Modern Investing Techniques — Episode 28

Monday morning, markets are open. Welcome to Modern Investing Techniques, episode twenty-eight, for April twenty-seventh, twenty twenty-six. I'm Patrick, coming to you from Vancouver. New week — let's see what opportunities the markets are presenting. Quick reminder — everything we discuss here is for education and entertainment. The Practice Investment of the Day uses simulated trades with no real money. I'm not a licensed financial advisor and this isn't financial advice. Always do your own research before putting real money to work. Stalled Iran talks lift oil two dollars and fifty cents while global shares gain — value strategies offer Canadian investors a practical edge right now. This morning the S and P five hundred rose zero point eight percent to close at seven thousand one hundred sixty five. The NASDAQ Composite climbed one point six percent to twenty four thousand eight hundred thirty seven. The T S X Composite ended the day flat at thirty three thousand nine hundred four. The NASDAQ Composite sits at twenty four thousand eight hundred thirty seven with a year to date gain of six point eight nine percent. Our simulated portfolio stands at year to date minus zero point five two percent. This delivers alpha versus the NASDAQ of minus seven point four one percent. Since inception the alpha stands at minus eleven point five three percent. Brent crude jumped on stalled Iran talks creating energy and currency ripples across assets. Recall our SSRM pick from about seventeen days ago that closed down four point two one percent. It underscores why we always verify data availability from multiple providers before declaring any position closed. We are down on the scoreboard which makes today's focus on value investing especially timely. Value investing means systematically buying high quality businesses trading below their intrinsic worth. The typical screen uses metrics such as price to book below one point five. You also want free cash flow yield above eight percent. And debt to equity under one point zero. In today's environment of geopolitical tension and elevated NASDAQ valuations this approach gains relevance. Capital tends to rotate toward stable earners when oil shocks and policy uncertainty rise. To implement open your Questrade or Wealthsimple screener. Filter for T S X listed financials and industrials meeting the above thresholds. Then cross check balance sheet strength via the latest filings. Allocate no more than ten percent of your T F S A or R R S P per name to stay diversified. The strategy historically outperformed in the three years following the two thousand tech bust. It also outperformed after the two thousand eight crisis when cheap valuations compounded. Its main risk is value traps where low prices reflect permanent business erosion rather than temporary mispricing. Remember in uncertain times a dollar of earnings bought cheaply beats a dollar bought at a premium. While value offers defense Cathie Wood's approach is the pure offensive playbook. Here is what every retail investor should learn from her journey. This is a simulated trade for educational purposes only. No real money is involved and this is not financial advice. Our Practice Investment of the Day is a weekly hold in CCL, Carnival Corporation. The market is the New York Stock Exchange in the consumer sector. The strategy is mean reversion after corporate restructuring announcement. The hold period is Monday to Friday. The catalyst is the upcoming London Stock Exchange delisting to create a single unified New York Stock Exchange listing. This is expected to deliver a like for like share swap that simplifies holdings for international investors. It may improve liquidity as well. On the technical side CCL is moving with broader market strength. The NASDAQ rose one point six percent today and the stock is sitting near visible short term support. Volume is expected to rise as United Kingdom holders decide on next steps. Risk assessment includes broker specific execution risk on the swap. There are also potential differences in voting rights. Maximum acceptable loss is five percent from entry with a stop placed below the most recent swing low. The target is plus two percent to plus five percent as the market digests the simplified listing structure. Confidence is medium because a single clear corporate catalyst is present with supportive broader market tone. Yet broker and rights uncertainties prevent high conviction. This simulated weekly hold demonstrates how to analyze corporate actions that quietly affect cross listed names. It forces investors to contact their broker ahead of time to confirm United States dollar share support. You also need to understand any foreign exchange implications inside a T F S A or R R S P. The exercise trains the habit of reading the fine print on voting rights and liquidity changes before simply doing nothing. Even when the move is modest the discipline of preparing for structural shifts separates reactive traders from methodical ones. Before we set this new position in motion we need to review what happened yesterday. Yesterday's flash trade was CLDX on an analyst upgrade play tied to successful phase three results and accelerated enrollment. We simulated entry at thirty five dollars and seventy nine cents at market open. Exit was at thirty four dollars and thirty eight cents at market close. The result was a loss of three point nine four percent. That equals a forty nine dollar and forty cent loss on a one thousand dollar position. The trade lost three point nine four percent while the NASDAQ gained roughly zero point eight percent over the same window. This produced approximately minus four point seven four percent alpha. Despite the publicly confirmed positive catalyst CLDX moved against us. Expectations had already been priced in and sector momentum was absent. This reinforces the process gap we keep encountering with binary events. Now let us look at two practical frameworks you can use immediately. The first is the intergenerational wealth conversation framework from BNN Bloomberg. This structured approach walks through initiating money discussions with aging parents. It covers wills, powers of attorney, beneficiary designations, and digital asset access. The goal is to act before health or cognition declines. It gives DIY investors an edge by preventing costly family disputes. It also helps avoid unintended T F S A or R R S P inheritance friction that can erase twenty to thirty percent of transferred wealth through probate and taxes. Canadian users should schedule a low pressure forty five minute conversation this month using suggested open ended questions. The framework is free and requires only your brokerage statements and a shared Google document. The second is the central bank question framework from Investing dot com. Adapt the five targeted questions posed for the European Central Bank. Those questions focus on inflation path, growth risks, policy optionality, communication tone, and market pricing. Apply them to any upcoming rate decision. This technique lets you anticipate volatility in rate sensitive Canadian holdings weeks in advance. Rather than reacting post announcement. Portfolio managers and T F S A investors holding bank or utility exchange traded funds should run the framework the weekend before each Bank of Canada or Federal Reserve meeting. It takes fifteen minutes and can be documented in a simple Notion template. The discipline reduces knee jerk selling during headline driven swings. While those frameworks help you prepare these quick hits require faster action. Beijing halted Meta's two billion dollar purchase of the Singapore based A I firm with Chinese roots. This signals continued regulatory scrutiny on technology transfers. The move raises the bar for Western A I deals and may slow certain innovation pipelines. Consider trimming single name A I concentration in your R R S P if exposure to China related supply chains exceeds fifteen percent. Rotate the proceeds into diversified A I exchange traded funds. The world's largest E V battery maker CATL is raising roughly five billion dollars via Hong Kong shares. This adds to the wave of large capital deals as risk appetite improves. The placement could pressure near term price but strengthens the balance sheet for long term growth. Add CATL's Hong Kong listing to your watchlist and prepare a two percent portfolio limit buy order if it trades five percent below the placement range within the next ten sessions. Qualcomm shares jumped nine percent in premarket on a report of an Open A I smartphone chip partnership. This highlights continued investor appetite for on device A I infrastructure. If you own Qualcomm consider selling a covered call against the position at today's elevated levels to capture the implied volatility premium. You would still retain upside to the partnership details. Nickel surged to its highest level in two years after reports of potential Indonesian export restrictions. This tightens supply for E V battery production and may lift input costs across the battery supply chain. Review any E V or battery holdings in your portfolio and reduce exposure by twenty five percent if nickel stays above current levels for the remainder of this week. Our simulated portfolio currently sits at a running total of minus forty one dollars and fifty six cents across eight trades. The win rate is three wins out of eight total trades for thirty eight percent. Our A I analysis is learning from patterns around binary events and adjusting the verification process accordingly. This remains a learning journey where every trade sharpens the framework. Now here is something that most retail investors get wrong and it cost me money before I figured it out. Imagine you bought A R K K in January twenty twenty when Cathie Wood's concentrated bets on innovation looked prescient. Your order filled near forty dollars. The E T F delivered a triple digit gain that year on explosive moves in Tesla, Zoom, and early genomics names. Then it posted a roughly sixty seven percent peak to trough drawdown by late twenty twenty two as rates rose and growth multiples compressed. ARK's thematic model relies on high active share and portfolio turnover often exceeding one hundred percent. It channels capital into five core platforms including A I, robotics, energy storage, genomics, and autonomous vehicles. The thesis is that exponential technology adoption will drive outsized earnings growth over a five to ten year horizon. In twenty twenty that produced spectacular returns. The subsequent drawdown illustrated how correlated these themes become during risk off periods. Wood sizes positions aggressively sometimes ten percent or more in a single name and rebalances frequently. This creates tax drag inside non registered accounts. It also forces holders to endure volatility that exceeds the NASDAQ by two to three times on the downside. The biggest misconception with thematic disruptive investing is chasing last year's headline returns without stress testing your own drawdown tolerance. Instead cap any single thematic E T F or stock at five to ten percent of total portfolio value. Pair it with a core S and P five hundred or T S X index holding and rebalance once per year. All of these ideas point back to one actionable exercise you can do this week. Before we wrap briefly tease something to watch for tomorrow. Tomorrow I will share how to build a simple screen that flags corporate actions like the one in today's CCL pick before they hit the tape. That's it for today's Modern Investing Techniques. The resources page has links to everything we discussed. Subscribe and share with someone who wants to go beyond index funds. See you tomorrow. This podcast is curated by Patrick but generated using AI voice synthesis of my voice using ElevenLabs. The primary reason to do this is I unfortunately don't have the time to be consistent with generating all the content and wanted to focus on creating consistent and regular episodes for all the themes that I enjoy and I hope others do as well.