive business like trucking. Who knows where the next UPS freight $800 million carve out comes from, right? Like, those are great. Those are bonuses, but like, I don't know where the next one comes from. So what a ride it's been. I still think it can outperform the market here, but I feel like I've got other opportunities. And those other two opportunities are two Canadian acquirers that I already own, have amazing conviction in, and I just think have better returns from here. And those two names are Terravest, which is ticker TVK and WSP Global WSP.

WSP Global WSP. So I took what was nearly like an 8%, 7%, 8% position that owes me nothing, has made me a ton of money and thrown it into these two companies, which have also been fantastic winners. I just like their future a little bit more. WSP having a little bit more global opportunity and TerraVest just being smaller in a place where Dustin Ha being 40 years old can compound for the next 25 years. So those are the two names. That's what I've done. So that's a bit of an update on some stuff I've done with my TSX stocks. I like to own some of these under known, less talked about, only trade on the TSX consolidators. They've been a great place to play. They've been fantastic for me. And, you know, so I've just kind of shuffled around some capital. Yeah. So, no, I mean, should have listened to you when you talked about TerraVest, but.

Oh, man. It's all good. You win some, you lose some. If you can't get, I heard this recently, I can't remember where, but you know, when you invest, you just have to get comfortable with regret because you're going to, yeah, you're going to have regrets sooner or later. And, you know, I think it's important to just understand that, you know, most moves that you'll make, there's probably going to be a little bit of regret, whether you sold too early, whether you waited a bit too long to get in. I think it's just important to be at peace with that because what's done is done, right? Yeah. I mean, if you're owning individual securities,

like you and I do, you can't own all of them. No, exactly. Individually, at least, unless you have some broad basket index fund, and then you're going to have a tiny sliver of them, and I'm not going to move the needle for something as small as a TerraVest. So if you're going to own individual equities and smaller names like TerraVest, you can't own all of them. So yeah, you do have to be comfortable with that fact. Now that I've said that, salt in the wound a little bit here, it's a total return 170% year to date. Hey, I've had a decent year, so I guess I'm just gonna... Yeah, I saw your returns on the year. We're not having any bake sales for you.

I'm doing okay, but so I've made, for me, I'm gonna look at things more on the holistic kind of bigger picture, obviously. That's how my brain tends to work. And I think it's just good for people to see different approaches, because we do have different approaches when it comes to investing, and we're both doing really well. So I think it just, you know, Braden has an approach that fits well for him, I have a different approach that fits well for me. So for me, it's more different in asset

allocation, I had a few ideas of what to do for this segment, but I figured I'd just kind of piggyback on what you said. Like you mentioned, join TCI subscriber, already have seen these moves. I actually did a recent kind of mid month update because I was starting to trim some positions. Now, you know, the main thing that I've been doing is that I've been selling. So I know we, you know, talk about dollar cost averaging, but if you've been listening to a podcast, it probably doesn't come as much as a surprise just because when you look at the Buffett indicator we talked about not too long ago, investor sentiment, call put ratios, and a slew of other indicators, there's definitely a strong case to be made that

markets are in the aggregate, of course, very richly valued right now, but especially those big tech names that are pulling the indices up. The issue with that is that it could continue like this for some time, right? Like you're looking at this and you go back to, you know, 2006, 2007, when you started having in 2007, kind of warning, you know, 2006, 2007, when you started having in 2007 kind of warning, you know, things that could go bad. Well, it took over a year for the markets to actually really start kind of correcting and having significant drawdowns. So you have to be careful when you make some allocation, because if you go all in one way,

for example, if you decide to go all into cash right now, because you're afraid of a correction, well, you know, there might be a correction, it could be next month, like it could be a year or two from now. And if it's a year or two from now, like how much gains did you actually leave on the table by going all in cash? So you have to remember that. So for me, it's been pretty simple. I don't believe in, you know, doing an all or nothing approach. So I just decided for me that it was best to, you know, just starting to modify my allocation. So the biggest thing I'm going to be doing and I've started doing is to increase my cash allocation. Now, to be clear, cash is short term U.S. Treasury bills

for the most part for me. So that's yielding over 4 percent. I think it's around 4.5 percent right now. And it's been increasing. I've been increasing that allocation in the past month. So it's gone from 9 percent to 11.5 percent. May not look like a big jump, but actually been a decent amount of cash that I've been putting in Treasury bill for the most part, just because I had a really strong November month. So clearly, it doesn't look as much, but it is a decent amount of cash that I've actually been adding and putting in US treasury bills. My goal here is to get my cash allocation between 15 and 20%. So that's my end goal, what I'll be doing in the next month or two. Yeah, go for it.

I want to get ahead of this in your segment. Yeah, yeah. And add some real color around when you say cash, you don't mean it sitting in a Canadian bank earning nothing. And so I just want to get that distinction out there, out of the gate. Don't hear what you're not saying. These are short-term T-bills. Yeah. Short-term treasury bills, a little bit in money market fund because that's the only option I have with my pension at work. But again- So money market and short-term T-bills is what you're

calling your cash allocation. That's all fine. It's like cash equivalents. But I think that that's really important for a podcast like this with the listeners. It's not sitting in your personal bank account making 0.1% interest. Yeah. I mean, I do have some cash in my personal bank account with EQ Bank. Like a rainy day fund. Yeah, exactly. So that I do keep a little bit of Canadian dollars when it comes to that. And I want it to be as liquid as possible. So that's why I keep that there.

And U.S. Treasury bills are very liquid. It's just it takes a little more time. Could take, you know, between selling the etf getting the money in your account transferring out could take a week week and a half but it is still very easy to deploy when it's your into your account which is what i have it right now so just to give people an idea of what my holdings are and some are quite high because you know of bitcoin doing quite well so equities as a whole, it's around 43%. Bitcoin is, if I round up, 36%. My cash is 11.5%.

Ethereum is 5.5%. And gold, silver, which is mostly gold, is just around 5%. So my target weighting that I want to get to, and you'll see that the ranges are quite wide because I do want to give myself a little bit of flexibility here. So equities, I wanted 40 to 50%. Bitcoin, 20 to 40%. And that is because of Bitcoin's volatility. There's a bigger range there. I don't want to be forced to sell or you know purchase necessarily if it does come below 20% of my holdings I will probably add a little more but that's why there's a bigger range there just to account for the volatility cash 15 to 20% like I mentioned precious metal 5 to 10% and then

Ethereum it's something I will be trimming to add more to my cash. My goal is also to trim my Bitcoin ETF. I do have some holdings of that. I'm pretty reluctant at selling my actual Bitcoin for a couple of reasons because of tax implication. But also I like having the actual asset as a Bitcoin. Ethereum, there is some tax implication. But the reality is I've had that for a long time and I just don't have the same conviction anymore. I have more conviction into Bitcoin. So that's why I'm giving priority to that. And like you mentioned, at the end of the day, 15, 20 percent might sound like a lot. But the reality is, is I'm still keeping a whole lot of upside like I'm still you know between Bitcoin equities gold and Ethereum I'm still invested in assets like pretty heavily so I'm still keeping a lot of that potential upside what I'm doing in terms of what fits for me is I'm also kind of lowering a little bit the

volatility with the cash here and also you know putting a bit of a floor on my downside as well, clearly, it's just 1520%. So if everything else corrects 50%, I'm still gonna, you know, feeling quite a bit, but it won't be as bad. And it will give me some opportunities to deploy that capital when we do get a significant correction. I know we will get one, I just don't know when. do get a significant correction. I know we will get one. I just don't know when. And by doing kind of a hybrid approach like that, I'm that's the way for me to still benefit from the upside, but, you know, limit my downside. And, you know, I'm not going to complain getting four percent plus on my USD for 15 to 20 percent of my portfolio. I mean, I'm fine with that. So I know for some, it won't work for them. Again, this is just for me. This is what works for me. It's not investment advice. But to me,

that's what I'm the most comfortable with right now, just because of what I'm seeing in terms of indicators in the market. But again, it's impossible to predict. And, you know, timing is everything, right? You that. You can be right and still wrong, which is very difficult, tough pill to swallow just in general with money, in general with money in general with investing for sure it's like bill ackman was heavily with his fund heavily short herbal life there's even that documentary on netflix about the whole thing and you know he's heavily heavily short like i think he has a billion dollar short on herbal life did i just say i just said something, Herbal Life at the time was a, you know, 30-ish dollar stock. It climbed, it climbed, it climbed for years and became a $60 stock and hung out there for a couple of years, bounced around between a $50 stock and a $60

stock. And the short was getting absolutely slaughtered when it comes to the Herbalife short. Now, his claims were that Herbalife is a pyramid scheme. And for those who know Herbalife and multi-level marketing schemes, they are like straight up like i have such disdain for this industry it's it's pathetic and these are pyramid schemes the i think it was the ftc went to the to the to the courts and they paid a 300 million dollar fine that basically said 200 pages about how it is a multi-level marketing scheme and without admitting it yeah it sounds like a pyramid scheme it quacks like a pyramid scheme but hey it's not formally a pyramid scheme and then we can you know hence we can continue to operate this thing slap slap

on the wrist hundred three hundred million dollar fine or whatever it was at the time now he had to exit the short of course i mean you can't just hold this thing forever, right? You're bleeding, especially as you get squeezed upwards. It's now a $7 stock and still certainly an MLM. Still certainly what I believe is a pyramid scheme. And so, here's an example of like someone who's so right, but so wrong, you know, so sorry to take a tangent on that. I think that's a good point. I'm doing like having some cash yielding four percent you're basically hedging your bets in case you get you know a decline in some of your holdings that you know you hold in my case it's equities bitcoin gold and ethereum so just it's a way to hedge that and again provides me some downside protection and it's not like I'm getting zero uh four percent on u.s dollars which i have a lot more faith than canadian dollar unfortunately it's time to say yeah i'm very happy with both yeah

exactly unfortunately you and me yeah okay yeah very interesting again uh different uh Again, different strategy than me. You know, very different. Yet I look, you know, I can see your returns. You can see my returns. They've been very market beating and very different. Yeah, it's been a good year. Yeah, if you don't have double digit returns this year and you're invested in like, you know, equities

or like risk asset, let's just say risk asset. So like anything but bonds or, you know, even if you have bonds, but it's like 20 or 40% of your portfolio and you're not getting double digit returns. Woof. Yeah, like I don't, like you should not be investing your own money.

Like it's sad, but true. Yeah. Sad, but sad, but true. Yeah. I mean, it's, yeah, that's kind of, yeah. At the end of the day, like, look, if you have 4%, 5% returns because you're all in treasury bills, like that's one thing, right? Like you're playing it. It's safe. Like that is, that's your decision. That's fine. But if you're in two other types of assets and you can't achieve you know at least 10 this year then and especially if you don't have much downside protection then yeah you definitely should be asking yourself about like what you're doing with your portfolio it's not investment advice just you know just two of us talking here yeah i'm still fully invested with no chain no plan on uh on changing that of course you know when markets are this optimistic you can't as an

investor not skeptical is not the right word cautiously optimistic yeah yeah and maybe it's my personality because i like to go against the grain too like when i see everyone not everyone but a lot of people being like overly i would say overly confident i think for you it's different and dan too like you know some of the people i know well that invest that are a lot invested like they they're meticulously reviewing the companies but i think you're seeing it with a lot of people entering the markets right now. And it's not just equities. I mean, talk about crypto, the wider crypto space, like there's just a lot of excitement.

And when I see that kind of excitement, just on a sentiment basis, it's just kind of alarm bells that start going off in my head. I just I can't help it. But again, I could be very wrong. That's why I'm still invested. Like you mentioned, it's just 15 to 20% is just to provide me a hedge against like basically the stuff I'm seeing. Yeah. Yeah. Yeah.

So two things, you know, don't hear what you're not saying. You're not not, you're not not invested. You're just changing your allocation and then cash not equal sign to bank account yeah and there's worse things than taking some profits too like at the end of the day i am selling into strength like that is what's happening could it go higher of course it could but it's in my view it's better than selling into weakness where unfortunately a lot of new investors and if you're a newer investor remember this like corrections and market crash will happen in the future they will happen we just don't know when it will happen and you just have to be careful to not panic when those happen because there's nothing

worse than selling when things took look like like they can't get any worse or they can only go further down to then just turn around a year or two later and just realize that you sold pretty close to the bottom in my mind and i'm not trying to get all you know bring the spirits down and get you know doom and gloom here on the pod but there will be you know markets climb the wall of worry there will be very likely you know in the next you know i'm not even gonna say a time it doesn't matter. Something that looks so, so bad, the thing that worries me the most is tensions globally when it comes to war. I think that there is, in terms of like, it could bring massive drawdowns to equity markets. In that case,

I'm investing for a long, long time, market closed the wall of worry, and I continue to double cast average, probably double my contributions every month. But there is a legitimate concern that I'm regularly thinking about of how things are getting hotter, not cooler abroad. how things are getting hotter, not cooler abroad. And there's two massive wars happening, massive tensions geopolitically between the US and China that just don't seem to ever go away. And it's a realistic possibility

that something really bad happens and that equity markets get destroyed in the short term. That's all I'll say. I'm not trying to go doom and gloom, but just the reality of it. I'm not trying to put a blindfold on to what's going on in the world. There is legitimate concerns of massive, massive war. And that's very very concerning for me i think that this is the you know largest issue facing you know humanity right now is like you don't get a second chance at like this next level of war with with uh drone warfare nuclear power. It's very, very concerning. And we're walking a pretty narrow tightrope that keeps me up a bit at night. And so I think that people need to be

realistic around equity markets at some point in our lifetime will get scared shitless because of this. Just because it is a possibility. And if things ramp up, the world knows that you don't get a second chance on these types of wars. So that's something I've been thinking about quite a bit in terms of like, what could really break markets? And this rising war climate is certainly one of them. Yeah. No, I think that's a good point. I mean, obviously, it's not to get doom and gloom.

And I think, and Braden's talking, he's fully invested pretty much in equities and Bitcoin, right? Fully invested. Fully invested. No, I think it's just good for people to get in the mindset, especially if you've only been investing for the last four or five years. You just haven't seen a big drawdown. I mean, we saw it in 2020, but it was like pretty short, it was like within like a month or two. But during that time- We were at all time highs within like a quarter. Yeah, exactly. But during that time, I mean, it wasn't, we didn't panic. We saw it as a buying opportunity, but I'm sure a lot of people ended up selling near the bottom and then bought back when the S&P 500 was like, you know, 20, 30% higher. And hopefully they, you know try to under like think how you would react if those

situations would happen and then you know if you don't think you'd react well then maybe it's a sign that you need to look at your allocation a little bit and make a little bit of changes that will help you actually you know weather those kind of events i think it's just that i am saying everyone will react differently i think we both know how we would react but it's just that I am saying everyone will react differently. I think we both know how we would react, but it's until you've lived it. I know it's hard to understand, but when you see your portfolio down 30, 40 percent and that can happen, it's not a fun feeling, but you have to understand that, yes, things will turn around eventually. But, you know, sometimes the emotions gets the best of people and they make some really bad decisions in a moment.

And something that, you know, we haven't had to endure, you know, seriously in any way in the last basically what I'll call since 08. Actually, even longer, like really, is long periods of just sideways. Sideways. Because that's happened multiple times historically. So it's good to become a market historian. I've always said becoming a market historian is really important in terms of just like what to expect in the future.

Two things that I'll call out. Sideways for a long, long time feels terrible. Feels terrible. So that's one. And that's happened many, many times. And the second point is the average that people point to of around, you know, the S&P goes up 10% per year. Look at S&P returns year by year over the last hundred years. It almost never returns 10% or even close. Like the eight to 12% bucket, that 4% bucket of returns, the S&P lands in there like a handful of times, like legitimately a handful of times over a long, long stretch of data. It's usually up way big, down way big, up way big, like flat, flat, flat, up way big. So that average is not telling of reality of living in the market.

of living in the market is like pretty mind-blowing to realize that like that 10 percent number it doesn't happen it's an average but it almost never happens and people tend to just focus well it's like 10 returns like yeah on average but you know over a long period of time but yes it goes kind of up and down and the two last year we've had for returns are more out like they're more the anomaly than you know just the sheer sides because i i don't know it was like 20 something percent last year and it's like the same ballpark 20 to 30 percent i kind of lost track 25 percent maybe this year like back-to-back years like that does not happen very often like that's pretty rare well i i think that it actually does i've looked at the data it actually happens a lot back-to-back like 20 plus percent years it's yeah really yeah it's it's it's it's happened a lot i've done it i did it it's on our note our show documents okay year by year quartile by quartile we can

review it maybe next week but it happens actually pretty often it's just that i have to see the data i it's just again that it's very very infrequently in that 10 average that people talk about you know it's it's it's followed by negative six percent the following year or like you know i'm just making stuff up here. But thanks for listening to the pod, folks. We really appreciate you. I'm writing that as my topic next week because I want to see the data again. Yeah, show me the data. It's fascinating. You see all the quartiles, the buckets. And folks, reminder here, we are in December. I talked about this last week with Dan. If you are one of the folks who are eligible for

a first home savings account opening, and you're already an investor in your brokerage, you already have a TPSA, RRSP, non-reg accounts, and you're eligible for that first time home buyer savings account, open it. Accumulation room starts when you open it, not when you turn 18. It's when you open it. Very important to get it before the end of the calendar year here. Since we're in December, that's going to unlock you an additional 8,000 room of contribution room. Open it up. Just get it.

Just do the paperwork. It's easy. It's quick. Get it done. And then if you live in Toronto, just go start making lowball offers on condos just throw them everywhere it's probably has it been bad in the condo following along it's that's that's probably one of the worst spaces in canada is toronto condos yeah especially the the one bedrooms i know dan foch has been doing a lot of work on that and it's starting to come out more in the mainstream media but uh basically condos that were sold pre-construction at like pre-con 30 40 percent higher than what

the market value is now so good luck the pre-con bubble was real for sure yeah they're coming up right so there's more and more supply coming up and uh you know they're being i don't know i'm just throwing numbers here but let's say they were sold at 1400 a square foot now the condo across the street people are selling for a thousand a square foot so try to close that so people are just forfeiting their deposits uh hoping to not get sued you know these buildings are finishing with while the rental market stays hot because rates have gone up well the rental market is also softening up apparently in real real data yeah no it's uh it's not uh i mean if

you're in the market for condos in toronto like i don't know if it's all condos i know the one bedroom ones are definitely right taking a big hit like hurting the most yeah do i mean there's tons of supply. So in my view, if I was there, just low ball, low ball, low ball. At some point, someone is desperate enough, they'll accept it. Yeah, they won't have a choice.

I know. That's one good thing about real estate. Pretty ruthless, I know, but- You can elbow grease real estate really well. Yeah. To make money. I like that. All right, folks, thanks for listening. We appreciate you tuning in. It's good to have you back on the pod. All right, folks, thanks for listening. We appreciate you

tuning in. It's good to have you back on the pod. This has been a full episode. We're coming on here an hour recording the show, all this talk of nuclear war, but we appreciate you coming into the show. If you want to support the show, the easiest way to do that is obviously on our Patreon, the show. If you want to support the show, the easiest way to do that is obviously on our Patreon, jointtci.com. But more than ever is leaving a review or follow five stars on the podcast player, sharing it with your friend really helps us. We've got lots of amazing sponsors on the show, so we can continue to do this. But ultimately, we like to see number go up. And so we want to continue to grow the show. Thanks for listening.

Take care. Bye-bye. The Canadian Investor Podcast should not be construed as investment or financial advice. The hosts and guests 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.