How Small Regular Investments Create Big Gains Over Time

[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. Hosted by Braden Dennis and Simon Belanger

[00:00:14] [SPEAKER_02]: The Canadian Investor Podcast. Welcome into the show. My name is Braden Dennis. As always joined by the tenacious, Mr. Simon Belanger.

[00:00:28] [SPEAKER_02]: Buddy, we have a unreal episode here for you guys. You have a segment and then I am giving a presentation this coming Tuesday. And I want to share it with the podcast listeners slash this is the dry run. You know, there's only so much time I have in the day. I got to practice my presentation. Do it live on the podcast.

[00:00:54] [SPEAKER_02]: Sounds like a plan. Yeah.

[00:00:56] [SPEAKER_01]: He's got that.

[00:00:57] [SPEAKER_01]: Why is I don't cough too much? Yeah, coming out of a cold as usual. So, it's okay. I've got my honey ready for your presentation.

[00:01:05] [SPEAKER_02]: Good man. Good man. And you know, of course, don't wait for questions till the end. Please, please jump in audience members.

[00:01:13] [SPEAKER_02]: I'll raise my hand.

[00:01:14] [SPEAKER_02]: And please jump in audience members, listeners of the podcast and go to our website, thecanadianinvestorpodcast.com. Leave us some questions, all kinds of good stuff on there.

[00:01:23] [SPEAKER_02]: But before that, Simon, you have up first a segment for the show. This is so, so important and to put some math behind it, to put some substance behind it is really kind of quantifies it for people to be able to justify why we're doing this, why we keep talking about things that we talk about on the show in terms of long term investing. So, take it away.

[00:01:51] [SPEAKER_01]: Yeah. So, I mean, the name of the segment is pretty, you know, pretty obvious. I think it's self-descripting. So, being consistent is as important as returns. So, more specifically, being consistent in your approach of adding new money, new funds.

[00:02:06] [SPEAKER_01]: And so, you know, we've talked about it, paying yourself first, but doing it regularly kind of as the first thing you do.

[00:02:13] [SPEAKER_01]: And I think a lot of people just don't realize or a lot of investors, they just don't realize how big that can have an impact.

[00:02:20] [SPEAKER_01]: So, I'll give some example here just to help wrap your head around how big that impact can be.

[00:02:26] [SPEAKER_01]: And obviously, just a caveat, like I'm talking about decent returns here, it doesn't mean that these, you know, you'll be able to necessarily achieve that.

[00:02:36] [SPEAKER_01]: So, first example, say you have $10,000 invested, okay? So, you're starting off with 10K, whether you just got inheritance, a windfall, whatever it is, you just have $10,000.

[00:02:48] [SPEAKER_01]: Typically, it's used pretty frequently with like fun facts and stuff like that.

[00:02:52] [SPEAKER_01]: So, I figured, you know, it's not too big of a sum. People can relate to that.

[00:02:56] [SPEAKER_01]: Now, for that $10,000 for 20 years, say you're like, you're crushing it.

[00:03:01] [SPEAKER_01]: You're beating the market. You're doing 15% annual returns compounded on average.

[00:03:06] [SPEAKER_01]: And that means that your $10,000 is worth $197,000 after 20 years.

[00:03:12] [SPEAKER_01]: Second scenario, you have the same $10,000, but you also add $250 a month.

[00:03:18] [SPEAKER_01]: Every single month, you're extremely consistent. You don't miss a month for 20 years.

[00:03:24] [SPEAKER_01]: And Brandon, I'll ask you, what do you think you need to have in terms of return to end up with that same $197,000 after 20 years?

[00:03:33] [SPEAKER_02]: So, the first example, you said $10,000 after 20 years turns to almost $200,000 at a 15% CAGR?

[00:03:41] [SPEAKER_02]: Yeah, that's right.

[00:03:42] [SPEAKER_02]: And this one's adding $250 a month dollar cost averaging?

[00:03:46] [SPEAKER_01]: Yeah. You're still starting with the $10,000, but on top of that, you're adding $250 a month.

[00:03:52] [SPEAKER_01]: Maybe half?

[00:03:53] [SPEAKER_02]: Yeah, it's pretty close.

[00:03:55] [SPEAKER_02]: Half the returns, maybe a bit more?

[00:03:57] [SPEAKER_01]: Yeah, so exactly that.

[00:03:59] [SPEAKER_01]: So, the answer is 8%.

[00:04:00] [SPEAKER_01]: So, you're about like $500 or so close to it.

[00:04:04] [SPEAKER_01]: So, just because you're adding an extra $250 a month, you end up with the same amount despite only having returns of 8%.

[00:04:12] [SPEAKER_01]: Now, the third scenario, let's say…

[00:04:14] [SPEAKER_02]: A more realistic and approachable number.

[00:04:16] [SPEAKER_01]: Yeah, yeah, exactly.

[00:04:18] [SPEAKER_01]: And the third scenario here that, you know, just to help people, again, wrap their head around it.

[00:04:24] [SPEAKER_01]: Same $10,000 invested.

[00:04:26] [SPEAKER_01]: You add $250 a month for 20 years, but instead you get 10% returns.

[00:04:31] [SPEAKER_01]: Well, you actually end up with $263,000 in that example.

[00:04:37] [SPEAKER_01]: And if you do the same and then end up with 15% return with adding that $250 a month, then after 20 years, you end up with $571,000.

[00:04:49] [SPEAKER_01]: So, it just goes to show that being consistent has a really, really big impact.

[00:04:55] [SPEAKER_01]: Sometimes, you know, I think we're guilty of that too.

[00:04:58] [SPEAKER_01]: Sometimes it's just focusing on the returns a bit too much, which is good.

[00:05:02] [SPEAKER_01]: You want to beat the market.

[00:05:03] [SPEAKER_01]: You want to have, or at least I think my priority is handily beating the market, but also inflation.

[00:05:10] [SPEAKER_01]: Because at the end of the day, you want to keep your purchasing power, but also increase it.

[00:05:14] [SPEAKER_01]: But I think we focus on that sometimes a bit too much and not as much as, you know, looking at being consistent, adding that money.

[00:05:23] [SPEAKER_01]: And even if you have a bit lower returns, just that consistency can really make a big difference.

[00:05:29] [SPEAKER_01]: There are things you can do to help being consistent because I'm sure there's some people listening saying, you know what, Simo Brayden, like $250 a month is nice, but I can't afford doing that.

[00:05:41] [SPEAKER_01]: Which, you know, that's totally understandable.

[00:05:44] [SPEAKER_01]: Not everyone will be able to.

[00:05:45] [SPEAKER_01]: Sometimes some people may be able to do more than that.

[00:05:48] [SPEAKER_01]: But the first thing to help you is having a budget and update it at least once a year.

[00:05:52] [SPEAKER_01]: And I would suggest doing it every six months because, you know, forget about the official CPI that was saying 1.6% when it was released today.

[00:06:02] [SPEAKER_01]: The rate of it, the official rate of inflation may be slowing.

[00:06:05] [SPEAKER_01]: So things are still increasing, but not at the same pace.

[00:06:08] [SPEAKER_01]: But on a personal basis, that could be more or less for you.

[00:06:13] [SPEAKER_01]: So you have to keep that in mind because this is just aggregate.

[00:06:16] [SPEAKER_01]: This is for Canada as a whole.

[00:06:17] [SPEAKER_01]: They try to do the best they can with CPI.

[00:06:20] [SPEAKER_01]: But the reality is your personal expenses will likely be very different than what is in that basket.

[00:06:26] [SPEAKER_01]: And it could be increasing at a much faster pace.

[00:06:30] [SPEAKER_01]: So it's important to adjust that regularly.

[00:06:33] [SPEAKER_01]: And the regular revision also helps you review expenses.

[00:06:37] [SPEAKER_01]: Expenses that you may look six months later and, you know, that subscription to, let's say, Sportsnet, you know, that you got because you thought the Blue Jays would be good.

[00:06:47] [SPEAKER_01]: Six months later, they're out of the playoffs.

[00:06:48] [SPEAKER_01]: Well, maybe you kind of cut that off because you're not going to watch hockey during the winter or, you know, vice versa, right?

[00:06:55] [SPEAKER_01]: You're having during the hockey playing months and during the summer, you're not interested in anything else.

[00:07:01] [SPEAKER_01]: So you cut it off.

[00:07:01] [SPEAKER_01]: So there are things, there are efficiencies that you can do in your budget by reviewing them regularly because sometimes you might just also kind of forget that it's there.

[00:07:10] [SPEAKER_01]: The second we've talked about this again, but I think it's super important.

[00:07:14] [SPEAKER_01]: I've seen it recently.

[00:07:16] [SPEAKER_01]: Make sure you have an emergency fund.

[00:07:18] [SPEAKER_01]: Ideally, three to six months.

[00:07:20] [SPEAKER_01]: Six months, you know, it may be better if you have also a family.

[00:07:23] [SPEAKER_01]: If you're single or just a couple, maybe you have a bit more flexibility.

[00:07:26] [SPEAKER_01]: If you're a couple, for example, with no kids, maybe you can make it work with just one income.

[00:07:32] [SPEAKER_01]: There's different situations, but typically the rule of thumb, three to six months in cash.

[00:07:37] [SPEAKER_01]: And right now you can get some pretty good interest on your cash still.

[00:07:40] [SPEAKER_01]: So it's not something that is kind of slowly chipping away at it.

[00:07:45] [SPEAKER_01]: Like inflation is slowly chipping away at.

[00:07:47] [SPEAKER_01]: At least you're keeping some purchasing power with that.

[00:07:50] [SPEAKER_01]: And having that, you just you have some flexibility if you have a large unexpected expense that you can still continue your regular additions to your investments.

[00:08:00] [SPEAKER_01]: However, with a caveat, of course, you know, if you end up losing your job and, you know, your let's say your sole income, you'll probably want to stop your contribution while you find a new job.

[00:08:13] [SPEAKER_01]: Even if you have a large emergency fund, you have to also be pragmatic, right?

[00:08:18] [SPEAKER_01]: Like, I mean, it's nice to invest. It's nice to be consistent, but you also have to live.

[00:08:22] [SPEAKER_01]: And if you end up in an event where, you know, you may have to make some tough choices, but you're lowering the likelihood that you have to stop those contributions.

[00:08:33] [SPEAKER_01]: And the last thing here is that it doesn't have to be an all or nothing.

[00:08:37] [SPEAKER_01]: Again, using the example of losing your job.

[00:08:41] [SPEAKER_01]: Say you found another job that pays a bit less.

[00:08:44] [SPEAKER_01]: And with your previous job, you were doing $500 a month.

[00:08:47] [SPEAKER_01]: But now you can only afford to do $100 a month.

[00:08:50] [SPEAKER_01]: I mean, $100 is better than zero and it can still make a big difference.

[00:08:55] [SPEAKER_01]: You know, using the same examples as earlier, starting with the $10,000 over 20 years.

[00:09:02] [SPEAKER_01]: If you add in $100 a month at 8% returns, you end up with $109,000 versus, you know, a much smaller amount.

[00:09:12] [SPEAKER_01]: If you don't have the $100 per month.

[00:09:15] [SPEAKER_01]: So you have to keep that in mind.

[00:09:17] [SPEAKER_01]: And you have to be, you know, realistic, but putting things in place where you maximize the chances of actually, you know, following with the plan and continuing with that consistency.

[00:09:29] [SPEAKER_01]: And I have a second segment planned today.

[00:09:32] [SPEAKER_01]: I think you looked at it.

[00:09:32] [SPEAKER_01]: We'll see if we have time because your presentation will take a bit more time.

[00:09:37] [SPEAKER_01]: But you and I both have been critical and Dan as well at some of these like Fintwit influencers or accounts that focus on, you know, dividend income.

[00:09:47] [SPEAKER_01]: So, you know, just a dividend income.

[00:09:50] [SPEAKER_01]: That's the only thing they don't post like their returns.

[00:09:52] [SPEAKER_01]: They just post, you know, I got like $2,000 this month in dividend income.

[00:09:56] [SPEAKER_01]: The one thing I will give a lot of these accounts, I will give them that is that most of them are very consistent with adding new money.

[00:10:06] [SPEAKER_01]: They are very, I mean, it's almost cultish, but they are very consistent with adding new money.

[00:10:12] [SPEAKER_01]: And I'm not going to, you know, criticize everything they do because that is something that I think is exemplary that a lot of people could take a little bit of that.

[00:10:21] [SPEAKER_01]: And I think it's a good philosophy to have is you may not agree with the investment approach of someone to like, you know, you might not agree with 90% of what they do as their approach.

[00:10:32] [SPEAKER_01]: But you can still pick the 10% that you agree that is actually a good idea.

[00:10:37] [SPEAKER_01]: So, you don't have to, it's not an all or nothing proposition.

[00:10:40] [SPEAKER_01]: So, I wanted to mention that as well.

[00:10:42] [SPEAKER_02]: I think there's just some level of endorphins that kick in when you get some notification that you did absolutely nothing and made, in this case,

[00:10:50] [SPEAKER_02]: potentially thousands of dollars.

[00:10:53] [SPEAKER_02]: I got a notification, my Constellation software shares paid me $1 dividend.

[00:10:58] [SPEAKER_02]: It's like, oh, I, if I relied on this guy, I would be at the food bank.

[00:11:06] [SPEAKER_02]: Like, no, I mean, like the, it's cliche, but the pay yourself first mentality is like really cliche personal finance things that get repeated over and over again, usually because they're good.

[00:11:23] [SPEAKER_02]: And like they usually, most people should follow them.

[00:11:27] [SPEAKER_02]: And so, I've been persistent and live by that religiously in terms of pay yourself first, in terms of what comes into my investment account.

[00:11:39] [SPEAKER_02]: And over the last five years, Simone, I've had a monthly goes into my account.

[00:11:47] [SPEAKER_02]: I buy stocks on the first Tuesday of every month for so, so long now.

[00:11:52] [SPEAKER_02]: But that amount has fluctuated a lot.

[00:11:55] [SPEAKER_02]: It was a very healthy amount when I was working as an engineer.

[00:12:00] [SPEAKER_02]: When I quit my job, it went down to like almost nothing.

[00:12:03] [SPEAKER_02]: I think I had literally like, I think I could only throw like 100, 250 bucks a month in there.

[00:12:09] [SPEAKER_02]: I had no income.

[00:12:10] [SPEAKER_02]: Like, I was basically just some of my savings were just continuing to drip in like cash wise, like some pension stuff that I had cashed out.

[00:12:20] [SPEAKER_02]: I sold some stuff.

[00:12:21] [SPEAKER_02]: Like, I kept investing even though it was a small amount.

[00:12:24] [SPEAKER_02]: And then, you know, out of the dirt and ramen phase into a real salary again with FinShot, it's like I ramp, ramp, ramp it back up.

[00:12:31] [SPEAKER_02]: And it's higher than ever now.

[00:12:33] [SPEAKER_02]: And it's like, this is normal.

[00:12:36] [SPEAKER_02]: And I think that you mentioned like not all everyone will be able to have those consistent amounts because you can basically buy for no cost or you can at least buy ETFs for no fees on Questrade there, for example.

[00:12:51] [SPEAKER_02]: Like, you can have really low contributions to move the needle.

[00:12:56] Yeah.

[00:12:57] [SPEAKER_01]: Yeah, exactly.

[00:12:57] [SPEAKER_01]: Exactly.

[00:12:57] [SPEAKER_01]: And I mean, Mike, I have an example.

[00:12:59] [SPEAKER_01]: I think you know about it.

[00:13:01] [SPEAKER_01]: But, you know, we pay ourselves a dividend and I'm very disciplined.

[00:13:05] [SPEAKER_01]: I put those in GICs all with EQ Bank that will mature right before tax time.

[00:13:11] [SPEAKER_01]: Well, there was a little CRA rule.

[00:13:13] [SPEAKER_01]: I was not aware of that if you I think it's like two or three thousand dollars, a couple of years in a row that you pay in taxes.

[00:13:19] [SPEAKER_01]: They require you to do installments.

[00:13:22] [SPEAKER_01]: And I didn't know about that.

[00:13:23] [SPEAKER_01]: And I had a pretty substantial amount to pay early, which was problematic because all that money was locked into the GIC.

[00:13:31] [SPEAKER_01]: So the joint TCI listeners will know about that.

[00:13:35] [SPEAKER_01]: So I had to kind of, you know, move some money around.

[00:13:38] [SPEAKER_01]: Thankfully, I had enough cash, but I didn't want to, you know, affect our emergency fund too much that I had to pause the contributions.

[00:13:48] [SPEAKER_01]: But then they will ramp up very quickly and I'll make up for it when the GICs become unlocked because I'll have to, I'll have paid all my taxes essentially up front at that point.

[00:13:57] [SPEAKER_01]: So I just wanted to mention that because there are just sometimes there's just circumstances that, you know, you have to make, you know, a decision that makes sense for you.

[00:14:05] [SPEAKER_01]: And you may have to pause it for a little bit.

[00:14:07] [SPEAKER_01]: Yeah.

[00:14:07] [SPEAKER_02]: Hey, CRA listening to our conversation.

[00:14:11] [SPEAKER_02]: You hear that?

[00:14:13] [SPEAKER_02]: He paid his taxes on time.

[00:14:15] [SPEAKER_02]: He is a good standing citizen.

[00:14:16] [SPEAKER_01]: Yeah.

[00:14:19] [SPEAKER_02]: All right.

[00:14:19] [SPEAKER_02]: Let's shift gears to the presentation, shall we?

[00:14:23] [SPEAKER_01]: Yeah, let's do it.

[00:14:25] [SPEAKER_01]: Should I use that little raise hand icon or you're good if I just...

[00:14:30] [SPEAKER_02]: Jump in.

[00:14:31] [SPEAKER_02]: Jump right in.

[00:14:32] [SPEAKER_02]: Okay.

[00:14:33] [SPEAKER_02]: Start the timer, folks.

[00:14:35] [SPEAKER_02]: All right.

[00:14:36] [SPEAKER_02]: So I'm doing this presentation for context.

[00:14:39] [SPEAKER_02]: It's probably going to be three, 400 people, DIY investors in California and San Diego.

[00:14:45] [SPEAKER_02]: So some asset managers, some VCs, some...

[00:14:50] [SPEAKER_02]: A good mix of DIY investors, but mostly a lot of bigger LPs and asset managers and long equity funds.

[00:15:00] [SPEAKER_02]: So they're like, why don't you do a presentation on FinChat?

[00:15:03] [SPEAKER_02]: And I'm like, well, I don't really want to like just talk about FinChat for 15 minutes.

[00:15:09] [SPEAKER_02]: That seems like...

[00:15:11] [SPEAKER_02]: I can give demos later.

[00:15:13] [SPEAKER_02]: But like, what can I actually provide some value and maybe show FinChat in creating the presentation?

[00:15:20] [SPEAKER_02]: And so I wanted to...

[00:15:23] [SPEAKER_02]: I landed on where my head is at so much with the content of this podcast, but also like what I truly believe in generates really good long-term returns.

[00:15:35] [SPEAKER_02]: I was like, let me just focus strictly on that.

[00:15:37] [SPEAKER_02]: And if I can show a couple FinChat graphs along the way, I will.

[00:15:40] [SPEAKER_02]: So the presentation is called The Case for Quality.

[00:15:47] [SPEAKER_02]: And The Case for Quality is about investing in the world's greatest companies.

[00:15:54] [SPEAKER_02]: Now, you know, what does that really mean, right?

[00:15:59] [SPEAKER_02]: It's like investing in the world's greatest companies.

[00:16:02] [SPEAKER_02]: Quote from Terry Smith, when it comes to generating good returns, the most important thing is quality.

[00:16:10] [SPEAKER_02]: Here, I should do this.

[00:16:12] [SPEAKER_02]: Let me put it on the old JoinTCI screen.

[00:16:17] [SPEAKER_02]: Oh, yeah.

[00:16:18] [SPEAKER_02]: Now the people will see.

[00:16:19] [SPEAKER_02]: Beautiful.

[00:16:20] [SPEAKER_02]: So that's to me what quality investing is, seeking to invest in the world's greatest companies.

[00:16:25] [SPEAKER_02]: And what does that mean?

[00:16:26] [SPEAKER_02]: I think that that's what this presentation is about.

[00:16:29] [SPEAKER_02]: Now, first off, I want to answer the question of why quality?

[00:16:33] [SPEAKER_02]: Quote, a great business at a fair price is superior to a fair business at a great price.

[00:16:39] [SPEAKER_02]: Quote, Charlie Munger.

[00:16:41] [SPEAKER_02]: And this is really instrumental into how Buffett and Munger started really navigating financial markets and holding on to winners for a really long time.

[00:16:52] [SPEAKER_02]: Instead of buying really, really cheap stuff, what if we can try to pay a fair price on a superior business or a great business rather than, okay, we buy something at a low multiple and then flip it at a high multiple later.

[00:17:09] [SPEAKER_02]: I'm trying to very minimally sell.

[00:17:13] [SPEAKER_02]: If my goal is to never sell and hold winners and let them compound forever, I want to buy right and sit tight.

[00:17:20] [SPEAKER_02]: But a good place to start why quality is why do stocks go up?

[00:17:27] [SPEAKER_02]: So how about this?

[00:17:28] [SPEAKER_02]: In your mind, why do stocks appreciate in value?

[00:17:32] [SPEAKER_02]: Why does the market, you know, one time say it's $100 and then 10 years later, the market says it's worth $200.

[00:17:40] [SPEAKER_02]: Why does that happen?

[00:17:42] [SPEAKER_01]: The traditional answer is earnings growth.

[00:17:45] [SPEAKER_01]: And that's usually what is driving returns.

[00:17:47] [SPEAKER_01]: I'm going to add, because you know me, I like the macro stuff.

[00:17:51] [SPEAKER_01]: I think the ever-expanding money supply for asset prices, like we've talked about in the previous episode.

[00:17:57] [SPEAKER_01]: I mean, you have more and more money available for more and more limited amount of companies.

[00:18:05] [SPEAKER_01]: At some point, that money is going to find its place in those companies and the prices will go up as a whole, right?

[00:18:12] [SPEAKER_01]: But the best companies, the ones growing their earnings, the most will be the largest benefactor from that.

[00:18:18] [SPEAKER_02]: Yeah, I think that that's fair.

[00:18:20] [SPEAKER_02]: You know, capital has to find a home.

[00:18:22] [SPEAKER_02]: Quality companies typically become a good home for that capital.

[00:18:28] [SPEAKER_02]: And capital being very efficient usually flows to these types of companies.

[00:18:32] [SPEAKER_02]: And so the answer to this question is why?

[00:18:36] [SPEAKER_02]: You hinted at it at earnings growth being the traditional reason stocks grow up.

[00:18:41] [SPEAKER_02]: So if I have my total shareholder return, you know, this is what we're trying to maximize as investors.

[00:18:49] [SPEAKER_02]: I want to get my total stock return.

[00:18:53] [SPEAKER_02]: The two ways I get that is dividend and dividend, sorry, and dividends in via cash, you know, the company rewarding me that way, or price appreciation, the stock price going up.

[00:19:04] [SPEAKER_02]: The two sub drivers for why price appreciation happens of the stock is long-term earnings per share growth and the earnings multiple change, like the PE multiple or whatever multiple you want to use.

[00:19:20] [SPEAKER_02]: So those two factors definitely are sub drivers for the price going up.

[00:19:24] [SPEAKER_02]: You can have flat earnings, but the multiple goes way up, or you can have a flat multiple and the earnings go way up.

[00:19:31] [SPEAKER_02]: And so sub driving earnings per share growth, you have net income growth and change in shares outstanding.

[00:19:39] [SPEAKER_02]: Now, the largest sub driver of total shareholder returns of the S&P 500 from 2012 to 2021 was earnings per share growth.

[00:19:50] [SPEAKER_02]: This was the source of CounterPoint Global, which is Michael Mubison, Morgan Stanley.

[00:19:57] [SPEAKER_01]: Do I win anything for pointing that one out?

[00:19:59] [SPEAKER_01]: You do.

[00:20:00] [SPEAKER_02]: You win.

[00:20:00] [SPEAKER_02]: Maybe during my presentation, I'll throw out some goodies, you know, you get a FinChat hat.

[00:20:06] [SPEAKER_02]: Okay, so now we're peeling back the onion.

[00:20:08] [SPEAKER_02]: We know earnings per share growth is the largest sub driver than PE multiple change over time.

[00:20:14] [SPEAKER_02]: But what drives earnings per share growth?

[00:20:18] [SPEAKER_02]: You know, again, we're peeling back the onion.

[00:20:21] [SPEAKER_02]: Earnings per share growth has two ways that it can happen.

[00:20:25] [SPEAKER_02]: You have net income growth, the numerator, or you reduce shares outstanding, aka buybacks in the denominator.

[00:20:33] [SPEAKER_02]: That both of those will increase earnings per share, reducing shares or increasing net income.

[00:20:39] [SPEAKER_02]: But what about net income growth?

[00:20:43] [SPEAKER_02]: Why is it so important?

[00:20:45] [SPEAKER_02]: Well, earnings per share growth in the S&P 500, 90.5% of it was driven from net income growth and just 9.5% from changes in shares outstanding.

[00:20:58] [SPEAKER_02]: Again, from Michael Mubison and CounterPoint Global and data from Morgan Stanley.

[00:21:03] [SPEAKER_02]: So, we know that there's like a 90-10 effect here happening in the S&P 500 for earnings growth that is mostly happening from increasing profits rather than share buybacks.

[00:21:14] [SPEAKER_02]: Which makes sense.

[00:21:15] [SPEAKER_02]: Of course, if you get both of them, then you get this amazing effect.

[00:21:18] [SPEAKER_02]: And then, you know, you get these kind of monster winners.

[00:21:20] [SPEAKER_01]: It can also be a warning sign, right?

[00:21:22] [SPEAKER_01]: If you have a company that, and the one that comes to mind is Apple, right?

[00:21:26] [SPEAKER_01]: That, you know, the net income is kind of stagnating, but their earnings per share is increasing because they're deleting shares.

[00:21:35] [SPEAKER_01]: They're buying back shares.

[00:21:36] [SPEAKER_01]: You know, it's an indicator that, especially if it's happening over a prolonged period of time, let's say it's been like four or five years, if not more.

[00:21:46] [SPEAKER_01]: I think it's a pretty, you know, and I'm not in medicine, but it's a symptom of the business, you know, slowing.

[00:21:54] [SPEAKER_01]: I think it's just, that's what it is.

[00:21:56] [SPEAKER_01]: And, you know, Wall Street will probably focus on EPS, which is fine.

[00:22:00] [SPEAKER_01]: It's increasing.

[00:22:01] [SPEAKER_01]: But the reality is that there might be some question mark about that business longer term, and it's already showing.

[00:22:08] [SPEAKER_01]: It changes into a different type of investment.

[00:22:10] [SPEAKER_02]: Yeah.

[00:22:10] [SPEAKER_02]: So, what drives net income growth?

[00:22:13] [SPEAKER_02]: Again, we've peeled back the onion so much here.

[00:22:16] [SPEAKER_02]: We're just trying to answer the question, why do stocks go up?

[00:22:20] [SPEAKER_02]: And we've reverse engineered all the statistics that point to net income growth is the largest, you know, net profit growth is the largest driver of return attribution long term.

[00:22:33] [SPEAKER_02]: Which, by the way, should come to no major surprise to anyone.

[00:22:37] [SPEAKER_02]: Like, I think if you asked a sixth grader, you know, why would a company be more valuable over time?

[00:22:43] [SPEAKER_02]: They'd probably say they make more money.

[00:22:45] [SPEAKER_02]: And that's true.

[00:22:47] [SPEAKER_02]: This is true.

[00:22:48] [SPEAKER_02]: Let's not, there's no bonus points in investing for added complexity.

[00:22:54] [SPEAKER_02]: I had to learn this the really hard way in the first couple years of investing.

[00:22:58] [SPEAKER_02]: I did well, but I don't think it was because I thought I was, because I was any smarter.

[00:23:03] [SPEAKER_02]: I think I got a little lucky.

[00:23:05] [SPEAKER_02]: It was really complicated stuff.

[00:23:07] [SPEAKER_02]: And I've really kind of gone away from that mindset because there's no bonus points for complex investments.

[00:23:15] [SPEAKER_02]: What drives net income that is in the company's control is sales growth and operating margins.

[00:23:24] [SPEAKER_02]: Those are the things that can be impacted by the company.

[00:23:29] [SPEAKER_02]: Everything above that operating income line is directly in their control because that does not include tax rates.

[00:23:38] [SPEAKER_02]: That does not include interest rates.

[00:23:41] [SPEAKER_02]: It's directly in the control of their operating spending and how the company's growing on top.

[00:23:48] [SPEAKER_01]: I would push back a little bit on that.

[00:23:49] [SPEAKER_01]: I would say they mostly control this just because, again, you know, thinking about, you know, macroeconomic cycle.

[00:23:58] [SPEAKER_01]: I mean, as much as they can try to increase sales, you know, if customers are just stretched out, they're stretched out.

[00:24:04] [SPEAKER_01]: Like there's, you know, at some point there's a limit to what you can do.

[00:24:06] [SPEAKER_02]: But it's a direct result of the business.

[00:24:09] [SPEAKER_01]: Yeah, yeah, yeah.

[00:24:09] [SPEAKER_01]: It is.

[00:24:11] [SPEAKER_02]: Like, I see what you're saying.

[00:24:12] [SPEAKER_02]: Like, you know, if the economy is really good and people are buying, you know, toy, let's use BRP.

[00:24:18] [SPEAKER_02]: Yeah.

[00:24:19] [SPEAKER_02]: This Sea-Doo jet skis.

[00:24:20] [SPEAKER_01]: Probably the best example to use.

[00:24:22] [SPEAKER_02]: Yeah.

[00:24:24] [SPEAKER_02]: Discretionary spending.

[00:24:26] [SPEAKER_02]: Very cyclical.

[00:24:27] [SPEAKER_02]: 100%.

[00:24:27] [SPEAKER_02]: It's like, yeah.

[00:24:27] [SPEAKER_02]: It's such a cyclical discretionary spending name, which, by the way, I don't shy away from.

[00:24:33] [SPEAKER_02]: I think you can make a lot of money in second close.

[00:24:34] [SPEAKER_02]: But it is a direct result of their business model that there is a changing ebb and flow of the company.

[00:24:42] [SPEAKER_01]: No, the point I was making was more like, you know, yes, they mostly control them,

[00:24:47] [SPEAKER_01]: but there's always going to be some small elements that are just out of their control that,

[00:24:51] [SPEAKER_01]: you know, that's where I was.

[00:24:52] [SPEAKER_01]: Sure, 100%.

[00:24:53] [SPEAKER_02]: Yeah, there is always going to be that kind of macro overlay.

[00:24:56] [SPEAKER_02]: And I'm going to talk about this in a little bit.

[00:24:59] [SPEAKER_02]: Because that macro overlay is a very important part of what makes a quality stock.

[00:25:05] [SPEAKER_02]: So if we look data from 1990 to 2009, an analysis from BCG and Morgan Stanley, what drives long-term

[00:25:16] [SPEAKER_02]: stock performance over 10-year periods, 10-year increments that they looked at in this, you

[00:25:24] [SPEAKER_02]: see, 20-year period, sales and profit growth made up for 90 or 89% of return attribution,

[00:25:37] [SPEAKER_02]: 5% from the change of the PE multiple, and 6% from, I guess that is free cash flow margins.

[00:25:46] [SPEAKER_02]: Yeah.

[00:25:46] [SPEAKER_02]: So, okay, that one's a bit confusing because free cash flow is my view, just a form of profit.

[00:25:52] [SPEAKER_02]: So let's just say nearly all of the return came from the change of the business, not the

[00:26:00] [SPEAKER_02]: valuation multiple, which is quite interesting in this data.

[00:26:04] [SPEAKER_02]: The businesses that consistently achieve above average sales growth and operating profits while

[00:26:10] [SPEAKER_02]: building this durable moat.

[00:26:12] [SPEAKER_02]: A durable moat and competitive advantages allow these companies continue to compound your money

[00:26:18] [SPEAKER_02]: for long stretches of time.

[00:26:20] [SPEAKER_02]: So we know the inputs are sales growth and operating profits.

[00:26:24] [SPEAKER_02]: Okay.

[00:26:25] [SPEAKER_02]: How do they keep those durable?

[00:26:27] [SPEAKER_02]: That's for the competitive advantages and then building out a moat.

[00:26:30] [SPEAKER_02]: This combination allows for companies to compound for a really long time.

[00:26:36] [SPEAKER_02]: These are quality stocks.

[00:26:38] [SPEAKER_02]: This is the recipe for the case for quality.

[00:26:43] [SPEAKER_02]: So what are some of the core characteristics of a quality company?

[00:26:47] [SPEAKER_02]: I have six here that I think are incredibly important and then a bunch of bonus point characteristics.

[00:26:55] [SPEAKER_02]: One, they have superior reinvestment opportunity inside of their business to reinvest cash flows.

[00:27:03] [SPEAKER_02]: Two, they have proven sales and profit growth rates.

[00:27:10] [SPEAKER_02]: Three, they're a bottleneck business model.

[00:27:13] [SPEAKER_02]: More on this in the next slide.

[00:27:15] [SPEAKER_02]: They have strong, durable pricing power.

[00:27:19] [SPEAKER_02]: They're not commoditized.

[00:27:21] [SPEAKER_02]: Conservative capital structures and they are leader or disruptor in a global secular growth trend.

[00:27:28] [SPEAKER_02]: So this is what I was talking about where there is that macro overlay.

[00:27:32] [SPEAKER_02]: Let's not kid ourselves.

[00:27:33] [SPEAKER_02]: This stuff is important.

[00:27:35] [SPEAKER_02]: If there is a global secular growth trend like digital payments for credit card companies, that's going to help.

[00:27:45] [SPEAKER_02]: Right?

[00:27:45] [SPEAKER_02]: If digital payments is going away or they're a business that relies on cash, that's in the face.

[00:27:55] [SPEAKER_02]: They have major headwinds against this global secular trend, which makes for a difficult business, makes it hard for investors to make money.

[00:28:03] [SPEAKER_02]: Now, additional characteristics I think are really important.

[00:28:07] [SPEAKER_02]: High gross margin profile.

[00:28:08] [SPEAKER_02]: This just means that there's favorable unit economics.

[00:28:11] [SPEAKER_02]: Network effects.

[00:28:13] [SPEAKER_02]: Opportunity for both organic and acquisition driven growth.

[00:28:18] [SPEAKER_02]: I think that that's really important.

[00:28:21] [SPEAKER_02]: The company is easily understood.

[00:28:23] [SPEAKER_02]: Don't underestimate that.

[00:28:24] [SPEAKER_02]: The management is transparent and they're properly incentivized.

[00:28:29] [SPEAKER_02]: If they're founder-led, that's more favorable.

[00:28:32] [SPEAKER_02]: High switching costs.

[00:28:34] [SPEAKER_02]: Economies of scale.

[00:28:35] [SPEAKER_02]: Regulatory capture.

[00:28:37] [SPEAKER_02]: And shares can be acquired at a fair price relative to business quality and growth rates.

[00:28:42] [SPEAKER_02]: Those are some of the additional characteristics that I think make for slam dunk opportunities.

[00:28:48] [SPEAKER_02]: Now, putting this together, I put that slide together a long, long time ago.

[00:28:54] [SPEAKER_02]: You've probably seen me share this before.

[00:28:56] [SPEAKER_02]: I think so.

[00:28:57] [SPEAKER_02]: I made this like five years ago.

[00:28:59] [SPEAKER_02]: I think it holds up so well today.

[00:29:01] [SPEAKER_02]: This one I just made this week.

[00:29:04] [SPEAKER_02]: What is the core strategy?

[00:29:06] [SPEAKER_02]: Okay?

[00:29:07] [SPEAKER_02]: It's buy right and sit tight.

[00:29:09] [SPEAKER_02]: And I have three things that really drive the kind of portfolio management strategy.

[00:29:16] [SPEAKER_02]: One, don't sell winners.

[00:29:20] [SPEAKER_02]: Number two, concentrate in conviction.

[00:29:25] [SPEAKER_02]: And number three, true quality is rarely cheap.

[00:29:28] [SPEAKER_02]: So swing at fat pitches.

[00:29:30] [SPEAKER_02]: I look at the best quality investors, ones with absurd track records that talk a lot about this type of stuff.

[00:29:40] [SPEAKER_02]: And they don't have any portfolio turnover.

[00:29:46] [SPEAKER_02]: Like if I look at like Dev Cantissaria of Valley Forge Capital, it's the same six companies in the top of his portfolio from when the fund was, you know, tens of millions to now three and a half billion.

[00:29:58] [SPEAKER_02]: There's been almost zero portfolio turnover.

[00:30:01] [SPEAKER_02]: And there's a lot of concentration.

[00:30:04] [SPEAKER_02]: I think between FICO and S&P, that's 50% of the portfolio.

[00:30:08] [SPEAKER_02]: You have Nick Sleep, three companies, Amazon, Costco, Berkshire, roughly a third each.

[00:30:14] [SPEAKER_02]: Don't sell the winners.

[00:30:17] [SPEAKER_02]: They're so hard to find.

[00:30:18] [SPEAKER_02]: They're so hard to find, Simone.

[00:30:20] [SPEAKER_01]: Yeah.

[00:30:20] [SPEAKER_01]: I mean, at the same time, that's highly concentrated.

[00:30:24] [SPEAKER_01]: Like I would say.

[00:30:25] [SPEAKER_01]: Yeah.

[00:30:26] [SPEAKER_01]: From a risk management perspective.

[00:30:27] [SPEAKER_01]: It's yeah.

[00:30:29] [SPEAKER_01]: Even if they're really good companies, that would be a lot for just for me.

[00:30:33] [SPEAKER_01]: And I own like have like not quite a third, but pretty close on my portfolio in Bitcoin.

[00:30:39] [SPEAKER_01]: So that's that's a lot for me.

[00:30:41] [SPEAKER_01]: But again, I think what I like about this is don't sell winners.

[00:30:45] [SPEAKER_01]: Like it's OK to sell losers or, you know, under for underperforming companies.

[00:30:50] [SPEAKER_01]: I'm just thinking Dan and I recorded and we talked about this whole like TDML resolution, right?

[00:30:56] [SPEAKER_01]: With their the fine of three billion and the asset cap.

[00:31:00] [SPEAKER_01]: And we talked a little bit about Wells Fargo and how for the longest time Buffett held it.

[00:31:07] [SPEAKER_01]: But I think at some point, you know, I'm sure he had conviction.

[00:31:10] [SPEAKER_01]: He didn't really want to talk about it too much.

[00:31:12] [SPEAKER_01]: I remember for a few annual meetings, AGM, he didn't want to talk about it.

[00:31:17] [SPEAKER_01]: But at some point, I think he sold it out all now.

[00:31:20] [SPEAKER_01]: I think he's exited the whole position.

[00:31:22] [SPEAKER_01]: But yeah, just goes to show that I'm sure he had a valid reason, a good premise to buying Wells Fargo.

[00:31:28] [SPEAKER_01]: But at some point, I think, you know, he probably came to the realization that look,

[00:31:33] [SPEAKER_01]: that money can be better placed somewhere and there are better companies to buy.

[00:31:38] [SPEAKER_01]: Like I'm not Warren Buffett.

[00:31:39] [SPEAKER_01]: Obviously, I don't know exactly his thought process on it, but I would assume that's probably, you know, fairly close to how he was thinking.

[00:31:48] [SPEAKER_02]: And look, it is pretty extreme concentration in those examples that I've talked about.

[00:31:56] [SPEAKER_02]: You and I have a few positions of what I would characterize as extreme concentration.

[00:32:02] [SPEAKER_02]: But that's why the core strategy says concentrate in conviction.

[00:32:06] [SPEAKER_02]: And the fact that you avoid selling winners, like you got to rip them out of your dead hands.

[00:32:12] [SPEAKER_02]: That is what ultimately creates those types of positions.

[00:32:17] [SPEAKER_02]: Yeah.

[00:32:17] [SPEAKER_02]: You get that as a result of winners winning and compounding and your conviction building over time and really understanding the position to give a lot of concentration and conviction.

[00:32:31] [SPEAKER_01]: It's true because a lot of, if you listen to a lot of investors that will have like one super large position, like you and I or, you know, other people.

[00:32:39] [SPEAKER_01]: Oftentimes, I would say most of the time, the story is pretty much the same.

[00:32:44] [SPEAKER_01]: It's like, oh, I just had it for the longest time.

[00:32:47] [SPEAKER_01]: It started as a 5% position in my portfolio and as it has grown and I never sold any of it.

[00:32:52] [SPEAKER_01]: That's typically how that story will go.

[00:32:56] [SPEAKER_01]: Totally.

[00:32:56] [SPEAKER_02]: And it's like, you know, it's such a high position that like anecdotally, I mean, for you and I and a lot of people, you don't see them aggressively continuing to add to it.

[00:33:05] [SPEAKER_02]: Because it seems crazy.

[00:33:06] [SPEAKER_02]: You know, it's like this is already half the portfolio.

[00:33:07] [SPEAKER_02]: I'm not going to add fresh capital to it.

[00:33:09] [SPEAKER_02]: But you'll find even if you're not adding fresh capital to it, winners keep winning.

[00:33:16] [SPEAKER_02]: And you get this like you get this huge position.

[00:33:19] [SPEAKER_02]: This happens all the time.

[00:33:21] [SPEAKER_02]: The difference is that the main difference is quality companies can warrant these types of positions because they have unequal advantage.

[00:33:35] [SPEAKER_02]: Life isn't fair.

[00:33:36] [SPEAKER_02]: Business isn't fair.

[00:33:37] [SPEAKER_02]: And a lot of these companies just have better positions in the world of, you know, of their industry or opportunities being fed to them.

[00:33:46] [SPEAKER_02]: And that is exactly why I'm going to talk about my next slide.

[00:33:49] [SPEAKER_02]: Bottleneck businesses.

[00:33:51] [SPEAKER_02]: Chuck Ackery's firm defines in their paper they've written on their website called Bottleneck businesses.

[00:33:57] [SPEAKER_02]: Bottleneck businesses have opportunities funneled disproportionately to them because of sustainable competitive advantages.

[00:34:04] [SPEAKER_02]: This is what I was just talking about.

[00:34:06] [SPEAKER_01]: Smart to not use Visa here in MasterCard.

[00:34:08] [SPEAKER_01]: I'll just say that.

[00:34:11] [SPEAKER_02]: If you want to see the slides, I am sharing them right now for listeners on jointtci.com on the video.

[00:34:17] [SPEAKER_02]: He's using MasterCard as the example.

[00:34:20] [SPEAKER_01]: And obviously, because of the whole regulatory antitrust lawsuit right now with Visa, it's probably a smart idea to not put Visa.

[00:34:28] [SPEAKER_02]: I don't want to be bringing them into the radar.

[00:34:31] [SPEAKER_02]: I already have enough money on the line.

[00:34:33] [SPEAKER_02]: So the graphic here that I've created is a bottleneck, a bottle.

[00:34:40] [SPEAKER_02]: You know, there's four things going in and then out comes profit on the other side of MasterCard at the end of the bottleneck.

[00:34:49] [SPEAKER_02]: In coming into the bottle is digital payments.

[00:34:54] [SPEAKER_02]: You know, the world is still mostly cash and that they continue to erode market share onto card.

[00:35:00] [SPEAKER_02]: Growth of FinTechs that are actually just building on top of their ecosystem.

[00:35:04] [SPEAKER_02]: Between buy now, pay later, all the neobanks, all the banks that really want to issue you card technology because they make a lot of money on it.

[00:35:12] [SPEAKER_02]: Visa and MasterCard have their, you know, their foothold on the rails of FinTech.

[00:35:19] [SPEAKER_02]: The growth of e-commerce.

[00:35:20] [SPEAKER_02]: So again, more kind of digital payments.

[00:35:23] [SPEAKER_02]: Cross-border payments.

[00:35:24] [SPEAKER_02]: As people travel and go cross-border and spend more and more money.

[00:35:29] [SPEAKER_02]: Again, that is really good high margin revenue for a company like MasterCard.

[00:35:34] [SPEAKER_02]: So all of these opportunities are funneled disproportionately to it because of their competitive advantages.

[00:35:44] [SPEAKER_02]: I look at ASML as a perfect example of this one as well.

[00:35:48] [SPEAKER_02]: You have all this pressure of needing more and more infrastructure, more foundry capacity for chips.

[00:35:58] [SPEAKER_02]: There's the governments wanting more capacity to reduce geopolitical risk.

[00:36:03] [SPEAKER_02]: There's industry wanting more capacity.

[00:36:06] [SPEAKER_02]: There's AI and new technologies wanting more capacity.

[00:36:10] [SPEAKER_02]: And in the end of that bottleneck is ASML, the only one producing ultrafile photography machines.

[00:36:17] [SPEAKER_02]: I feel like you're laughing because the stock's down 15% today.

[00:36:20] [SPEAKER_02]: Yeah, I just happened to look at the stock.

[00:36:22] [SPEAKER_01]: I was like, holy.

[00:36:23] [SPEAKER_01]: And I won't say what internally my head happened because I just happened to see like I had a tab open.

[00:36:30] [SPEAKER_01]: They missed the bookings number.

[00:36:32] [SPEAKER_01]: I was like, oh boy, this is, yeah.

[00:36:35] [SPEAKER_02]: They missed the bookings number and I just moved a bunch of CAD to UBSD because I am buying more.

[00:36:42] [SPEAKER_02]: Yeah, no, sorry.

[00:36:42] [SPEAKER_01]: I didn't want to distract.

[00:36:43] [SPEAKER_01]: I just like, I think you saw it with my face.

[00:36:45] [SPEAKER_02]: No, it's a good side note.

[00:36:47] [SPEAKER_02]: It's a good side note for the people wondering what's happening with ASML.

[00:36:50] [SPEAKER_02]: I am buying more of the stock.

[00:36:52] [SPEAKER_02]: I'm happy to take short-term booking numbers.

[00:36:56] [SPEAKER_01]: I mean, yeah, starting definitely popping back up on my radar because I had sold around, you know, when it was pretty richly valued.

[00:37:04] [SPEAKER_01]: And now I'm like, okay.

[00:37:06] [SPEAKER_02]: Also, they were not supposed to release that information today as of recording.

[00:37:10] [SPEAKER_02]: It was supposed to be tomorrow.

[00:37:11] [SPEAKER_02]: So someone's getting a stir.

[00:37:13] [SPEAKER_01]: Someone got the trigger finger.

[00:37:15] [SPEAKER_01]: Oops.

[00:37:16] [SPEAKER_02]: That publish button, it got in the way of my mouse.

[00:37:20] [SPEAKER_02]: All right, let's look at three companies.

[00:37:23] [SPEAKER_02]: Speaking of ASMLs, one of them, businesses that have had consistent core characteristics of high quality stocks.

[00:37:29] [SPEAKER_02]: So three compounding case studies.

[00:37:32] [SPEAKER_02]: And I wanted to show them visually via FinChat here because fundamentals are gravity even when you're on the moon.

[00:37:41] [SPEAKER_02]: Fundamentals are gravity and stock prices, price appreciation does follow those core characteristics of sales growth and profit growth over time.

[00:37:51] [SPEAKER_02]: So here is Visa.

[00:37:53] [SPEAKER_02]: If you have growth of the stock price, earnings per share and total revenues, yes, they fluctuate and leave each other and have a little bit of discrepancy sometimes in the short term.

[00:38:04] [SPEAKER_02]: But over the long term, you're getting very, very similar types of results.

[00:38:08] [SPEAKER_02]: You have the stock price compounding at 22% since 2010 and earnings per share is compounded at 17%.

[00:38:17] [SPEAKER_02]: ASML.

[00:38:18] [SPEAKER_02]: You have the stock up during that time frame, I guess since 2008, the stock's up 5,600% and the earnings per share price is compounded at 20%.

[00:38:32] [SPEAKER_02]: These graphics visually, you can see a lot of correlation.

[00:38:38] [SPEAKER_02]: FICO.

[00:38:38] [SPEAKER_02]: This was, I guess, a stock that now is super highly valued, but maybe potentially massively undervalued as there was a huge gap between its share price and its fundamentals.

[00:38:52] [SPEAKER_02]: I would say from 2019 through to 2021.

[00:38:56] [SPEAKER_02]: And then the stock massively caught up.

[00:38:59] [SPEAKER_02]: But Simone, the starting and finishing point of these axes are pretty similar.

[00:39:04] [SPEAKER_02]: And so you can see fundamentals are gravity.

[00:39:08] [SPEAKER_02]: And these are just, I'm not cherry picking these ideas.

[00:39:10] [SPEAKER_02]: I just picked three companies, graphed them out, and I wasn't surprised to see what's happening.

[00:39:15] [SPEAKER_02]: Now, you have to talk about patience and volatility when it comes to holding companies for a really long time, if that's what we're trying to do.

[00:39:23] [SPEAKER_02]: We all know compound interest is magical.

[00:39:27] [SPEAKER_02]: That's why you're listening to the show.

[00:39:28] [SPEAKER_02]: That's why you're here sitting down for the presentation.

[00:39:31] [SPEAKER_02]: The key to compounding is to not interrupt it unnecessarily.

[00:39:36] [SPEAKER_02]: But to let compounding happen, you have to hold through long periods of volatility and you only die on a roller coaster if you jump off.

[00:39:46] [SPEAKER_01]: Let's look at Amazon.

[00:39:47] [SPEAKER_01]: You should change that slide to like just strap on your seat belt and enjoy the ride.

[00:39:54] [SPEAKER_01]: That's it.

[00:39:54] [SPEAKER_01]: That's a slide.

[00:39:57] [SPEAKER_02]: Look at my nice little graphic here.

[00:40:00] [SPEAKER_02]: It's good.

[00:40:00] [SPEAKER_02]: It's good.

[00:40:00] [SPEAKER_02]: This roller coaster.

[00:40:01] [SPEAKER_02]: It's like some roller coaster tycoon type, you know, this is pretty good.

[00:40:07] [SPEAKER_02]: Patience pays.

[00:40:08] [SPEAKER_02]: Amazon as a business has been on a historic run since its founding in 1994.

[00:40:13] [SPEAKER_02]: The stock went public in 97 and has returned investors 200 times their money since then.

[00:40:21] [SPEAKER_02]: As we know, internet companies that went public in 1997 had quite the round trip.

[00:40:27] [SPEAKER_02]: Maybe that's generous from that time through the bubble bursting in 2001.

[00:40:33] [SPEAKER_02]: This is what we get when we sign up for public company equity ownership.

[00:40:39] [SPEAKER_02]: We sign up for volatility.

[00:40:43] [SPEAKER_02]: One, two, three, four, five, six, seven, eight, nine.

[00:40:48] [SPEAKER_02]: I'm just reading roughly nine times that you've seen a Amazon drawdown of more than 40%.

[00:40:54] [SPEAKER_02]: More than 60%.

[00:40:56] [SPEAKER_02]: I'm seeing one, two, three, four, five ish times that you lost 160% of your money.

[00:41:02] [SPEAKER_02]: It was down more than 70% twice and more than 80%, almost 90% when the bubble burst.

[00:41:12] [SPEAKER_02]: You saw absurd drawdowns.

[00:41:16] [SPEAKER_02]: This is not an easy stock to own.

[00:41:18] [SPEAKER_02]: But if you were blocked out of your brokerage account and you were just studying the business,

[00:41:23] [SPEAKER_02]: it actually probably would have been a pretty easy story to own.

[00:41:27] [SPEAKER_02]: It wouldn't have been the hardest story to hold for 30 odd years.

[00:41:33] [SPEAKER_02]: But when you see the gyrations of Mr. Market, it would have been very difficult to own through all of this.

[00:41:43] [SPEAKER_02]: It looks left for dead several, several times while Bezos was building this little empire.

[00:41:49] [SPEAKER_02]: I don't think little is a good word for Amazon anymore, but you know what I mean.

[00:41:53] [SPEAKER_02]: An underrated benefit of high quality companies is sleeping well at night.

[00:41:58] [SPEAKER_02]: From Schroeder's MSCI data, quality companies give shareholders consistent good news and are less likely to disappoint in the year after being designated high quality.

[00:42:11] [SPEAKER_02]: So high quality companies more often had good news events and less often had bad news events like cut dividends, issued new shares, made a loss, negative free cash flow, earnings declines, and underperformance by 20% plus.

[00:42:30] [SPEAKER_02]: So compared to the universe average, their high quality index had significantly more good events and significantly less bad events during this study.

[00:42:41] [SPEAKER_02]: And quality companies tend to exhibit lower volatility in the market.

[00:42:46] [SPEAKER_02]: They've graded quality companies into five buckets and annualized volatility of the highest quality bucket had lower volatility than lower quality companies.

[00:42:56] [SPEAKER_02]: Again, this is data from 88 onwards.

[00:42:59] [SPEAKER_02]: And you get to sleep well at night rich.

[00:43:03] [SPEAKER_02]: You get, you know, sleeping well at night while you get rich.

[00:43:07] [SPEAKER_02]: The Morningstar Wide Moat Index ETF from VanEck has outperformed SPY since inception.

[00:43:13] [SPEAKER_02]: Now, when you look at it, you're like, okay, there's a slight outperformance since its inception in 2013-ish.

[00:43:20] [SPEAKER_02]: Okay.

[00:43:21] [SPEAKER_02]: And you're like, it's not by a lot, right?

[00:43:23] [SPEAKER_02]: Has it been worth owning it?

[00:43:26] [SPEAKER_02]: Simone, when you look at the top holdings on the right side here, again, you can find all this data for every ETF holdings on FinChat.

[00:43:35] [SPEAKER_02]: What do you see here in the companies versus the traditional SPY megatech allocation?

[00:43:43] [SPEAKER_01]: Yeah, I mean, there's none of the megatech in there.

[00:43:45] [SPEAKER_01]: I mean, there are some, but they're all equal weighted.

[00:43:50] [SPEAKER_01]: You know, there's no Mag 7.

[00:43:52] [SPEAKER_01]: I'll just say that.

[00:43:52] [SPEAKER_02]: It's not Mag 7 making up 25, 30% of the portfolio.

[00:43:56] [SPEAKER_02]: It's not Apple, NVIDIA, Microsoft, 20-something percent.

[00:44:02] [SPEAKER_02]: It's Transusion.

[00:44:04] [SPEAKER_02]: It's Autodesk.

[00:44:05] [SPEAKER_02]: It's Allegiant.

[00:44:06] [SPEAKER_02]: It's Brown and Foreman, Bristol-Myers Squibb, Salesforce, Gilead Sciences, Market Access.

[00:44:14] [SPEAKER_02]: And it's equal weighted pretty well, too.

[00:44:18] [SPEAKER_01]: Surprise, there's a U.S. Bancor in there.

[00:44:20] [SPEAKER_02]: I guess Morningstar thinks it's a very high-quality company.

[00:44:25] [SPEAKER_02]: Again, these indexes are not perfect.

[00:44:28] [SPEAKER_02]: But when I do look at the index, there are some very wide-mount companies in there.

[00:44:34] [SPEAKER_02]: So, interesting that it's able to have that outperformance without owning NVIDIA.

[00:44:39] [SPEAKER_02]: Like, honestly.

[00:44:40] [SPEAKER_02]: Yeah.

[00:44:40] [SPEAKER_02]: Like, actually.

[00:44:41] [SPEAKER_02]: That's insane to me that it's able to do that.

[00:44:44] [SPEAKER_02]: All right.

[00:44:45] [SPEAKER_02]: Sleeping well at night, Rich, part two.

[00:44:48] [SPEAKER_02]: Historical returns by quality cohort, again, had exactly what you'd want to see.

[00:44:53] [SPEAKER_02]: High-quality companies in the highest tier had excess returns above 4% during that timeframe.

[00:45:01] [SPEAKER_02]: All right.

[00:45:02] [SPEAKER_02]: I have a list of homework type of companies or investors to look at.

[00:45:07] [SPEAKER_02]: Studying the greats.

[00:45:09] [SPEAKER_02]: These investors, I believe, have demonstrated high conviction in holding high-quality businesses

[00:45:17] [SPEAKER_02]: through long periods of compounding and very resistant to portfolio turnover.

[00:45:21] [SPEAKER_02]: Chuck Ackrey of Ackrey Capital.

[00:45:24] [SPEAKER_02]: Dev Kentiseria of Valley Forge Capital.

[00:45:27] [SPEAKER_02]: Nick Sleep, now running his own fund, but formerly of the Nomad Partnership.

[00:45:33] [SPEAKER_02]: Chris Hohn of TCI Fund Management.

[00:45:36] [SPEAKER_02]: Terry Smith of Fundsmith.

[00:45:38] [SPEAKER_02]: Francois Rashawn from Quebec in Guerny Capital.

[00:45:42] [SPEAKER_02]: Chris Meyer, friend of the show, personal friend.

[00:45:45] [SPEAKER_02]: He's running Woodlock House Family Capital.

[00:45:48] [SPEAKER_02]: Amazing investor.

[00:45:50] [SPEAKER_02]: Mark Massey of Altarock.

[00:45:52] [SPEAKER_02]: Look at Dev Kentiseria's portfolio.

[00:45:55] [SPEAKER_02]: It's 33% FICO, 20% S&P, another 10% Moody's, 16% MasterCard, huge position in Visa, ASML, Intuit.

[00:46:08] [SPEAKER_02]: And it's been that for like since inception.

[00:46:13] [SPEAKER_02]: It's just crushed the market.

[00:46:16] [SPEAKER_02]: Like I look at these companies and they're all super wide moat, really good businesses that I think you can sleep very well bracket rich owning.

[00:46:28] [SPEAKER_02]: Just to wrap this up, fundamentals matter.

[00:46:31] [SPEAKER_02]: My process and what I recommend is build and screen a universe of high-quality companies.

[00:46:37] [SPEAKER_02]: Track by using a screener.

[00:46:40] [SPEAKER_02]: Maintain them by using a FinChat dashboard.

[00:46:43] [SPEAKER_02]: Then understand all the financials and the KPIs.

[00:46:47] [SPEAKER_02]: Review all investor relation content, conference calls, investor days.

[00:46:52] [SPEAKER_02]: Deeply understand the business qualities in the management team.

[00:46:56] [SPEAKER_02]: And the not-so-sexy part of this is conviction is built over long periods of time, not typically in an afternoon.

[00:47:05] [SPEAKER_02]: So all this info can be found for global fundamental data on FinChat.io.

[00:47:11] [SPEAKER_02]: And, you know, plug, of course, if you're listening to the podcast and you want to subscribe, code TCI is 15% off.

[00:47:20] [SPEAKER_02]: So yeah, that's the presentation on quality stocks, Mo.

[00:47:26] [SPEAKER_01]: It's good.

[00:47:26] [SPEAKER_01]: It's good.

[00:47:27] [SPEAKER_01]: Standing ovation.

[00:47:28] [SPEAKER_01]: No, it was good.

[00:47:30] [SPEAKER_01]: Yeah, definitely.

[00:47:30] [SPEAKER_01]: I think it'll do great.

[00:47:32] [SPEAKER_01]: I hope you have more than 15 minutes because I think it's going to be a bit longer than that.

[00:47:36] [SPEAKER_01]: But aside from that, I think it was great.

[00:47:38] [SPEAKER_02]: Yeah, I think it'll probably be 20-ish.

[00:47:42] [SPEAKER_01]: We'll see.

[00:47:42] [SPEAKER_01]: If they don't have a hard cap, you'll be fine.

[00:47:44] [SPEAKER_01]: That's a case-like presentation.

[00:47:46] [SPEAKER_01]: I find they always end up being longer than you think.

[00:47:49] [SPEAKER_02]: Yeah, there's always a buffer.

[00:47:50] [SPEAKER_02]: I looked at the agenda.

[00:47:51] [SPEAKER_02]: There's a buffer built out.

[00:47:52] [SPEAKER_02]: Okay, okay.

[00:47:53] [SPEAKER_02]: But I'm just going to have to throw everyone a couple snacks first.

[00:47:57] [SPEAKER_02]: I think I'm before lunch.

[00:47:59] [SPEAKER_02]: The deadly.

[00:47:59] [SPEAKER_02]: The deadly slot.

[00:48:01] [SPEAKER_02]: You don't want that slot.

[00:48:02] [SPEAKER_02]: I got that slot.

[00:48:03] [SPEAKER_02]: You do not want that one.

[00:48:05] [SPEAKER_01]: Just buying like Celsius or whatever for the whole room.

[00:48:08] [SPEAKER_01]: Oh, they'll pay attention.

[00:48:11] [SPEAKER_02]: Get some Celsius for everyone.

[00:48:13] [SPEAKER_02]: Tell them not to look at the stock price of Celsius and you'll be good.

[00:48:17] [SPEAKER_02]: Exactly.

[00:48:19] [SPEAKER_02]: How's it doing?

[00:48:20] [SPEAKER_02]: I'm curious.

[00:48:22] [SPEAKER_01]: Every show, there'll be a breed and update on Celsius stock price.

[00:48:26] [SPEAKER_02]: Oh, tough sledding.

[00:48:27] [SPEAKER_02]: It is on a 64% drawdown.

[00:48:32] [SPEAKER_02]: Is that an improvement?

[00:48:33] [SPEAKER_02]: Slightly from like 68.

[00:48:37] [SPEAKER_02]: Slightly.

[00:48:38] [SPEAKER_02]: If we're taking consolation.

[00:48:40] [SPEAKER_02]: I'm not even a shareholder.

[00:48:42] [SPEAKER_02]: So, dude, for our company, once a month,

[00:48:47] [SPEAKER_02]: I make everyone to come to our all hands meeting with a stock pitch,

[00:48:51] [SPEAKER_02]: which seems ridiculous.

[00:48:53] [SPEAKER_02]: But the main reason is,

[00:48:55] [SPEAKER_02]: is we have a lot of folks who don't have direct connection with the product.

[00:49:00] [SPEAKER_02]: Like if they're not directly involved with building or selling the product,

[00:49:06] [SPEAKER_02]: they might not have a lot of context on how to use it.

[00:49:11] [SPEAKER_02]: Same way Home Depot is sending their corporate employees to go work retail shifts.

[00:49:19] [SPEAKER_02]: I don't know if you've seen that in the news.

[00:49:20] [SPEAKER_01]: No, I didn't see it, but I'm not surprised.

[00:49:22] [SPEAKER_02]: They're sending corporate employees to go do a retail shift once a quarter.

[00:49:27] [SPEAKER_01]: Okay.

[00:49:28] [SPEAKER_02]: This is not new.

[00:49:29] [SPEAKER_02]: Everybody works at DoorDash.

[00:49:30] [SPEAKER_02]: He has to like dash food like once a quarter as well too.

[00:49:35] [SPEAKER_02]: It helps give important context.

[00:49:39] [SPEAKER_02]: I think a lot of manufacturers do this quite well.

[00:49:41] [SPEAKER_02]: If you work at the big head office,

[00:49:44] [SPEAKER_02]: but you have no context on what's happening on the shop floor,

[00:49:46] [SPEAKER_02]: like that's a bad disconnect.

[00:49:47] [SPEAKER_01]: It can give you a better perspective on what is working well and what isn't.

[00:49:52] [SPEAKER_01]: And some of the pain points.

[00:49:54] [SPEAKER_01]: Yeah.

[00:49:54] [SPEAKER_01]: If you don't realize, you know, that whatever,

[00:49:56] [SPEAKER_01]: you know, a tool or an app that you're using is not working well,

[00:50:02] [SPEAKER_01]: while as management, you'd be like,

[00:50:04] [SPEAKER_01]: whatever, like it's not really important.

[00:50:06] [SPEAKER_01]: But then you kind of realize that it's affecting productivity,

[00:50:10] [SPEAKER_01]: the business ultimately.

[00:50:12] [SPEAKER_01]: If you live it,

[00:50:13] [SPEAKER_01]: then you actually can get a better perspective of the impacts

[00:50:16] [SPEAKER_01]: and try to fix it and be more motivated to do it.

[00:50:20] [SPEAKER_01]: Correct.

[00:50:21] [SPEAKER_02]: And so I make folks do like a little stock pitch

[00:50:24] [SPEAKER_02]: by showing like a 30 second chart on FinChat

[00:50:29] [SPEAKER_02]: and building the chart and doing it.

[00:50:31] [SPEAKER_02]: This has helped us create a lot of product improvements

[00:50:34] [SPEAKER_02]: just doing this alone.

[00:50:35] [SPEAKER_02]: But anyways,

[00:50:36] [SPEAKER_02]: it's a roundabout way of me saying,

[00:50:38] [SPEAKER_02]: I am psychologically long Celsius because I pitched it.

[00:50:41] [SPEAKER_02]: Okay.

[00:50:42] [SPEAKER_02]: Okay.

[00:50:43] [SPEAKER_02]: With fake money.

[00:50:44] [SPEAKER_02]: Fake money.

[00:50:45] [SPEAKER_02]: Because it doesn't exist.

[00:50:45] [SPEAKER_01]: Play money.

[00:50:46] [SPEAKER_01]: Yeah.

[00:50:47] [SPEAKER_01]: That's always that.

[00:50:48] [SPEAKER_02]: It is the worst performing name of all the pitches.

[00:50:54] [SPEAKER_02]: And we do it every month.

[00:50:54] [SPEAKER_02]: It is dead last by a huge margin.

[00:50:59] [SPEAKER_01]: Yeah.

[00:51:00] [SPEAKER_01]: That's the problem with play money, right?

[00:51:02] [SPEAKER_01]: Like it's,

[00:51:02] [SPEAKER_01]: or fake money.

[00:51:04] [SPEAKER_01]: At poker,

[00:51:05] [SPEAKER_01]: it was always like that too.

[00:51:06] [SPEAKER_01]: You'd have these like free money tournaments

[00:51:08] [SPEAKER_01]: where people just like play like insane,

[00:51:12] [SPEAKER_01]: but then.

[00:51:13] [SPEAKER_01]: They go all in like right away.

[00:51:14] [SPEAKER_01]: Exactly.

[00:51:15] [SPEAKER_01]: And even if it's like as small as like one or $2,

[00:51:19] [SPEAKER_01]: the fact that people have like actual money on the line,

[00:51:22] [SPEAKER_01]: they play completely differently.

[00:51:24] [SPEAKER_01]: Yeah.

[00:51:26] [SPEAKER_02]: Makes sense.

[00:51:27] [SPEAKER_02]: Yeah.

[00:51:27] [SPEAKER_02]: Like I play poker with my buddies and it's like the buy-in's like 20 bucks.

[00:51:32] [SPEAKER_02]: Dude,

[00:51:32] [SPEAKER_02]: I,

[00:51:33] [SPEAKER_02]: I act like each dollar is like a thousand.

[00:51:35] [SPEAKER_02]: Oh yeah.

[00:51:36] [SPEAKER_01]: Yeah.

[00:51:36] [SPEAKER_01]: It's like so.

[00:51:39] [SPEAKER_02]: God forbid I lose 20 bucks.

[00:51:42] [SPEAKER_02]: Thanks for listening folks.

[00:51:43] [SPEAKER_02]: We appreciate you tuning in.

[00:51:44] [SPEAKER_02]: Again,

[00:51:46] [SPEAKER_02]: I think someone was asking to join TCI for a code to,

[00:51:48] [SPEAKER_02]: to subscribe to FinChat.

[00:51:49] [SPEAKER_02]: So that's code TCI.

[00:51:51] [SPEAKER_02]: Gives you 15% off.

[00:51:54] [SPEAKER_02]: And,

[00:51:55] [SPEAKER_02]: uh,

[00:51:56] [SPEAKER_02]: yeah.

[00:51:56] [SPEAKER_02]: Anything,

[00:51:57] [SPEAKER_02]: anything else,

[00:51:58] [SPEAKER_02]: Simone?

[00:51:58] [SPEAKER_02]: No,

[00:51:58] [SPEAKER_01]: that's good.

[00:51:59] [SPEAKER_02]: Anything else to,

[00:52:00] [SPEAKER_02]: uh,

[00:52:00] [SPEAKER_01]: and they'll have to go dig into those,

[00:52:03] [SPEAKER_01]: uh,

[00:52:04] [SPEAKER_01]: SML earnings.

[00:52:06] [SPEAKER_01]: I'm tempted now to,

[00:52:07] [SPEAKER_01]: that was the only reason why I sold my,

[00:52:10] [SPEAKER_01]: my position in it was just that,

[00:52:13] [SPEAKER_01]: uh,

[00:52:13] [SPEAKER_01]: I felt along with other semiconductor stocks,

[00:52:16] [SPEAKER_01]: I just felt like the multiples were just too stretch and not factoring in any risk.

[00:52:21] [SPEAKER_01]: But now,

[00:52:22] [SPEAKER_01]: I mean,

[00:52:22] [SPEAKER_01]: yeah,

[00:52:23] [SPEAKER_01]: with this,

[00:52:24] [SPEAKER_01]: that changes things a little bit.

[00:52:27] [SPEAKER_02]: Yeah.

[00:52:28] [SPEAKER_02]: It's trading at a more justifiable forward 25,

[00:52:32] [SPEAKER_02]: uh,

[00:52:32] [SPEAKER_02]: 24 times EBITDA.

[00:52:34] [SPEAKER_01]: Yeah.

[00:52:34] [SPEAKER_02]: Next year.

[00:52:35] [SPEAKER_02]: Right.

[00:52:36] [SPEAKER_02]: So,

[00:52:36] [SPEAKER_01]: which is not,

[00:52:37] [SPEAKER_01]: that's a lot,

[00:52:38] [SPEAKER_01]: it's a lot easier to swallow than 40 something.

[00:52:41] [SPEAKER_01]: I think it was like,

[00:52:42] [SPEAKER_01]: it was up there before this.

[00:52:45] [SPEAKER_01]: I mean,

[00:52:45] [SPEAKER_01]: it had come down,

[00:52:46] [SPEAKER_01]: but even before this drop is,

[00:52:48] [SPEAKER_01]: it was pretty expensive.

[00:52:49] [SPEAKER_01]: Yeah.

[00:52:50] [SPEAKER_02]: Yeah.

[00:52:51] [SPEAKER_02]: And look,

[00:52:52] [SPEAKER_02]: I mean,

[00:52:53] [SPEAKER_02]: these companies are so,

[00:52:55] [SPEAKER_02]: it's such a chunk as chunky bookings,

[00:52:57] [SPEAKER_02]: man.

[00:52:57] [SPEAKER_01]: Oh yeah.

[00:52:58] [SPEAKER_01]: Yeah.

[00:52:59] [SPEAKER_02]: Chunky,

[00:52:59] [SPEAKER_02]: chunky bookings.

[00:53:00] [SPEAKER_02]: It's not like,

[00:53:02] [SPEAKER_02]: you know,

[00:53:03] [SPEAKER_02]: you're not selling $10,000 equipment.

[00:53:06] [SPEAKER_02]: You're selling a hundred million dollar equipment.

[00:53:10] [SPEAKER_02]: It's very,

[00:53:11] [SPEAKER_02]: very chunky and very few tons of suppliers,

[00:53:14] [SPEAKER_02]: very few customers.

[00:53:16] [SPEAKER_01]: Yeah,

[00:53:17] [SPEAKER_01]: no,

[00:53:17] [SPEAKER_01]: exactly.

[00:53:17] [SPEAKER_01]: But,

[00:53:18] [SPEAKER_01]: uh,

[00:53:18] [SPEAKER_01]: no,

[00:53:18] [SPEAKER_01]: at the right price,

[00:53:19] [SPEAKER_01]: I will definitely get back in.

[00:53:21] [SPEAKER_01]: That's for sure.

[00:53:21] [SPEAKER_01]: I don't trade,

[00:53:22] [SPEAKER_01]: but you know,

[00:53:23] [SPEAKER_01]: sometimes,

[00:53:23] [SPEAKER_01]: uh,

[00:53:24] [SPEAKER_01]: I trim on the edges.

[00:53:25] [SPEAKER_01]: I'll just say that.

[00:53:26] [SPEAKER_01]: Yeah.

[00:53:26] [SPEAKER_02]: If the market's given you the opportunity,

[00:53:28] [SPEAKER_02]: I think that is one difference between our styles.

[00:53:32] [SPEAKER_02]: You're,

[00:53:32] [SPEAKER_02]: you're,

[00:53:32] [SPEAKER_02]: you're willing to be a bit more nimble.

[00:53:34] [SPEAKER_02]: Whereas I'm like,

[00:53:35] [SPEAKER_02]: so resistant.

[00:53:36] [SPEAKER_01]: Yeah.

[00:53:37] [SPEAKER_01]: Hmm.

[00:53:38] [SPEAKER_02]: For better,

[00:53:39] [SPEAKER_02]: for worse.

[00:53:40] [SPEAKER_02]: I,

[00:53:40] [SPEAKER_02]: you know,

[00:53:42] [SPEAKER_02]: sometimes it works out by being locked out of your brokerage account.

[00:53:46] [SPEAKER_02]: Sometimes you trade it well,

[00:53:48] [SPEAKER_02]: like,

[00:53:48] [SPEAKER_02]: like you are in this case and,

[00:53:49] [SPEAKER_02]: you know,

[00:53:50] [SPEAKER_02]: it works out.

[00:53:50] [SPEAKER_02]: Yeah.

[00:53:51] [SPEAKER_01]: I mean,

[00:53:51] [SPEAKER_01]: trade well,

[00:53:52] [SPEAKER_01]: right?

[00:53:52] [SPEAKER_01]: Like it's more around the hedges.

[00:53:54] [SPEAKER_01]: Like I said,

[00:53:55] [SPEAKER_01]: I'm not doing like crazy moves on a daily basis.

[00:53:58] [SPEAKER_01]: Um,

[00:53:58] [SPEAKER_01]: but yeah,

[00:54:00] [SPEAKER_01]: there's,

[00:54:00] [SPEAKER_01]: there's a logic to my madness,

[00:54:02] [SPEAKER_01]: but I think both approaches can do well longterm.

[00:54:05] [SPEAKER_02]: Thanks for listening folks.

[00:54:06] [SPEAKER_02]: We will see you in a few days.

[00:54:08] [SPEAKER_02]: Take care.

[00:54:09] [SPEAKER_01]: The Canadian investor podcast should not be construed as investment or financial advice.

[00:54:15] [SPEAKER_01]: The hosts and guests featured may own securities or assets discussed on this podcast.

[00:54:20] [SPEAKER_01]: Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.