The Canadian Investor - Youtube, FOMO and books for 2022

Episode Date: December 27, 2021

In this release of the Canadian Investor Podcast, we discuss the following topics: The impact of big tech on various indices Books and resources to learn more about investing in 2022 The growth of Youtube within Alphabet How FOMO can adversely impact investment decisions   Tickers of stock discussed: GOOG https://thecanadianinvestorpodcast.com/ Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Stratosphere 🚀 https://www.stratosphereinvesting.com/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

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My name is Brayden Dennis and as always joined by Simon Belanger. Simon, are you a candle guy? Because I got all kinds of Christmas candles just buzzing right now. This place smells fantastic. Are you a candle guy? Not really, but you know, if once in a while, I guess I'll enjoy a candle, but I wouldn't say I'm a candle guy, no. You should join it. Become a candle guy. You won't regret regret it i mean i i like to take baths so i'm a bath oh you're a bath guy okay yeah everyone's gotta have that soothing thing they do that like you don't tell your buddies at the bar that you do but like do you do it it's fine it's okay all right we got another episode today because we're recording too and then you guys

don't miss a beat over the holidays. I have a first segment here on the market is, I don't know what else to call it right now. I literally labeled it on the doc here, Simon, called the market is in a weird place right now. And the reality is that we're in a pretty serious drawdown on most of the market. Now that is completely normal. Stocks are volatile and that's not necessarily a bad thing. Volatility is the only normal thing. But it just goes to show you that indices, like the stock market indices, the S&P 500, the NASDAQ 100, they're telling you absolutely nothing other than perhaps what I've been a broken record on this podcast for maybe two years straight, twice a week, which is it's goofy to not own big technology

stock. The market is telling us, it's laughing at our face going, you idiots, you should have just owned big tech this whole time. The outperformance has been very consistent for 10 plus years. I actually suspect it will continue based on my bottoms up analysis of these mega tech companies. We call it, you know, maybe Magma now, Meta, Apple, Google, Microsoft, Amazon. When you look at the S&P 500, you're laughing here. What's going on? Yeah, we should call it Mama because isn't it Alphabet over Google?

You're right. Yeah, it's Mama because it's not. Yo, Google is just Alphabet, right? So it's Mama. I was like, oh, that would be a funny name. Your face lit up. I had to stop talking. I knew that you had something good there.

Your face lit up. I had to stop talking. Knew that you had something good there. The graphic I pulled up here, well, I pulled up a few graphics here that were posted by one by S&P Global, another one by Goldman Sachs Global Investment Research that showed Apple, Microsoft, Google, Nvidia, Tesla are basically driving all of the index return. And then the few other dots, because it's by market cap, Amazon and Facebook have had relatively flat years. And then you see all those dots in the bottom left corner of their assignment. Those are the remaining 493 companies, which are basically, it shows you how much that 35% of the S&P 500's year-to-date return has just come from five stocks. And this is the law of tails that we have spoken about relentlessly on this podcast, that a very small amount of events will perform most of the outcome in your portfolio. And that is completely normal.

And we're seeing it play out in the indices as well. This is from S&P Global Research. Without the five biggest stocks, the NASDAQ is deeply negative year to date percent. If you remove the five biggest stocks in the NASDAQ, you are in a 25% drawdown. Are you seeing this graph that I'm looking at here, Simon? Oh, yeah. Yeah. And with those five stocks, the NASDAQ composite index is up close to 20%. That is wild. And that is the reality of market cap weighted indices and how a few companies drive a lot of the returns. This is what makes it so difficult to beat the index. However, I think that these companies that I just mentioned, some of them are probably worth owning.

Now, one more thing I wanted to bring up, kind of talking about the performance during the year and this kind of disparity between the performance of the index and some of these big technology companies is it is zero correlation. Absolutely zero correlation predictably between what the stock market does this year and what it's going to do next year. I'm seeing lots of hot takes about, oh, you know, the S&P is closing out this year. That means that we're going to have weakness going into first quarter. As soon as an economic forecast uses the word weakness, I'm like, dude, you're a nerd. This has zero correlation. You're seeing another graph I have here up on the doc, Simon, which is it shows a scatterplot of total shareholder return this year and total shareholder

return next year of the S&P 500 from the years of 1928 to the year 2020. The R correlation is completely useless. It's 0.01, meaning that there's actually no correlation in the data whatsoever. And you can see here, you know, visually, Simon, you're lucky enough to see this visually. There is no correlation whatsoever. Yeah. And that's really interesting. And it just goes back to what we were talking about on another episode about the ARK ETF, right? The innovation ETF, where you have people that will invest in a specific fund or ETF or whatever it is just based on the past performance or how well it's doing right now. But the problem is, is past performance

doesn't mean anything for future performance. And this is a great indicator right now. That's why I always find it back in the day, you were probably too young, but in the 1990s, I would remember my parents with their financial advisor and you'd look at these various funds and say like, oh, this one performed so well last year and trying to use that as justification, these thematic funds. And it wouldn't really matter when you think about it because you know, past returns are really no indication of future returns. Yeah, and so the fact that you know, we're ending this year without the five biggest stocks, chances are your portfolio in a drawdown the Nasdaq without the five biggest stocks going down to close to 25% year to date and then going, oh, you know what? I don't want to be in stocks because that's

going to tell the story for next year. Again, completely guessing. It has zero statistical correlation. So whether or not the market continues to go down early into the first quarter of next year, or it sharply increases, either way, no one knows. So just be very cautious with economic predictions and realize that the facts are the real statistical analysis suggest that it has no correlation. And like Simon said, if one fund does exceptional one year, it might be the worst performing the following year. Like it's really hard to kind of predict that and have some real statistical evidence that it's going to persist into the future. Yeah, yeah, exactly. And just a couple of things I wanted to add there is market cap weighting is very nice for funds when it's performing well. But let's keep in mind

that the inverse is possible too, right? so you could have a year where big tech gets completely smashed and then all the pretty much all the other stock in a S&P 500 fund for example would do very well but the index would still finish down with the opposite effect that you just mentioned that's always something to keep in mind yes there could be more upside because of it but there could potentially be some downsides if those big market caps within the index kind of they go down. So that's always something just to keep in mind. And the last thing is, again, when you're looking at certain sectors, I'm going to say broadly sectors here that may look undervalued. I'm thinking here just oil and gas.

I'm thinking here even Chinese tech. You have to be careful, right? You might think they are undervalued, but it all depends if the market agrees with you in the medium to long term, right? They might be undervalued, but it might also just be the new price that the market is putting on these. And we've talked about that in terms of multiple expansion, right right it's not always guaranteed that they will happen so be careful when you you do have a premise that is based on expanding multiple because even if they may look super cheap there's no guarantee that they will expand yeah it's a good point to bring up because if if i just strictly looked at

multiples and did discounted cashflow statements all day and went, okay, this is the best value the stock market can possibly give me, you know what my portfolio would be? It'd probably be entirely tobacco. And the reason... No, I'm serious. Oh yeah, I believe you. I've done the work on that. The tobacco stocks are actually most of them growing in high single digits, extremely profitable, growing on the top and bottom line, and trade like no one's going to smoke a cigarette ever again next year. However, if you run this DCF, you're trying to put on a multiple in the future that you think is going to be higher than it is now because you're like, there's no way this business that's growing kind of slowly, but growing is so cheap given its characteristics. It probably should be assigned a higher valuation multiple. In what world is the market going to start valuing tobacco stocks on a higher multiple? So that just kind of goes back to what you're saying is predicting or hoping for multiple

expansion is a game that is very, very difficult to do these days. Yeah, yeah, exactly. I mean, it can still happen, right? Like you saw with TFI, right? Like TFI International, they've done really well because of that multiple expansion. But I would say just be careful if your old premise is multiple expansion on the business because you never know, right? That's it. Yeah, no, no. Don't hear what I'm not saying. Working in multiple

expansion into your investment thesis is totally legit. It's more so the fact that relying on it to make money is an entirely different scenario and not a game I really want to play. 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

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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. 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. So now we'll go on to our

next segment. I thought it'd be a good idea to just talk about some ideas, books, resources that could help you learn more about investing in 2022. So this is just some of the books either I've read or I'm interested in reading and some other resources you'd be interested in. The first one is the Bitcoin Standard by Safedan Amos. It's available audiobook and paper book as well. available audiobook and paper book as well. In my opinion, anyone who wants to learn more about Bitcoin should definitely start with this book before you even buy Bitcoin. This is a great started point and he goes over basically everything you need to know just to understand how it works. The second one, have you read that one? I know I've talked to you about it before.

I have never read start to finish a book on Bitcoin. I have to admit to you, I've talked to you about it before. I have never read start to finish a book on Bitcoin. I have to admit to you, I've never done it, but I need to. It's a good one to listen to. I've listened to an audio book. This is the one I always hear about is the Bitcoin standard and I should probably just crush it over the holidays or something. Yeah, or just listen to the audio. It's easy. That's true. Although I got to tell you something, I'll talk about it after in the new year. I am going on a full week, complete digital diet. And that includes no podcast, no audio books. I'm allowing myself paper books, but you know, the odd movie because the holidays why not but i am trying to go

completely i need a break man i don't know about you but i feel like i feel like we're in a time warp and i stare at a computer screen for 18 hours a day so that probably doesn't help no no i i completely agree with that i think just disconnecting from technology once in a while i think it's a good thing obviously we'll we'll still need to record depending which week you do it on but i'm gonna record from a cave in bali you'll take your notes on the on a pad and just like kind of take a picture send it to me you'll be like i use my phone just to send a picture that's it i'll call it on a pay phone so the next on the list it's another that's focused a bit more on bitcoin so this one is layered money it's

available both audiobook and paper book this is one i've read this one really looks at the history of money and the different layers that are involved in a monetary system a lot of people don't realize there are several layers here it looks how gold the gold standard worked and why bitcoin should become the base layer of money over time. The next one is one we've talked about before, but doing any list of books without this book for investing, I think would be, I don't know, I should just stop doing the podcast if I didn't mention this book. So people probably have heard about it before. I know a lot of you have. It's The Intelligent Investor by Ben Graham. It's available both audiobook and paper book. Again, this might not be the

best book. And we've mentioned that before for really beginners. I think it requires a decent base to be able to understand a lot of concepts. But I would definitely recommend once you're starting to get into investing more and more and have a decent understanding of the basics. This is a great book. And if you want to understand more how Warren Buffett thinks, then this is basically his Bible right here. Yeah, I agree. And you touch on an important point, which is for some reason, the finance community has done new investors a disservice by going, oh, you want to get into investing? Read The Intelligent Investor by Ben Graham. This is like the worst book for a beginner to get their hands on because it will bore you to sleep and you'll end up not finishing it

because you need a decent base to be able to actually gain something from it. So it is an incredible book, a little outdated in some of the way it speaks about certain ratios, for instance. But the first quarter of the book that talks about Mr. Market is must read. It is must read material. The first quarter of the book focuses primarily on this concept that Ben Graham outlines as Mr. Market. And Mr. Market is a fun little analogy for the fact that stocks move up and down and are completely irrational in the short term. Mr. Market is some angry guy who has highs and lows. He's a bit bipolar. Sometimes he's going to new highs and doesn't make sense, but sometimes he's you know going to new highs and it doesn't make sense but sometimes he gives you extreme opportunity you know by selling off a lot so that portion of the book is must read

material yeah there's definitely a lot of numbers too so definitely to what brayden was saying and even if you listen to the audiobook you constantly have to check your computer because there's like they're referring to images and stuff. So you have to constantly look at that. So even audiobook, it is available, but it's not the easiest thing to listen to. But again, I think it's a must read for anyone who wants to get at least more serious into investing. The next one on the list, this you can access for free or buy it. So it's the Berkshire Hathaway letters to to Shareholders. So there's a lot of great information. I've read some of them. I've not read all of them. But even if you look at the

old ones, you can look at some of the ones that released during the financial crisis in 2008, 2009. You can get a lot of wisdom from Buffett, but you can also buy it consolidated as books. So it's great if you just want it all in one place and don't want to read them online, for example. So that's a great way to just basically get some free insight from the Oracle of Omaha himself. It is forever wisdom and I love his writing style. You just wish that Warren would write a full start to finish book because not only is he just incredibly witty, his writing is second to none. And those letters to shareholders, I have not read every single one. And I think I want to buy the book that has all

of them consolidated. And there's like the essays of Warren Buffett and stuff like that. There's lots of resources you can buy that have this stuff i've read probably half of them start to finish but i do think i should read more of them going back because you can learn so much wisdom of buffett along the way and i think that that's really cool yeah and just to see what he was saying at the time and having you, the hindsight of knowing what happened afterwards. It's always like fun to kind of put in context. Yeah. It's just weird how good he is. You know, like he really just doesn't, I mean, that sounds so stupid to say that he doesn't

get enough credit. Cause of course he does. He's like, you know, the, the all time goat, but some of those little tidbits that he was talking about and you're like, aha, like you get you understand why he was talking about it. He's just the man. I love it. Exactly. And, you know, you can get them for free.

So if you're willing to read them, they're there for you to get them. The next one is financial shenanigans, how to detect accounting gimmicks and Fraud in Financial Reports. That is available both audiobook and paper book. This is actually one I haven't read. I have it at home. I just haven't gotten to it just yet. But it is on my list for 2022 and something I can give a bit of a breakdown when I finish reading the book. But it looks very interesting.

I've seen a lot of good reviews. A lot of people on FinTwit have read that and say very good things. So it is one that I'm looking to read. I suspect it's a bit more technical here, but definitely something that I'm interested to read. Next one, the last thing I think for people want to invest in their investment knowledge, and especially for people who don't have any accounting background buy an accounting for beginner book or take a accounting 101 course so this like I said is for people that are starting investing but really have no accounting background you can definitely learn it on your own that's something you can do personally I did some accounting courses while i was in university while i was doing my bachelor's so i definitely had a good base when i started

investing my mom's also an accountant and i did help her when i was younger to to the accounting for my dad's business so i do have a good understanding like as a base but i clearly have learned a lot since i've been investing. So it's something that I think is really useful for everyone. It could be as simple as buying a book like accounting for dummies. I've read a lot of like for dummies books and I find they're usually like pretty well put out there. I know it says for dummies, but it does to me, at least I don't know about you, but they do give a good breakdown when you're starting to learn something and just understanding the concepts. Accounting is the language of finance and needs to be at least at a minimum understood to the point of how the statements actually flow together.

together. And you don't have to be able to, and sometimes I forget, even though like line whatever on the cashflow statement, I'm like, wait, how does this work with CapEx? Or like, how does this work with working capital? And like, I'll have to piece those together. That being said, how they flow together just at a bare minimum is extremely essential to doing some base level research on some, some businesses you might want to own. So I totally agree. And it's one that you can get to a proficiency that will really, really help you with actually not that much effort. Um, when it comes to accounting, like you can go to the next level and be able to recite every line item and how they work together and, you know, tell you everyone what the formula is without looking it up. You can get to that level and that would be great. But even with just a base level of

accounting, you'd be shocked at how helpful it is for your base analysis of companies. Yeah, exactly. It could be also just understanding like when we talk about businesses like REITs, real estate investment trusts, why depreciation and amortization, it's not a good metric for these kinds of businesses yet it's still under income statement and you have to understand why it's there. And then you realize why funds from operation is so much more important for these type of businesses. Well, it really helps to understand that when you have that accounting base. And like you said, you don't need to be an expert, but just having a base so you can better read these statements

and just better understand the businesses you're dealing with. I think it's just an easy way for people to get better just to get that base. And I know we have a wide range of audience, but that to me is a great starting point. You can probably, like I said, you can learn, start learning on your own very cheaply and get better at that aspect. And that will pay, no pun intended, but dividends down the line. But ding. Yeah, no, that's a good point. I'm glad you brought that up because it is something I kind of take for granted about now knowing my way around financial statements for

a while now. So I can appreciate that. What I did do in university is I went to school for engineering. I graduated with an engineering degree. But my electives I had to do was I could pick from all these like fairly useless bird courses. And because I'm an absolute nerd, of course, I picked all the accounting courses. I picked basic second year, third year, and fourth year accounting classes. And I was with all my buddies from business to business courses too. So that was kind of fun. But the reality here is that having just a base level of accounting is not actually that hard. And maybe, you know, maybe I'm just a numbers guy. So I, that's what I think. But even if you're not like, even if you went to school and you're like, I wasn't like a

huge math guy and I wasn't a huge math girl, I got like mediocre math grades. I didn't love it. I was more artsy person. You'd be shocked at how simple the basics of accounting are. Maybe I'm oversimplifying it, but you can get, like I said, a million times already, you can get to a point that it will help you immensely with very little work into it. Yeah. Yeah. No, that's well put. Let's talk about YouTube. I wanted to have a quick segment about the growth of YouTube because it is a fascinating story. It's a fascinating acquisition.

It is now the second most visited website on the planet. And just the scale of content that is being created on YouTube is a little bit mind bending these days. And I just wanted to speak to it. So on October 9th, 2006, Google acquired YouTube for $1.65 billion. I see you smile. Like how much is, do you think that it would be worth spun out? Like it would just be, it would just be wild. Actually, let's, let's have a quick segment on that. What do you think YouTube would be? And I'm putting you on the spot. You don't know their financials right now. But what do you think YouTube would be worth spun out knowing that they're doing trailing 12 months revenue of $27 billion and growing that top line at a very fast rate, 30% year over year.

Okay. So if I'm using current valuations, I mean, we're looking probably in the $500 to $700 billion range is probably where I'd place YouTube around there, like 25 times sales, something like that. Yeah, maybe. That seems a little high, but the point is it could be a range. I'm saying somewhere between 350 to 550 billion. Again, this is completely arbitrary. Yeah, what's Netflix at right now? Because that's a good comparator in terms of market. That's a decent comp. Yeah. Yeah. So they're at $262. I thought Netflix was worth more than that.

Okay. $263 billion on Netflix. But YouTube's way more profitable though. So that's a thing. Oh, I would. It's going to be worth a lot more than Netflix. And there's some comparables I want to have to Netflix. But regardless here, we're talking about YouTube being acquired for $1.65 billion, and we're about to strap on $500 billion to the value of it. And so, without doing too much work on it, we could come up with a whole range of numbers, but we're talking about hundreds of billions of dollars. So YouTube was founded by Steve Chen, Chad Hurley, and Jawad Karim, three founders. Sorry, these are the three founders and the former employees of PayPal.

Now, how many good entrepreneurs did PayPal spit off? So there's what are known as the PayPal mafia. It's a group of former PayPal employees and the founders who have now since developed additional technology companies such as Tesla, LinkedIn, Palantir, SpaceX, YouTube, Yelp, Yammer, which is acquired by Microsoft, and much, much more. The list is pretty exceptional. Today, YouTube is the second most visited site in the world behind their parent company, Google, and their parent company, Alphabet. Alphabet owns the top two most trafficked websites on the planet. Look, people love YouTube, including me. Kids love YouTube. They all want to be YouTubers. Look, people love YouTube, including me. Kids love YouTube. They all want to be YouTubers.

YouTube has over 2 billion monthly active users and over 30 million YouTube premium subscribers, which is still fairly nascent in the story on YouTube premium. The scale of YouTube today and compared to other streaming services is quite exceptional. YouTube generated a quarterly revenue of $7.2 billion in the third quarter. Netflix, on the other hand, generated a revenue of $7.5 billion in the same corresponding quarter. So very similar, $7.2, $7.5. Now, if you look at the two businesses, they're very different. Now, these figures are very similar, 7.2 and 7.5. These are very similar figures. However, they're obviously very different platforms.

One's a subscription, one's a free website. But just to give you the scale of how big a business YouTube has become, a lot of people can forget about that. a business YouTube has become, a lot of people can forget about that. Similar to Instagram inside of Facebook or Meta, whatever you want to call it these days, it is the same case where YouTube inside of Google, since they're not separately public listed entities, you have individual platforms like YouTube or Instagram worth hundreds of billions of dollars inside of a larger entity. This is something like we just haven't really seen before, right? Where you have like a sum of parts analysis on these big technology companies where you actually do some sum of the parts analysis and you're like, hmm, if these were all spun off, you know, the regulatory

concerns of them broken up probably unlocks value for shareholders. I don't know if that's a fascinating or scary phenomenon. From a financial perspective, YouTube did $7.2 billion in the third quarter. This represents a run rate of $28 billion annually in revenue on YouTube and represents a roughly 30% growth rate from last year in 2020. The annual trailing 12 months of revenues is $27 billion on the company. So a couple interesting facts about YouTube here is that more than a billion hours of content is consumed on the platform every single day. YouTube's user count is 2 billion plus, which places it second on the list of most used social media platforms after Facebook. YouTube is the most popular among the ages of 15 to 35, which is an important demographic

in the economy moving forward. And on average, individual creators receive between three to five per 1000 views. This is that CPM number that is used very often. So three to $5 per 1000 views. So $3 to $5 per 1,000 views. 62% of US YouTube users access the site daily. I'm one of those 62%, even though this is a US statistic. And an average visitor spends 16 minutes and 44 seconds on YouTube. Those figures are wildly fascinating considering it still feels early for YouTube. And I'm curious on your thoughts on that. But this is one of those companies that is very mature. Everyone knows about it. And I think its best days are still in front of it. Yeah. I mean, there's definitely a lot of growth still ahead, I think, for YouTube. And I think its best days are still in front of it. Yeah, I mean, there's definitely a lot of growth still ahead, I think, for YouTube. And I think really what's interesting for me looking at YouTube and comparing them to Netflix is just how the content creation is done.

Obviously, YouTube probably pays something for the content because they will reward their YouTubers that provide a lot of, you know, views of daily views. They get paid for the ads. Yeah, exactly. But at the same time, I mean, let's be honest, the content creation is way, way cheaper for YouTube than it would be for Netflix. But they could invest millions of dollars in a single show or a single movie and it could totally flop and not really catch on with its users. They still get that subscription revenue, so that's fine. But, you know, there's that risk of investing a lot of money in certain shows and not getting the returns or the viewership that they were expecting where YouTube, you don't really have that issue, right? Yeah, agreed. And I don't mean to compare the two companies because they are so different.

And frankly, they're both exceptional companies. I think that that goes without saying, but it is often misunderstood because it sits inside of Alphabet on truly how big the scale of YouTube is and how fast it's growing inside of Alphabet. The scale and the run rate right now is quite exceptional and growing off a huge base of growth in 2020, they did an additional 30% in trailing 12 months of revenue and on growth on the top line. So you can't sleep on YouTube. That's the point of this segment. Yeah. And the only thing I would wonder for YouTube, and that would also apply to Netflix, how much growth was pulled forward because of the pandemic? Because Netflix did see early on their subscribers go go way up

and then kind of level off so i'm just wondering if maybe we're seeing that growth from youtube but it's gonna taper off a little bit and just be still growing but not as quickly as it has in the past two years is that something you'd be concerned about like i said they're 30 off the run rate of 2020 and so that was obviously pulled forward. And then you had this additional 30%, which is very healthy growth. Now, am I modeling 30% growth on YouTube and forever? Absolutely not. That's quite silly.

It's going to eventually continue to slow down due to the law of large numbers. That being said, who's to say this thing can't keep growing at double digits, 20 plus percent for a long time? I don't see a world where that doesn't continue to happen. One risk flag I will point out here is I think they're over-earning a little bit. That concerns me. I think that the ad load has gotten a bit aggressive.

And so I use Adblock. I think that the ad load has gotten a bit aggressive. And so I use ad block. I would agree with that. I kind of do depending on which computer I am. But obviously with my phone, I don't. And it just gets annoying. You almost have to like skip the app every like, depending how popular the video is, it could be like every three, four minutes, you have to like click skip, which is a bit of annoying maybe they're trying to really push people to get that paid subscription that's why they're doing it but not everyone can afford that you can still monetize ads but i think yeah i think i'm with you maybe dial it back a little bit you just worry about a little bit about over earning

now a counterpoint to my own thing that i'm pointing out that might be a risk for them is even as they continue to increase the ad load monthly active users is growing faster than ever so it's like that doesn't seem to be a concern for the growth of users on the platform well probably, probably the reason why is, is there really another viable option for users? That's a real thing, right? No, there isn't. Yeah, that's it. There isn't. And a lot of emerging countries, they all have smartphones now. They're gaining more and more internet connectivity in some of these emerging markets. And so,

they're going to be watching YouTube videos. of these emerging markets. And so they're going to be watching YouTube videos. 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.

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I wanted to talk about FOMO. So fear of missing out for those who are not aware of that. So this is always something I wanted to talk about. We've talked about it here and there, but everyone has had that feeling before. So whether it's a new and exciting business or an event that has limited capacity that really want to attend and you're almost ready to pay any price just to go there. So, for example, you know, Braden would probably sell his whole business just to go see a Leafs game in the Stanley Cup finals because he'd have so much fun. Leafs in the Stanley Cup. That's a hilarious joke. Kick me when I'm down, eh? Okay.

All right. I get it. No, no. It's okay. Like, I mean, let's be honest. I'm a Habs fan and how's it going for me? Hey, you know what? I'd liquidate some serious stock to go to the Masters.

I think I need to go to the Masters. Yeah. And it's easy to get FOMO when hearing about a new business. As soon as you start being interested in investing, you'll start seeing ads when you're browsing of a stock being the next Amazon, for example, or Tesla. I can't, how many times have I seen that kind of ad? And you'll get ads about also this Trader Bro that has a program that can make you $1,000 a day, but there's limited availability. So you must act now. And they're really trying to create that scarcity and essentially get that FOMO feeling out of people. So they buy their new product. Simon, you know what it reminds me of?

Remember a long time ago when you used to get chain mail? Do you remember chain mail on your old hotmail? No. You used to get an email that would be like, if you don't forward this to 25 people, you're going to get bad luck for the rest of your life. And they created fear and stuff. That's what these gimmicky stock bro trading bro courses they're trying to sell online that cost $10,000 to join with limited seats available. Dude, this is what it reminds me of. I can't believe people fall for it. Yeah. But I mean, I've read something recently where this person like lost $10,000 of, I think she went into, yeah, her line of credit,

got $10,000 to get into this like stock trading program and essentially said that it was a scam at the end. I'm like, why? How did you not notice that? But it happened. It's sad, man. Yeah, exactly. So if you've been listening to this podcast for a while,

you know that we try to be as transparent as we can for the stocks that we own. And we invest in the long term. Hell, we just had a recent episode on our exact stock portfolio. If you've missed it, just go back. It was the episode before this. And the reason I wanted to mention FOMO is because what I remind myself of when I see these new SPAC IPOs that have a ton of hype and it's easy to think that you can make a quick buck if you time it right and get into that mentality right away but you really have to be careful when you have that feeling I know it's you know when get really excited, it's easy to get emotional and just throw logic out of the window. But that's also where you risk making some of your worst mistakes. The four things that I like to just remind myself or do when I get super excited about something. First of all, I like to take time and just recognize that this is what is happening. So if an investment is such a great investment,

I tell myself, look, I'm excited, I get it. I'll wait a few days, weeks, or even months. It won't matter in the long run. And I know, Brayden, you talked about that, about consolation software that you relate to the game, and that's fine. Like a good business, you can wait a little bit and it's not an issue. If

it's a really good business and has huge tailwinds, whether you invest in it now or wait a few months or even years, sometimes you'll still be able to get some really good returns. When you see what seems like an opportunity of a lifetime, it's usually not true. That's kind of my rule of thumb. If it was so great, they would not need to upsell that to anyone. It would sell on itself. Make sure you do your own research and that's really important. It goes with what I was saying about accounting, learning about accounting and so on. So do your own research, look at the financials, listen to conference call, understand the business, and know what you own. And by doing that, even if you hear, for example, Braden or I talk about a business, we might like it, but then you start looking at it, and maybe you're more critical on the business than we are. And maybe in the long run, you end up being right and we're not.

But that's just stresses the importance of doing your own research. You can get ideas from anyone, but you should be able to think critically about them on your own. And the last thing is if it's too good to be true, then it probably is. Yeah. Well put. And there's so many factors at play that FOMO taps into, like into your emotions and it plays on them. When it comes to investing and articles online, this is something I really want to bring up. When you type up a stock, there'll be some blog post and it'll be some... I'm not going to comment how good quality that blog post may be. Say it's the best thing since sliced bread. Say it, you can tell they haven't done their work at all. Regardless, a lot of those sites are trying to

sell you something and they will use copywriting tactics to feed on the emotions of new stock investors. They will say, this is a rare, once in a lifetime opportunity to buy this stock. I have seen that, oh, you'll become a billionaire if you buy this stock. Really outlandish claims that they know are not true, they know are not correct, and frankly should be illegal. I don't have any time for that kind of stuff. And you know the companies that are doing this. We all know the companies that are doing this. They kind of own the Google search engine optimization, which is annoying. Or YouTube. Oh yeah, it's just terrible. So just be aware of that when you're reading things online, when researching stocks, there are going to always

be articles that tell you, this is the time to buy the next X, the next Amazon, the next Tesla. They're using these get rich quick prey on lack of knowledge type sales techniques, and they're using FOMO. And so I'm glad you brought this up because it's a real problem that I see online right now oh yeah and you know you see it a lot with stocks and the reason why I wanted to talk about stocks but also compare that to other events in your life right I was talking as a joke like you know Leafs going into the cup final I'm sure a lot of people would sell like almost their life savings just to go see that if they're big fans but no they sell their life savings just to see them in the cup like

even if they could just watch from home but you know it's also very prevalent another space is cryptocurrency i would say it's even more the wild wild west there i haven't seen those mice well i've seen some myself but I've heard about it on TikTok as well. You have these like influencers on TikTok. Are you on TikTok? I am not on TikTok. No, I know of TikTok, but I'm not on TikTok. Yeah. Okay. I'm too old for that, Brayden. You should know that. I'm too old for TikTok. I was shocked that you were going to be on TikTok. But essentially, I'm just saying that, you know, cryptocurrency, for the most part, there's almost no regulation. And if you're going to invest in that space or look at people saying it's the next Bitcoin, Dogecoin, whatever you

want, they want to call it, just be very careful because it's the same kind of thing, right? They want to get you to FOMO into that cryptocurrency oftentimes. So they'll already have either been paid by whichever organization is backing it or they already own it and they're just trying to orchestrate this pump and dump scheme. So just keep that in mind. Think critically. Do your research. Take some time back.

There's no rush in investing. You take your time. I think that's probably the most important thing because when you take your time, that's when you allow yourself to take the emotion out of it. Yeah, good investing happens over years and decades, not months and quarters. And that goes without saying, before you act kind of on a whim or impulsively with investing, just remember that it happens over many, many years and not many, many days or even many, many hours for these day trading schemes that I hear about. that I hear about. I mean, I know people that have made money trading. That doesn't mean that I actually think that there's a real way to predictably do it long term. I've never been convinced of it ever once. Me neither. And I think the biggest thing with I know we're kind of firing off a little bit with day trading in my view is to hold taxes right like how to deal with taxes i think that's something it's a losing proposition just because

of that one aspect right there where you're constantly buying and selling so you're creating these taxable events that's why i never really got an interest into it i mean we get reached out by these random trader bros who want to come on the podcast and usually we'll just say no thanks or just not respond to them because uh clearly they've never listened to our podcast as they're trying to do some work first yeah exactly before you reach out maybe do some work and listen to the actual podcast but that's not something we're interested in and i know most of our listeners are like us and they want to invest in good businesses for long periods of time, not try to make a quick

buck just because they see a guy on YouTube trying to sell a program. That's right. Yeah, well put. And so the mission, they should make this the mission of our podcast next year in 2022, Simon, which is make getting rich sexy, slowly. Make getting rich slowly sexy because that's where real compounding is found over a long period of time, not even a few years. It takes a long time, man. It takes a long time, man. It takes a long time to compound. So getting rich slowly is the way to go. And that's really one of the most reliably, reliable ways to actually get it done and meet your goals financially. That does it for this week, guys. Thank you so much for listening. Appreciate you guys so much.

We have a new mission, Simon. It's make getting rich slowly sexy in 2022. Thanks so much for listening. Appreciate you guys so much. We have a new mission, Simon. It's make getting rich slowly sexy in 2022. Thanks so much for listening to the podcast. Check out stratosphereinvesting.com. We were talking a lot about accounting before. What you can do is go onto, you can do a company search, you go on their financials, any company you want, and it'll show 10 years of financial statements. Go line by line on those and just figure out what they mean. Some of them are more important than others, but you'd be surprised at how in just a short amount of time, you can connect the dots between what those line items mean on the income statement, the balance sheet, and the cash flow statements.

the income statement, the balance sheet, and the cash flow statements. This accounting is the language of finance, and it is incredibly useful to know how to use it. That does it for this week, guys. Thanks so much for listening. We'll see you in a few days. Take care. Peace. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.