Hot Stock Tips & 2024’s Best Performing Sectors

[00:00:01] [SPEAKER_00]: This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets.

[00:00:10] [SPEAKER_00]: Hosted by Braden Dennis and see Mobile-Ajay.

[00:00:15] [SPEAKER_02]: The Canadian Investor podcast welcome into the show.

[00:00:21] [SPEAKER_02]: My name is Braden Dennis as always joined by the astute, Simo Belanger.

[00:00:28] [SPEAKER_02]: But we have a full slate.

[00:00:32] [SPEAKER_02]: And I was downtown Toronto with a podcast listener that I ran into, and he said,

[00:00:39] [SPEAKER_02]: Hey, have a bunch of questions.

[00:00:40] [SPEAKER_02]: And I said, How much you leave a question on our fancy voice message player?

[00:00:47] [SPEAKER_02]: That we don't give enough love to.

[00:00:50] [SPEAKER_02]: And I want to highlight it and get it on the pod.

[00:00:54] [SPEAKER_02]: So here it is from Steve.

[00:00:58] [SPEAKER_01]: We'll play that clip now.

[00:01:00] [SPEAKER_01]: Hey, guys, Steve Kendall here.

[00:01:02] [SPEAKER_01]: I recently attended the Money Show in Toronto where I came across a lot of host stock tips from random people.

[00:01:07] [SPEAKER_01]: When you hear a bit of hot tip, what's your first step in researching it?

[00:01:10] [SPEAKER_01]: What initial factors do you consider and what will make you dive deeper into the company?

[00:01:15] [SPEAKER_01]: Finally, what key criteria will push you toward actually investing?

[00:01:18] [SPEAKER_01]: I think you want to take this first.

[00:01:21] [SPEAKER_01]: You got some notes here.

[00:01:22] [SPEAKER_03]: Yeah, so I'll start off.

[00:01:23] [SPEAKER_03]: I think it's a great question.

[00:01:25] [SPEAKER_03]: So, you know, I think hearing hot stock tips happens all the time.

[00:01:30] [SPEAKER_03]: I mean, on Twitter slash eggs, I'm always, you know,

[00:01:33] [SPEAKER_03]: a lot of people mention different types of companies.

[00:01:36] [SPEAKER_03]: And, you know, I try to respond as best as I can.

[00:01:38] [SPEAKER_03]: I think you do like we tried to respond to people as much as we can.

[00:01:42] [SPEAKER_03]: Can always get to it.

[00:01:43] [SPEAKER_03]: But there's kind of three main things that I like to look at first thing because I've said it before and I'll say it again.

[00:01:52] [SPEAKER_03]: And I think you can probably agree with that too.

[00:01:55] [SPEAKER_03]: Like, we have business schedules.

[00:01:57] [SPEAKER_03]: Different for different reasons for you.

[00:01:59] [SPEAKER_03]: You know, you have a startup on top of the podcast for me.

[00:02:02] [SPEAKER_03]: I did a podcast part time.

[00:02:04] [SPEAKER_03]: I have my regular job.

[00:02:05] [SPEAKER_03]: I have, you know, a daughter, soon to be second daughter.

[00:02:08] [SPEAKER_03]: So, it's managing all these different things that I don't have time to waste on a company.

[00:02:13] [SPEAKER_03]: That, you know, I'll put an hour or two and then just to realize that.

[00:02:17] [SPEAKER_03]: Okay, it's not a good fit for my portfolio.

[00:02:20] [SPEAKER_03]: So for me, there's three main things.

[00:02:22] [SPEAKER_03]: First are sales growing.

[00:02:24] [SPEAKER_03]: Two is the company profitable on a earnings basis.

[00:02:27] [SPEAKER_03]: And three does the company generate free cash.

[00:02:30] [SPEAKER_03]: Now granted this is a general kind of,

[00:02:34] [SPEAKER_03]: this will work for most companies.

[00:02:35] [SPEAKER_03]: If it's a reader utility, for example,

[00:02:38] [SPEAKER_03]: it will be different.

[00:02:39] [SPEAKER_03]: So I'm going to be using slightly different metrics to look at a first lens.

[00:02:43] [SPEAKER_03]: Like, uh, funds for my operation or adjusted funds from operation for a read for example.

[00:02:49] [SPEAKER_03]: But then if that checks out,

[00:02:51] [SPEAKER_03]: uh, then I will go on, for example,

[00:02:54] [SPEAKER_03]: like I'll go on Chad G.P.T.,

[00:02:56] [SPEAKER_03]: which I think it's a great tool.

[00:02:58] [SPEAKER_03]: It's you've got to always double check what the,

[00:03:00] [SPEAKER_03]: spit's out, but for the most part,

[00:03:02] [SPEAKER_03]: it is pretty accurate.

[00:03:03] [SPEAKER_03]: It does elucinate from time to time.

[00:03:05] [SPEAKER_03]: And I'll just try to get a sense of what the business does.

[00:03:09] [SPEAKER_03]: Just to, you know, have a general idea of what it is.

[00:03:12] [SPEAKER_03]: And if I still like the company at that point,

[00:03:15] [SPEAKER_03]: then I'll start digging a bit deeper into the metric and into what they do.

[00:03:20] [SPEAKER_03]: Because of course,

[00:03:21] [SPEAKER_03]: Chad G.P.T will give you an overview of what they do,

[00:03:24] [SPEAKER_03]: but it's usually you can get more information,

[00:03:27] [SPEAKER_03]: FinChat.io can also give you some information there using the AI.

[00:03:32] [SPEAKER_03]: Now, there's a lot of different things.

[00:03:34] [SPEAKER_03]: I'll look at the market cap.

[00:03:36] [SPEAKER_03]: I will look at their margins.

[00:03:37] [SPEAKER_03]: Are they growing?

[00:03:38] [SPEAKER_03]: Are they shrinking?

[00:03:39] [SPEAKER_03]: I'll look at their financial held in terms of that interest payments.

[00:03:43] [SPEAKER_03]: I'll look at the share outstanding,

[00:03:45] [SPEAKER_03]: some metrics per share like free cash will per share and things per share as well.

[00:03:50] [SPEAKER_03]: That will give me a good idea of the,

[00:03:52] [SPEAKER_03]: in terms of dilution.

[00:03:53] [SPEAKER_03]: That's why I look at these metrics here.

[00:03:55] [SPEAKER_03]: If they pay a dividend,

[00:03:57] [SPEAKER_03]: I'll look at the payout ratio.

[00:03:58] [SPEAKER_03]: I'll look how, you know,

[00:04:00] [SPEAKER_03]: as the dividend how long has it been paid for?

[00:04:03] [SPEAKER_03]: Is it a special dividend?

[00:04:04] [SPEAKER_03]: Is it a growing dividend?

[00:04:06] [SPEAKER_03]: All these different kind of things.

[00:04:07] [SPEAKER_03]: I'll also try to find a peer that would be in the same industry and compare them,

[00:04:12] [SPEAKER_03]: because especially if it's a company or an industry.

[00:04:15] [SPEAKER_03]: I'm not super familiar with.

[00:04:17] [SPEAKER_03]: I find a comparing with peers really helps put things in perspective.

[00:04:22] [SPEAKER_03]: Because if not,

[00:04:23] [SPEAKER_03]: it's kind of hard to gauge whether it may be a bit overvalued undervalued.

[00:04:27] [SPEAKER_03]: I'll listen to multiple earnings calls.

[00:04:30] [SPEAKER_03]: I'll definitely look at what kind of KPIs,

[00:04:33] [SPEAKER_03]: so keep performance indicators are in place for that business.

[00:04:37] [SPEAKER_03]: So I can kind of go back into the future.

[00:04:39] [SPEAKER_03]: Sorry,

[00:04:40] [SPEAKER_03]: in the past and see how that's evolved and what's really driving.

[00:04:45] [SPEAKER_03]: I've revenues, growth, earnings,

[00:04:47] [SPEAKER_03]: and so on.

[00:04:48] [SPEAKER_03]: And then I'll look at what the future looks like for the company

[00:04:51] [SPEAKER_03]: and the industry as a whole.

[00:04:54] [SPEAKER_03]: And another thing I'll look is also the return on invested capital.

[00:04:59] [SPEAKER_03]: See, these are all things.

[00:05:00] [SPEAKER_03]: Of course, this is not everything I look at when I review a company.

[00:05:04] [SPEAKER_03]: But it just goes to show that if I'm going to take the time

[00:05:07] [SPEAKER_03]: and dig a deeper into the company,

[00:05:11] [SPEAKER_03]: there has to be that basic kind of criteria.

[00:05:14] [SPEAKER_03]: That basic test that I can look at like five ten minutes max

[00:05:18] [SPEAKER_03]: that I can get a good sense whether this company is worth spending more time

[00:05:23] [SPEAKER_03]: or not into it.

[00:05:24] [SPEAKER_03]: If it doesn't meet that then,

[00:05:27] [SPEAKER_03]: sorry,

[00:05:27] [SPEAKER_03]: but there's thousands of publicly listed companies.

[00:05:30] [SPEAKER_03]: There's other companies I can put time in.

[00:05:32] [SPEAKER_02]: The basis of your process as you alluded to is to get to know really fast,

[00:05:42] [SPEAKER_02]: if it's going to be a no.

[00:05:45] [SPEAKER_02]: I think that that's like super, super important.

[00:05:48] [SPEAKER_02]: Especially if you know your style and you are fairly seasoned in your style

[00:05:54] [SPEAKER_02]: and what you're looking for and your time horizon,

[00:05:57] [SPEAKER_02]: then yeah, you're trying to get to know really fast.

[00:06:01] [SPEAKER_02]: I think you touched on a couple of things that I'm definitely looking at right away.

[00:06:06] [SPEAKER_02]: I mean, investing in quality companies, right?

[00:06:09] [SPEAKER_02]: So I believe quality companies have a growing top line.

[00:06:13] [SPEAKER_02]: They have a ability to have unit economics continue to flow

[00:06:19] [SPEAKER_02]: to their company over time.

[00:06:21] [SPEAKER_02]: You know, by the way, the top line,

[00:06:23] [SPEAKER_02]: the margin profile market share,

[00:06:26] [SPEAKER_02]: these kinds of things that I want to see at a high level.

[00:06:31] [SPEAKER_02]: And like you said mentioned with AI,

[00:06:34] [SPEAKER_02]: I love going into the Finch Act co-pilot and just like explain

[00:06:38] [SPEAKER_02]: what this company that I've never heard of does like I'm five

[00:06:42] [SPEAKER_02]: because Finch Act is trained on every single noble thing in the public domain about the company

[00:06:49] [SPEAKER_02]: and not just like some crappy, motley, full article.

[00:06:54] [SPEAKER_02]: It's really, really powerful to go from zero to one.

[00:06:57] [SPEAKER_02]: And this is why people use stock screeners, right?

[00:07:01] [SPEAKER_02]: If you want to have a universe of companies that meet those criteria,

[00:07:06] [SPEAKER_02]: that's why people use stock screeners.

[00:07:08] [SPEAKER_02]: Like, if I know I don't invest in companies that are growing top line

[00:07:13] [SPEAKER_02]: or consensus analysts think it's going to at least grow over the next three years.

[00:07:20] [SPEAKER_02]: Consensus, broadly.

[00:07:22] [SPEAKER_02]: Okay, I know those things.

[00:07:23] [SPEAKER_02]: So let me eliminate everything that doesn't meet that criteria.

[00:07:26] [SPEAKER_02]: I think that's a much better way to build a universe that's not,

[00:07:30] [SPEAKER_02]: that doesn't create a list of stocks.

[00:07:33] [SPEAKER_02]: All right, I'm going to buy all 87 of these that meet the criteria.

[00:07:37] [SPEAKER_02]: This is where the investing process begins.

[00:07:41] [SPEAKER_02]: But if I know these are the things that I'm not going to go after

[00:07:46] [SPEAKER_02]: and they're measurable via numerical screening,

[00:07:50] [SPEAKER_02]: then these are why these tools exist.

[00:07:54] [SPEAKER_03]: Yeah, I guess the only one that you have to do on top is like,

[00:07:57] [SPEAKER_03]: just learn quickly about the company.

[00:08:00] [SPEAKER_03]: Yeah, yeah, so that's the only the other one you have to do.

[00:08:03] [SPEAKER_03]: And obviously, FinChat.io is a great.

[00:08:05] [SPEAKER_03]: It's an awesome platform.

[00:08:07] [SPEAKER_03]: You know, not everyone will have it,

[00:08:09] [SPEAKER_03]: and we understand that.

[00:08:11] [SPEAKER_03]: So there's also free versions for Chad G.P.T, right?

[00:08:14] [SPEAKER_03]: I think, what is it the version of Chad?

[00:08:16] [SPEAKER_03]: Like you get the older version,

[00:08:18] [SPEAKER_03]: I think right.

[00:08:19] [SPEAKER_03]: And then you don't have to pay for it.

[00:08:21] [SPEAKER_03]: Something like that.

[00:08:22] [SPEAKER_02]: You don't have to pay for FinChat.

[00:08:24] [SPEAKER_02]: No, no, okay.

[00:08:25] [SPEAKER_02]: You can trial it and then you have certain,

[00:08:27] [SPEAKER_02]: you just can't use unlimited prompts, right?

[00:08:30] [SPEAKER_02]: Okay, okay.

[00:08:30] [SPEAKER_03]: But like other AI tools in Shirk as I've had you.

[00:08:34] [SPEAKER_03]: You grandfathered me in the investor.

[00:08:36] [SPEAKER_03]: Yeah, I was in Shirk.

[00:08:38] [SPEAKER_02]: No, I mean, like this why we made the tool, right?

[00:08:41] [SPEAKER_02]: It is like, if you go to Chad G.P.T,

[00:08:45] [SPEAKER_02]: it's like you have such outdated information.

[00:08:47] [SPEAKER_02]: It's trained on a dataset that's not like institutional quality, right?

[00:08:52] [SPEAKER_02]: But yeah, I know generally,

[00:08:55] [SPEAKER_02]: you're trying to go, the genesis of the,

[00:08:57] [SPEAKER_02]: you know, the genesis of this question is,

[00:08:59] [SPEAKER_02]: how do I go from zero to one on their new idea?

[00:09:04] [SPEAKER_02]: And I would create a checklist like Simone just did.

[00:09:08] [SPEAKER_02]: And then yes, try to find out really quickly.

[00:09:11] [SPEAKER_02]: Like what does the company do?

[00:09:13] [SPEAKER_02]: What is it to Shriar?

[00:09:14] [SPEAKER_02]: Is it going to be in my circle of competence like get to that really quick?

[00:09:20] [SPEAKER_02]: And if not, do I see a path to me understanding the company well enough?

[00:09:26] [SPEAKER_03]: And I think to it's important to remember as those are our criteria.

[00:09:31] [SPEAKER_03]: But you know, I know some people on Twitter that I followed that are more like deep value investor.

[00:09:37] [SPEAKER_03]: So for them, you know, growing top line may not be the most important thing.

[00:09:42] [SPEAKER_03]: For them is unlocking some deep value,

[00:09:46] [SPEAKER_03]: maybe some businesses that the markets are not very fond of for various reasons.

[00:09:51] [SPEAKER_03]: But like I think Buffet mentioned, you know,

[00:09:54] [SPEAKER_03]: when he started investing, trying to get that last puff out of a cigarette,

[00:09:58] [SPEAKER_03]: but for example, which is fine, right?

[00:10:00] [SPEAKER_03]: And I think people that do that well can make a whole lot of money.

[00:10:04] [SPEAKER_03]: So that's why I think it's important to find the criteria that matches what you're looking to achieve.

[00:10:10] [SPEAKER_02]: I find a lot of hot stock tips followed to two categories,

[00:10:15] [SPEAKER_02]: one junior miners that are about to,

[00:10:19] [SPEAKER_02]: quote unquote literally find a gold or do something.

[00:10:24] [SPEAKER_02]: And then too, which kind of fits in a similar style of investing,

[00:10:28] [SPEAKER_02]: of pharmaceutical or experimental startups for a lack of a better word,

[00:10:36] [SPEAKER_02]: that are pre FDA approval.

[00:10:39] [SPEAKER_02]: And if they get their approval,

[00:10:41] [SPEAKER_02]: boom, stocks gonna go crazy and that's true.

[00:10:45] [SPEAKER_02]: If they do achieve those things,

[00:10:48] [SPEAKER_02]: this stock will go up.

[00:10:50] [SPEAKER_02]: You will make a lot of money because it goes from a,

[00:10:53] [SPEAKER_02]: a maybe story to a probably story.

[00:10:55] [SPEAKER_02]: That's usually a good way to make money in the stock market.

[00:10:59] [SPEAKER_02]: But that's not the way that I want to make money because if it doesn't go the other way,

[00:11:06] [SPEAKER_02]: or you're left hanging,

[00:11:09] [SPEAKER_02]: you can heavily underperform the market and lose a lot of money.

[00:11:12] [SPEAKER_02]: And that's, that's not what I'm trying to do.

[00:11:13] [SPEAKER_03]: Yeah, I mean, I learned that the hard way with junior miner,

[00:11:18] [SPEAKER_03]: where you know, I've was one of the story.

[00:11:19] [SPEAKER_03]: I've told a few times on the podcast,

[00:11:21] [SPEAKER_03]: where I invest in a company that just found diamonds up north.

[00:11:26] [SPEAKER_03]: And it's one thing to find deposits,

[00:11:28] [SPEAKER_03]: it's another thing to extract deposits,

[00:11:31] [SPEAKER_03]: whichever they are, whether it's gold or diamonds,

[00:11:34] [SPEAKER_03]: whatever it is or other precious metals.

[00:11:37] [SPEAKER_03]: I think that's important for people to remember because these are two very separate things.

[00:11:42] [SPEAKER_03]: It requires a whole lot of financing.

[00:11:44] [SPEAKER_03]: That's why like a company like Franco Nevada,

[00:11:46] [SPEAKER_03]: because they finance, they make a lot of small bets and then some works.

[00:11:51] [SPEAKER_03]: I don't work out, but they end up not having to take a whole lot of risk

[00:11:56] [SPEAKER_03]: because they spread out the risk.

[00:11:57] [SPEAKER_03]: And that's how the best investors in the spaces you just mentioned,

[00:12:02] [SPEAKER_03]: they make very small bets.

[00:12:04] [SPEAKER_03]: And I think when people start investing,

[00:12:06] [SPEAKER_03]: I think one of the biggest mistake is they will make one big bet on one junior miner,

[00:12:12] [SPEAKER_03]: one big bet on one pharmaceutical company that they think will have

[00:12:16] [SPEAKER_03]: an approval and the probability, yes, if I could set it,

[00:12:19] [SPEAKER_03]: it works out.

[00:12:20] [SPEAKER_03]: You'll be rich, but what's the probability of it working out?

[00:12:23] [SPEAKER_03]: And the best investors spread out there,

[00:12:25] [SPEAKER_03]: that's a bit like venture capital, right?

[00:12:30] [SPEAKER_03]: Like if you're looking at VC firms,

[00:12:33] [SPEAKER_03]: like you won't find a firm that just has one bet.

[00:12:36] [SPEAKER_03]: That's right.

[00:12:37] [SPEAKER_02]: And they're looking for something they can buy at a $10 million value,

[00:12:44] [SPEAKER_02]: and that's a big innovation that can become $3 billion.

[00:12:47] [SPEAKER_02]: And you only need to find one to make your whole career.

[00:12:50] [SPEAKER_02]: So if you know that, you know that's the model,

[00:12:53] [SPEAKER_02]: then work backwards from there.

[00:12:56] [SPEAKER_02]: The idea of a hot stock tip is very different than the idea of a stock tip.

[00:13:02] [SPEAKER_02]: Like when I think of a hot stock tip,

[00:13:04] [SPEAKER_02]: it's inherently very, very speculative.

[00:13:08] [SPEAKER_02]: You don't get some hot stock tip, you go,

[00:13:10] [SPEAKER_02]: I got a, come here, I got a, I got to tell you something.

[00:13:14] [SPEAKER_02]: Yeah, I'm in the back of a, I'm the cab driver.

[00:13:16] [SPEAKER_02]: I'm the cab driver.

[00:13:18] [SPEAKER_02]: Let me tell you, let me tell you about Microsoft.

[00:13:21] [SPEAKER_02]: It's like that's not a hot stock tip.

[00:13:23] [SPEAKER_03]: It's almost, it almost implies that you have like,

[00:13:27] [SPEAKER_03]: on privilege information, right?

[00:13:31] [SPEAKER_03]: Which can be very enticing, trust me, like yes,

[00:13:34] [SPEAKER_03]: it can be very enticing, yes.

[00:13:36] [SPEAKER_02]: Another thing is I noticed that,

[00:13:38] [SPEAKER_02]: I mean, I could only pop into that conference for

[00:13:41] [SPEAKER_02]: a very short period of time because I was in between meetings.

[00:13:45] [SPEAKER_02]: And I was downtown.

[00:13:47] [SPEAKER_02]: The, there were a lot of very speculative investments

[00:13:55] [SPEAKER_02]: being represented there by their investor relations team.

[00:14:01] [SPEAKER_02]: There were both set up about some speculative junior mining companies

[00:14:06] [SPEAKER_02]: traded on the TSX venture.

[00:14:08] [SPEAKER_02]: And their sales pitches, hey, look, we're about to explode by our stock.

[00:14:14] [SPEAKER_02]: There were a lot of those booths set up.

[00:14:18] [SPEAKER_02]: Be careful, people.

[00:14:20] [SPEAKER_02]: Like this is not all of them are scams,

[00:14:25] [SPEAKER_02]: but a lot of them are.

[00:14:29] [SPEAKER_02]: So just know that and I have no problem calling them out.

[00:14:32] [SPEAKER_02]: Like they are scams.

[00:14:34] [SPEAKER_02]: These people are scammers.

[00:14:36] [SPEAKER_02]: Yes, they operate public companies.

[00:14:39] [SPEAKER_02]: The TSX venture, man.

[00:14:41] [SPEAKER_02]: Oh, forget about it, man. Such a, such a grimy place.

[00:14:45] [SPEAKER_03]: The first question I would ask them would be like,

[00:14:47] [SPEAKER_03]: okay, like what financing if you secured?

[00:14:50] [SPEAKER_03]: That would be the first, like, for extraction or explore,

[00:14:53] [SPEAKER_03]: like, for production because that is one of the,

[00:14:56] [SPEAKER_02]: They're looking for financing via, they are probably.

[00:14:59] [SPEAKER_03]: Yeah, exactly. So if the answer is no,

[00:15:01] [SPEAKER_03]: then again, if they say, oh, yeah,

[00:15:03] [SPEAKER_03]: they're a friend, co-innovada is actually backing us.

[00:15:07] [SPEAKER_03]: Then there might be something to it.

[00:15:08] [SPEAKER_03]: I'd want to validate that, but yeah,

[00:15:10] [SPEAKER_03]: just have to be careful, right?

[00:15:12] [SPEAKER_03]: Sometimes if it's too good to be true, probably is.

[00:15:16] [SPEAKER_02]: Thanks for the question and I wanted to bring that up because

[00:15:19] [SPEAKER_02]: you can go on to our website.

[00:15:22] [SPEAKER_02]: And if you're on the Canadian investor podcast.com,

[00:15:25] [SPEAKER_02]: you'll see links to all of our episodes and show notes

[00:15:28] [SPEAKER_02]: and the Patreon and all that stuff.

[00:15:30] [SPEAKER_02]: Put on the right side if you're on your browser as well.

[00:15:32] [SPEAKER_02]: There is a little button on the right side of the screen called

[00:15:36] [SPEAKER_02]: Send us a voice message and you can just talk into your phone

[00:15:39] [SPEAKER_02]: or talk into your computer.

[00:15:41] [SPEAKER_02]: Just try to be in a quiet place with somewhat decent

[00:15:44] [SPEAKER_02]: sound quality to make it onto the show and we'll put you in there.

[00:15:48] [SPEAKER_02]: It's a little bit more fun than email,

[00:15:50] [SPEAKER_02]: and then you can be on the show.

[00:15:54] [SPEAKER_02]: All right, sir.

[00:15:55] [SPEAKER_02]: Next topic I wanted to revisit a topic that I did last year

[00:16:02] [SPEAKER_02]: in March.

[00:16:03] [SPEAKER_02]: The good old show doc that we have, which is,

[00:16:08] [SPEAKER_02]: we're now on version 4, which is like 700 pages.

[00:16:11] [SPEAKER_02]: So you know, this is the definition of the show goes on.

[00:16:15] [SPEAKER_02]: It was I did it a segment called The Four Types of Luck.

[00:16:20] [SPEAKER_02]: And I wanted to revisit it because I think this is only really two types of luck

[00:16:26] [SPEAKER_02]: that are relevant for investors and I want to rename them.

[00:16:30] [SPEAKER_02]: So I want to perform a remix on the 2007 Andreson Horowitz piece called

[00:16:37] [SPEAKER_02]: Luck and the entrepreneur, The Four Types of Luck.

[00:16:41] [SPEAKER_02]: Those four kinds are one blind luck, two motion, three recognizing good fortune

[00:16:49] [SPEAKER_02]: and four directed motion.

[00:16:52] [SPEAKER_02]: All right, so what does that mean?

[00:16:54] [SPEAKER_02]: Blind luck is like, all right,

[00:17:00] [SPEAKER_02]: it's just completely random.

[00:17:01] [SPEAKER_02]: You know, I'm going to flip a coin, heads or tails, blind luck.

[00:17:06] [SPEAKER_02]: This, this exists in life we all know it.

[00:17:09] [SPEAKER_02]: Motion is like, if I really want to get a meeting with the CEO of some company

[00:17:17] [SPEAKER_02]: and it's kind of just luck if I send a bunch of emails and see who responds.

[00:17:24] [SPEAKER_02]: Motion would be like showing up where some of those people might be

[00:17:29] [SPEAKER_02]: trying to like get a meeting or try to get a coffee.

[00:17:32] [SPEAKER_02]: That's like motion, you're like, you're kind of in the mix, you're, you're,

[00:17:38] [SPEAKER_02]: you're somewhat creating your own luck but it's not directed.

[00:17:42] [SPEAKER_03]: Oh no, also known as talking, but yeah,

[00:17:44] [SPEAKER_02]: stalking.

[00:17:45] [SPEAKER_02]: Yes, motion is like stalking basically.

[00:17:50] [SPEAKER_02]: But it's random stalking.

[00:17:52] [SPEAKER_02]: We'll talk about, we'll talk about target stalking.

[00:17:54] [SPEAKER_03]: Oh, yeah, you have to look surprised.

[00:17:58] [SPEAKER_02]: Actually, you know what?

[00:17:59] [SPEAKER_02]: That's more like targeted talking.

[00:18:00] [SPEAKER_02]: Third is recognizing good fortune which is like, okay, I have an opportunity.

[00:18:05] [SPEAKER_02]: I'm going to jump on this.

[00:18:07] [SPEAKER_02]: It's lucky that it happened to me but I'm, I'm going to jump on it.

[00:18:10] [SPEAKER_02]: I'm going to recognize that.

[00:18:11] [SPEAKER_02]: I have good fortune here.

[00:18:12] [SPEAKER_02]: And four is like directed motion, which is, you know, directed stalking.

[00:18:18] [SPEAKER_02]: Since blind luck is not an investment strategy and motion without a plan

[00:18:23] [SPEAKER_02]: to be wondering lost in the markets is also not a good strategy.

[00:18:28] [SPEAKER_02]: As we just talked about in the first second here, the podcast.

[00:18:31] [SPEAKER_02]: Let's focus on three and four but I want to rename them because we're looking

[00:18:39] [SPEAKER_02]: to, in like, we're looking to control our destiny as an investor.

[00:18:47] [SPEAKER_02]: Luck is a thing.

[00:18:49] [SPEAKER_02]: We all know what's a thing.

[00:18:50] [SPEAKER_02]: Yes, some people get lucky.

[00:18:52] [SPEAKER_02]: Some people have better forces of nature in this scenario.

[00:18:59] [SPEAKER_02]: But we know if we're doing this for 40 years what can we control?

[00:19:05] [SPEAKER_02]: What can we do to influence our luck as an investor?

[00:19:12] [SPEAKER_02]: And if I look at recognizing good fortune, I want to rename this to conviction

[00:19:18] [SPEAKER_02]: as an investor.

[00:19:21] [SPEAKER_02]: Recognizing good fortune only happens with conviction.

[00:19:25] [SPEAKER_02]: I think this is so underrated in your process.

[00:19:30] [SPEAKER_02]: If there is a huge market sell off on a stock or a nasty drawdown,

[00:19:35] [SPEAKER_02]: it is so hard to take advantage of opportunities without prior conviction.

[00:19:40] [SPEAKER_02]: It's like 25% sell off happens, March 2020.

[00:19:45] [SPEAKER_02]: And you've never looked at a single security in your life.

[00:19:49] [SPEAKER_02]: You cannot recognize good fortune.

[00:19:52] [SPEAKER_02]: You haven't built the conviction.

[00:19:54] [SPEAKER_02]: I strongly believe if you have not done this already.

[00:19:58] [SPEAKER_02]: I think you need a list of ideas that you might not own right now, but you deeply understand

[00:20:05] [SPEAKER_02]: and it if an opportunity comes along, you'd be happy to own it.

[00:20:08] [SPEAKER_02]: For me that's like 10 to 20 stocks that I think are firmly in this list.

[00:20:13] [SPEAKER_02]: Examples of that are Costco, FICO, the credit score company.

[00:20:20] [SPEAKER_02]: Fantastic business.

[00:20:21] [SPEAKER_02]: But everyone knows it's a fantastic business and it's just like really expensive.

[00:20:26] [SPEAKER_02]: And so that would be a bunch of like positions that I might be working on.

[00:20:31] [SPEAKER_02]: And then I have another 15 that I'm kind of just flirting with as new ideas.

[00:20:35] [SPEAKER_02]: But what do you think of this concept?

[00:20:38] [SPEAKER_02]: You can't recognize good fortune without prior conviction.

[00:20:41] [SPEAKER_03]: Yeah, no I think it's absolutely true at the end of the day too.

[00:20:44] [SPEAKER_03]: If you're looking at really good businesses, they rarely go on sale.

[00:20:49] [SPEAKER_03]: And if you're looking at companies oftentimes if there's a big market correction,

[00:20:55] [SPEAKER_03]: they're going to fall along with the rest of the market.

[00:20:57] [SPEAKER_03]: Maybe not as much, but if you don't have prior conviction or if you don't know the company,

[00:21:02] [SPEAKER_03]: well you won't be able to pull the trigger because it's kind of hard to pull the trigger.

[00:21:07] [SPEAKER_03]: If you've seen a drawdown of within couple weeks, something is down 10, 15%.

[00:21:13] [SPEAKER_03]: If you don't have conviction, if you don't know the business,

[00:21:15] [SPEAKER_03]: well it's going to be really hard to pull the trigger.

[00:21:19] [SPEAKER_03]: So I think it's a valid point.

[00:21:22] [SPEAKER_03]: If not, I mean you'd see it in your like, okay, something's clearly wrong with this company.

[00:21:26] [SPEAKER_03]: Right? So I think that's the easiest way for me to explain it.

[00:21:31] [SPEAKER_02]: Yeah, because sometimes there's some broad news headline that is moving the stock.

[00:21:36] [SPEAKER_02]: Let's look at that crowd strike example on recent memory.

[00:21:41] [SPEAKER_02]: But sometimes things just go out of favor and you like, why's the stockdown?

[00:21:46] [SPEAKER_02]: It's like, there isn't a concrete example.

[00:21:49] [SPEAKER_02]: It's just the EBS and flows.

[00:21:51] [SPEAKER_02]: There's not a concrete reason in my apologies.

[00:21:54] [SPEAKER_02]: The EBS and flows things go out of favor.

[00:21:56] [SPEAKER_02]: Things move on factors in the short term.

[00:21:58] [SPEAKER_02]: But in the long term, it's a strong weighing machine and not a short term voting machine.

[00:22:06] [SPEAKER_02]: All right, let's talk about number two directed motion.

[00:22:10] [SPEAKER_02]: So I'm renaming this to fish where the fish are because I just want to start with a quote here from Munger.

[00:22:19] [SPEAKER_02]: It really helps if you know which hunting ground to look in.

[00:22:23] [SPEAKER_02]: In fact, we all do better hunting when we hunt where the hunting is easy.

[00:22:30] [SPEAKER_02]: I have a friend who's a fisherman.

[00:22:32] [SPEAKER_02]: He says, I have a simple rule for success in fishing fish where the fish are.

[00:22:37] [SPEAKER_02]: And that's where you want to fish where the bargains are.

[00:22:40] [SPEAKER_02]: It's that simple.

[00:22:41] [SPEAKER_02]: If the fishing is really lousy where you are,

[00:22:45] [SPEAKER_02]: you probably ought to look for another place to fish.

[00:22:48] [SPEAKER_02]: That was a Q&A session he was doing for the daily journal court.

[00:22:53] [SPEAKER_02]: And there was tons of funny anecdotes used in many of the questions here.

[00:22:59] [SPEAKER_02]: And you know, it's just like fish where the fish are, right?

[00:23:03] [SPEAKER_02]: Like directed motion in luck is like directly trying to make your own luck, right?

[00:23:10] [SPEAKER_02]: Trying to stir the pot up so that there's enough happenstance moments where you're in the right place at the right time.

[00:23:17] [SPEAKER_02]: Some of the investing is being in the right place at the right time.

[00:23:21] [SPEAKER_02]: Catching the right macro trend at the right time,

[00:23:24] [SPEAKER_02]: the right company, the right management team,

[00:23:27] [SPEAKER_02]: the right space, the right industry, the right secular trend.

[00:23:31] [SPEAKER_02]: Where's the pond that has those things?

[00:23:35] [SPEAKER_02]: You know, don't look for trout in a pool full of salmon, right?

[00:23:40] [SPEAKER_02]: Like it's not, it doesn't make any sense.

[00:23:42] [SPEAKER_02]: So I think this one is self-explanatory,

[00:23:47] [SPEAKER_02]: but I'd like to add to it a bit here, which is fish where your fish are.

[00:23:53] [SPEAKER_02]: Fish you like fish you understand.

[00:23:57] [SPEAKER_02]: Because both require some outside forces of luck,

[00:24:00] [SPEAKER_02]: but if you're a fisherman who has conviction in your process and you're still,

[00:24:05] [SPEAKER_02]: and you are fishing where the fish are, you fish do still have to bite.

[00:24:08] [SPEAKER_02]: And so to add one more thing to the Canadian fishing investing podcast here,

[00:24:13] [SPEAKER_02]: I've come to realize that luck is surface area,

[00:24:17] [SPEAKER_02]: and luck is real, and you can't beat the chaotic randomness that exists in the universe.

[00:24:21] [SPEAKER_02]: I mean, just look at fluid dynamics and turbulence.

[00:24:25] [SPEAKER_02]: It's literally mathematically trying to understand random chaos in the universe.

[00:24:32] [SPEAKER_02]: This is how the universe physically operates.

[00:24:36] [SPEAKER_02]: But as to point one, blind luck is a thing.

[00:24:39] [SPEAKER_02]: However, it can also be said that luck is a surface area.

[00:24:44] [SPEAKER_02]: If it is lucky if a fish swims into your net,

[00:24:48] [SPEAKER_02]: but what if the net was five times larger?

[00:24:52] [SPEAKER_02]: You've created more surface area for luck to occur,

[00:24:55] [SPEAKER_02]: so now we're influencing probabilities.

[00:24:58] [SPEAKER_02]: So don't just fish where the fish are, fish where your fish are, fish you understand.

[00:25:02] [SPEAKER_02]: If you really, really understand cybersecurity.

[00:25:08] [SPEAKER_02]: Fish in cybersecurity.

[00:25:11] [SPEAKER_02]: Like if you work in that field, fish there.

[00:25:15] [SPEAKER_02]: That's like there are so many generalist pension fund and

[00:25:19] [SPEAKER_02]: downment fund billionaires who wish they had your knowledge.

[00:25:23] [SPEAKER_02]: So take advantage of it.

[00:25:25] [SPEAKER_03]: Yeah, just careful for a conflict of interest.

[00:25:27] [SPEAKER_03]: But yeah, well fair enough.

[00:25:30] [SPEAKER_03]: No, I think that's a great point.

[00:25:32] [SPEAKER_03]: I mean, in terms of yeah, you can definitely create a lot of your luck.

[00:25:36] [SPEAKER_03]: Of course there's always going to be some black Swan events,

[00:25:41] [SPEAKER_03]: whether it's broad for the market or, you know,

[00:25:45] [SPEAKER_03]: it could be just for a specific company.

[00:25:47] [SPEAKER_03]: Something really unexpected happens and it's pretty unlucky.

[00:25:51] [SPEAKER_03]: It could the probability of that happening was very low.

[00:25:54] [SPEAKER_03]: But for the most part, I think yes.

[00:25:56] [SPEAKER_03]: If you put yourself in the better position,

[00:26:00] [SPEAKER_03]: it should work out for you on with a long-term investment or

[00:26:03] [SPEAKER_03]: rise in.

[00:26:04] [SPEAKER_02]: It's like your days of poker, right?

[00:26:06] [SPEAKER_02]: Poker is a game of skill and luck, of course.

[00:26:12] [SPEAKER_02]: There are factors of randomness in the deck of cards that are completely random

[00:26:16] [SPEAKER_02]: and unknowable about what's going to happen in the future.

[00:26:21] [SPEAKER_02]: But over one hand of poker,

[00:26:25] [SPEAKER_02]: I could beat the best poker player in the world over one hand of poker.

[00:26:30] [SPEAKER_02]: Yeah, but I will not win more than 50% of hands if I play them for 2,000 hands.

[00:26:36] [SPEAKER_02]: They'll smoke me.

[00:26:38] [SPEAKER_02]: They'll crush me.

[00:26:39] [SPEAKER_02]: And so that's the same thing with investing.

[00:26:42] [SPEAKER_02]: It's like yeah, things move up and down daily.

[00:26:44] [SPEAKER_02]: But if we're talking about removing the randomness over a couple of decades or multiple

[00:26:51] [SPEAKER_02]: multiple years, now we're actually like in the business.

[00:26:55] [SPEAKER_02]: It's making money here.

[00:26:58] [SPEAKER_03]: Yeah, exactly.

[00:26:58] [SPEAKER_03]: And I know like just an example for poker, some of the most dangerous players

[00:27:03] [SPEAKER_03]: are the ones that are very, very aggressive, but the top player is what, you know,

[00:27:08] [SPEAKER_03]: some inferior pair of lives won't realize is that they'll just notice them playing

[00:27:12] [SPEAKER_03]: a whole lot of hands, right?

[00:27:14] [SPEAKER_03]: Raising, raising, raising, raising.

[00:27:15] [SPEAKER_03]: But what they don't notice is when they put a whole lot of chips in,

[00:27:19] [SPEAKER_03]: they usually have the best end.

[00:27:21] [SPEAKER_03]: And the bad players will see that and sometimes I'll get frustrated.

[00:27:26] [SPEAKER_03]: And then they'll be like, oh, I got so unlucky.

[00:27:28] [SPEAKER_03]: This like super aggressive guy ended up having aces and he's always raising.

[00:27:32] [SPEAKER_03]: And I had like, you know, queens like how can I fold in so on?

[00:27:36] [SPEAKER_03]: But they weren't paying attention and realizing that this player, yes,

[00:27:41] [SPEAKER_03]: he's playing his very aggressive, but when all the chips go in,

[00:27:46] [SPEAKER_03]: he tends to have the goods.

[00:27:47] [SPEAKER_03]: But it's just an example, right?

[00:27:50] [SPEAKER_03]: They might say that this player is lucky, but the player was actually using the image

[00:27:54] [SPEAKER_03]: of his advantage.

[00:27:56] [SPEAKER_02]: And the other parallel to there is the best players don't want to risk

[00:28:02] [SPEAKER_02]: blowing up.

[00:28:03] [SPEAKER_02]: If you blow up your whole, your whole stash of chips, you're done, right?

[00:28:08] [SPEAKER_02]: If you're in a tournament, yeah,

[00:28:10] [SPEAKER_02]: if you're in a tournament like you're done.

[00:28:11] [SPEAKER_02]: So the risk of blowing up is, is there's like,

[00:28:15] [SPEAKER_02]: they know when to make calculated bets mathematically to void blow up,

[00:28:22] [SPEAKER_02]: the same way that you know, putting 80% of your portfolio in a speculative

[00:28:29] [SPEAKER_02]: pharmaceutical company has a risk of blow up.

[00:28:33] [SPEAKER_02]: It has a risk of wealth creation, but it has a risk of blow up.

[00:28:38] [SPEAKER_02]: And if we're trying to compound over a long time,

[00:28:42] [SPEAKER_02]: and we have a blow up, and we have to reset,

[00:28:47] [SPEAKER_02]: then in the poker analogy, we're out of the tournament.

[00:28:49] [SPEAKER_02]: We're out of the game.

[00:28:50] [SPEAKER_02]: The guys can keep compounding and we're out of the game.

[00:28:54] [SPEAKER_02]: And say I've been compounding for six years and I have a blow up,

[00:28:57] [SPEAKER_02]: I'm out of the tournament.

[00:28:59] [SPEAKER_02]: You know, it's, I have to start again.

[00:29:00] [SPEAKER_02]: Those, those are killers in, in poker, in investing.

[00:29:07] [SPEAKER_02]: So don't blow up.

[00:29:08] [SPEAKER_03]: No, exactly. So I could go with 10 tons of example for poker,

[00:29:13] [SPEAKER_03]: but in it is an investing podcast.

[00:29:16] [SPEAKER_03]: Although poker does have a lot of parallels.

[00:29:20] [SPEAKER_03]: So we'll go on here to the next segment.

[00:29:23] [SPEAKER_03]: I wanted to look at, you know, what sectors I've actually been doing pretty well this year.

[00:29:29] [SPEAKER_03]: I use a sector of speed.

[00:29:30] [SPEAKER_03]: I've used it before here.

[00:29:32] [SPEAKER_03]: Really useful tool. It uses essentially ETFs.

[00:29:37] [SPEAKER_03]: The main one would be the SPY that they used to track.

[00:29:41] [SPEAKER_03]: So these are just ETFs that track all the sectors of the S&P 500.

[00:29:47] [SPEAKER_03]: And it's really interesting just to, I'll share my screen and I'll go over the years year-to-date returns.

[00:29:54] [SPEAKER_03]: And well first of all, I don't know if you realize that,

[00:29:57] [SPEAKER_03]: but all the sectors are up year-to-date.

[00:30:00] [SPEAKER_03]: And I was a verifying with Finchette.io to just to make sure

[00:30:03] [SPEAKER_03]: that it was total returns and it is doesn't appear to be total returns here.

[00:30:08] [SPEAKER_03]: But in terms of the top sectors of performance,

[00:30:11] [SPEAKER_03]: the top one definitely surprised me.

[00:30:14] [SPEAKER_03]: Did you expect to see utilities as the top performing sector legislator wound up

[00:30:19] [SPEAKER_03]: and sit up 25% for the year?

[00:30:22] [SPEAKER_03]: Yeah, what is that financials as well that's doing super hot?

[00:30:26] [SPEAKER_02]: Mm-hmm.

[00:30:27] [SPEAKER_03]: Yeah, some names I did not expect to see.

[00:30:32] [SPEAKER_03]: I also did.

[00:30:33] [SPEAKER_02]: The utilities got absolutely wrecked when raised.

[00:30:36] [SPEAKER_02]: They started rising.

[00:30:38] [SPEAKER_02]: Yeah, yeah.

[00:30:39] [SPEAKER_02]: These are heavy debt load companies that had terrible years

[00:30:45] [SPEAKER_02]: when raised started rising for what is traditionally like a not a very volatile investment.

[00:30:51] [SPEAKER_02]: Yeah, right.

[00:30:52] [SPEAKER_02]: And so I think that you're just seeing a huge rebound in the sentiment there with a bit of cuts happening to.

[00:30:56] [SPEAKER_03]: Yeah, and probably to the sentiment that utilities will be benefactor from the whole power buildup for AI, right?

[00:31:03] [SPEAKER_03]: So I think that's been one of the, you know, I guess, tailwinds or the thesis.

[00:31:09] [SPEAKER_03]: I think it's probably the better word to use for utilities.

[00:31:13] [SPEAKER_02]: Yeah, you make money generally when something goes from a very crummy story to a good story.

[00:31:21] [SPEAKER_02]: Like that's, that has time and time been what's worked.

[00:31:28] [SPEAKER_02]: You know, Peter Lynch has a really good little talk that he does where he talks about what happens when something goes from a really really bad story to an OK story.

[00:31:40] [SPEAKER_02]: And it OK story to a good story, but when it has a very bad story to a really good story,

[00:31:45] [SPEAKER_02]: it's when you have like, you know, monster monster years.

[00:31:48] [SPEAKER_03]: Yeah, exactly. And what I decided to pull to was just essentially what you were saying, right?

[00:31:53] [SPEAKER_03]: Utilities that been clobbered by higher rates is I decided just to pull a chart.

[00:31:59] [SPEAKER_03]: So I included here, Excel U, which is the utilities.

[00:32:02] [SPEAKER_03]: I included Excel C, which is communications.

[00:32:05] [SPEAKER_03]: Just going off hand here, communication.

[00:32:09] [SPEAKER_03]: Yeah, that's the one, SPY, which is the broad index and as well as Excel K.

[00:32:15] [SPEAKER_03]: I, Excel K here, looking quickly. It's technology. So you're looking at the returns.

[00:32:21] [SPEAKER_03]: Since let's just say the beginning of 2021. So Jan 4 2021 up to January December 29 of 2023.

[00:32:28] [SPEAKER_03]: So it's really interesting before this year because we're looking at the year to date.

[00:32:33] [SPEAKER_03]: Clearly technology performed really well at 55% if we round up behind that.

[00:32:39] [SPEAKER_03]: The SMP 500, the broad index at 35%, but then utilities were 13.7% and communication services 12.19%.

[00:32:50] [SPEAKER_03]: Communication and services interesting because it includes some pretty big names in there.

[00:32:56] [SPEAKER_03]: I believe like you'd have a meta that would be part of that Netflix.

[00:33:00] [SPEAKER_03]: So there's clearly some that I've been dragging a bit more on those.

[00:33:05] [SPEAKER_03]: Like I think probably like the legacy companies like AT&T.

[00:33:09] [SPEAKER_03]: Yeah, AT&T and stuff like that. But just to show what you were saying is those companies were,

[00:33:15] [SPEAKER_03]: you know, kind of going sideways for a better part of two years and then it's really picked up so far this year.

[00:33:22] [SPEAKER_02]: It's so funny because those companies couldn't have more different balance sheets.

[00:33:27] [SPEAKER_02]: Exactly.

[00:33:27] [SPEAKER_02]: These, the of these tech companies with literally net cash positions.

[00:33:32] [SPEAKER_02]: Like they have more cash than debt if not no debt.

[00:33:37] [SPEAKER_02]: And then you have these legacy communications companies with huge fiber build out cap X and absurd amounts of debt on the balance sheet,

[00:33:46] [SPEAKER_02]: getting a fit by rates. These companies couldn't be more different structurally in their balance sheet.

[00:33:52] [SPEAKER_03]: Yeah, exactly. And if you're looking here in terms of, you know, you said financials

[00:33:57] [SPEAKER_03]: and financial includes a whole broad of like a lot of different types of companies.

[00:34:02] [SPEAKER_03]: Like you'll have a birch shirt that's in financial insurance companies like a progressive American Express not insurance,

[00:34:08] [SPEAKER_03]: but all state is an insurance.

[00:34:11] [SPEAKER_03]: You'll obviously have banks and what's kind of cool with this tool is if I take financial for example,

[00:34:16] [SPEAKER_03]: year to date progressive is the top performance 61%

[00:34:20] [SPEAKER_03]: and then if you go, you can actually look at the worst performer.

[00:34:24] [SPEAKER_03]: So you'll have like Franklin resources, ink, not familiar with that global payments, ink in Vesco.

[00:34:31] [SPEAKER_03]: So you can also look at the best and worst performers.

[00:34:34] [SPEAKER_03]: So it's not a bad tool to say the least if you're looking at large, you want to look at large cap companies,

[00:34:41] [SPEAKER_03]: but you want to kind of drill down a bit more get some ideas of what been performing well,

[00:34:45] [SPEAKER_03]: what's not been, it's kind of cool to use that tool.

[00:34:49] [SPEAKER_03]: Obviously, you know, it's more to grab ideas and get a general sense.

[00:34:53] [SPEAKER_03]: But the one that I think will be very interesting to look at,

[00:34:58] [SPEAKER_03]: especially with, you know, the much anticipated FedCud that will likely happen tomorrow.

[00:35:04] [SPEAKER_03]: I think it's still 100% that they're cutting.

[00:35:07] [SPEAKER_03]: I think it just depends on whether they'll be cutting 25 basis points or 50 basis points.

[00:35:11] [SPEAKER_03]: I think that's the debate at this point real estate.

[00:35:15] [SPEAKER_03]: It's just there's just so many different factors that play for real estate because clearly lower rates will be a tailwind for reach real estate investment truck.

[00:35:25] [SPEAKER_03]: But, you know, then you can drill down to specific type of reach.

[00:35:29] [SPEAKER_03]: So you have office reads on the other hand that will probably continue to be affected by hybrid work.

[00:35:34] [SPEAKER_03]: And downtown areas not being uses much as they used to.

[00:35:38] [SPEAKER_03]: So if we're heading into a slow down a recession, you know, is that going till so impact demand for office reads.

[00:35:45] [SPEAKER_03]: Then you also have retail reads and industrial reads that might also be negatively impacted by a slowing economy.

[00:35:52] [SPEAKER_03]: Still benefiting from that interest rate cut tailwind, but there's so many different factors that played for reads that could dictate how they perform in the next few years.

[00:36:03] [SPEAKER_03]: I guess kind of short to medium term.

[00:36:05] [SPEAKER_03]: Even within retail reads right, you can have malls. You can have different class of malls class ABC so a are kind of the top newest malls that I've been renovated were most people frequent or there's higher traffic.

[00:36:20] [SPEAKER_03]: And there's kind of the low winds one. You also have a company like real TN come which tend to have like kind of single tenants further their properties.

[00:36:29] [SPEAKER_03]: I think they have a lot of gas stations, groceries, stuff like that. They should be pretty resilient. And then you have these other types of reads that have pretty good staying power and even grow when you think about like medical reads, medical building reads.

[00:36:44] [SPEAKER_03]: You have office tower reads data reads that should see some tailwinds as well. So it's just I don't know about you. I know we don't talk about real estate super often, but I just find that I find a sector so fascinating.

[00:36:59] [SPEAKER_03]: Because it could go so many different ways depending on you know the name you're looking at essentially this website's pretty sweet like this.

[00:37:11] [SPEAKER_03]: Yeah and then like even like right to real estate once we have Iron Mountain that's up 69% year to date well tower 43% but then you have like some names that are you know in the negative territory as well.

[00:37:25] [SPEAKER_03]: So it just yeah, just kind of a fun little site to get the pulse of clearly it is for the S&P 500 but you know the sectors that are always Iron Mountain a real estate company.

[00:37:39] [SPEAKER_03]: They do storage I think so they do a lot of like data storage type of stuff they also do like shredding and stuff. I know yeah they are like considered a read.

[00:37:49] [SPEAKER_02]: I think of like shredding and like yeah all the 90s tech. I think of Iron Mountain but did the stock's been on fire.

[00:37:58] [SPEAKER_03]: Yeah, I know yeah I'd have to haven't looked at Iron Mountain but I think they did also like kind of file storage as well. So I think it info management.

[00:38:07] [SPEAKER_03]: Yeah exactly I think that's the best way to describe them for sure.

[00:38:10] [SPEAKER_02]: Impressive pivot because they did like Iron Mountain was document management but like for physical paper for a long time.

[00:38:21] [SPEAKER_03]: Yeah exactly but there's diversity of name and I think that kind of goes when you're looking at I think it's a good discussion for when you're looking at sectors is yes there's like these names right that are kind of you know like people will think of certain sectors and

[00:38:38] [SPEAKER_03]: they'll think like tech right don't think oh well surely a meta and Google is in there well no it's actually in communication services. So you have to keep in mind when you look at sectors it may not always be contained in names that you expect them to contain

[00:38:54] [SPEAKER_03]: and I think these are just kind of big categories that I don't really I guess S&P decides which sector is which and you know some make more sense than others but just keep that in mind that yes if you end up like guy buying a sector specific ETF.

[00:39:11] [SPEAKER_03]: The exposure that you end up getting might be a bit different that you actually expected if you don't drill down to the actual ETF and the specific holdings and the waiting for each holding of that ETF.

[00:39:25] [SPEAKER_02]: When you're pulling up financials I just wanted to see the performance of total return American Express versus Visa versus Mastercard.

[00:39:32] [SPEAKER_02]: Five year base is the vault on well but wow American Express has really really done well as of late.

[00:39:41] [SPEAKER_02]: It's operatives a different type of company but it's the brand the brand really resonating with young people it looks like.

[00:39:51] [SPEAKER_03]: Yeah as long as they pay the bill they.

[00:39:55] [SPEAKER_03]: Yes, obviously that's always the resume with it and pay for it because they also all I didn't know if you don't know if you knew that but they have like savings account in the US.

[00:40:07] [SPEAKER_03]: They have their banking license in the US so they do have I think it's primary credit cards but they do have like they have customer deposits like on their balance sheet like a normal banquet have but clearly you know it's kind of a hybrid like I've always been intrigued by that business because it provides you almost like a hybrid between a bank and a like Mastercard slash Visa.

[00:40:29] [SPEAKER_02]: Yeah, well that's exactly what it is. It's it's a very different business model being that they take on credit risk but holy moly it's been it's been doing well.

[00:40:43] [SPEAKER_03]: All right how are we doing for time here I think we could call it an episode here I think would you think.

[00:40:50] [SPEAKER_02]: Yeah, let's let's let's tease next week's episode we'll do we'll talk about what Canadians have been buying with the TD and direct investing index and Simone I am going to do a segment on the business of only fans next week that's what I got slated up for for next week.

[00:41:16] [SPEAKER_02]: I am shocked because they're basically one guy good money on their like really good money.

[00:41:24] [SPEAKER_02]: Well I think there's a huge extreme not outliers where it's like there's a few people who are making like 99% of the money in terms of like a few creators but I'm going to more talk about it not only from like the creator side but the owner okay.

[00:41:45] [SPEAKER_02]: Because it's because it's UK based it's privately held but UK companies over a certain threshold of revenue are required to make their financial statements public.

[00:41:56] [SPEAKER_02]: So I'm going to dig into their financial statements and talk about it because there's basically one guy who owns whole thing and he pays themselves like hundreds of millions of dollars in dividends every year.

[00:42:08] [SPEAKER_02]: So it's basically yeah absolutely absurd.

[00:42:13] [SPEAKER_03]: Yes, I mean I've heard stories like not to go into too much detail but I've heard like story of you know someone in Ottawa I won't go into too much detail that makes make makes a very good income out of that but clearly I think.

[00:42:30] [SPEAKER_03]: The from what I know it's not PG 13 that's what I'm talking about usually isn't.

[00:42:36] [SPEAKER_02]: One point they tried to pivot the business to like a clean no safely it's like strictly safer work content.

[00:42:46] [SPEAKER_02]: Yeah, I did not work.

[00:42:49] [SPEAKER_02]: Well you can't pivot the bread people know what only fans is and that's it is what it is.

[00:42:56] [SPEAKER_03]: I know they've been getting flag in terms of I think there's like maybe some that are being exploited for that I don't know I've seen some articles I don't know to the full extent of it but in terms of you know the stuff that's clean there's already like you know Patreon I guess would be a competitor if they wanted to keep it like just clean right patrons more known for that like there's already platforms out there that.

[00:43:18] [SPEAKER_03]: Are pretty well known that are like you know kind of not catering for lack of better word to the adult industry yeah.

[00:43:27] [SPEAKER_02]: It's a fascinating world I all dive into their financials how much this guy's taking home the whole story of it because there are these outlier businesses that are private that are just unbelievable.

[00:43:45] [SPEAKER_02]: They're print money basically yeah print money.

[00:43:50] [SPEAKER_02]: Huge network effect too.

[00:43:52] [SPEAKER_02]: Yeah, like they have this contributor model user generated content it's absolutely wild I saw a post that the you know the cash me outside girl.

[00:44:04] [SPEAKER_02]: Remember she was on Doctor Phil?

[00:44:06] [SPEAKER_02]: No I don't think I I know you don't remember.

[00:44:10] [SPEAKER_02]: She went viral for being on Doctor Phil for some stuff she said this was years years.

[00:44:18] [SPEAKER_02]: Okay, she was like a kid she was like a kid.

[00:44:21] [SPEAKER_02]: Now she's like 20 or something and she's made I think she posted her only fans earnings of 57 million dollars last year.

[00:44:31] [SPEAKER_02]: I'll pull up the exact amounts actually disclosed on the podcast next week.

[00:44:36] [SPEAKER_02]: Yeah, go over the business of only fans but that's the type of money we're talking about for some of these you know 1% of the 1% earners on the platform.

[00:44:46] [SPEAKER_03]: Yeah, yeah, but I've seen like I've heard like you know anecdotal stories of people in Canada like making like you know easily five digits you know a month.

[00:44:56] [SPEAKER_03]: Which is pretty good living like right like even they may not be making a million but it's more than enough to sustain them.

[00:45:05] [SPEAKER_02]: Yeah, I don't know if you still can but you used to be able to see what everyone has made because it said the amount of subscribers that is on each creator and I went to high school with the girl who was making over six figures a month doing ASMR.

[00:45:23] [SPEAKER_02]: Do you know what ASMR is?

[00:45:25] [SPEAKER_02]: I don't know. Yeah, it's like dude. It's like people whisper into the microphone. Oh, okay.

[00:45:33] [SPEAKER_02]: He sounds like I'm 39. I don't know what the hell any of this means. Dude, there's these weird sub niches and people are making bank.

[00:45:44] [SPEAKER_02]: We got a we got a game here. We're talking about investing podcasts on the mic. Let's make a whispering version.

[00:45:51] [SPEAKER_03]: Yeah, I don't think there's demand for an Holy fence face for much.

[00:45:56] [SPEAKER_02]: Oh and this is really quickly yeah.

[00:45:59] [SPEAKER_02]: Yeah, thanks for listening to the podcast folks. You're now you're really gonna have to listen next week, but you know of course it'll be a bit the financials of it all.

[00:46:08] [SPEAKER_02]: Yeah, and we appreciate you listening to the pod.

[00:46:13] [SPEAKER_02]: We are here Mondays and Thursdays as the shout out on the top of the show here. If you go on to the website and you go on to the Canadian investor podcast.com, not only can you see all of our stuff.

[00:46:24] [SPEAKER_02]: But there's a send us a voice message button.

[00:46:27] [SPEAKER_02]: And it used to get a lot of traction, but you know it's our fault because we weren't really putting any of them in there.

[00:46:35] [SPEAKER_02]: So, but I'd like to do more of those because more fun for Q and A and you'll you'll make it on to the show just make sure you're on here's two two requests.

[00:46:46] [SPEAKER_02]: One keep it brief if it's a long word salad that's two minutes long you won't make it on the show.

[00:46:52] [SPEAKER_02]: Two if it's in like you know you do it in auto repair shop. That's not gonna work.

[00:47:00] [SPEAKER_03]: Yeah, the auto be quiet.

[00:47:02] [SPEAKER_03]: Yeah, exactly.

[00:47:04] [SPEAKER_02]: So if you meet those very two very simple requirements, you'll make it on to the show.

[00:47:10] [SPEAKER_02]: We'll see you in a few days take care.

[00:47:11] [SPEAKER_03]: The Canadian investor podcast should not be construed as investment or financial advice.

[00:47:17] [SPEAKER_03]: The host and guest featured may own securities or assets discussed on this podcast.

[00:47:23] [SPEAKER_03]: Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.