Modern Investing Techniques — Episode 34

Welcome to Modern Investing Techniques, episode thirty-four. Today is May fifth, twenty twenty six, I'm Patrick broadcasting from Vancouver. Let's get into the numbers, the strategy, and today's A I selected trade. 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. U S companies have announced six hundred sixty five billion dollars in share buybacks year-to-date, offering a potential support level for equities amid geopolitical cross-currents. Markets closed lower today with the S and P five hundred at seven thousand two hundred one, down zero point four percent. The NASDAQ Composite finished at twenty five thousand sixty eight, down zero point two percent, while the T S X Composite closed at thirty three thousand six hundred thirty nine, down zero point seven percent. The NASDAQ is up seven point eight nine percent year to date. Our simulated portfolio sits at negative zero point four four percent year to date, generating negative alpha of eight point three three percent against the benchmark. Sentiment was pressured by uncertainties around Iran affecting oil flows and Asian equities. Canadian investors should keep an eye on Bank of Canada policy signals and domestic housing data for potential sector rotation opportunities. Share buybacks occur when a company uses cash to repurchase its own shares, which mechanically reduces the float and often lifts earnings per share while supporting prices when other fundamentals are stable. With six hundred sixty five billion dollars already authorized this year, the tactic is especially relevant in a mixed market where organic growth is uncertain and companies with strong free cash flow can return capital directly to shareholders. Investors can implement this by screening for firms that have active repurchase programs and sufficient cash generation. Most Canadian platforms including Questrade and Interactive Brokers let users filter by share repurchase authorization and cross-check the latest ten Q or management discussion and analysis for remaining capacity. Historically the strategy has delivered excess returns in sideways or modestly rising markets when buybacks are funded from operations rather than debt. However, it can backfire if management overpays or if the company later faces a liquidity crunch. The key risk metric is the ratio of buyback spend to operating cash flow. Anything above fifty percent for consecutive quarters warrants extra scrutiny. Canadian investors can apply the same screen inside a T F S A to capture the tax-free compounding effect of a reduced share count. This is a simulated trade for educational purposes only. No real money is involved and this is not financial advice. Today's Practice Investment is a weekly hold on Cresco Labs, ticker C L on the CSE. The catalyst is the second Ohio dispensary opening in a month, lifting the total footprint to eight locations in the state and seventy four nationally. The technical setup shows the stock reacting to operational expansion news, so monitor for volume confirmation above the twenty day average and nearest resistance from recent consolidation range. We assess the risk as medium given that the cannabis sector remains sensitive to regulatory shifts and state level competition. Set a stop loss six to eight percent below entry to cap single position drawdown. The target is plus three percent to plus six percent over the weekly horizon assuming continued rollout momentum. This is a medium confidence setup because operational expansion provides a tangible growth catalyst but broader sector volatility and limited price history on the new locations introduce uncertainty. What this teaches is how to evaluate retail expansion catalysts in emerging consumer sectors by focusing on unit growth metrics rather than headline revenue alone. Yesterday's flash trade was on BTC as a macro rotation play on cross asset signals. We entered at thirty three dollars sixty seven cents at market open and exited at thirty three dollars eighty one cents at market close. The result was a gain of zero point four two percent, or four dollars sixteen cents on a one thousand dollar position. The trade gained zero point four two percent while the NASDAQ declined zero point two percent over the same day, producing zero point six two percent alpha. This modest same day gain validated quick execution on cross asset signals. The lesson learned is that capturing modest gains is possible, yet the portfolio’s persistent underperformance versus the NASDAQ underscores how difficult it remains to generate consistent alpha with single day volatile assets. The new rule is to always cross check crypto price feeds with at least two independent sources before executing flash trades. Across eleven simulated trades the win rate stands at forty six percent with five wins. The cumulative profit and loss is negative forty eight dollars four cents. The average return per trade is negative zero point four four percent. The best trade gained seven point eight eight percent while the worst lost seven point four nine percent. We are currently on a two win streak. Imagine you noticed DuPont shares jump after the company reported its latest quarter and you placed a market order at the open. The fill price reflected not just the headline number but also how the market interpreted revenue versus earnings quality, forward guidance, and balance sheet health. Revenue growth tells you whether the top line is expanding while earnings and E P S reveal how much of that growth actually reaches shareholders after costs and taxes. A beat on E P S alone can be misleading if it stems from one time tax items or aggressive cost cutting rather than sustainable sales. The forward P E ratio and management’s own guidance on the next quarter or year are usually more important than the backward looking beat or miss. On the balance sheet, rising debt paired with declining cash is a red flag even when earnings look fine. Free cash flow that exceeds reported net income signals real cash generation rather than accounting optics. Professionals always read the management discussion and analysis section for the company’s own assessment of risks and outlook instead of relying solely on the press release bullet points. The biggest mistake retail investors make is treating any earnings beat as an automatic buy signal. Instead, always compare actual results and guidance against consensus estimates and check whether the beat was driven by sustainable operations or transitory factors. The Bank of Canada Market Participants Survey polls a broad cross section of financial market participants on inflation, growth, and policy rate expectations. This gives Canadian investors a forward looking read on Bank of Canada thinking before official announcements. It is especially useful for positioning in rate sensitive sectors such as banks, REITs, and utilities inside a T F S A or R R S P. Access the results directly on the Bank of Canada website under the Publications tab and set a calendar reminder for the next release date. For company project status updates, frequent operational updates from development stage companies allow investors to track construction milestones, budget adherence, and first production timelines without waiting for quarterly financials. Canadian investors can add these issuers to a watchlist in Questrade or Wealthsimple and receive push notifications when new releases appear on SEDAR plus or GlobeNewswire. Greater Toronto home sales rose seven percent in April as lower prices jolt the spring market. Sales increased year over year for the second straight month while average selling prices continued to ease, suggesting the spring market is finding traction at lower price points. Consider adding a broad Canadian REIT E T F to your watchlist and consider a small starter position on any further price stabilization in the GTA data. Fraport shares slipped as the first quarter traffic outlook was trimmed despite a ten percent ee-bit-dah beat. The airport operator beat ee-bit-dah expectations but lowered its full year traffic forecast, illustrating how geopolitical and macro risks can override strong operating results. It may be wise to trim or avoid European infrastructure exposure until clearer guidance emerges on traffic recovery. KeyBanc reiterated its Overweight rating on Somnigroup stock on market share gains. The firm highlighted continued share gains in the sleep products space, pointing to durable competitive positioning even in a cautious consumer environment. Add Somnigroup to your consumer sector watchlist and review the next earnings release for confirmation of margin trends. Brembo stock jumped as its Sensify braking system enters production. The new braking technology is moving from development into commercial production, providing a concrete catalyst for revenue growth in the automotive supply chain. Place Brembo on your industrials watchlist and monitor order flow commentary in upcoming quarterly updates. Open your brokerage screener and filter for Canadian consumer or retail names that have announced new store or facility openings in the past ninety days. Note any that also show rising year over year revenue in their latest quarter. Add the top two results to a dedicated watchlist and set a price alert three percent above their current levels. Tomorrow I will check in on the Cresco Labs position and look for fresh A I selected opportunities in the consumer sector. That wraps up today's Modern Investing Techniques. Remember, every trade is a learning opportunity, win or lose. Subscribe, share with a friend who wants to invest smarter, and we'll see you tomorrow. This podcast is curated by Patrick but generated using AI voice synthesis of my voice. 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.