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Slip into something more comfortable and delve into personal finance with Josh Sheluk and Colin White, experienced portfolio managers at Verecan Capital Management. Each episode demystifies complex financial topics, stripping them to their bare essentials. From investment strategies and financial planning to economic headlines and philanthropic giving, delivered with a blend of insight, transparency, and a touch of humour. Perfect for anyone looking to understand and navigate their financial future with confidence. Subscribe now to stay informed, empowered, and entertained.
Verecan Capital Management Inc. is registered as a Portfolio Manager in all provinces in Canada except Manitoba.
Welcome to Barenaked Money, the podcast where we strip down the complex world of finance to its bare essentials. With your hosts, Josh Sheluk and Colin White, portfolio managers with Verecan Capital Management.
Colin White:Welcome to the next edition of Barenaked Money where Josh and I are about to get naked of about tariffs. Now I thought before I let Josh talk, I I I did my research leading into this. So I asked some really smart people about, you know, hey. What what? You know, that's we're doing a podcast on tariffs.
Colin White:And one of them sent me a very detailed and comprehensive list of all the tariffs that are currently in effect. And they thought that would be, you know, useful for the podcast, Josh. Do you think that, you know, we should be discussing in detail exactly what the tariffs are as of this moment in time? Do you do you think that that would would would age well by the time that this podcast actually airs?
Josh Sheluk:I think we should start by listing everyone, Colin. Shit. How how many how how long is the list?
Colin White:Oh, it's it's it's comprehensive. We could make this a complete snapshot in time for this picosecond. This is exactly what the tariffs are at this moment in time, real and imagined. But it's it's actually it was a very comprehensive list. I was I was a little impressed it was able to be pulled together as quickly as it was.
Colin White:I think AI was involved. But there there do know how many tariffs are out there, Josh? It's almost innumerable.
Josh Sheluk:Yeah. I I would imagine it's probably pretty significant. And what I'm kind of interested, I wonder if your list identifies tariffs that were in place prior to a few months ago versus ones that are new? Does it does it differentiate at all?
Colin White:It it there that I I could ask that follow-up question. I'm sure I would get an equally comprehensive list. But I think we should leave that to the history books because there's gonna be somebody who's going to write a paper or two or three, or this could become a university course at some point on the exact timeline of what tariffs were introduced when and if they ever actually were announced and implemented and or implemented as announced or implemented but never announced and in all the different versions thereof.
Josh Sheluk:Well, I think it's important to say we're recording this on March 14, the morning of March 14.
Colin White:If something doesn't AM at lady time.
Josh Sheluk:Exactly. It was funny yesterday during our investment committee meeting, Dave, I think it was said, well, tariffs are in place. And then we said, are they? And he said, you know what? I haven't checked in the last fifty five minutes, so I'm not really sure.
Josh Sheluk:And that's the state of the world at the moment.
Colin White:Introduce this as a bit of a humorous way to point out, Oh my God, like, you know, this is like, you know, talking about sand running through an hourglass. Like you really don't know what you're, what you're grabbing or where, what the current state of things really is. And you know, that's part of the problem. That's part of the issue and that's the stage that we're standing on when we stand up here to pontificate profusely about tariffs. So I can't wait for your list, Josh, because you're Josh.
Colin White:Josh always comes up with better lists. It's gonna be a more meaningful list. It's gonna be a list that's evergreen. It's it's it's gonna be a timeless list. Right, Josh?
Josh Sheluk:I did pro in my list for for the record, just a list of questions, but I did approach it from the idea of let's try to let's try to ask and answer some questions that are are meaningful and will be permanently meaningful. Like, even if tariffs change in the next two months, which I guarantee they will, something that we could still use and still reflect on is something that can maybe help us think about making decisions even if we're not going to actually make any decisions based off of it.
Colin White:Well, the old adage, I mean, that there's something to learn. You know? So I mean, guess maybe that's the the best way to preface this or to to situate this podcast. What what can we learn? Like, what what learnings are there in the current set of tumult that we're living through?
Colin White:You know, and what information is out there that people can use to make decisions on since meaningful?
Josh Sheluk:I'm going to start with a track that I don't think anyone would expect me to go down. So exciting. Including probably you. I haven't shared my list with you. So I'm going to be really be putting you on the spot with this one.
Josh Sheluk:But I want you to start by giving me and and the listeners three good things that are coming out of this tariff war. Three positives.
Colin White:They they were discussing interprovincial trade barriers in Canada. It is my personal favorite, and I'm you know what? I really don't care how we got in this room. The fact we're in this room, it was gonna take something of this level to make this conversation happen. I love that.
Colin White:The fact that people in Quebec are chanting, oh, Canada, I I think is another, you know, really big upside of this. The third one, I think is a bit further out. I'm not sure it's happening, but I think it's got the potential to happen that Canada as an entity is going to now consider how do we become more competitive and how do we become stronger in the face of adversity? As a parent, you always loved I always loved seeing my kids go through adversity because it was an opportunity. It was an opportunity to learn some skills and become a stronger individual.
Colin White:And the third one I'm going to pause and say, I'm not sure we're going to do that, but I think that it gives us an opportunity that would not be afforded to us in easy times. So, you know, we have a chance here as a country to double down and get more competitive in a whole bunch of ways. And then we they've measured it economically and, you know, the decrease in productivity per person GDP and stuff like that. And, you know, there's different measures that, again, I think have some efficacy, but maybe are not complete. But the general idea that Canada is not necessarily a competitive place to do business, you know, could we could come out of this stronger and better going forward.
Colin White:So I don't know. Did I disappoint you, Josh? Those are three off the top of my head.
Josh Sheluk:I was kind of going down exactly the same track with the ideas when when I had thought about this, this question. And again, I don't think people really realized a few months ago that we have all these interprovincial trade barriers up. Why we do? It's just why we have international trade barriers up as well as some somebody or some entity or some group is trying to protect their own interests. And it ends up being negative over, you know, the bigger picture.
Josh Sheluk:The the pie shrinks because you're trying to protect your peace. And, again, I don't think people really realize that we have all these interprovincial trade barriers up. So the fact that we're really talking about tearing that stuff down right now is amazing, and that could be long term a long term win.
Colin White:There's also another level to it too. It's also the way confederation was structured, that powers were given to provinces that really don't belong at the provincial level. I mean, we've discussed this within our industry that we have provincial securities commissions that produce
Josh Sheluk:Insane. Absolutely insane.
Colin White:Right. But that goes right back to the founding document of the country. And, you know, in that founding document, there are provincial powers that honestly, in today's day and age, don't belong in other subsections of countries. So sometimes it's not even I wanna protect my industry. It's I've got the responsibility and example.
Colin White:I think maybe you shared it with me that Ontario has got a different rule about the upholstery that's allowed to be used in cars compared to the rules in Quebec about the upholstery you can use in the car. So therefore, there's issues sometimes with a car manufactured in Ontario not being allowed in Quebec. And it's you know, part of me says it's not necessarily that they were trying to make it that way, but just they had that responsibility. So their group of experts came up with a different answer than that group of experts. And or maybe it is an artificially manufactured way of being a protectionist, but it's really hard to untangle that.
Colin White:You know, the the professional accounts of of Canada's going through this. There's the CPA Canada, Ontario and Quebec have bowed out. So there's no national accounting standards in Canada. So, you know, is that an interventional trade barrier or is that just stupid the way the provinces have certain powers and have a mail along? But now that Quebec is chanting, oh, anything's possible.
Colin White:We may, but the provinces may go way closer and a whole bunch of things.
Josh Sheluk:Yeah. Well, the competitive thing is interesting too, because I not only I think is there a possibility that we really make a push on that front, but also just with deepening other international trade relationships, I think could be a very positive thing. Obviously, hopefully, we're always going to have a very close trading relationship with The US because of our proximity. It's just a marriage of convenience more than anything Yeah, it makes sense. Would be stupid to do anything else.
Josh Sheluk:Like, it would be stupid to try to, you know, import bourbon for lack of a bit an easier idea from, you know, South Korea or something like that. But, no. You can't even do that because bourbon's very protected. But, the point is, you know, if if we can try try to deepen some of the relationships with with some other countries, then I think, again, long term positive potentially if we're able to also mend some of our relationships here in North America.
Colin White:Well, it's just funny because that's that's a talking point that people are going say, hey, maybe we can go trade with other people. And I mentioned that to a CEO of a company who did the business, I think, 138 different countries around the world. And he's looking me and says, You don't fucking think I've been trying? Yeah. If I could sell something somewhere else, I'd already be selling it there.
Colin White:Mean, it's not as if I said I'm not going to do anything else anywhere else in the world. I mean, you think there's like a tap I can turn on? No, I'm already fully staffed up. I already have sales agents in all those countries. You know, it's not something that we weren't doing like, you know, thanks for the feedback.
Colin White:But but if I could sell something in another country, I'd already be doing it. So it was a kind of a funny and spot on response to a talking point that I think a lot of us sitting on the outside, well, we should just go trade with other countries. The people who have those relationships are going, we are. Yeah. It's not something we we work.
Colin White:Yeah. Thanks for the idea. Yeah.
Josh Sheluk:Fair enough. I I think there's probably times where we can be accused of being overly optimistic on things. So I don't wanna just present the optimistic case, the rosy case on this. But leaving aside like, let let's assume three months from now, this stuff has blown over again, and we're kinda back to our our normal tenuous, we'll call it, trading relationship with with our North American peers. What do you think are the long term negatives of this?
Josh Sheluk:Even if the short term stuff blows over and tariffs all go away, what are the long term negatives potentially of this?
Colin White:I I think this is allowing more deglobalization to to to creep in because I think, you know, people get conditioned, companies get conditioned, and they go, you know, we go again. So I'm gonna take steps to protect myself from this. And those steps Ostensibly, I want to believe that if you make the assumption that the current arrangement that things are in the most efficient form possible, and that's a bit of a big stretch. But if you say that, you know, given the current landscape and the current rules, regulations and current tariffs in place, that everything is as efficient as it can be. And everybody reacts by saying, okay, I want to build a little more safety into the system.
Colin White:That normally means a little more inefficiency in the system, which would normally mean it's a little bit more expensive, which would be inflationary. Now, at the end of it, this may go back to, you know, we hope for earlier in the conversation that, you know, Canada is going to become stronger, more self sufficient. Stronger self sufficient typically would mean it's inflationary because it's not quite as efficient or cheap to do it that way. Otherwise, we would have been doing it that way all along. Know, so this is just adding another constraint to how economic activity is occurring, you know, so we're artificially building in a bit more a bit more protection.
Colin White:That's an additional constraint. And when you are at an artificial constraint that is not driven by a profit motive, typically you're sacrificing the profit motive. So it should be a little bit more inflationary. But again, as to how much, you know, because inflationary, you know, substitution is a thing. You know, if something becomes more expensive in one way, that means people stop doing it.
Colin White:And I'm not even going to want to tongue in cheek say it and hope not too many lobster fishermen are listening. But the fact that China just hit us with lobster tariffs on top of The US lobster tariffs, I'm kind of excited that I'm not gonna get to eat lobster four or five days a week because it's gonna be way cheaper than chicken or steak. Now that's terrible. That's absolutely terrible for the lobster industry and the infrastructure that they've built to ship live lobsters all over the world and the millions of dollars that are spent to service that market that are just going to get decimated for a little while. I'm going to do my part.
Colin White:I will eat as much lobster as I possibly can consume in order to do my part to be a better Canadian. And I think that there'll be a number of us that'll stand up and contribute in those kinds of ways. But I think every time you see a new threat near its head, the natural reaction for everybody is to build up some protections against it. And I think that that's generally going to be inflationary. But I'm going to well, I'll save my challenge to you later.
Colin White:But before we end this pod, I want you to address the question of, you know, how many other factors are playing out in the background of this trade war because we're talking about like one dimension of what's going on. But behind the scenes, there's an economic cycle and economic activity going on that is maybe may or may not be influenced by the current trade war that I think some of that stuff's more important than the current state of trade to, you know, the the forces when it comes to inflation, pro inflationary and disinflationary and deflationary. Okay. Let me ask it let me ask it better. Sure.
Colin White:How much do tariffs really matter? We're watching employment numbers. We're watching GDP numbers, you know, all of which you could argue are going to be affected one way or another. But they already are on a path. They have a strength and a weakness.
Colin White:They already have. There's already data points there. Tariffs may or may not be influencing those things. But is there anything else in those underlying data points in your mind, top three things that are more important to the outcome of what we're gonna see in the next three, six, nine, twelve months than tariffs?
Josh Sheluk:So I think tariffs themselves are not the biggest thing, but when that they're the change at the margin, they might become the biggest thing. So what I mean by that is employment matters way more than tariffs, just in a vacuum for economic progress and productivity and all that. But if tariffs create an uncertainty or demolish an auto industry overnight, then you're going to have unemployment and unemployment is going to lead to a recession, most likely. So the tariffs themselves are not necessarily the problem. It's all the spillover effects that tariffs can create.
Josh Sheluk:And I think economically, we're on a decent footing at the moment, or at least the recent last six month data would say that we're in a decent spot. In The US, especially in Canada, maybe a little bit less so, but still holding up okay. Like most of the employment numbers, which are obviously super important for all kinds of reasons, most of those have been stable, let's call it. Not maybe at the absolute best situation that we've seen over the past few years, but stable over the past six
Colin White:months. Just to ask a question there, you know, to me that stability is in the face of some of the uncertainties already baked That's true. It's it's been uncertain for a while now. Now you can argue that the tempo has increased now and it's more uncertain now than it was a few months ago. But there was a level of uncertainty already baked into some of the numbers.
Colin White:I think it's been enough of a lag like Trump was elected and he's become president. You know, so some of the numbers are already affected by some of the uncertainty that was expected. And they remain stable, which I don't think is a small thing.
Josh Sheluk:You're absolutely right. And I think that's a good point. So that's kind of the employment side. I think the inflation side is maybe equally as important to the employment And what we've seen there, again, is stability and inflation within the range of where we want it. Now the challenge here is, again, one of expectations.
Josh Sheluk:And does even the thought or idea of tariffs lead us to different behavior? And what we've been seeing over the past couple months, even though our inflation numbers haven't really changed, inflation expectations have been creeping back up. And that is dangerous because inflation expectations can be a bit of a self fulfilling thing. We still don't know exactly economically what leads to inflation, but one of the prevailing thoughts is that inflation happens because of inflation expectations. So if inflation expectations increase, then that could naturally lead to more inflation, even without any tariffs in place.
Josh Sheluk:So that's a real risk as well. So tariffs create spillover risks like a bit of a domino effect with other very important aspects economically. I think that's the risk of these things. And certainly from the smart people that I've seen that are out there that have made estimates on what semi permanent, I'll call them, tariffs would do. It's unequivocally negative for growth and unequivocally positive for inflation, which I'm a little bit more skeptical of.
Josh Sheluk:It's not it wouldn't be a good thing. Let's put it that way.
Colin White:Well, think it's an inflationary force now. And we already seem to have an inflation situation and job situation that is fairly concrete. So that's the amount of disruptions it's reflected in the numbers now has been absorbed. And, you know, it hasn't really moved the needle too much yet. And again, it may still move the needle.
Colin White:But I also am of the opinion that, you know, once the economy adjusts to a permanent level of tariffs, mean, it's going to impede growth for a period of time. I don't think that it's reasonable to say that this is a permanent impediment. Just what is the period? Is it three months, six months, nine months? How long does it take to spin up a new aluminum smelter in Michigan?
Josh Sheluk:Yeah. You
Colin White:know, if if that's what has to happen. Right?
Josh Sheluk:Yeah. Well, I I think in theory, tariffs are trade barriers and trade barriers should have some type of permanent negative impact to growth to the extent that tariffs are permanent. The inflationary thing, though, is a different story. Right? If you throw tariffs on everything, the inflationary aspect happens overnight, and that runs for how long, and then maybe we go back to a more normalized situation on the inflation side.
Josh Sheluk:Or even if tariffs are inflationary and impacting growth in a negative way, then at some point that negative growth is gonna feed through to less inflation as well. So there are some sort of self stabilizing mechanisms here that I don't think anybody really wants to explore, even Trump. I don't think he wants to explore it either. I don't know, but I'm I'd be skeptical. But it's it's really hard to know.
Colin White:I wanna go back to your very first question, Josh, about the upside here. And let me let me go deep. You want are you ready to go deep for a minute with me?
Josh Sheluk:Yes. Let's do it.
Colin White:I I I think that the idea of globalization was something that was chased for decades. But in the chase for globalization, the power rested with the international companies that are operating across different borders. And an unelected group was getting to decide where things got produced and could be argued had a disproportionate influence within those countries because they were able to play countries off against each other. So the power went from the elected governments of the various countries to the corporations that were playing countries off against each other to act in their own best interest. There are those who argue, and again, I think that there's always a there's a little bit of truth in a lot of different arguments that maybe the power had gone too far.
Colin White:The fact that the auto industry has free flow of goods across Mexico, Canada, The US. Yeah. We got cheaper cars out of that. But you also saw and again, maybe coincidentally, the evaporation of a lot of the middle class in The US. No, I'm a proponent saying that the two are directly connected, but you could make an argument that the globalization ended up hollowing out different countries and was not done to the best interest of all of the working class in all of the countries.
Colin White:So again, this is an argument being made by some on the fringe that getting away from globalization and getting things to be more aligned with the residents of each individual country, maybe the pendulum swings back.
Josh Sheluk:Sure. Well, that would certainly be a certain Republican's supposed argument and part of his policy campaign. I'm quite skeptical myself that we're just gonna say, okay. Let's let's onshore all of our manufacturing again. I don't think that's gonna happen.
Colin White:Oh, that's silly. Yeah. Yeah.
Josh Sheluk:Yeah. What I think is more likely is like, We're not gonna hire 10,000 employees for this factory, but we are going to build a bunch of new robots for this factory now that we have to onshore again and that could be pretty cool. I am a bit skeptical of that argument, but let me match your deepness for a second and say, how about this as an idea for optimism? So you said, and I think this makes sense that if you're more resilient, you're potentially less efficient, like the whole just in time manufacturing and all that. But what if you look at it over a longer time horizon, like a twenty to twenty five year time horizon, and you look at something like COVID hit?
Josh Sheluk:And that, I think part of the reason why that was such an inflationary event for us was that we had all of these perfect efficiencies, supposedly perfect efficiencies in our supply chains. And what happens if we maybe take a little bit of a year to year hit to make things a little bit more redundant and a little bit less efficient, a little bit more resilient? But if you look at it over the course of like a twenty, twenty five, thirty year time horizon, you avoid that one spike, that one COVID spike or that one, you know, there's a war that spiked because of the war. That wipes out all of the negative, the incrementally negative impacts that you had over the prior two decades. You can wipe that all out by just being more efficient in that one year, two year period or whatever it is.
Josh Sheluk:And in in some cases, that could make everything a lot better and more effective and more efficient and all that and and with a bit more of a longer term viewpoint.
Colin White:Sound like you're arguing for gold, Josh, you know? It's right once once every ten years. Therefore, need it.
Josh Sheluk:I mean, it's right right now. It's the first time in, like, kind of fifty years, seems, but, you know But generation is probably not enough to to argue that point, but Yeah. Maybe we have more shock events over the next little while. Who knows?
Colin White:But but I'm gonna go deep on your deep because you introduced another whole fucking thing. This is a throwaway comment in the middle of what you said. It's like, yeah, we don't need middle class. We're just gonna go straight to robots. Well, maybe that's where the efficiency comes.
Colin White:Right? You know, maybe we'd pick necessity some other invention again. And we're we're we're making a big leap and it's interesting because everybody's making it's going be less efficient unless it isn't. Unless this is what drives us to actually invest in technology using AI and robots and everything actually gets more efficient coming out of this because of the pressure that things go under. Right?
Josh Sheluk:Yeah, sure. We probably do need a strong middle class for the record. It just they might not be those middle class people working in factories. Just might not be what it is.
Colin White:Yeah. I'm not against the middle class. I'm the strong middle class. Holy crap. We're in trouble again, aren't we?
Josh Sheluk:Yeah. That was danger. Our
Colin White:empathy is not showing.
Josh Sheluk:Yes. Yes. Well, here's one that's not gonna show our empathy or my empathy anyway with this question. But I I I trust, you know, trust me and and believe me, we we are very empathetic about some of the human impacts of these these things. But I I wanna ask you a financial question.
Josh Sheluk:So I'm gonna give you a million dollars to invest, and you have you have a three year time horizon for this investment. So you get you know, you gotta build a a diversified portfolio of some sort to see this grow over three years. I'm gonna give you four scenarios. You have to rank the scenarios from this is the best the best situation for my three year diversified investment portfolio. This is the worst situation.
Josh Sheluk:Okay?
Colin White:So is this a blind ranking? Like you're going to give me one, I got to pick one to four and then select the other one
Josh Sheluk:to pick No, no. I'm going give you all four.
Colin White:You all four. Okay. Okay. Alright.
Josh Sheluk:No. Yeah. Here here, scenario number one, you have a global pandemic to deal with. Scenario number two, you have 10% inflation to deal with. Scenario number three, you have a war.
Josh Sheluk:Scenario number four, you have tariffs just like we do today, this whole tariff kerfuffle. Rank one to four is like, this is most attractive for me to invest through versus versus the least attractive for me to invest.
Colin White:I'll go pandemic.
Josh Sheluk:That's most or least attractive?
Colin White:Most most attractive. Most I'll and I'll get and I'll get there. See, I'll get I'll get there. Alright.
Josh Sheluk:Okay.
Colin White:You get the answer. Right? You asked the question, I get the Yeah.
Josh Sheluk:I'm just surprised. You went there first. Go for it though. Pandemic number one.
Colin White:So I go pandemic number one, I would go inflation number two and sorry, war and what was the?
Josh Sheluk:Tariffs. Tariffs. Our current Yeah.
Colin White:I'll go tariffs and then war.
Josh Sheluk:Okay. Interesting. Very interesting.
Colin White:So here's the rationale. So right now we are fighting with each other. Right? There's a there's a conflict and it's just making everything more complicated, making everything less efficient. My feeling and this is pure science fiction.
Colin White:You know, if we went through another pandemic right now, we now have to concentrate on fighting something else. It's more unifying. Like we now have we don't have time for the shit harder we were going through now and arguing about where the aluminum is made. Like we don't have time for all of that other pettiness. It becomes something that's like we all have a common thing we're fighting against now.
Colin White:And I think given three years and if we look back at the last pandemic, three years in economically things were looking pretty good. I think it would actually clean the slate from a lot of the pettiness that's going on and remove the oxygen from the room about having stupid arguments. We'd have to get much more, much more aligned with what we're doing. So that's why I would I would pick that. And again, think I put tariffs number two.
Colin White:I'm trying to remember.
Josh Sheluk:They had inflation was number two for you.
Colin White:Inflation. Three years is enough time to get inflation under control and I'll ride that wave for three for three years. And I think that central bank, well, give central banks credit for it. But you and I, I don't know that the central banks or whether just three years is enough time for inflation to work its way out of the system. Yeah, But I think three years is enough time horizon that inflation would go away.
Colin White:We can debate later whether we give anybody credit for that. And I think, you know, my portfolio could do fine.
Josh Sheluk:Yeah. Yeah. Okay. Interesting. See, I had for for me, the inflationary period, that was the most difficult to deal with because was like the pandemic, and it's a bit of a guessing game as to what the next pandemic could look like.
Josh Sheluk:But it was very much a shock and then recovery. I think things happened so quickly. We got over it so quickly in a lot of ways. And in a lot of ways, we're still scarred. But in a lot of ways, we got over it so quickly that for investors, by the time you're like, oh, boy, this is bad, things were actually kind of already good again.
Josh Sheluk:So you didn't really have that much time to do damage to yourself by panicking or blowing out your portfolio at the worst possible time. So I felt like that was maybe less of a bad event, but nonetheless, very economically damaging. Inflation for me is it's tough because everything kinda gets hurt. Like, don't have anywhere to hide in the inflationary. And we we saw this through 2022.
Josh Sheluk:Right? Stocks were down, but bonds were down as well. And bonds had their worst period of time investment wise in, well, forever, basically. So that makes things, in my mind very challenging to manage a portfolio, even a diversified portfolio. You don't have a lot of protection anywhere that you look.
Colin White:Yeah. No. You're you're gonna go through it. Like, you know, inflation is gonna cause that disruption. Again, my my take on the question was I had three years to ride it out.
Colin White:Sure. Yeah. I think I think given three years, I can ride that wave. It'll be bad for a year. And then, you know, like, I have enough time in there that I would I would be okay at the end of it.
Josh Sheluk:Yeah. And see, for me, tariffs, especially the this kinda, like, tenuous tariff environment that we're in now or that may or may not be in place, like, I I think that is a well uncertain and concerning, also something that can be dealt with reasonably well with with, you know, well diversified and balanced portfolio.
Colin White:I'll completely argue with you, Eric. The worst scenario is that we remain this uncertain for the next three years. If there's absolutely no direction for the next three years and we don't know whether we're coming or going three years from now, that will be the worst. It's going to paralyze everybody. Paralyzing people right now.
Colin White:Companies are not spending money. They're not taking on projects. They're not building factories. They're just everything's paralyzed. I mean, my argument would be that that would be the worst.
Colin White:We need to and that's why I would love an an asteroid. I'd love an asteroid to be headed towards Earth right now. I would love for that to be, you know, just, oh my god, we have to come together and Bruce Willis has got to go blow up an asteroid and, you know, take all the oxygen out of the room to argue about all this other stupid shit. Yeah. As to where the alcohol is being made and who's got the electricity and where aluminum is being made.
Colin White:Like, no, the Earth is going to end. Like, we have to go move this rock. Everybody pay attention to that for a while.
Josh Sheluk:Yeah. Yeah. We need a galvanizing force.
Colin White:It would it would be beneficial as much as it would be stressful.
Josh Sheluk:Right. So we've seen some market turmoil over the last few weeks or so Yeah. Especially with some of these tariffs kind of being put into place. Some some stocks, some parts of the market have got hit a lot harder than others. This is not a serious question, by the way, but it's a good question.
Josh Sheluk:So Tesla stock down 35% over the past few weeks, and I think it's it's down something like 60% this year or something. Still remarkably up over the last six months. I I don't understand that stock at all. But do you think Trump's saying he's going to buy a Tesla? Does that change your thesis on the Tesla stock itself?
Colin White:No. No. This is not a good question, Josh. It's I've got a Ron Ervin here jumping up and down on it. I mean, he's he's pitching cars on the white law on front lawn of the White House.
Colin White:I mean, you know, when you actually dig into the showmanship that's going on, it's Saturday Night Live doesn't write this well. Like, it's just and it's reality. So no. No. I don't think that helps, Tesla's talk.
Colin White:But one thing that is interesting, and you gave me some numbers earlier this week, which actually I think is beginning to illustrate the point. One thing we are absolutely seeing right now is, you know, regardless of the origins of the concern and the anxiety, we are having one of our own thesis play out that the most overvalued parts of the market are the ones that are hurting the worst. Right? So the the highest flying, the biggest contributors to the stock market growth are the ones that are absolutely getting pummeled right now. And, you know, I think that that that's an important lesson and important takeaway and a confirmation that valuations matter.
Colin White:You know, now again, we've got a whole cycle to go through. But when things like this go sideways, you know, this is another shining example because I was even surprised the numbers you showed me, the Canadian stock market is actually holding it better than The US stock market. And, you know, we have not been all that constructive on Canada for a while because of the relative economic, domestic economic strength. And, you know, but the saving grace for Canada is it wasn't so highly valued that when shit went sideways, it hasn't fallen nearly to the level of certainly the NASDAQ. So again, valuations matter is one of the lessons I think that's coming out of this.
Colin White:You asked Tesla question. They ended up on valuation. I guess that was predictable.
Josh Sheluk:Well, that was kind of the point.
Colin White:Yeah. And I found in your silly question, I found the point.
Josh Sheluk:Yes. Good stuff. Well, okay. So this is another silly question. But I'd like you to predict the next ten days of this trade war, Colin.
Josh Sheluk:And and please be specific about which days, which tariffs are gonna be put in place on which industries from which country and the percentages that you anticipate.
Colin White:I think Donald Trump will lead the news cycle for each of the next ten days. And I think that at least three of the ten days, his leading of the news cycle will be completely contrary to another message that he had within the previous seven days. So, you know, you can start tracking that one. So I think three of the next ten days, there's going to be him leading the news cycle with a message that on his face is completely contradictory to something he has said within the last seven days. Number wise, they're gonna be big, very bigly.
Colin White:They're gonna be hugely and they're gonna be the best they're gonna be the best of of all the tariff numbers. Like, you're gonna see tariff numbers like you've never seen tariff numbers before. They're gonna be magnificent, you know, you know, better than anything any president's ever done. You know, so we're going to see the best trade war in the history of trade wars. It's it's it's it's going to be, you know, beautiful.
Colin White:It's just going be a beautiful thing.
Josh Sheluk:And Well, I can't wait. I will say I can't wait.
Colin White:It's interesting. Well, it's gonna be interesting ten days because we have an unelected prime minister now who's now going to be put in charge and, you know, can't wait to see how that goes. We have an academic school teacher who's gonna get in the ring with, you know, you know, the the ultimate warrior and, you know, they're gonna have a cage match. I have no idea how that's gonna play out.
Josh Sheluk:What are the chances, like, three months from now, Carney's just like, I can't. I can't do this. I I vote.
Colin White:I have to imagine in some room, like, you know, out out of the public eye, he's going, I can't even. Like, I
Josh Sheluk:just What did I get myself into?
Colin White:I don't even know where to take the conversation from here. Yeah. Yeah. I'm sorry my Donald Trump impression wasn't a spot on. If I had a chance to rehearse it, I could have probably used more bigly words.
Colin White:We had this conversation this week with the PM group and we're trying to find something to trade on. We're trying to find, you know, is there a thread here of any kind of a sensical thread you can pull on? And for the love of God, no. Like there really isn't because a lot of people are suffering from the infinite projection. He announced there's a 25% tariff.
Colin White:That means this is what's going to happen next. Assuming the tariff stays in place forever. That's a bad assumption. That's assuming no retaliatory tariff. That's that's assuming that nothing changes.
Colin White:Shit's gonna change. Sorry. Let's go back to your question. Over the next ten days, everything we know now, a lot of it's gonna be different, you know, because this is not a static environment. Not like it's a train track that has been, you know, rerouted and therefore is now a new train track.
Colin White:This is somebody who's just banging on a computer keyboard.
Josh Sheluk:Again, was that was kind of the point of the question is trying to get to the realization that there's not a lot to be done here. If you had a properly built and structured portfolio and plan going into whatever the start of this year, there's nothing that's happened over the last three months that should change what track that you're on. Because Yeah. Yeah. There could be tariffs or there could not be.
Josh Sheluk:And if you position for tariffs and there's no tariffs, then you're gonna hurt yourself. If you position for tariffs in Canada and there's tariffs on in Europe instead, well, you're gonna hurt yourself. So you just kinda sit back and say, you know what? I just need to be flexible, be adaptable, and ride it out a little bit.
Colin White:Stress causes you to find out how strong you are. So if this situation has directly impacted your financial plans, then there's probably a really good chance you had a bad portfolio. You know, if something in the short term is derailing something material to you, then there's a good chance. When advisors make mistakes and when mistakes happen in an environment like this, it's often overcommitting to their investment portfolio and not maintaining a safety net. If you find that your diet is going to be dependent on what the next budget announcement is, then you've gone too far.
Colin White:You should have that much cash on hand to do what you need to do to get through the short term. If you've over allocated, if you invested in a market investment and I'm spending the profits in order to live on, stop it. That's dumb. You don't want your portfolio that exposed to markets. You need to maintain a certain margin of safety.
Colin White:So, this is a good gut check to consider that. You're right. Properly constructed, this is what happens. And sometimes we try to convince people that chaos is unavoidable and that's really uncomfortable. And if you plan for it, it's perfectly comfortable.
Colin White:Like, just accept that this is what's going to happen and it's going to happen regularly. It's going to happen without warning. It's going to not be forecastable. Once you accept that and you build your portfolio accordingly, now you're good. The stress comes from expecting you can avoid it.
Colin White:The stress comes from, oh my God, I got to get out the way of this. What do I do now? That's where the stress comes from. And it's unnatural stress. And unfortunately, there's lots of organizations and people that'll feed into that.
Colin White:Were you getting the pitches this week? There's a new AI tool that, you know, gets figures things out before Wall Street and can tell us what's gonna happen next in the market.
Josh Sheluk:I didn't get the pitch, but I know one of my clients did. And this whole thing, I don't know if it's exactly what you're talking about, but this you know, and tell me how much of a scam this sounds like. You put in $250. It can predict 10% growth on whatever investment stupid investment they're making. You put in a thousand dollars.
Josh Sheluk:You become a silver member. It can predict 20% growth. You put in $2,500, it can predict 30% growth, gold member. So those types of things are starting to pop up right now. I don't think it's just tariff related, but it's all this whole, you know, crypto craze, AI craze, probably terrorists to some extent and people are getting caught up and that the thought that some of the stuff's predictable when it's not.
Colin White:Yeah, that's the scammiest of the scam scam. Like that's, that's Bigley scam.
Josh Sheluk:So Yeah.
Colin White:But it's, you know, again, the market for it is there and people people want it. So I'm waiting for the tariff ETF to be launched, Josh. Have you seen the tariff ETF?
Josh Sheluk:I haven't, but that's gotta be bad marketing.
Colin White:No. No. I'm thinking that somebody's gonna launch an investment product to profit from tariffs.
Josh Sheluk:I'm almost, ashamed that I didn't think I have this already and look for it because it's probably out there. Somebody launched that this month, I'm sure.
Colin White:I I didn't mean to shame you, Josh. But, you know, this is how the world behaves. Like, know, you got something everybody's afraid of. Hey. Do you want to profit from tariffs?
Colin White:We have a product you can buy that will, you know, benefit from tariffs. Oh my god. That's amazing. This is my hedge. I'm gonna put 40% of my portfolio in this, and I'll protect my portfolio from tariffs.
Colin White:Why? Because it says so in the name.
Josh Sheluk:So I got one more question for you, and this is probably a good one to kinda end on. Tariff war is over tomorrow, hypothetically. What now?
Colin White:I know if I this will give enough oxygen that we're gonna go back to Gaza as a strip mall, Greenland as another state focusing on Europe, the the the military invasion of the Panama Canal. Any of these other sub stories that are kind of playing out will just go to the top, and it will be equally compelling, equally outlandish, seemingly equally as destructive. Unless Donald is leading the news every day, he's not happy. And the best way to lead the news is to pick a fight with somebody who can't defend themselves and, you know, sign executive order after executive order. So the fight will just change.
Josh Sheluk:Yeah. I would even try to take people's attention away from politics in general.
Colin White:That's good advice all the time.
Josh Sheluk:Yeah. Worry start worrying about other things or because the reality is there's always gonna be something to worry about. So if we're not worried about tariffs, we'll be worried about something else, whatever it is. It does seem like tariffs have taken on a bit of a more of a special, for lack of a better word, part in people's brain space at the moment than a lot of events over the past several years. Right?
Josh Sheluk:I'd say more so than inflation really even, even though inflation seemed to be much more impactful in the moment, more so than in some of the wars that we've seen. So this this is like the one thing that's dominating headlines more than anything else since the pandemic, I would say.
Colin White:But if it was an inflation war, we would have paid attention to it. I mean, this is a trade war.
Josh Sheluk:I'm pretty sure we I'm sure we described it, the media did at some point as a war against inflation. Right?
Colin White:A war against inflation, but that's an inanimate object. What we have now is a trade war between countries. That's way more compelling. But I will make a couple of comments. I've had some I would call them actually unsettling conversations with some very, very good people.
Colin White:And I think some of this feeds out of coming out of the pandemic. There's still people who are isolated. There are still people who made a shift into working from home and or retiring during the pandemic. And they're maybe a little bit more isolated. So there may be a little bit more myopic in the news they're getting.
Colin White:If you find yourself trapped in a room or in a space or in a time where you're consuming nothing about all of these things except all of the most egregious thing, if that's all you're eating every day, it will wreck your soul over time. You need to, you know, look at kittens, go for a walk, take up pickleball. You know, you need to fill your time with other things because I think that coming out of the pandemic, we still have a little bit of isolation And eventually, people went into retirement during the pandemic or just after the pandemic. Again, isolation is a thing. It's always has been.
Colin White:I think it's a little bit more now. But man, if you're isolated and you get on this wavelength and you start consuming nothing but this news, man, that is fucking terrible. Like, shake your head. Don't do that. You know?
Colin White:It's it's just bad for your soul. Like, take knitting, take up board games, like, do something, but, you know, don't get caught in that loop and don't hang out with people that are caught in that loop because they'll drag you down to their level.
Josh Sheluk:It's important to break the algorithm, so to speak, because they can be vicious.
Colin White:In a positive way.
Josh Sheluk:Yes. Yeah.
Colin White:Maybe we should go back and focus on all the upside that you and I saw in this.
Josh Sheluk:Well, I'll give you one more upside thing just because we were talking about similar kind of themes at dinner with some of my friends last week and my friend Steve, we're having dinner and he goes, No, tariffs, pretty good for me. Pretty good for me. It's like he works in a sales business and he said all of his US clients, they are supportive of Canada and continue doing business with him as a Canadian. And all of his Canadian clients, they want nothing to do with The US, and all of their business is going to be redirected to to Canada. So think of your friends like Steve, are lovely people and are gonna be benefiting from some of this.
Josh Sheluk:There will be some winners, and maybe we could focus on them for a while and be happy for them.
Colin White:Everybody wants to be Steve. Thanks, everybody. Rachel, if you have any feedback or you'd like to hear a different topic on one of these podcasts.
Colin White:If you're breaking a sweat trying to figure out what your financial advisor is talking about, you're not getting the service you need. You probably hate trying to get an answer from them, but you also think moving your accounts will be a headache, and it might be. But working with don'trocktheboatwealthplanning.com or .ru isn't exactly stress free, is it? Call us. We will demystify the world for you.
Kathryn Toope:For more information on the subject of today's podcast or any other financial topic, please visit us online at verecan.com. That's VERECAN.com. There's plenty of information there, or you can reach out to someone on the team. Thanks for listening. Please note, the information provided in this podcast is for general information purposes only.
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Kathryn Toope:Barenaked Money is produced by Verecan Capital Management Inc, a licensed portfolio management company in Canada. We operate under the regulatory framework established by the provincial securities commissions in the provinces within which we operate. The views expressed in the podcast are our own and do not necessarily reflect the official policy or position of any regulatory authority. Remember, at Verecan Capital Management Inc, we focus on aligning our goals with yours, prioritizing integrity and transparency. For more information about us and our services, please visit our website.
Kathryn Toope:Thank you for listening, and let's continue to challenge the norms of the financial services industry together.