This Transcript has been automatically generated.

Colin White: So we’re gonna go through a few things today. We’re going to do some good news because one thing there’s not enough of in the world is good news. So every time you see me speak, I’m gonna start with a couple pieces of good news you probably didn’t know about.

Katrina Cooke: Down is next.

Colin White: Down is next. Okay. Not up is next. User error. There we go.

So mark and then we’re gonna give a market update, and that’s largely because people, when we stand up to speak, they wanna hear market updates. So we’re gonna go through, and it’s exciting times right now, and Josh has got some exciting things to say. And then we’re gonna go through things you can do when it comes to investing, but you probably shouldn’t. So we’re gonna step through some popular things, some popular ideas, things people are talking about. Our goal is to educate you so that when somebody comes up to you and talks about a really good idea, you have a bit more information to put that in context and understand what’s really going on.

There’s a lot of things that are being said. A lot of people are losing a lot of money. We wanna make sure that we try to educate people as much as we can to protect them from some of the some of the dangers that are out there. So oh, down is up. Got it.

Good news. They have cured type one diabetes in rats. They actually have a treatment that has been successful and completely erasing type one diabetes sorry, mice, not rats. That’s that’s a mouse. Now again, that doesn’t mean we’re ready to cure it in people, but a nerd somewhere in a lab has been successful.

Has anybody heard about this? Isn’t this big enough news that it probably should have made the news somewhere that we’ve cured type one diabetes? There you go. You’re welcome. Stem cell injections of some description.

I’m not that much of a geek. I just read the article. I know that lots of people are in. So that’s a big deal, and that’s the kind of stuff we don’t hear enough about. The next one is that they have reintroduced now I don’t know if it’s Tortai or Tortus is.

I call them Tortai in the Galapagos Islands. It’s been a hundred and eighty years since this particular species existed in the Galapagos, and they have successfully reintroduced them. Now last time I gave this presentation, somebody had just come back from the Galapagos Islands who had seen them. So this is real. Has anybody here just come back from the Galapagos Islands?

Okay. Just that’s a future check I wanna keep an eye on. Big deal. Galapagos Islands are a very biodiverse environment, and they’re having success in reintroducing some things that were the staples of the Galapagos. And again, I still need to look up whether it’s tortoisesis or tortii, but anyway, a bunch of them.

So with that, I’m gonna pass it off to Josh. And Josh, the down arrow means up, so just don’t make the same mistake I did.

Josh Sheluk: So markets, I’ve already had a couple people say today, I don’t think they use this the term exciting like Colin used, but scary, little bit volatile. That’s definitely happening right now. But I’m gonna go over a couple things with you. The first is the headlines versus the fundamentals, and I’m gonna go to my piece of paper here so I can actually read some of these headlines that I pulled out today. So there tends to be, with the world, with the media, a bit of a dislocation between what the media is saying, what the headlines are telling you, and what what is actually happening in the world.

So I’m gonna read you a couple headlines, and then I will give you the actual facts. Headline number one, this is from today. Bonds, stocks decline as Iran sustains attacks. So that’s the headline for today. Stocks and bonds are down.

But if you look at over the past six months, stocks are about flat. If you look at over the past twelve twelve months, stocks are up by double digit percentages. And if you look at bonds, they’re actually up since the start of the year. So, yeah, today, this month, things might be a little bit volatile. They might be down.

But over any reasonable long term, medium term time horizon, things are doing pretty good. Headline number two, Iran war escalation wakes markets up to risks of deeper economic pain. So I think everybody’s heard about this, everybody’s talking about it. Yes, there are some risks from the Iran war that might challenge economies a little bit. Well, here’s the facts.

Over the last six months, on average, both Canada and The US have added jobs to their job market. Unemployment rates are down to stable in both countries over that period of time. Inflation rates to the February were as low as they’ve been probably in three or four years. So risks? Yeah.

Sure. But everything pretty much up to the March was running fairly positively. So here’s another thing where the headlines are a little bit dislocated from the reality. So terrorists, tariffs, we know. Tariffs are scary.

Tariffs were scary when Trump introduced them last year. There’s a little bit of funny stuff going on. So you might not be able to see the numbers here, but in 2025, China reported exporting 4 and $20,000,000,000 worth of goods to The US. In 2025, The US reported importing $308,000,000,000 of goods from China. So there’s a $112,000,000,000 gap between what these two countries are reporting.

I’d like you to tell me, what do you think is happening to that $112,000,000,000 worth of goods between leaving China and entering The US? Anybody have any guesses? That’s a good guess, Larry. Somebody’s lying. So as the the saying goes, follow the money, right, to see what’s happening.

So there’s a couple things that could be happening. I don’t know what’s happening. I don’t know exactly what’s happening. There’s a couple things that could be happening. One, businesses, shipping companies are finding creative ways to change or alter the origin of the goods that they’re shipping.

I would say that there’s a very good likelihood that that’s happening to some extent. Second thing that could be happening is perhaps shippers are are not necessarily changing the origin of the goods, but maybe they’re rerouting the goods. And I’ve I heard this early on when tariffs were introduced, that a few things were gonna happen. Either companies were gonna go out of business. That’s probably happened a little bit, but probably not.

But I haven’t seen it to a significant extent. Companies are gonna find creative ways to throw perhaps a tie or a Vietnamese flag on something that’s coming from China, or companies will actually reroute through a different country so the origin of the goods is different. So this is one of those things where the tariffs the headlines were very scary at the time. And as is so often the case in the world, companies, businesses, countries are are creative. They’re dynamic.

They’ll figure out ways around the hurdles that you throw them. So obviously, the elephant in the room right now is the war that’s going on, if we call it that. We had a debate last week on our investment call. What do we call this? Do we call it a skirmish?

Do we call it a conflict? Do we call it a war? Somebody threw out the word Donnie Brooks, so we might be calling it that. If you look historically, the returns on stocks following geopolitical events or in this case, what I’m representing here, The US involvement in some type of military conflict, actually not so bad. There’s volatility around that event for sure early on, but if you look at even over a six month time horizon, results have been pretty good for stocks.

Twelve months, even better. Three years after that, pretty pretty good still. Right? So this is not to say that there’s nothing to worry about here. This is not to say that there’s all not all kinds of issues being created by the war on a humanitarian level.

It’s And not to say that this is good for economies. I don’t want to make that argument. But it is to say that historically, if you look back even since World War two, you can look at dozens of different geopolitical events, dozens of different actually armed conflicts. Markets tend to do okay, at least okay, and in some cases very good. Now these are just averages.

So there’s a saying that I use sometimes, if your head’s in the in the freezer and your feet are in the oven, on average, you’re the perfect temperature. Yeah. But even if you look at individual events, it’s very hard to find any individual events historically, aside from maybe one or two, where there’s a direct link between armed conflict and bad for markets. This is gonna be a really small way at the back. I’ll explain it to you.

So the other the the big challenge that’s getting talked about right now is the price of oil, and somebody already today was mentioning how high the price of gas is. They saw it at a buck 70 a liter. So, yes, gasoline is very expensive. A big part of that is the price of oil. So there’s a lot of concern about what the price of oil is gonna do for economies.

This bar chart that you probably can’t see represents several different events where the price of oil spiked more than 20% over a two day period. So that’s a lot, 20% up over two days. And what you see or may not see from the chart is that historically, stock markets have done pretty good twelve months following that type of event. There’s one situation in 2008 where that wasn’t the case. Oil spiked and stock markets were down the following twelve months, but that was 2008.

I think there were a few other different things going on at that time that was not specific to the oil causing that that issue. Right? So again, I don’t wanna represent that the price of oil being up is a good thing. It’s not. It’s gonna be challenging for economies.

You’re all, including me, we’re gonna have less money in our pockets to spend on fun things because we’ll be spending money on gas. That’s not a good thing for the economies at large, but it does represent that high oil prices are not a death blow for the economy and that historically we’ve we’ve done pretty well in these types of scenarios. There’s probably far more important things going on in affecting economies than the price of oil specifically. Again, a bit of a busy chart here, but I don’t think I could get through this without talking about AI at least a little bit. We haven’t seen the same impact on the stock market from AI this year that we had last year.

What we started to see this year from AI is concern over which industries or sectors are going to be most affected by AI. Throughout the month of February, was like every day you open up your newsfeed and it’s like software stocks get punished because of fears of AI. Cybersecurity stocks get punished because of fears over AI. Insurance brokers, logistics companies, trucking companies, real estate companies, investment companies punished because of AI. It’s like every day, the market woke up and felt that something else was at risk from AI.

So all of a sudden, it gets punished. February 2 is a great example, the the far left part of this slide here. On that day, software stocks, which have probably been the most punished from AI, were down 5%, but the market at large was up. And that’s what you’re seeing in a lot of headlines. And coming back to what I talked about before, there’s often a mismatch between what’s happening in reality and what the headlines are telling you.

We had a call with a company that we invest with called Hamilton Lane earlier this week. They are a private equity and venture capital company. They’re basically taking money and investing it in cutting edge businesses, new businesses, some of the most innovative businesses on the planet. This company is seeing them firsthand and investing in them. We asked them, we said, what are you seeing these companies do with AI?

Because these are some of the most innovative companies on the planet. What are you seeing them do with it? And the representative there said to us, we’re not seeing any companies really drive revenue from AI use yet, and we’re not seeing any companies really cut costs from the use of AI yet. Everybody’s experimenting with it. Nobody’s doing anything very material to their bottom line.

So he said, I don’t really know what’s gonna happen with AI. And this is, again, this is somebody that’s probably one of the most plugged in people in the country on what’s at the forefront of the AI and technology push. And he doesn’t know what’s gonna happen. Their business doesn’t know what’s gonna happen. So we don’t know what’s gonna happen collectively, and we’re not gonna try to guess.

There’s gonna be winners and losers for sure. We don’t know exactly who they’re gonna be yet. Time will tell. So this is a a chart that shows The US and Canadian stock market plotted against each other over the last ten years. Simple way to look at this is where the blue line is below that dark horizontal line, Canada sucks.

Where that blue line spikes above the black horizontal line, Canada good. Throughout a lot of the last few years, we started to get questions. Why don’t you just own the S and P five hundred? The S and P five hundred is a representation of US stocks. Why would you invest anywhere outside of The US?

And the reason is, for most of the last fifteen years, The US has been better than Canada. Now all of a sudden that switched, and we’re starting to get the opposite type of Why isn’t my portfolio doing as well as the Canadian stock market? Canadian stock market? Yeah. Once in a while, it’s it has its time in the sun and it does really well.

The reality is we’re not trying to beat The US market for you. We’re not trying to beat the Canadian market for you. What we’re trying to do is get the most reliable, predictable, surefire way to get you to your goals. So for us, that means that most of the time we’re gonna have I shouldn’t say most of the time. All of the time.

We’re gonna have some Canadian stocks. We’re gonna have some US stocks. So we’re gonna benefit. We’re gonna do okay when The US market’s outperforming the Canadian market. We’re gonna do fine when the Canadian market is outperforming The US.

We’re never gonna be the best. We’re not trying to align your portfolio with the best things at all times. But it’s interesting how the narrative changes. What’s doing well recently? All of a sudden, we start getting questions about that one specific thing.

All of these things that I’ve talked about, they all relate to volatility of the stock market in some way, shape or form. And the thing about volatility is it’s a feature of the market. It’s not a bug or a flaw. It’s just an inherent feature of market. It’s something that we have to live with as investors in stocks.

Part of the reason why stocks have generated a 9% per year return on average over the last hundred years is because that’s the return that you get, the compensation that you get for living with the uncomfortable volatility that comes along with it. There’s this concept in in Japan. It’s an art form in Japan called kintsugi. And what it is is when things break, they put it together in in their view a more beautiful way using gold, or it’s like a gold solution essentially. This is a picture of what it could look like here.

And that’s kind of how markets work too. Things will break from time to time. Things will go down from time to time. But if you’ve built your portfolio properly, which we think we have, we’re gonna take those pieces and we’re gonna be able to construct them, reconstruct them in a better way so we get something that’s more effective over the long run. In in effect, things are gonna recover to a higher point.

They’re gonna be better at some point because the things that fall fall off when you have, say, a market correction or a downturn is the most fragile parts, the weakest parts of of the overall market. And that’s also important for the long term success and and growth of of the world and the economy in the market as well. So before I pass it off to Colin, does anyone have questions about markets, economies, the war, what we’re seeing out there, happy to go anywhere you want.

Colin White: It won’t be the last time we ask. So think of your questions, suck up your courage, you can ask later, or you can interrupt me at any time. So I’m gonna take you through five different themes of investing that have been popular, that people have said are really good things, and maybe give you information that’ll help you put it in its place. I’ll start by saying very little is inherently a bad idea, although there is one bad idea we will talk about. Very little is inherently evil.

But putting things in proper perspective is very, very important and understanding what things are is very, very important. Now, gold is an investment. I wish I had the same PR firm that gold has because everybody believes so deeply in gold as an investment, and it’s really, really tough to find the evidence. But the belief is still out there. So let’s walk through some numbers so you understand the role that goal has played in in in people’s performance and where some of the perception comes from and where it’s disappointed.

There was a twenty year period between 1980 and 2000 where if you had invested your money in gold, your annual rate of return would have been about 2%. Twenty year twenty year period. K. During that same period, the S and P 500 was up 17% per year. That’s a twenty year time frame.

But sometimes gold is good. Though a ten year period from 2000 to 2011, gold was up 17%, and the S and P was only up two over that same ten year period. What happened between 2000 and 2011 that had nothing to do with gold that would have affected those numbers in a big way? This room’s old enough. We should remember these things.

What happened in 2000? dotdotcombubble. Y2k.combubble. Pets.com had a valuation of a few billion dollars, never actually did anything. There was a huge wreck in the stock market around 2000 as the tech bubble exploded. Then in 2008, we had the financial collapse, the two largest disruptions that the the financial markets have seen.

So in a period of ten years where you had these two major events that had nothing to do with gold, gold actually held up pretty well. So there you go. Twenty years where it sucked, ten years where it was really, really good. Most recently, 2021 to 2026, gold is well, it’s not as good now. We haven’t updated these numbers because these numbers would not look as flattering right now.

Gold’s 24% compared to 14 in the S and P 500. Now to Josh’s point earlier, when we’re looking to invest your money, not about getting the best return. It’s about getting a consistent return. So if we happen to have been wrong in the last five years and allocated money to the equity markets at 14%, you’re doing okay. But you did miss out because gold in this last spike that has gone through has looked really attractive and got a lot more attention.

Oh, down button means up. Got it. If you stretch it out and go from 1996 to 2026, goals average is 7.4 and the S and P is almost 11. If you can’t tell, if there’s no reliable way to move in and out of an asset, then it’s very, very difficult to make those trades properly, and then you take a look at the longer term averages to guide. So you could have done better over the long term in holding an equity investment than you could have done by holding gold buoyant.

Is gold a safe haven? Now this is the one that drives me nuts because I’m a curious person and I watch things. So every time the world seems like it’s blowing up, I’m gonna go look at gold and say, how’s it doing? Because if the PR people are right, it’s a safe haven. It protects value.

That’s why it’s there. Well, two thousand and eight financial crisis, when that was as close as we come to the fiat currency, as they say, being no longer accepted. Like, that was as close as we came to a monetary system problem. Okay. Now is gold’s time?

No. It was a 30% decline between March and October. So from a technical perspective, when I would expect that gold would have done its best, this is the perfect storm that gold’s gonna do well, it let everybody down. 2020 COVID had a 12% drop in one week. Again, everybody was scared.

Well, they tell me when people are scared, they’re gonna go buy gold. It didn’t didn’t hold up then either. And then we had the Ayatollah drop that they called it. I’m not sure why we called the Ayatollah drop, but there’s 9% drop in one day in January. And it’s fallen off a cliff.

Is it safe to say it’s off a cliff? It’s it’s down again last few days.

Josh Sheluk: It it climbed the cliff and then jumped off.

Colin White: And then we did the last days. And then jumped off.

Josh Sheluk: Yeah. And I think it’s down for seven to maybe today, eight straight days now. At a point where, again, you would hope that there would be some safe haven appeal to it.

Colin White: You would expect. So still the people that are standing up saying gold protects you during troubled times, times seem troubled. I’m I’m not feeling protected. It’s not holding up for that reason. Then there’s a practical challenges, and I’m gonna do a thorough takedown of gold because gold bugs are really, really determined.

So I’m gonna take it apart on a whole bunch of levels. You wanna buy gold. Okay. How are you gonna do that? Are you gonna buy the actual bullion?

The spot price that you see is the bullion price. So you can go to shop to to Costco, and they will sell you a bar of gold, and you’re going to pay a premium to buy it. And then when you sell it, you’re gonna sell it at a discount, and you gotta have somewhere to store it and keep it safe, and you can’t use it to buy anything with. Oh, okay. Well, I’m just gonna buy shares at a gold mining company, or I’m gonna buy another form of it.

The liquidity and insurance costs of maintaining a gold stash eats away at the potential rate of return you could see. If you get into an ETF that says it’s a gold ETF, you’re buying a derivative of gold. You’re not buying the actual spot price. There’s lots of things that erode the value of that investment as well. So you’re not actually buying the bullion.

You’re buying a piece of paper that’s promising to be something like the bullion. And there’s costs in that. There’s transactional costs, and it eats away that the rates of return. Because the rates of return that we used here are the spot price, which is not really attainable. Mining companies and gold prices.

I’m on record as saying that the mining companies in Canada have destroyed more capital than the rest of the industries put together because everybody gets excited. We’re gonna go drill for gold. We’re gonna find gold. I’m like, oh, you’re gonna find gold. I’m gonna invest with you.

I’m gonna get a tax break. And when you hit gold, I’m gonna get rich. That story is very sellable. If I stood up here and promoted a gold mining opportunity, I could fill this room and raise capital like that. Because it’s so easy to raise capital for that purpose, it attracts a lot of people who are not successful at it.

So if you take a look through history, gold, there’s notable times when it hasn’t held up as expected as a safe place to have your money. It hasn’t outperformed alternatives over time, and it’s had protracted periods of time when it severely lags. If you were invested in an asset class that’s underwater for twenty years, that’s the length of a pretty good retirement. So that’s an impact for retail investor to be careful of. Now I recognize anybody who came into this room a gold bug is sitting there disagreeing with me, and I haven’t turned you around at all.

But for those who are in a conversation with a gold bug, this information should help you understand a little bit what the downside to investing in gold is like. What I will say is that our portfolios that we have are invested in the Canadian market, And as such, the Canadian market does have a significant exposure to gold. The material sector in Canada is currently 2020%.

Josh Sheluk: And the gold sector, specifically your precious metals, is 13% of the Canadian stock market today.

Colin White: It’s better than having Google. So if you invest in Canada, you do have exposure to gold. So you don’t need to see gold separately in your account to have some influence from it. But investing specifically in gold is something to be very careful about. And I don’t care who you are.

You can’t tell me when things are gonna go up and go down. I’ve heard every story and every conspiracy theory. None of it’s reliable. It makes it very, very difficult to if you’re trading in and out of it and you make money at it, you’ve gotten lucky. Alright.

This is my third time giving this presentation, so I can jump into it. Oh, hopefully, it’ll come back. Bitcoin is the next one. Now I alluded at the start, most things have a place in the world. Bitcoin doesn’t.

Bitcoin is the world’s largest Ponzi scheme, and I’m on record as saying it’s gonna go to zero, And there are Nobel Prize winning economists who agree with me. It is not supported by anything. It’s got no system around it. Now that’s not to say that people aren’t gonna make money at it. People make money at Ponzi schemes.

Absolutely. There are people who can make money at But the it’s also not stood up to be anything that it was supposed to be. One of the claims that for Bitcoin is it’s a store of value. It’s a competitor for gold. Josh and I you showed me that podcast, wasn’t it?

Where they they were talking to the podcaster was talking to the Vinkelwas twins and who were the big crypto guys. And this podcaster asked the Vinkelwas twins, there we go, hey, about, you know, why, you know, Bitcoin was gonna be so valuable, and I swear to god, this was the answer. They said that Elon Musk had found an asteroid that was a 100% gold, and he was gonna land it. And when that much gold came into to the world, gold was gonna become worthless, and all the money was gonna flow to Bitcoin. We thought they were joking.

The podcaster thought they were joking. No. That was that was their actual pitch on why Bitcoin was gonna become valuable. Needless to say, Elon Musk has not landed an asteroid full of gold, and we’re still waiting for that to happen. But anyway, let’s take a look at some major Bitcoin events because one of the things they hold on-site, it’s a way to protect yourself.

It is a diversifier. It’s safer than gold. It’s safer than currency. It’s not outside the control of any government organization. It’s gonna protect you.

Mt. Gox collapsed in 2013. Bitcoin dropped 50%. Now I’m a geek. I’m a geek’s geek, so I know what Mt.

Gox stands for. The best way to understand Bitcoin is anybody ever played Pac Man? Everybody knows what Pac Man is. Right? You know, the little score in the corner that you run up, like, from eating all the little beads things?

That little score of that number? That’s kind of like a Bitcoin because nerds can trade that to other nerds to buy things for their video games. That’s kind of what a Bitcoin is. So Mt. Gox was a server, because this all is on computers, that’s the only place that exists, was a server that originally was for an online trading card server.

So people would go on to the server to trade their trading cards. It stands for Magic the Gathering Online Exchange. So the kids that were playing card games were using this computer to trade cards back and forth. That kinda died down. They repurposed it and made it a Bitcoin server and obviously didn’t put any security on it, and it caused a huge theft to happen, and then the the Bitcoin dropped by 50%.

All I think it was all one day or a very short period of time. Black Thursday in 2020, there’s a 39% drop in one day. China banned mining in 2021, 30% drop in one day. FTX and solvency, most of the major players in Bitcoin are either have gone to jail or have been convicted of things. That was in 2022, a 16% drop.

Oh, this is the Ayatollah shock. 23%. Again, at a time when things got really, really uncertain, everybody said this is what’s gonna protect you, and it did not. The average daily move for Bitcoin is three to 4% compared to the S and P 500, which is point seven. The stock market you trade in has circuit breakers.

If things go bad, they stop trading for five minutes. Alright? So if things start to fall, there’s a pause. Everybody takes a breath. And then the market reopens, and the things continue to be volatile.

There’s circuit breakers built into the system to protect against massive moves. There were no such things in Bitcoin. So you’re seeing average daily moves. So people call this a currency. So here are some of the moves that we’ve seen in Bitcoin.

So it got up to a 125. And at the time of this slide, it 68? It’s about 68 right now. It got down as low as 60. So it’s about a 50% drop from peak to valley.

That kind of volatility, don’t tell me it’s a store of wealth. Don’t tell me it’s a currency. These movements are so drastic as to make it not useful for either one of those things. The other context we give is Josh and I did a podcast for those who don’t know Barenaked Money. It’s a great podcast.

I’m gonna reference it a few times. We had a cybersecurity expert come on and talk to us about different cybersecurity threats that are out there. One of the things that people are familiar with are when they do a ransomware attack. So they freeze your system. You pay me Bitcoin.

I’ll give you your a about it. And that all happens using Bitcoin, and the majority of it happens to Bitcoin. And it was funny. We’re talking to him. Ignorance was explaining how it all worked.

And at the end it, he goes, and as soon as the, you know, the because criminals receive the Bitcoin, they convert it to currency because they don’t trust Bitcoin. Wait. The criminals don’t trust it. Even the thieves that are stealing using Bitcoin as a way to steal move the money into currency as quickly as they can, Which again, if don’t if thieves don’t trust it, again, it has its issues. So does anybody have any questions about Bitcoin?

You can save it for the end or you can ask you can come up later and ask if you like. Real estate investing. We had Rob Kerrig on our podcast about a month ago. And Rob Kerrig, many people will recognize the name. He’s one of the most famous Canadian finance commentators who’s retired from The Globe and Mail, and he’s had a lot to say over the years about a lot of things.

And I was excited to have a conversation with him. One of my questions to Rob Carrick, said, Rob, what’s the most controversial thing you ever said? You’re always a polarizing figure. You always had people angry with you. You were always going where people feared to go.

What was the most controversial thing you said over your whole career? And without hesitation, he said, you don’t have to own a house. And they go, really? It’s like, it’s okay to rent. And he went into it because his professional opinion as a financial commentator was that real estate’s not a slam dunk investment.

He wasn’t against owning real estate, and I wanna make sure that nobody thinks I’m against owning real estate. But the point is it’s okay not to because real estate as an investment has some issues. And we’re gonna go through some of it here, and we’re gonna use REITs as a proxy to talk about real estate. Individual communities, individual towns, individual pieces of real estate are all different. It’s not like buying a stock that’s the same across the country.

This is a regional thing. So we’re gonna talk in generalities and tell a couple of stories about the concerns that you can have when investing in real estate. And it’s not that you should invest no money ever in real estate, just should not necessarily be the most dominant part of your investments. So five years, REITs at 4.7, The overall TSX is at 12. One of the things from a portfolio management perspective, if I’m investing in something that is not as liquid, I’m giving up access to my money.

There’s not an open market for it. I expect a premium. So when you buy real estate, you’re losing a little bit of access to that money because real estate is not easily traded. So you expect a premium. So the last five years, and I will say the TSX has had a banger of the last five years for sure because as Josh said, Canada doesn’t suck right now.

But at this point in time, the five year number, that’s what it is. Over ten years, again, there’s still a significant difference. You go at fifteen years. So over the last fifteen years, real estate investment as an investment trust, again, not owning your own personal home, has not kept up with just the broad stock market. So you’re involved in something that is less liquid, where you should be expected to receive a premium for, and it wasn’t able to keep up with just a regular traded stock portfolio over that time period.

There are big forces that move real estate. Interest rates are a big deal. Go through a boom and bust cycle. We’ve gone from having a huge housing shortage to having housing oversupply. Toronto’s having their condo issues right now.

It can be a very cyclical thing. And cyclical things on top of not being as liquid pose a real problem. And higher interest rates are, again, another one of those factors that dramatically affect the price of real estate. The stuff they say, diversification. We have to be careful because we think diversification is good, but we put the word thoughtful in front of it.

Diversifying into something else just because it’s different and that’s the only reason you’re in it, that’s a trap, and it’s used to sell a lot of garbage. K? So diversification that’s not thoughtful, it’s not planned, is dangerous. They will build these up with monthly or quarterly income. Income is good, but the problem is the way some of these products are out there, we’re gonna talk more about it later, sometimes they’re giving your own money back.

It’s not necessarily money they’re making. So they know that if I walked up to you and said, hey, listen, I can get you a 12% income stream off of your money. 12% return on my money. That’s not what I said, But okay, that’s what you heard. 12% of your money you get back every month.

That’s compelling because that seems to be a great rate of return, but it may not actually be 100 profit that you’re receiving. You could be receiving some of your own money back. The the products that they put together in REITs will give you liquidity. They absolutely will. You can buy and trade them on the market within regions.

There’s times when that’s not as possible, but you can do it. So it does provide a level of liquidity doing it this way. And professional management. The rest of that sentence is for a fee. Okay?

So there’s costs associated that aren’t always apparent when you’re investing in real estate in this way. Rate sensitivity, sector concentration, lower long term returns versus equities currently. There have been periods of time when the mortgage rates went from 22% down to zero. If you track real estate prices over that time, that was a banger investment. Difficult to imagine interest rates are gonna go from where they are down and drop another 22% because, well, that would be a negative interest rate.

I don’t think that that’s practical. So it has had a run, which is part of what was whispered in everybody’s crib when they were young. Real estate is always a good investment. You’ll never lose money at it. But it’s not.

It has not held up as an investment class that you can use for 100% of your investments. It can play a part, you gotta be careful. It’s not a slam dunk. I personally had a client who had a condo in Fort McMurray that he had to pay the mortgage on for ten years before he was able to sell it for more than the mortgage. Those things happen.

We’ve got examples of clients trapped in real estate, all different kinds of scenarios. Just be careful. It’s not an answer. It’s not the total answer to any kind of an investment portfolio. Covered call ETFs.

Now I was terrified of this one. This is Josh’s favorite. Josh hates these. But I was terrified because it’s a really difficult concept to explain to people. Then we found a way.

So I’m gonna make you a deal. Let’s just say you’re gonna buy a house right now. You’re gonna buy a house. You’re gonna spend $500,000 to buy a house. I’m gonna make you a deal right now.

I’m gonna give you $3,000 every year you own that house just because I’m a good guy. When you sell that house, if you sell it for more than $500,000 I get to keep it. You’re going to make a deal with me. I’m going to give you income for your house every year. And if you happen to sell it for more than you paid for it, I get that money.

Josh Sheluk: The difference.

Colin White: Yeah. The difference. If you sell it for more than 500,000, I get that money. Who wants to take the deal? Sure.

Audience Member: When you ever buy real estate to live in yourself,

Colin White: That then that goes back to using it as an investment for sure. I mean, that’s one thing.

Audience Member: And if you have, you have to pay upgrades and stuff like that, that means for any work that you do, you won’t receive any benefit for it.

Colin White: Yep. No. Absolutely. And that and that erodes the value of it as an investment. But I have an offer out here.

I’m trying to get people to make a deal with me. Who wants my money? Who would take $4,000 a year? I’m gonna pay you $4,000 a year. I’ll pay you $5,000 a year.

I’ll pay you $5,000 a year on a $500,000 property I just get if you sell it for more.

I will keep going until somebody takes the deal. That essentially is what a covered call is. Okay? It’s owning something that you give away or you sell the future growth of it for a little bit of income today. Let’s see how we can screw that up.

They’re covered call ETFs. So there’s a provider in Canada that launched AI investing. Who wants to invest in AI?

All it was was they went out and bought one stock, NVIDIA, which is a very big name, one of the biggest names in the AI sector, one of the highest growing. And they said, you know what? We’re gonna sell you shares in NVIDIA, we’re gonna pay you an income off of it. I get to invest in AI and I get income. I get to win.

I’m gonna make all kinds of money off of the AI side of it, and I’m gonna get paid while I’m in there. I’ll take that. And it was actually pretty popular when it first launched. So this is growth of $10,000 for a three year period. This is the covered call, so you would have had $23,000, so you would have more than doubled your money over that same time period.

If you just bought the stock, you would have had a 109,000. For that income you were getting, you gave away all that upside. You bought a growth investment because you wanted the income. They sold you on the income, and you gave away all the growth that you would have had just by owning the security if you wanted it. But wait, Colin.

I’ve removed risk. It’s less risky to do it this way. Oh, have you? No. You haven’t.

So and these are all Josh’s slides. I should let Josh do this, but I’m having too much fun. And he gets too wound up. So he went and we went back to using index. So the the the product that’s been launched recently doesn’t have enough of a history, so we’ve gone to show some index.

So this is the S and P 500 in 2008 was down 37%. A similar covered call strategy was still down 28%. It’s like, yay. I win. I I saved 9%.

I I don’t feel good, but yay. So what if we do both sides? Let’s see how much of the downside you save versus how much of the upside you give away. So the the down market here is showing you saved six percent on the downside. On the upside, you gave away about 20.

This is a financial product that is sold based on giving you an income, changing the risk profile of it, and making you think you’re better off. The reality of it is that it doesn’t effectively do what it holds itself out to do, and they charge a fee on the way. So if somebody comes to you and starts talking about, I’m gonna give you income out of the product, this is one of the ways that they’re gonna structure it by using covered call strategies. And it is very prevalent and very successful. There are providers on the street that’s 100% of the product lineup because it’s so easy to sell.

If I was a salesman, I could sell this. But that’s the outcome, and I’m gonna be there. I remember the team is gonna be there to meet with you a year from now when it blows up, and I don’t want that meeting. I think that’s pretty good. I think that describes it well.

I was really terrified about bringing that slide out, to be honest. Alright. Next one, magnificent seven. Oh, we have a question. Let me think for a second.

I wouldn’t a reverse mortgage has its place as a tool. I’ll give it that. So if you’re if you come to me and you’re 80 years old and you’re running out of money and you wanna stay in your house for a couple years and you don’t qualify for conventional lending, doing a reverse mortgage to buy yourself a few more years in your house by eroding some of the equity in it, that has its place. That’s a fair trade off. That’s a product that, you know, in some situations I could see makes it.

It’s expensive. It’s the least effective way of doing it. But if it’s your only way to do it, I’ll give that a spot. I don’t give that a spot. I don’t think that that’s an effective way of doing shit.

Oh, there we go. My my my first s -bomb.

The magnificent seven. Anybody know what I mean by that?

Oh, come on. Throw me a bone.

Josh Sheluk: It is a movie.

Colin White: This is Google, Amazon, Tesla, Nvidia, all the biggest tech names. Okay?

So up until fairly recently, it was like, this is where you had to be to make money. And it was they’re they’ve been fairly dominant for sure. Five year annualized performance, 30% holding that group of companies compared to 13% of the overall market. That time period is the five year annualized performance. Three years worse or better depending on which side you’re on.

It’s even more bigger. So they’ve become an absolute dominant force. People compare this back to the .com problem we had in 2000. There’s a difference here. These companies are all actually profitable.

They’re just trading at valuations that are difficult to make sense of, and they become a dominant player. So many people who are talking about outperformance and having done well over this last period of time almost by definition have had to hold a big waiting in this sector.

Josh Sheluk: Can I tell my tow truck story?

Colin White: You bet.

Josh Sheluk: I think it it fits perfectly with this slide. So this is two years ago now. I was in a car accident. Everything was fine, so don’t worry about that. I like to start with that.

But so I I had to get picked up by a tow truck. So I got picked up by the tow truck driver. We started chitchatting because we had a thirty minute drive to get to the car lot, basically. And he starts asking me what I do. I tell him, Oh, I’m financial advisor.

And he says, Oh, like, you know, what do you invest in? And so I kind of gave him a bit of a spiel, I said, What do you invest in? Because he started saying, oh, I do some of my own stuff. And he said, well, I got a bunch of cryptocurrency stuff and then he rhymed off a bunch of cryptocurrencies that I didn’t know. And he’s like, yeah, do some stocks too.

I was like, oh, like which stocks? Amazon, Tesla, Google, Nvidia, Apple, Microsoft. See any comparison? This is my tow truck driver. I don’t think he had a deep financial background, but I don’t know.

Maybe he did.

Colin White: Yeah. Whenever that story gets told, all the professionals go, oh, no, It’s time for us to get out of the pool. But this is the kind of run up, and this is where it was getting all the attention. So people are walking up to you at parties going, my portfolio is doing really well.

I made 40% a year for the last couple of years because I invested in all the things. Oh my god. That’s great. I want that too. I should do that now.

Maybe not. Downside example, in 2022, we had a market pullback. Those were down 46% compared to the overall market being down 18. Now I know that doesn’t sound like it feels good. But the way math works, if I lose 50% of your money, I gotta make a 100% to break even.

It’s more important to protect the downside than catch the upside, and that’s a very significant amount to be down compared to the overall market. That’s the risk. Recent weeks, well, was recent weeks when we did the slide. We probably should update this one. A 6.3% drop into this year compared to flat on the market.

So these stocks are just more fragile. They are more fragile so that when people get scared, they’re gonna get a disproportionate amount of attention, and people are gonna sell those first. Because the other thing that plays out when people get really excited about things, they leverage into them. They borrow money to buy them. So when things start to drop, it hurts them even more.

So they get even more volatile on that end of the market. So right now, these companies are trading at very what we call stretched valuations. So when things are difficult and people are afraid, those tend to be the companies that get hit first from a share price perspective. Full disclosure, we do have some exposure to this, but we have set aside set out to be underexposed. We do not want a market exposure to this.

We want to be less exposed to this than the market because the market last I saw Josh, it was 30% of the S and P was those it’s about 30%. Almost one third of the market is made up by those seven companies. I feel much safer when you’re with me. I can check all these things. Question.

Oh, sorry.

Audience Member: Does it depend on how how long it’s down for? If something drops, like, I mean, when I invest- I don’t invest for three months. I invest for a long period of time.

Colin White: Yep.

Audience Member: So don’t you have to kind of see how long is it down for?

Colin White: So the time horizon of your investment is absolutely taken into account when we put together a portfolio. Our job as portfolio managers is try to give you the best possible outcome. One of the ways we can do that is lean away from the very, very expensive things and position your money with things that have show better value. Expectation is over time, that’s gonna give you a better experience with your investment portfolio over the long term time horizon. Nortel went to zero, and I’m not saying these companies are going to zero, but you have very high flying companies that run into very severe difficulties.

So it’s about getting you the best long term rate of return without taking unnecessary risks. At this point, exposure to that sector, we would classify as unnecessary. I can accomplish your goals for you. I can get you the rate of return you need with minimizing the exposure to this. We don’t have to be 100% in that sector.

Okay. So in the entire history of the world, panicking about something has never made anything better. So you can panic, but you shouldn’t. That doesn’t help. You can get cocky.

I just made money on gold, and I know those people. Most of them are in Nelson. But you shouldn’t get cocky because just because you were right recently doesn’t make you all that smart. In investing, there are so many things you can do. Success usually comes from the things you don’t do.

That’s the big finish. So thank you. There’ll be a test on the disclaimer at end for all of you. But thanks for your attention. We’re gonna take some questions, but nobody is allowed to leave.

The doors are now locked until everybody fills out a feedback form and tells us what they think and gives us ideas about what you’d like to see next. Thank you very much for your attention. Josh and I are here for your entertainment. Ask any questions you have. Thank you.