5 Canadian Stocks That Won’t Feel the Impact of Tariffs

[00:00:01] 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 Braden Dennis and Simon Belanger The Canadian Investor Podcast. Welcome to the show. My name is Braden Dennis. As always, joined by the jacked Simon Belanger. Jacked because I saw that new home gym you got there. I saw your video. It looks sick, dude.

[00:00:29] Yeah, I'm pretty pumped about it. So I've been using it a little bit. My back's doing better. So I'm actually able to lift bigger weights and it's just awesome when you have kids to be able to wake up a bit early, 5am, take a coffee, get some caffeine in, go to the gym. It's great if you really want to get workouts in. I feel like that's how you have to do it when you have kids. Yeah, it's a well good on you man. Those dumbbells getting tariffed or what?

[00:00:58] Probably. Yeah, I think I know it's a good segue. I see what you did there. So they will. I'm assuming it would have been more expensive to buy if we bought them now because they came at a company for the most part was from the US. They had some really good quality and reasonable prices.

[00:01:15] Yeah, we should probably caveat our discussion today. It is Thursday, March 6th. We have to timestamp everything now I feel like here in 2025. We're going to talk a little bit about kind of the latest updates. You're going to talk about some Canadian stocks that could see some impact and some that should see very little impact from tariffs. And then I'm going to talk about the state of retail investing.

[00:01:42] But first off, out of the gate here, a buddy of mine who runs a Vancouver-based company called Wilbur Budget, he sent me this because they run surveys inside their app. So they interviewed 750 Canadians. And the question was, which of the following factors do you believe will have the largest impact on the investment climate for Canadians in 2025?

[00:02:08] The number one answer was trade tensions between Canada and the US at 62%. So it looked like people could pick multiple. They didn't have to just pick one. But 62% of respondents said that it would have their largest impact.

[00:02:27] Inflation was next, inflation was next, then interest rates, and then the Canadian federal election to round out the top four. So pretty interesting. You could probably kind of stack rank these in multiple different ways, depending on your opinion on the state. But I think that those are probably four kind of very pertinent topics here going through the rest of the year.

[00:02:51] Yeah, I would actually personally put the Canada trade tensions with the US and the Canadian federal election almost in one, because they're very intertwined one another. We've seen how the polls have kind of shifted a whole lot ever since the tariff threats have become more and more real. And obviously, with the start this week, effective on Tuesday, March 4. So I can see those being personally, the way I view it is those two are very intertwined together.

[00:03:17] Yeah, it feels to me like it's a buildup of a lot of people becoming one topic voters. There's a real there's a good term for that. I can't single issue voters, single issue voters. Thank you. I have a feeling that that's going to be, you know, bringing us to a lot of single issue voters on this topic, which, you know, hard to hard to argue with that logic. But let's not forget, we have a lot to do and to fix at home that has nothing to do with the US.

[00:03:47] And so I want to, I want to remind folks that yes, you know, we got to look south of the border and we have to, you know, do what's right, best for the country here in this situation. But, you know, we got a lot of other things we got to focus on in this country as well. One good silver lining that I saw, it's been talked in the news, but there seems to be agreement now across provinces. Most of the major provinces in Canada are agreeing to lift some a lot of the trade barriers between the provinces.

[00:04:16] Inter-province tax. Exactly. So I think that is, I guess, a silver lining that it took these kind of trade tensions with the US to wake premiers up and the federal government to say, you know what, this is a low hanging fruit. Why are we not making progress on this? And it looks like it's happening. So I think that's a really positive note of having free trade within Canada, more trade within provinces.

[00:04:45] I think one of the things is like alcohol, for example, in Ontario, we're both from here. I mean, I rarely see wine from anywhere else in Canada is just Ontario wines and then international wines. And apparently now there's going to be more like BC wines available in Ontario or different industries or professional services that are accredited in a province or certified in a province.

[00:05:11] I think they're going to be able to more easily work in other provinces. These are all, in my view, good things. Like I don't, I don't really see the downside with that. It does create, encourage free trade within Canada, which I think is really good.

[00:05:27] Growing up, my dad used to say the term never waste a good crisis a lot. And you know, that, that to me rings true really well here, right? It's like never waste a good crisis. There's an opportunity here for us to get the proper kick in the butt here. Interprovincial tax is a very good example here.

[00:05:49] And look, there's a lot of things that just, this, this has nothing to do with Canada. This is just a broad statement. It takes a breaking point to, to, to challenge the status quo in almost everything that humans assemble, whether it's businesses, government, whatever it is. Like there has to be some sort of breaking point to challenge the status quo. And those kinds of resets are usually quite healthy and good for efficiency.

[00:06:18] No, exactly. And look, it's fast moving and there's, I mean, it feels like you're, you're seeing in one day, the type of information or movement that you'd see in several weeks or months. It's happening in a day. So it's a bit crazy what's happening, but clearly even since Tuesday, we're recording on Thursday, there has been some movement on the tariffs.

[00:06:40] So apparently Trump lifted the, or put a pause on the tariffs for automakers to grant them an exemption over 30 days. There's talk now for agricultural products, which I'm hoping if that comes through, that Canada will also follow suit because I've been pretty vocal on that, that I think it's a mistake to do tariffs on agricultural products coming from the U S, especially when it comes to produce.

[00:07:07] It will hurt the most vulnerable in Canada, the most. And that's been, I've been steadfast on that. It's, um, I was sad to see that those types of tariffs would be going in place. So that is one thing that I do hope that is lifted so that consumers in general don't see higher food prices. Well, I mean, we'll probably see higher food prices one way to another, but clearly not as big of a jump.

[00:07:33] And I've seen a lot of people on Twitter say like, Oh, this will only last for a short period of time. And the impact won't be important. The problem with that kind of mentality is sure. Obviously if the trade war goes on for a year, it's going to have a much more pronounced impact than a week. That's clear. But just the uncertainty that it creates, even if it only lasts a week or a few weeks,

[00:07:57] it just creates so much uncertainty. If you're a consumer, the best example here, if you were thinking of buying a house this spring, but now you're concerned that you've got an increased chance of being laid off. Like, are you really going to go ahead and make that purchase? Probably not. You'll probably think about it twice.

[00:08:17] If you think there's a risk of losing income and Brayden, you own the business. I like, you know, we, we share the podcast too. And maybe those, those are not the type of businesses as impacted. But if you're a business producing goods in Canada or the U S do you really want to be making massive investments right now? You might still invest, but you might scale it back.

[00:08:38] Um, that's probably something because who wants to be investing when there's so much uncertainty and you're definitely starting to see that with certain types of businesses. I think too, that our listeners and you know, well, I know pretty well too, to that come to mind is TFI and BRP. They've been in a world of the hurt. Let's just be very honest here. If you're looking at, I'm showing a chart here on FinChat.

[00:09:05] Matt, the drawdowns over the last year are just massive. If you're looking even as the last six months, they're pretty substantial as well. So if you're looking at BRP over the last year, it's looking at drawdowns of around 44% and TFI 46%. I mean, TFI has been mostly in the last month. These drawdowns. Very steep cliff after their latest earnings results. Yeah, exactly. And look, I'm not surprised. It's pretty simple.

[00:09:35] There's a whole lot of uncertainty when it comes to tariffs, trade war, commerce within North America, which is clearly impacting these two businesses specifically. But then these businesses are also dependent on the economy and these tariffs, there just creates a whole lot of uncertainty in terms of the economy going forward. And at the very least, a short to medium term and even longer term.

[00:10:01] Right. If we're seeing a structural shift in how we do business in North America, they may still thrive. It just creates that additional uncertainty. And those are two of the names that I wanted to highlight. I don't think you have to look very far to find other names that have been pretty impacted by the trade war and what's happening between Canada, the U.S. and Mexico. Let's not forget Mexico as well has had an impact on that, too.

[00:10:28] And since Trump, which I think is pretty interesting. So remember when Trump got elected, the markets were like just euphoric. It was like, OK, deregulations. The economy is going to be booming. And you're seeing here on Finchad, you got a big pop pretty early on. Kept going for the most part until I would say. Better part of, I guess, up until just a month, month and a half ago, it's been up and down a little bit.

[00:10:58] But you've pretty much at this point let go of most of the gains that we had seen with the S&P 500 since the Trump election. So a lot of people were thinking that, yes, it just number would go up. But I think a lot of investors right now are just realizing that there's just going to be a lot of volatility, not only down, up as well. And I mean, we've been seeing it. If you've been paying attention to the markets, it's been pretty common.

[00:11:25] You have one day it'll start down like 2% and then finishes the day up 1% or vice versa. CEO Brian Cornell of Target said, expect price increases across most items at Target in the next few days. Yeah. So, I mean, listen to what the big box retailers are saying. I mean, I've been saying this over and over again. Say it with me, folks. Tariffs are inflationary. Of course. Yeah.

[00:11:54] Will it be inflationary for the whole economy? I mean, there's so much debate. I've been listening to people that are economists, people that have 20, 30, 40 years experience, people that have looked at history. I mean, it's pretty divided. I would say for the most part, yes, people say it is inflationary. What is hard to gauge is will people pay those higher prices but scale back their overall spending?

[00:12:21] And I think that is probably the question is overall will inflation go up or you're just going to see reduced spending, which will lead to lower economic growth. It's hard to say. I think this is a bit unprecedented in the form we're seeing it. So, I think we're probably going to look back in 10 or 15 years at this period and take a lot of learnings. Yeah, definitely.

[00:12:49] I got a top ticked TFI, but oh man, I'm taking a bath on BRP here. It's a tough stock to own right now. It's, of course, demand down, guidance is down, estimates for top line are down. I guess the thing is, when you own these types of cyclical names, don't get surprised when they act like cyclicals. Yeah, that's a good point.

[00:13:18] You know, like I think that that's a pretty obvious statement to make, but, you know, at the same time, maybe not realistic for a lot of investors to really brace for when they own the stock, when times are good, you know, when they're in the cycle. You know, when the cycle does go the other way. Now, of course, you have this other geopolitical thing on top of it that's making it even a more difficult situation for the business.

[00:13:46] But like gross profit is up on a two-year stack, even with the downward guide. So, I mean, you got to own these things with a pretty clear thesis. And the thesis can't be the cycle remains hot for 20 years. Like that can't be the thesis. The thesis has to be something, you know, gaining market share from competitors.

[00:14:10] Overall, you know, you think that the net in and out of cycle recreational products is going to be a good place to be for the next, you know, several decades. So, that's just my reminder to people who own cyclicals. Don't be surprised when there's a cycle. That's literally what you signed up for, being an equity holder. Yeah, and I feel for BRP, right? We've covered them, Dan and I, on earnings.

[00:14:35] And I think they had like a stretch of like four quarters in a row where they lowered their guidance. But I'll defend them in saying like, look, I mean, clearly it's super hard for them to provide guidance right now. I think the only thing I may push back against their revised guidance is maybe just lift guidance right now. Maybe it's just too difficult to provide guidance. And instead of lowering, you just straightforward with investors. Remember COVID at the start, companies were just waving guidance altogether.

[00:15:05] It may be worthwhile to just say, you know what? We, until further notice, we're not putting any guidance just because we are just unsure the business is in good standing. We're going to come through this like reassure investors. But at the same time, I mean, how can you predict where these kind of sales will be going? I mean, it would be, I wouldn't, I do not envy them. Like it would be so hard to predict. Yeah.

[00:15:31] And whether it's guidance or forward estimates kind of being revised, like when you see revision estimates, one thing I like about the estimates tab on FinChat is you can see the trend of revision history. So you get something like Nvidia, which is basically just like the lines keep stacking higher on top of each other as guides keep, or estimates keep getting revised higher and higher. This is the opposite where revisions keep getting knocked lower and lower and lower. Like obviously not a type of chart you want to see.

[00:16:01] But, you know, this is, this is the kind of thing that you have to brace for when you own equities. Like this number doesn't always go up. Yeah. The future is unknowable and number doesn't always go up. Well, even the SMP, right? I think it's, it's not quite in correction territory, but it's approaching. That's for sure. Um, I was looking, it was what, 56 around there. And I think it peaked around 6,000, maybe slightly higher.

[00:16:29] So it's not that far off from a correction. I have a great stat for you that I just saw this morning from Redholtz. Okay. Awesome. Oh yes. I just got it here. The SMP has had 91 sell-offs of 5% or more since 1950. Okay. About a third of them. So call it 30 of them.

[00:16:57] Our blips on the radar dropped smaller than 10% and last less than a month. Interesting. So one third of the 91 sell-offs of 5% or more were basically just like nothing burgers. Yeah. And then I guess two thirds were into correction territory. And then a few or just a handful are like what we call crashes of 20% or more based on the data here.

[00:17:27] Which is, which is interesting. But, you know, when you zoom out to 1950, they all look like nothing burgers. Yeah, exactly. That's it. And I mean, I think expect, I would say for this year, just I wouldn't be surprised if we get a few of those. That's just how I think how volatile it will be. So I think it's just important for people to understand, like, just be ready for swings. I think it's just, it's just going to happen. And I'm not saying just down swings. There could be up. It could be up and down.

[00:17:55] And I think that's important because a lot people tend to think about volatility just on the downside. I think we're going to see a whole lot of upside and downsides. All right. You got five stocks to go through here on names that you think would see little. Am I reading this right? Little impact. Yeah, exactly. I think. And when I say little impact, I'm really talking about their business and the results. And clearly some of these names will see some impact.

[00:18:24] But there's really two main themes here. These are businesses that are, for the most part, tend to operate in sectors that are non-discretionary. So things that people need to have. It's not a nice to have type of deal. And with these companies, you're putting more emphasis, obviously, on high floors for your investments versus high ceilings.

[00:18:45] So these are businesses that may not, you know, provide, that will likely not provide, you know, 20, 30% returns or multi-baggers. But they're less likely to have massive drawdowns in a uncertain environment like we have right now. And of course, the tariff file will move rapidly. So who knows how long they last. But again, these are businesses that are more, I think, more on the defensive end of stocks for the most part. So the first one would be Loblaws.

[00:19:15] I think this one is pretty obvious. I took Loblaws, but any of the grocers in Canada should perform pretty well. Just Loblaws tends to be the best run of the grocers in Canada. And they said on their latest earnings call that about 10% of their cost of goods sold come from the U.S. And the majority of that 10% is produce.

[00:19:35] And they said they'd be able to mitigate the about half of the increases associated with that with different suppliers in different countries, for example. Now, if there's increased costs, the reality is the majority of that will be passed on to consumers. So I don't expect their margins to be too impacted. The other thing that Loblaws has working for itself is for some alternatives, they have their in-house brand.

[00:20:05] So think No Name as a really value option or President Choice. That is a still decent value, but not as much as the No Name, I would say. And they've been doubling down on their discount chain. So that's pretty much the only thing they've been opening in terms of new stores. They converted all their Quebec stores to the Maxi chain, which is their discount chain. So all of their Loblaws and Prévisgos in Quebec have been converted to that.

[00:20:30] You're probably not going to get any kind of discount buying this company because I'm talking about it, but a lot of investors are viewing Loblaws exactly like that. So you're not going to see any type of big pullback. In my opinion, you might, but I don't think you will. And on top of this, you do get a small 1.2% dividend that is well covered by free cash flow. So that's the first name. Any comments on that or you agree with my assessment?

[00:20:59] Yeah, everything looks good. To be honest, I'm looking at, I've been graphing Loblaws gross margin on my other screen. So I'm not going to pretend I know what you said, but I am blown away by the consistent growth of margins across the board. And obviously, you know, they get a lot of heat for price fixing this, that, and the other thing that folks come at them for.

[00:21:25] But I don't think they get really enough credit for the mix that they've also done. You know, you mentioned those in-house brands, the pharmacy, other things that they've done efficiency wise. Like, yes, I'm sure they're charging more than most grocery stores, but at the same time, like just unbelievable execution. Say what you will about Loblaws and whatever your opinion about them and the ownership group is. As a business person, respects. That's it.

[00:21:55] And that's what I'm focusing on here. So it's really about, you know, the businesses. The second one is Intact Financial, ticker IFC.to. So I haven't talked much about them. Obviously, insurers are extremely complex to understand, to fully understand. I understand them like, you know, a decent amount, but they are very complex. Intact has been one of the best, if not the best performing insurer in Canada for a long period of time.

[00:22:23] There's other insurers too, like Emanulife, Canada Life, Sun Life, for example, that are all publicly listed. But at the end of the day, people, companies, individuals, companies need to have insurance policies on various things. And despite tariffs, they're not likely to cancel those. Now, they may see some indirect impacts from tariffs if the cost of replacement goes up.

[00:22:47] So if you total your car and the cost of the car is up 10, 15 percent because of tariffs, then obviously that's going to have an impact on Intact Financial. But for the most part, these policies renew relatively frequently. So they would be able to increase the price of their policies to reflect those additional costs. So that's why I think they'll be able to pass that on to the consumer.

[00:23:12] So it's not to say there won't be any impact, but I don't think there's going to be any major impact to their actual business and profitability. And Intact also pays a dividend, which currently yields 1.8 percent. This is the ultimate they can't keep getting away with this TSX stock because I'm always just so shocked at the consistent outperformance. Like, yes, I know that they're like a really well-known insurance business.

[00:23:42] They have the different brands underneath them. I personally use Bel Air Direct, which is like kind of like their cheap auto insurance. Yeah, I do as well. So I shout out to my brother-in-law that works for them. Oh, nice. Dude, I've never been able to find anyone that beats their rates, honestly. No, exactly. It's nice because you deal directly with them. So yeah, I use them as well. Yeah, I switched. And it's just easy. Like you can get it going really quickly. This sounds like an ad for Bel Air. It's not. They're not. Yeah, they're not.

[00:24:11] Hey, Bel Air, it's buzzed the pod. But I mean, look at the consistent performance. Like a stock is compounded at nearly, you know, since 2013. I just pulled up a random arbitrary number here on Finchett. Total return, including dividends, compounded at 17.5%. Yeah. This is the ultimate. They can't keep getting away with this stock. It just keeps working. Yeah, maybe it's one that Berkshire will end up by. Who knows? It is a beautiful, beautiful stock chart.

[00:24:40] It would have to be a better bargain than that. I don't think Buffett would, even if he likes the business, he would probably think it's too highly prized. But yeah. You're sharing your screen. Stay there because you can't see market cap. Just off the top of your head, what do you think is the market cap? Don't scroll up. What do you think the market cap of Intact is? I haven't looked at it in so long. I don't know. I'd be like maybe 20 billion. 51. 51. Oh, wow.

[00:25:10] Okay. Yeah. Yeah. I also would have said 20. Like this thing just keeps getting it done. Yeah. That's crazy. And even it compares like if you're looking over the five years, I mean, it's right in line with the S&P 500. So that's pretty impressive. Yeah. Yeah. For a Canadian insurer, that's pretty impressive. It's actually outperformed it by 4%. Yeah. Yeah. And it's probably outperformed more if you go longer timescaled than just five years. Yeah. No.

[00:25:39] So this is one, obviously. And, you know, when I say a company and I'm talking oftentimes like I've said it already, right? Like, yes, I spoke about an intact, but you can also make that thesis for other insurers. And the next one is Fortis, ticker FTS.to. Again, this is a utility. It's just an example because I know they're, I don't know them super well, but I know them well enough to know they're pretty well run utility.

[00:26:06] Um, utilities in general should do well in this type of environment because again, they provide essential services to individual and businesses. The bonus with utilities and this one, of course, is you get a pretty high dividend yield. So for income seekers, that is something if the stability of having a dividend coming in and usually the utilities tend to have quite stable dividend. Don't take this as the dividend being guaranteed. It is not.

[00:26:34] Um, the like, the growth likely won't be huge, but, and they are levered, but they are also very regulated. So you're definitely not looking at amazing growth, but when you're looking to be a bit more defensive, a utility like Fortis is definitely something to consider. It's a premier, premier utility. That's Melanie thoughts. Okay. Now the next one, next one, I will elaborate a little bit on.

[00:27:03] So gold miners or streamers. And the reason I want to talk about these is they have actually, they've done quite well over, uh, some pretty long period of time. Now it's been the three years and five years as well. I'm going to pull some chart here and I'm showing the, um, GLD and SPY and GDX as well from, uh, VanEck.

[00:27:28] The reason I'm not like BMO who's our sponsor has some really good options, but for example, their, um, bullion ETF for gold only started trading a year ago. So it's not super useful if I'm trying to show like the three, five years and one year clearly. But what you start looking at is over five years, the S and P 500 has done much better than gold and gold miners.

[00:27:53] Uh, you're looking at 108% in terms of return for the S and P and you're looking at 71 for gold and 55 for gold miners. But then if you look at the three years, it's neck and neck between the S and P 500 and gold and gold miners are a bit behind at 31. And then if you start looking at the one year gold and gold miners, I've completely crushed the S and P 500.

[00:28:16] You're looking at gold miners, 49% gold at 37% and the S and P 500 at 16.4%. I know I've been beating this drum for over a year now. Clearly if people would have listened, they, they, they would have done pretty well with, uh, with gold during that period of time. But the reason why I think it's, um, it's really interesting to look at these is because they should not be too impacted by tariffs.

[00:28:43] And I was talking about these charts thinking I was showing my, my, uh, my screen, but I wasn't. But for people who are watching on joint TCI, they'll be able to see it now. And look, my understanding is gold is likely is going to be tariff. Like it's not been exempted. So it's going to be tariffed in the U S. But the reason why I don't think there's going to be a big impact is there has been a massive increase in global demand for gold. So X us.

[00:29:09] So even if there's that 24 5% tariff on it, I just don't think it's going to have a major impact on gold miners and the price of gold. And according to the world gold council, 2024 saw record high demand for gold in big part led by central banks around the world who want to diversify away from U S treasuries. They still, whether you look at China, whether you look at all the major central banks, they

[00:29:35] still own a lot of U S treasuries, but for them, this is an alternative of a safe asset that essentially is not controlled by anyone. The miners are definitely very attractive because if I go back to the five year chart, the miners have really underperform the price of gold, even looking at the three years. So they're definitely behind. And typically when gold starts going up in price, miners end up like doing actually better than the price of gold.

[00:30:04] So there is a case to be made that they should still have some upside left here, even if gold doesn't keep increasing in price, which I think there's a good chance that it will keep increasing in price just because it's seen as a safe asset and more and more people are coming a bit nervous about you holding longer term U S bonds, U S government bonds. And this is a viable alternative. Clearly it does not pay you any coupon, any interest.

[00:30:33] Of course, that is something to take into account. And a lot of people won't switch all of their bonds for gold clearly, but you know, it's just incremental changes, whether you have before you had 0% and now it's 5% of your portfolio. If you start seeing a lot of investors doing that and a lot of different institutions starting to incorporate gold into their portfolios, then you can definitely see those gaining in price.

[00:31:02] And Canada is rich in gold miners. Like, let's be honest. There's a lot of them in Canada and some names to consider here at Nico Eagle Mines, ticker AEM.to, bear gold, ABX.to. Most of them are dual listed, by the way. Canada, U S some are even listed in like Australia and other countries as well. Franco Nevada, one that I own FNV.to. Wheaton Precious Metal, WPM.to. The last two are streamers. So they're a bit different than miners.

[00:31:31] They have less, less costs than miners. So they're basically, they finance miners and then they get a royalty in exchange for financing those miners. So that's one of the reason I own Franco Nevada. But it's been one of my best investments, Franco Nevada, since I started my positions about six months ago. I think it's up like 30 something percent. So it's performed pretty well. Again, who knows where the future is going?

[00:31:56] But they are not likely to be heavily impacted because there's so much demand for gold around the globe, even if you slap those 25 percent tariff from the U S. Good job on the gold call. I'll give you your flowers there. I don't I still don't understand it. And that's OK. That is that is OK. But but well done. OK, thank you. But no, that oh, actually, I thought that was it. But I do have one last name here.

[00:32:25] This one people may push back a little bit, but I've talked about them before. Restaurant Brand International. QSR.TO is the ticker for those not familiar with the name. They own some. They own a very iconic Canadian brand. So Tim Hortons, they're the company that owns that. It's about 50 percent of their revenue. They own Burger King, Popeye's and Firehouse Sub in order of importance. And the ones I name here now, they might see some price increases as a result of tariff,

[00:32:55] especially if it's on agricultural products and food. But I think they'll largely be able to pass on to consumers because their competitors will also have those increased costs. And I've said it time and time again. If you're someone that went regularly to a Starbucks, for example, you may like their coffee better than Tim Hortons. You may like their lattes better. But if you want to still have that treat of having the food already prepared for you,

[00:33:24] being able to pick up that quick serve option, but you want to spend less, then going to a Tim Hortons is a logical option. If you don't want to make everything at home, then you downgrade to a more affordable version. Even if their prices go up a little bit, I think they'll still be able to pass on to the consumer because they'll still be able to be much cheaper than other alternatives out there. And it's the same thing that Walmart is seeing, right?

[00:33:51] They've mentioned that they're seeing more and more household in the $100,000 plus household income switching over to Walmart because they're finding better value. And people downgrade when they're trying to save money and the budget becomes tighter. And the last thing here is they're paying a nice dividend yielding 4%. Payout ratio is very reasonable. Free cash flow payout ratio of 80%.

[00:34:16] And which, by the way, I love those new custom metrics because now I created one for free cash flow payout ratio, which is not a common metric, but I like to use it. So I have it now readily available for everything. But it's another one to consider for that reason. And again, it wasn't to say that they won't be impacted at all, but I think their businesses will have little impact because they'll be able to keep their margins intact and pass that on to the consumer.

[00:34:46] Tim Hortons is finally bringing back actual roll up the rim. Are they? Not on the app? Yeah. Not on the... That was the dumbest idea possible. I get it. They want to have the app downloads. You want people in your ecosystem. I get it. But my God, did they blunder this. Roll up the rim was just such an instant classic success. Oh, yeah. And you saw it in their results and you rolled up the rim.

[00:35:16] Everyone knows that you roll up the cup. You see what's under there. There's that instant endorphin dopamine kick that they just completely blundered. So they haven't actually had the roll up cups, I think, in six years, if I'm seeing this correctly, which feels about right. It feels like it's been a long time since they've actually had that. Good move bringing it back. Don't know why they ever got rid of it. That made no... And why they kept it gone for so long.

[00:35:43] It remains a mystery to me, but I'm glad they're course correcting. Do you want some breaking news? What is it? So who knows what will happen with Canada, but I just saw my watch. I got beeped with my Apple watch that apparently Trump is lifting... Suspending tariffs on most Mexican goods until April 2nd, following talks with their president. Yeah. So we'll see. We'll see. Canada still... Hey, we'll see. But... We're going to get rolled back. Throw... You know what?

[00:36:12] Like, my fear is that, you know, this happens again and just... Well, the uncertainty. Yeah. That's what it is. It's just this nonstop cat and mouse, like garbage. And he just loves the... He just loves the attention and the television and the, you know, like... It's the apprentice. That's what it is, you know? It's the big stage. We're living a reality show pretty much. It's so tiring. I mean, I'm laughing.

[00:36:41] It's not funny, but it's just like, I don't know what else to say. Like, it's just... I mean... He's the content president. He's the content president. That's what it is. And especially, you know, I'm a big fan of Ray Dalio. I've read, like, almost everything that he's put out. And I... Whenever I see him on... That he's been on the podcast, I go and listen to him. And I encourage everyone to do so. He's very knowledgeable. Relies on data.

[00:37:11] And he's had some pretty harsh words, like, for the U.S., but the world in general, that we have to make some big changes. If not, history will repeat itself and we'll get into a death spiral for all the major countries. And whether Trump and his administration are trying to tackle that, I think they're not going to amount to anything until they look at the big expense items. Like, those, it's all nice and dandy. But if you don't start looking... Like military?

[00:37:41] Military, Medicare, and Social Security. Those are the big three that take up most of the budget. And they have massive liabilities, especially for Social Security. So if they don't start looking at that, I mean, it's just going to be peanuts. But I digress. Yeah. Yeah. It's crazy. You get to such a large, large scale where, you know, save a few billion here, a few billion there. It doesn't even matter. Like, that's really depressing, honestly.

[00:38:11] Yeah, exactly. Because those should be big wins. And they do stack up, but yeah. But it's hard to know what their real endgame is. I think I've heard so many different things from him, from his administration, from people that were consulted. And people will say, oh, that's their goal. And then something happens a few days later. And it's like, oh, maybe it wasn't their goal. Like, it's really hard to figure out what they're trying to achieve. That's, yeah. I am not American.

[00:38:40] They can do what they want. But I am also pro-small government. I am unapologetically pro-small government as well. And, you know, I'd like a similar approach to be done here. Now- I'm pro-living within our means. That's just- Yeah. That's been my stand. Balance a budget. You can spend on whatever you want. Just make sure the budget is balanced. Fair enough. We'll leave it at that.

[00:39:11] All right. The state of retail investing. The state of retail, Simon. Okay. So it's been a little while since we did a little check-in. You know, when I think of retail investing as a term, it feels a little talk down-y, talk down at you a little bit. You know, it's like, here's professional investors. They do it full-time. And then there's like retail investors who are just degenerate gambler idiots.

[00:39:40] There are some of those, but that's not how I like to characterize this term. So we'll call it the state of retail investing. But there's a lot of folks who listen to this podcast, even you and I, that we are quote-unquote retail investors. But we are really disciplined, self-directed investors managing our own money. And frankly, doing pretty damn good at it too. And the rise of this type of persona is no secret.

[00:40:09] I mean, JP Morgan said that the percentage of individuals moving money from a checking account to a brokerage account was four times higher than preceding years. Don't have data on that as of the most recent years. But what I do have data in on is retail flows to ETFs still red hot. That has not been a trend that has dipped. It has continued to reach all new highs higher and higher and higher, which is quite impressive

[00:40:39] that this trend has been so sticky. Real long-term correction. We'll see how that really shakes people out. But, you know, I digress. Asset allocation to risk on assets obviously substantially rose in 2020 and has remained elevated, JP Morgan says. And they have two more points that they point out in their report, which is investors who

[00:41:07] opened a brokerage account in 2020 and 2021. That cohort higher than the most recent cohorts and the older cohorts pre-pandemic years have held and continue to hold significantly higher allocation to risk assets. So high beta and high allocation to risk assets. So they probably don't own gold is what you're saying.

[00:41:37] Probably not. But, you know. Or cash. Well, yeah, it's hard to say. I mean, they defined it as like high beta allocation to equity. Yeah, they're probably into, yeah, like high growth stocks. Yeah. It's probably, you know, depending on the brokerage, you can't even own like Robinhood. It allows you to have like cryptos. I don't know if they put that in, factor that in either. So. I believe so. Yeah. Crypto.

[00:42:04] They all own Palantir stocks, you know. This cohort. Okay. Now, I'm not in the camp that retail investors being fully invested in stocks for the long term is reckless by any stretch. It's not like I own bonds. And I think beta is a fine measure of volatility. But I think it's a terrible measure of risk. So I'm always careful to, when I hear these types of things like, oh, people are holding lots of risk.

[00:42:32] Oh, but just because they're holding equities and maybe have more beta than the market. I don't necessarily think that that means that they are risky investors. But, you know, that's how the industry has liked to classify these things. But, okay. The takeaway across the board, investors are eager to own more volatile assets and want more upside.

[00:42:56] And the cohort of new investors during the pandemic era was certainly more open to owning these riskier high beta assets. The study also found consistent with prior research, women's portfolios were much lower beta, more aligned with the market benchmark and lower idiosyncratic risk suggesting higher allocation to index funds and less volatile investments.

[00:43:24] In contrast, men's portfolios were held in much higher market risk, less aligned with the market benchmark and higher idiosyncratic risk suggesting more concentration in single stock equities and less diversification. Not entirely surprised. That's been a trend that behavioral finance and behavioral economics have found. Testosterone is not helping. No. No.

[00:43:55] Okay. So, I wanted to check in. I wanted to check. Go to Robinhood's latest investor day. You know, go on the investor relations tab. Oh, boy. I'm just flipping through some slides. I'm looking for content for the pod. And I found a really interesting slide that Vlad presented on their investor day. Okay. Again, these are Robinhood customers. Don't get me wrong. But 50% are millennials.

[00:44:23] 25% are Gen Z, which is a really high allocation given the fact that how many of them can actually own registered accounts and stuff. Baby boomers, silent gen. What is silent gen? It's like before baby boomers. Yeah. So, like older. It's like, yeah, it's older. Yeah. Okay. So, the generation beforehand. So, I think it would have been like probably like pre-1945 roughly. Yeah. Okay.

[00:44:51] Because baby boomers, I think it starts roughly around. Yeah. Yeah. When the second world war ended. Only 5% in that cohort. 20% Gen X. Gender wise, 60% male, 40% female. Okay. Interesting. That feels like honestly not surprising. For instance, this podcast, what are we typically? 70% male, 30% female? Yeah. It's up there. Yeah. Yeah.

[00:45:19] I'm not surprised to bozos up here talking on the podcast. To our 30%, ladies, we appreciate you. Thanks for listening to the show. You guys are great. Marital status, 60% married, living with partner. 60% married, living with partner. 10% divorced and 30% never married. Okay. It makes sense. 25% of the cohorts are Gen Z. So, it makes sense.

[00:45:49] Income wise, okay. Here's where things get interesting. Over 100K a year is the largest at 45%. 35% at 50 to 100K. And less than 50K a year is at 20%. Now, this is great because you get people like Chamath Paliapatiya going on Twitter and his podcast saying,

[00:46:14] Trump doesn't care about the stock market going down because Trump's supporters don't own stocks. They're either really, really rich or they're in the working class and they don't own stocks. It's like, dude, things have changed so much. People who have less income can go zero commission trading. People with less income in Canada can go on Questrade, go zero commission trading and own assets. So, that's bogus.

[00:46:44] It's the dumbest tweet I've ever read in my entire life calling poor people asset light. Dude. Yeah, I mean, I think... If you call poor people asset light, you are such a dickhead. Like, what a stupid thing to say. Okay. Okay. And Chamath definitely, like, I listen to the All In podcast from time to time and he definitely has the snobby vibe coming from him. The one I do love is... He forgets he is a Canadian. Yeah, exactly.

[00:47:14] The one I love is Dave Friedberg. Yeah, he's great. I could listen to him for a long period of time because he's always very nuanced. You guys remind me of each other, actually. Yeah. Yeah, I'm not surprised. I think he's also a big fan of Ray Dalio. Yeah, exactly. Yeah, you guys are... I'll try to get him on the podcast maybe one day. Cut from the same cloth. But imagine being such a fucking dickhead that you call poor people working class asset light. Like, dude, what?

[00:47:43] You're such a nerd. Okay. Roughly half and half... So, half and half mobile and web volumes, which I have a lot of thoughts on. In terms of people, how people actually do their trades and activity on their brokerage account. Pro tip. Okay. If you want to be a really good and self-directed investor, only invest on desktop. I actually don't think I have a better tip. No, it's not.

[00:48:13] Yeah. Only invest on desktop. We, you and I use Questrade, Dan Kent, Dan Foch, all of us on the pod, we use Questrade. And I do not have the app. Love you guys. Won't download the app. It is... I am trying to avoid emotional decision-making at all costs. Okay? I can sit down and have the data and make an informed decision.

[00:48:36] I don't need to be, you know, walking out of the gym, see some news article about some stock I own, go down 5% and panic sell. Like, avoid those types of decision-making over the next, you know, several decades. And your returns will be better. Like, 100% they will be better. And so, my tip for almost all investors, self-directed, you just don't need the app. I mean, I use the app. I don't use it often, though.

[00:49:05] So, most of the time, I just go on the web browser. The only time I really use it, I'll get a notification that I got a dividend. So, I'm like, oh, yeah, which one is it? I'm just curious. I'll log into the app. That's most of it. But the app is nice. But I do agree. I do agree where you're coming from. Yeah. There's nothing wrong. Yeah. I mean, there's nothing wrong to have the app as, like, a quick view on your portfolio.

[00:49:28] I just mean, like, you don't need to trade a stock at a red light of an intersection. No. I mean, unless you're a trader, right? And then that's a different story. But, yeah, if you're investing for longer term, yeah, you don't need the app. And if you do have it, I mean, just make sure you control your emotions. Exactly. Yes. Know thyself. Yeah. Okay. Another point.

[00:49:58] You know, I think it's overall net good, much of the innovation up to this point. I mean, look, you have zero commission fees now on trades. You got close to zero fees on the ability to own broad-based index fund exposure. This is fantastic, right?

[00:50:15] Like, that forcing function of innovation of capitalism and how it has affected anyone to own assets so you're not asset light is amazing. Like, that's so, so good.

[00:50:33] And, you know, it's like the most democratic thing of all time is capitalism giving people the ability to own stocks and, you know, owning a piece of the businesses they know and love in their life as, like, to be an equity holder. For next to no fees, it's fantastic. You have research tools like FinChat, you know, obviously I'm biased, I'm the CEO, but, like, it's the best platform for fundamental research on the internet.

[00:51:02] And it doesn't cost 10 grand a year like FactSet does, like, for what people would have to use before if they wanted access to public company information. So what's next, Simone? What's next? What's coming down the pipe? Unfortunately, more degeneracy. More things that look like Vegas than they do investing in terms of innovation.

[00:51:23] I feel like we've gotten to this point, I'm going to say even 2023, where a long-term oriented, sophisticated, self-directed investor has everything they need and more. In terms of being able to stack their cash, put it into these assets that are going to work for you over time. All those problems have been solved. So what's next? Event contracts.

[00:51:51] Progressive pushing into options trading. Bringing illiquid and expensive private equity products into the fold, which I believe to be an awful idea. But hey, this is where it's going and it doesn't matter what I think. I had a segment at the end of last year that this was my number one prediction into 2025 and is no longer a prediction. This is happening right now. And I will give props to these companies, these fintech companies, the speed that they're moving at.

[00:52:20] I expected event contracts to be rolled out maybe in the next few years across the board. No, that's already in a lot of these places. It's like the same place I bet on the Super Bowl should not be the same place I manage my long-term wealth. I mean, that's my opinion. And I have no problem with people. Let people do what they want to do. Don't hear what I'm not saying. I am very free markets. Let people do whatever they want to do.

[00:52:51] But they just don't need to be in the same place and we don't need to lead people down dangerous paths. That's just my opinion on this. Yeah, exactly. And I mean, like if you go to options trading, like there's ways to make money, but you have to be, you have to put in a whole lot of work to be able to make money off of options trading. Know when it's time to buy different type of options, sell them the duration, all these different kind of things.

[00:53:20] And you see these YouTube videos and they just, they make it look like it's easy when it's not, right? So, and I think that's the big issue. And then people get fooled into that. Or I think it just comes down to, unfortunately, a lot of people think they just need to gamble and take these moonshots to be able to get ahead or be able to buy whatever they want to buy. Whether it's a new home to put a down payment. They're like, you know what?

[00:53:47] I'll never achieve that if I put my money in index fund and do the, you know, six, seven, eight, whatever percent every year in terms of return. And people are ready to take some long shots. I think it's, it's a reflection of where we're at right now in society as some of the bigger issues that we have is people, a lot of people are finding themselves with that kind of, that kind of mentality. This is a great segue.

[00:54:14] So I had, so I did a, I did a talk at a conference in New York in November of last year. So at the end of last year. Yeah. And I did it on the D-Gen economy and I had, I was, I ran the panel and I had some questions for people and had some thoughts as well on, on the D-Gen economy, which I, as far as I know, was coined by our, my seed investor, Howard Lindzen.

[00:54:42] And so the, the degenerate economy is basically like what I believe is the Vegasification of like all consumer applications. And it's creeping further and further and more pervasive into society as we go. Right. Just because of the incentives. And so the, a market watch journalist asked me for a follow-up story. And so I did this follow-up story with him like a month ago and it just came out yesterday. And so I know how, how cringe this is.

[00:55:11] I'm about to read a quote of myself from an interview, but I feel like I cooked. Okay. So it comes down to a structural issue that young people have and particularly the young men, Brayden Dennis said, told market watch. I don't know what I just said. That cohort basically has no vision for how are they going to get rich like their parents did. So their desire to achieve and not be a failure pushes them way outside the risk spectrum.

[00:55:39] Now you have a 22 year old with no experience trading extremely speculative assets like an option. This sports bettingification has transcribed into all areas of the markets, whether it's crypto or even equity markets. The mindset you hold when betting on the Super Bowl should not be the mindset for betting on your equity portfolio. And then he interviewed someone else here that I thought this, this lady, I love her quote here.

[00:56:05] She says, quote, it's can't lose because I have nothing to lose. Naomi Wynn, a behavioral finance at Orion advisor said, quote, the system feels to have failed them. The old tradition of if you just follow this particular track, you'll reap the rewards, which might align more with traditional investor thinking. That's already out the window.

[00:56:32] If you can't steer the boat, why not rocket? Yo, this lady cooked. If you can't steer the boat, why not rocket? I like that. That's really good. So yeah, it's an interesting article. Maybe we can link it to the show notes, but it's about this future that's unfolding. It's not going anywhere. It's only going to get more intense. Yeah. Yeah. And I mean, look, and to play devil's advocate, right?

[00:56:58] Let's say you're, yeah, like you're that 22 year old and you have a thousand dollars. What's like, I think a lot of them will just look, well, I mean, if I have a thousand dollars less, so zero dollars, I mean, I'm still not in a great spot. If I increase it at 10% a year, I mean, it'll take me a while. Or I could take this, put that thousand dollars and put it in this meme coin that just came out.

[00:57:24] And maybe I'll be able to 100 X in the matter of like a few hours. And then I have a hundred grand and I can start thinking about making plans for the future. I think that's the kind of mentality people get into. Yeah. And they're not educated on the actual math. No. Of loss. Yeah. Yeah. Not only the probabilities, but actually just like the math of losses.

[00:57:48] Because if that thousand dollars that you finally got and it disintegrates to zero, you have to, well, one, all your money's gone. But you know, you know, the returns, like you have to make a lot more in percentage terms than on the upside, than on the downside. Plus the expected value of that move is deeply negative of trying to do that.

[00:58:10] People just think about the 0.1% chance that it may a hundred X, but not the 99.9% chance of other outcomes with the vast majority of them being very bad. They don't think about that. They just, they don't think in probabilities. They just think there's a possibility. I may a hundred X. So I'm going to go and do that. And you see that, like, I know I've talked about my poker background a little bit, but you can even see that with top poker players.

[00:58:39] The very best longstanding poker players are not the bad, like, yes, they're going to be phenomenal at playing poker. Don't get me wrong. But they also do very good bankroll management. And that is what differentiates the ones that stand the test of time and those that don't.

[00:58:58] Because the ones that do good bankroll management that have rules who say, okay, I'll buy into games, but I will never buy into a game if it's more than 5% of my bankroll, whatever their rule is. Well, and if their bankroll drops too much, they drop in stakes. And they have that discipline. Whereas you can have phenomenal players that will pay essentially their whole bankroll on one table and they can play a really great game.

[00:59:24] They can put their money in with 80, 85% chance to win, but it ends up being that 15% and they lose the hand and they lose their bankroll and they're broke. So I think that's an example that I've seen time and time again in poker where you get phenomenal players, but they don't have the discipline to go with it. That's right. It's like just staying default alive matters a lot.

[00:59:49] I guess the concern, right, is like to what this Naomi, I forget her last name, Naomi Wan. What she's saying is kind of true though, where it's like, say you have that $1,000, you finally saved that up. I can go put it in a broad-based low-cost index ETF and stack it up over time and keep it growing.

[01:00:12] And then they look at a price of a home or something and they're like, oh, like this is it. Yeah. Like I'm just so, so far off the mark that it's just the problem is, is that there's no education for that person to say, okay, you are so off the mark. Let's call a spade a spade. You're so, so far off the mark.

[01:00:37] But if you can just do another 1,000, another 1,000 every, you know, say six months or a year, you're able to continue to add fresh capital while the principle keeps growing. Look at the math now. Now you're actually in the ballpark. Now we're getting somewhere. Right now, yes, you are so freaking far off the mark. Let's not kid ourselves.

[01:01:03] But like convincing someone like that, that they got to think 20 years down the line, it's just so unrealistic for that. So it's a tricky, really tricky problem to solve. But I'm just glad the tools for the people who do want to play the long game are just so readily available and democratized now. Yeah.

[01:01:24] And I guess the last option for people is that $1,000 example that we've been using is take that money, don't invest it in the stock market, invest it in yourself. So get, use it to make, you know, just develop your skills, whatever it is, so that you can make more money and then you'd have more money to invest and you don't have to try and gamble the money that you have.

[01:01:48] So that would be the third option, which I think is probably an option that a lot of people should consider, especially when you're younger, is okay. You can gamble on that meme coin. You can put it in an index fund or you can take it and invest in yourself and develop in your skills that will enable you to have a higher income and be able to save more and then invest in a more prudent manner. If I, if I had to say, uh, choose a word. Yeah.

[01:02:18] Yeah. It's, it's a tricky situation, but I, I tend to agree at that, at that level, you just got to start making more money. And of course it's easier said than done, but you got, you got to start making more money. It's no one's going to, no one's going to save you. You got to work for yourself. You take that thousand and you start a business, like whatever it is, invest in yourself. That will probably give you the best ROI if you, you know, you pick the right path of investment for yourself.

[01:02:47] So that's just my, I guess my, my last two cents on it. Thanks for listening to the podcast, folks. Appreciate you very much. We had lots of screen shares today. Uh, that is viewable on join TCI.com. That is join TCI for the Canadian investor. Join TCI.com. It's $9 a month. You see our monthly portfolio updates. The listeners would have saw, yeah, I took a bath on BRP lately. Yeah, that's a, yeah, yeah, that's okay.

[01:03:16] But, Simone, 19, or what is it? Yeah, 19% CAGR over the last 10 years. I'm closing in on my 10th year of recording the returns for the listeners. Yeah, it's, uh, that's nothing to sneeze at. That's for sure. No, no meme coins in there. I can, I can vouch for you. No, no meme coins in there to do the math on 19%, folks. Thank you, Constellation Software. Thank you, Mark Leonard. Appreciate you. I owe it all to you, Mark Leonard.

[01:03:46] No, go ahead and check that out. Simone and Dan have also done freaking fantastic. I mean, you're, uh, you've owned Bitcoin. We'll leave it at that. You have owned Bitcoin. And gold. And gold in the last year. I was looking at it now. I've now owned Bitcoin for five years. Yeah, you're welcome. Yes, thank you. I should, it should have been, should have been more, but you know, shoulda, woulda, coulda. Yeah. At least it's better than zero. So.

[01:04:17] Yeah. That's true. Thanks for listening, folks. We'll see you in a few days. 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. We'll see you in a few days later.