The Canadian Investor - Year in review and 2021 Bold Predictions!

Episode Date: December 14, 2020

In this episode we discuss some of the unexpected things that happened in the investing world in 2020. We look back at episode 5 and see how well our 2020 predictions fared after a crazy 2020 year. We finish the episode with some 2021 bold predictions! Want to send us a question? Check out our Anchor.fm link in the description below and leave us a voice message! Tickers of stocks discussed TFII.TO, GFL.TO, WSP.TO, AAPL. SNC.TO, TSLA Anchor voice message: https://anchor.fm/the-canadian-investor/message Twitter: @cdn_investing Getstockmarket.com Episode 5: https://anchor.fm/the-canadian-investor/episodes/Episode-5---Personal-debt-and-bold-predictions-for-2020-eiop65 --- Send in a voice message: https://anchor.fm/the-canadian-investor/messageSee omnystudio.com/listener for privacy information.

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And if you go back to episode five, which was about this time in 2019, you can hear Simon and I take some some fiery hot bold predictions for the year of 2020 uh you can tell that the podcast quality has drastically improved so uh simon let's pot ourselves on the back for that first yeah definitely but i'm. I listened to the episode today. And let's just say Simon has a crystal ball. And anytime Simon says something, you should probably listen because you did really well. Let's not kid ourselves.

You did really well, Simon. I think I kind of hit two out of three, I would say. ourselves you did really well simon i think i kind of hit two out of three i would say two out of three predicting anything for the year of 2020 i'd say is a supremely good batting average so before we go into what those were as a recap and how we landed on on those results let's talk about all the things that we, you know, did not expect. You know, we're not going to sit here and talk about, oh, 2020 was such a weird year. You're hearing that enough already on whatever other podcast you're listening to

and whatever conversation on the street. So let's not, let's get that out of the way first. Obviously, the pandemic, you know, no one predicted that, of course, right. So but what was very unexpected is what happened in financial markets during a pandemic. Now, that's very unexpected. And if you were to have known that this would happen in the year of 2020 and short the stock market, and if you were still holding onto that short, you lost money. Now that is something that is very surprising. Um, and, and why you don't bet against stock. So, so what were some standouts that you thought were unexpected for this year?

Well, yeah, obviously pandemic. I remember last December, I had read a couple articles on COVID-19 in China, but obviously I thought it'd be just something very local, like probably I'm sure you did and everyone else did. It was like the SARS scare where that was like really scary for a week and then it just kind of went away. Oh, yeah.

That's what I thought it was going to be like. Yeah, and I remember listening to a podcast in January and there was a topic economist for Zax that was talking and he was like, oh, it's just going to be another SARS and everything's going to get back to normal in no time and stuff. So obviously he had it wrong. We probably all had it wrong regarding that. But specific for the pandemic, for me, really what stood out is the amount of stimulus that the governments did.

So I pulled a few figures. The packages that Canada did, but the U.S. but also pretty much all the nations around the world or at least the industrialized nations is really astonishing when you look at the numbers so Canada which is not a huge economy Canada did including tax breaks and tax relief that they did about 400 billion in stimulus package for this year So that's why there's a deficit of over $300 billion. That represents 60% of the GDP. And the US, even though they're still in talk for a new stimulus package, including tax relief, $3.5 trillion inS. or 13 percent of their GDP. And in terms of percentage of GDP, Japan's actually the highest. They're close to 20 percent. I mean, it's just I guess I

underestimated how governments would act in the face of a really serious economic crisis like the pandemic triggered. And I'll go a bit more in terms of my bold predictions in what i think this could do uh medium and long term personally uh but that's really one of the things that stood out um just just a sheer magnitude of those figures yeah the the stimulus packages and the obscene amounts of money printing. I mean, the debasement of the dollars is in the amount of trillions that is quite astonishing in terms of percentage of dollars that exist already. So that debasement of the dollar is kind of nuts for one year. And yeah, so we've seen how people react

or how nations are reacting to this. And it's a lot of stimulus and a lot of printing. So that's been very, very surprising. IPOs. lot of printing. So that's been very, very surprising. IPOs. So today, DoorDash and Airbnb had some fiery hot IPOs, both closing much, much above the initial price. Airbnb especially, holy crap. I've been seeing some pretty funny jokes online about, you know, that they set the price of Airbnb listing at $68. But once you include the service fees and cleaning fees, it closes at $150.

That's pretty good. I thought that was pretty clever. Who would have thought there were to be so many IPOs, so many merger and acquisition, like these reverse SPAC mergers? It just seemed very, very unlikely several months before it started becoming very, very common. And you're seeing investment banks like Morgan Stanley hit all-time highs today. And you're seeing investment banks like Morgan Stanley hit all-time highs today. Some of these investment banks are crushing it in this IPO bonanza.

So that was very, very unexpected to me. Yeah, and not only another tailwind for the investment bank is all that money coming in and all the like low interest rates is caught what's that's creating is the the debt market is really cheap so they're obviously issuing a lot of debt on the bond market so that's also another tailwind with the investment banks but to get back to moody's corporation yeah one of my most boring favorite holdings yeah and just doordash and air, those are just really two good example. Like you just look at that, like Airbnb, we were texting about it and it's trading at above 20 times sales of 2019. So pre-pandemic, whether that makes sense or not,

I'm going to go on a limb and say no. And DoorDash, I mean, it's just another delivery service. That one I really do not understand. Like it's been proven time and time again. They just, I mean, I think as a hobby, they like to burn money. I think that's like part of the business plan. Just the gasoline and just light it on fire. Exactly. Like I don't get it.

I don't understand why anyone like specifically doordash airbnb you can probably make a case and try to make me understand the reasoning behind it but doordash like i do not understand why anyone would touch that unless you're a trader and you're good at spotting patterns or something like that but that's not what we do, obviously. Yeah, so I don't look at them the same because DoorDash, I'm with you. I mean, they compete on price, these services. And you know how I feel about businesses competing on price, like pass. Thank you. Airbnb, though, like part of me goes, okay, this IPO price stands for it's probably overpriced IPO.

And then part of me thinks this is like a generational type product market fit with the business. So I'm somewhere in between. somewhere in between. But as Simon and I talk about, you know, you don't have to own IPOs to have exceptional returns in the stock market. You can wait a while. You can wait decades. You have so much time on your side. And this just comes back to, you know, long-term investing. And this just comes back to long-term investing. You don't need that FOMO, even though there's just so much confusion out there, so many things trying to tell you what should matter and shouldn't matter in your investment portfolio. And you have a lot of time.

You don't have to worry about all that kind of stuff. So what is a big takeaway from 2020 is trying to guess short term movements and price action is almost impossible. Because here we see stocks crushing it in 2020. You know, after that pretty brutal March, where if you're listening to Simon and I and buying stocks like like I was, like you are, then you performed exceptionally, but you just don't, don't bet against the stock market because it doesn't work. And this is a very, very prime example of why you should stay optimistic long term. And just ignore the noise, you know, look at your investment portfolio a little less often, you'll probably do a little better. So I mean, let's pivot 2020 recap.

I'll say one that points that I'm looking at right away, and the fact that you on the air, and this is the good thing about a podcast, this is time stamped, and we can pull this segment. You said that you think in 2020, there will be a market correction of 20 at least and you said perhaps even over 30 uh where's the crystal ball are you doing time are you doing some sort of time machine uh what's going on how did you know this i mean i just uh i just felt like oh we the market was due that was just uh that was just my reasoning behind it.

Market corrections do happen a lot more often than people think, and when they happen, people tend to, when I say people, I'm not talking about our listener, I'm talking about the general population, but people tend to panic a little bit and forget that these are fairly frequent occurrences. So that was the basis of my prediction that we had a big bull run and the stock was due to have a pullback, obviously not factoring in the pandemic and everything, and then the bull run afterwards. But yeah, that's why I said that prediction.

Yeah, and it's good to know too, right? If we were 11 years into a bull market run and when stocks continue to only go up, new investors forget that market corrections happen and they are completely normal. happen very regularly more than people remember and uh it's good to it's good to experience that hopefully you didn't act irrationally but it is good to experience that uh what else did you have there uh you you had three yeah so the uh the second one i had was marijuana space troubles. I was saying bankruptcies, buyouts, or not necessarily buyouts, but mergers between different companies. There'd be a lot of shakeup in that sector.

And obviously, there has been a lot of shakeups. There hasn't been any major bankruptcies, but we've seen Auroa Cannabis do a reverse split. I don't exactly remember the ratio, but we've seen aroha cannabis do a reverse split i don't exactly remember the ratio but that's never a good thing um we've seen canopy and a bunch of the other producers uh slash jobs canopy just slash 200 jobs i think it was a couple days ago and reduce their operations because they just they overestimated the Canadian market as a whole. I've talked about XO before, which have been issuing new shares like it's just printing money, basically, and that's diluting shareholders. So it's not been very good. They're all losing money.

They're still not profitable. Who knows if they will be profitable, at least not until the u.s market probably becomes legal on the federal level um so i think i mean overall i think that was a pretty accurate prediction uh the writing was on the wall for those businesses and i think it'll the rough patch will continue in 2021 in my opinion opinion. Yeah, I just looked. Aurora did a 12 for one reverse split in May. Yeah. 12 for one.

So when you see that, I mean, red flag, red flag. Yeah. That's what should be triggered. It's usually when they want to stay listed on an exchange. So often like the big exchanges, usually they'll have a minimum price. exchange. So often like the big exchanges, usually they'll have a minimum price. And if companies don't keep their share price, I think it's for like an average of 30 days or something like that. Above that level, they get delisted. So I don't know the full reasoning behind it, but I suspect that they did not want to get delisted on one of the major exchanges.

they did not want to get delisted on one of the major exchanges. 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. 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. dot ca forward slash host my big flex on predicting things in the marijuana space was right before legalization october of 2018 i had a elaborate blog post talking about sales multiples of over 200 for a company that only sells weed primarily in Canada and some in Europe should not be allowed.

And now when I moved to Stratford Teal on the new platform, those dates got moved to me posting them this year. So that sucks for me, but that's okay. Simon, you also had one thought about SNc yeah snc lavalin um so the uh i guess the once uh quebec darling of engineering um they're still alive so my prediction was that they would be bought out or be bankrupt so they still haven't been bought out um they're not doing all that well so at least there's that um their share price has been pretty could have just been a little bit early yeah yeah it's definitely true i mean i

searched before we started recording just to see i mean they're still getting contracts here and there nothing like they used to it used to be the name i guess now would be um your uh your new darling i guess the uh the wsp baby wsp i guess they're they're pretty much in the same field your new darling, I guess. WSP, baby. WSP. I guess they're pretty much in the same field, right? Yeah, engineering. Yeah, so, I mean, we'll see where SNC-Lavalin goes.

I mean, I know a lot of people are employed by them, so I don't wish that they go bankrupt or anything like that. And, obviously, I grew up in Quebec, so I wish all their employees the best of luck but i their share price just looking at that as uh as a quick glance i mean it's been pretty much sideways since last year even though the overall market has done pretty well but they're still alive and i mean we'll see what happens in 2021. They're not doing great, but they're still not bankrupt or haven't been bought out. Well, that's pretty good. You know, two out of three you nailed.

You got those just bang on. Like no asterisk on those that you were bang on. So mine were not as successful.'s just let's just let's just go there that's not good successful i said that uh fast food healthy fast food restaurant franchise owner freshy was gonna get bought out i mentioned MTY Food Group has potentially taken them out. Yeah, that didn't happen. Freshie has been, in my mind, a absolute disaster of an IPO story. It IPO'd February 27rd, sorry, of 2017 at $14.44. It trades for $1.77 Canadian today, which is an 87.74% loss of the share price since they IPO'd in early 2017.

So not great. I thought the brand was strong. I thought it was growing. I thought the pieces were there for someone to come in and, and, and just get it there, you know, just push it. Uh, no one has touched it. So you know what? I, I, I still think they are an acquisition target. Um, perhaps I'm a little bit early. Uh, so another one was was I thought that Apple's, you know, $150-odd billion cash pile would be set to do something massive.

And I was talking about the massive scale of what we just saw last week with Salesforce buying Slack for $36 billion, I believe was the number, that kind of massive scale is what I was expecting from Apple's huge cash pile. So that's what I was expecting. What did they do? They made a bunch of small moves in AR and VR instead, augmented and virtual reality instead, and very, very small deals. What'd they do instead? Well, they did what they always do and buy back over $70 billion worth of their stock. So Apple had quite the run earlier this year. And I think the stock is quite

attractive here, to be honest, but this business is pumping out so much cash. I'm like, we've never seen anything like it. Uh, and what kind of company can buy back $70 billion of the stock and still have this outrageous cash pile. And that is Apple. So I still think, you know, this is another one of those. I'm going to give the caveat of, you know, something big is going to probably happen or should happen. And so we're still waiting for that. Simon, congrats. You won 2020.

Yeah, I'm going to make even wilder predictions, as you know, for 2021. So if those come true, I think I'm just going to become a psychic and just start telling fortunes for people and stuff. You know what? I'm looking at them, and I hate them, but I think you're going to be right. And that's just the state of the market these days. All right. What's number one?

Okay. So the first one, I think this one is probably the least bold of all three. So I think the bond market will trail the returns from stocks by at least 20%. And that that's weird that I'm saying that because I feel like stocks overall are quite overvalued. But it goes back to the when I was talking about all these stimulus packages and the money that the governments are pumping into the economy. And those low interest rates, it really feels like the only way people can get returns on their money is stocks or real estate, I would say is another option that people could get good returns on their money, potentially cryptocurrency, like I've mentioned before.

But it really feels like bonds will not fare all that well. I mean, I guess it's possible that interest rates go into the negative. And that would definitely help bond funds and things like that, because that'll make the price of bonds go higher. But yeah, I mean, I don't, I think you're just kind of hoping for keeping your money up to par if you're putting money into bonds. As high as stocks may seem right now and as crazy as some of the valuations may seem. So that's my bold prediction. And next year we will measure it around this time of year. We'll take one of the Vanguard broad bond market ETF and just compare it to one of the low-cost S&P 500.

Just see the difference between the two. Yeah, it's a good point. It's why I mentioned for people who are looking for that fixed income, bonds just really is going to be a tough place, to be completely honest. And this is not my opinion. This is pretty much consensus from everyone. So there are, in a book I read many years ago called Buffetology, which is basically a compilation of all of Warren Buffett's shareholder letters,

basically a compilation of all of Warren Buffett's shareholder letters, trying to put up with what we believe is Warren Buffett's strategy put down into one book. I forget who the author is, shame on me, but it's called Buffettology. And he talks about stock bonds being a good place for income. And what he calls stock bonds are basically companies that pay nice, safe dividends and have very low beta. Like a company that he has in his portfolio that matches this description exactly is called Verisign. Verisign is a company that owns the dot com uh ip i think the ticker is vrsn yeah vrsn trades on the nasdaq they own the internet root server name of dot com uh it's a 30 billion in market cap company and all it does is pretty much go up very steadily and has very low beta.

These things exist. I'm looking here and I'm a goofball because I don't think VeriSign pays a dividend. How about you just don't listen to that part. What I'm trying to get at is there are lots of low beta dividend stocks for income that you don't need to be, you know, in that traditional 60-40 bond allocation that many financial advisors have thrown their clients into for decades. You know, that cookie cutter 60-40 is not a rule that needs to be lived by by anyone in this bond environment so that's a good point simon yeah exactly i mean there's a good example of those in my opinion is telecoms so they perfect yeah they'll they won't they're not

very volatile yes they have a decent amount of debt, but usually very stable cash flows, reoccurring revenues, pays a nice dividend. Another one I've talked about it before, a digital realty trust compared to Equinix. DLR is probably a better kind of bond like play in terms of a higher dividend deal. But you can find quite a bit of utilities. Great example as well. So there are companies that, like Brayden said, they're low beta, lower risk, they'll give you a good income. Reality is like just you're not going to get much out of bonds. If anything, you'll lose money in bonds because the actual value of your money,

even though it might increase a little bit, it might not follow inflation. Because I think there is a high risk that inflation will be going up significantly in the coming years, all that money, all that stimulus package, no one really knows what it's going to do. And if we go back historically, there's a good argument to say that prices will probably be going up and you want to be keeping your buying power. That's really important. probably be going up and you want to be keeping your buying power that's really important the feds will uh financially manipulate the consumer price index formula anyways and come up with their nice two percent yeah we probably could do a whole episode uh and when we say low beta we just mean stocks that uh you know have low volatility. You know, they, they, they move around more stable than a wild

roller coaster and do not mix risk and volatility. They're not the same thing. Risk is, is, is not the same thing. Risk is real business fundamental risk. You know, If the company sucks, that's risky. If the company is very volatile, it doesn't necessarily mean it's risky, but the value of your holdings in the short term will move up and down more frequently. So low beta is the opposite of high volatility. Okay, so you think that bonds will trail. Okay, I think this is the Canadian investor pods. I got a Canadian. I got a Canadian one. I think Canadian industrials, not to be confused with energy stocks, not to be confused with those cheap energy stocks, will be Canada's best performing sector in 2021. We just talked about WSP. The stock is up 36% this month.

They made that big acquisition to buy Golder, the environmental consulting firm. I think there's a bunch, there's a lot of different factors that will play into this. But my thesis is, construction globally has huge backlogs. There's tons of government infrastructure spending as a form of stimulus, very cheap rates, cheap money. And a lot of them have an ESG spin onto them as well, which I think is going to be a big flow of capital in 2021. The environmental social governance piece, you know, the Brookfield renewable energy partners type of business gets extra flows in 2021 in my prediction. So I think this will be the best performing sector. We'll see next year where it stands.

So some ideas in there are GFL, WSP, and TFI International. I just realized all three of those businesses, their business name is the ticker. Very easy. Very easy to follow that. It's GFL, WSP, and TFI. But TFI has an extra I on the ticker, T-F-I-I. Let's go with yours next because you'll see why.

Just go. This is one. This one, you guys, everyone listening will be like, what? Did I hear that correctly? So I think Tesla will hit $1 trillion in market cap. And the reason I think that is because I'll be honest, I have no clue what's happening with that stock. So I'm just going to go on a wild guess and just say I'll keep not understanding what's going on. on it'll just keep going up even though in my mind and logically and all sense and logic within me says that it should probably go down to below 50 billion in market cap um and it's already at 500

billion so what's a double from here that's the way i see it so you know what i'm just gonna piece of cake that's it let's just embrace it. Tesla, $1 trillion market cap 2021. All right. Let's cool the jets because my bold prediction for 2021 couldn't be more opposite. So we'll see who's right. I mean, we have both of our bases covered here. So one of us should probably be right. and that it is not just Tesla, but EV valuations implode. They make no sense to me. These are car companies. The fanboys like to tell me that they are renewable energy companies as well. I work in renewable energy. So I know the sector very well. So you can't argue on this one with me. So, you know, they make cars and GM, Chrysler, Fiat, you know, they trade at

like six times earnings. Like, you know, when the multiple expands, they trade at 12 times earnings, 11 times earnings, historical five-year PE medians of crossing that point. The multiple's been expanding. These valuations make no sense. Zero. None. They make no sense. And I think they're going to implode. And a lot of these, you know, Gen Z TikTokers making these videos about Tesla going to one trillion, fueling Simon's bold prediction. I think it all ends very horribly. So Simon, one of us is probably going to be right I don't see them doing I don't see them flatlining for a year you say Gen Z's and one millennial right here

but no it's the reason is I think there's no logic behind it I think people just believe in Elon and his vision and that's the biggest driver behind this stuff yeah don't get me wrong I hope I'm wrong because, you know, the EV transition is very important. The electrification of combustible engine is very important. And Elon is the guy to do it.

I think he's, you know, one of the most impressive businessmen meets intellectual person ever that being said I think EV valuations just implode at some point and don't get me wrong I would not invest in Tesla or any of the EV vehicles manufacturer not yet right not not not until something majorly changes right that's it yeah so the next one and my last bold prediction for 2021 is one that you've probably heard before if you um have started reading into cryptocurrency but more specifically bitcoin um so i'm gonna go on a limb and just go on the hype train and say that bitcoin will hit 100k in 2021 i think simon you have you been like on uh zoomer tiktok finance lately because you're

you're pumping this stuff i love it um no not really i mean no i know you haven't i'm just giving you a hard time yeah i mean i think it's I think it's a great technology and I've said it before. I think one of the biggest things for Bitcoin that will be a tailwind is the fact that there is a cap supply contrary to our fiat money where the governments can really print money like they want. And there is a lot of uncertainty regarding that. And you never know to what extent they'll be printing money. A Bitcoin is literally the opposite. And it's designed to have a very low inflation, just the way that new Bitcoins are created. Without going into too much detail, it's basically when people process transactions with their computers, if they do a certain amount of transaction, they get rewarded. And that's the incentive to keep the whole structure and to keep processing these transactions.

And I think it has a track record. Obviously, in reality, I really don't know where the price is going of Bitcoin. But it would not surprise me at all, honestly, if it went that high, because a lot of people are seeing all that money printing with the governments and they're looking for somewhere to have a store of value. And in my opinion, it's a great alternative to physical gold. 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. 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. I tend to agree with you. If there's all this printing, I mean, that's only a positive for the price sentiment of Bitcoin. And the technology is really cool.

And if you are to have a store of value of a currency that is not fiat currency, I think Bitcoin's the best. I mean, I'm there with you. I get the technology. I think it's pretty smart. And it's a whole lot better than gold. So I would rather be a Bitcoin bug than a gold bug. And if you want to own a small piece of your portfolio in something like that, here's the thing. You won't have to own very much of it if portfolio in something like that here's the thing you won't have to own very much of it if it's if you're right i think simon we were texting about this right like you do not own have to own a lot of this alternative currency bitcoin if it's right you don't have to have uh very much in your portfolio to make a big difference.

That's just how it's going to have to be. Position sizing is huge here. It's very important. Yeah, exactly. Even just something 1%, it's not a big chunk. Or 0.5%, whatever you're comfortable with. And if you're not interested in Bitcoin, that's fine too. But if you're interested interested start a really small position

see how you react because it is volatile that is one thing volatility is the name of the game when it comes to cryptocurrency so if that's an issue with you uh make sure you keep your position sizing very small yeah good point yeah the position sizing is key. All right, to wrap it up, guys, I have one more. And that is in 2021, I think the FANG stocks are more broadly FANMAG, which is Facebook. Well, here we go. Netflix, Microsoft, Amazon, Google, those, you know, big tech, mega tech, you know, more than 100 billion in market cap, easily tech. I think that these are going to be looked at as like the boring value stocks next year. And over the last five years, they have absolutely dominated the S&P. Like as a group, it's not even close how much outperformance. Like it's a wide margin of outperformance on the S&P 500.

And next year and in 2022, they're all forecasting like huge, huge earnings per share growth. A lot of these companies are moving into that life cycle curve of monster profitability. Like real, real EPS growth. And who cares about EPS growth in this market when everyone cares about businesses growing revenues like 40-50%, new hot IPOs, bullshit electric vehicle companies, that's the kind of ecosystem that we're operating in right now. I don't know when that changes. I think it does eventually, but I don't know when that does.

And these big tech companies are moving into that mature stage of like gross profits, like profits. And I think that they're going to be become value stocks. Like no one's, they're going to be looked at in a much different light than they have been in the past three years. So that's why i think 2021 is actually going to be a great year to buy those big tech firms and and hold them forever uh in a buy and hold forever type coffee can portfolio strategy uh this one's going to be hard for us to really quantify but i think we'll get a very good sense of the sentiment this time next year. Yeah, I mean, we could even just look at QQQ, for example. I mean, they have such a heavy weight in those.

Obviously, there's other stocks. It's the PowerShares ETF. But I had a question for you regarding that. Do you think some of the ones that don't pay a dividend already, they'll start paying a dividend in 2021. I'm thinking here like Amazon could be a, you know, a logical dividend play with just pumping so much cash. We'll just have a little dividend as a return to shareholders. Yeah, I'm looking at the list here. So Facebook, no. Apple, yes.

Netflix, no. Microsoft, yes. Amazon, no. Google, no. So the only ones are Apple and Microsoft in the fan mag group. I mean, there's others, right? Like some people have done like, you know, they include Visa and MasterCard in there in some ways as well.

I'm forgetting all the acronyms you can come up with, but, you know, big, big names, right? And you know what? I think of that question, I think Facebook and Google would be the most likely. Netflix is a hard no for me. Yeah, I was gonna say Netflix, no chance. They don't generate cash. And Amazon, I also think is a hard no.

And if I was an Amazon shareholder, I wouldn't want them to. I would be not a fan of that, personally. But Facebook and Google, so profitable, pump so much cash. I think Google is probably the most likely in that group. I think last year, I think I might have predicted that they would start paying one. They haven't, but they could, right? Like they definitely could. Here's the thing. Their business is so, we were talking about this earlier offline, the core business generates so much cash and like the financials would look so much better if they only did the

core business, but they don't like their capital allocation structure is put it into other bets, you know, trying to grow new business lines. And the bare case for Google is that they've been pretty bad at it. Like generating new products and, you know, innovating new products from scratch outside of, you know, their core offering has been, you know, fairly mediocre in some ways uh but they're really really good at being a gateway to the internet and expanding that moat they're excellent at that right so a lot of people have been wanting them to keep focusing on the core biz uh extract value you know their financials would massively improve if they weren't lighting cash on fire with other bets. So, I mean, if they did that and they were not doing a capital allocation strategy like they currently are, perhaps capital flows back into buybacks and dividend issuance.

I don't know that, but I think they'd be the most likely candidate to answer your question. Yeah. And I think since ever the ceo and the name escapes but i know she um the cfo started at the same time her name is ruth porat and i know they've been a bit more strategic since ever they took over in terms of the other bets i think before that uh with the uh the previous ceo it was um they were spending a lot of money in those other bets. I think they're being a bit more strategic. So I would agree with you that dividend might be in the cards for Google in 2021.

There's potential. I mean, I wouldn't be shocked. I would be surprised. I'll put it this way. If I was betting money, I'd say they don't. But I wouldn't be shocked if they do. So that wraps it up, guys. Simon thinks alternatives are going through the roof

and that Tesla's going to hit one trillion market cap. And here's the thing. He's probably going to be right. But here's also the thing. We could both be right because it could hit one trillion market cap and then the valuations completely implode. You know, like that's also we could both be correct on this one. Oh, yeah, exactly.

And one thing I wanted to mention before we wrap up is we were aware we did not do all the questions we had last week. So don't worry. The ones we didn't answer will be doing another mailbag episode eventually, like probably in the next month or two. So not to worry. We'll get to your question eventually. All right, guys, that does it for this week. We have sounded off on our bold predictions.

Simon absolutely crushed it for this year somehow in a year that no one could predict pretty much anything correctly uh so we'll see how we do next year um i'm really excited to see some this market is it's it's getting into that what's going on category right now so it'll be interesting to to see what happens early next year and through the year. But that does it for this episode, guys. Getstockmarket.com brings you to Stratosphere. When I talk about growth numbers,

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No credit card required. 14 days right now. It brings you to stratosphere by going to getstockmarket.com because that's much easier to remember. And we'll see you next week, guys. Thanks. Bye-bye. The Canadian investor is not to be taken

as investment advice. Braden or Simone may own securities mentioned on this podcast. Always make sure to do your own research and due diligence before making investment decisions.