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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.
Announcer:
You're about to get lucky with the Barenaked Money Podcast, the show that gives you the naked truth about personal finance. With your hosts, Josh Sheluk and Colin White, Portfolio Managers with WLWP Wealth Planners, iA Private Wealth.
Colin White:
Welcome to the next edition of Barenaked Money with, there's only a shower curtain between us and we're going to have an off the wall conversation today. We had a request come in from a listener asking the question, "What was the most off the wall investment ideas that you guys have heard?" And it got Josh and I to talking. Now, I think we may disappoint a little bit because I know I have a filter up that keeps a lot of stuff away from me and I immediately dismiss stuff. So probably the most exciting stuff I've either forgotten or people just didn't come to me with. But I do have a couple, and Josh being the studious fellow that he is, I am sure has come up with a couple gems for us today. There you go, Josh. They built the expectation. Don't disappoint. What do you have for us?
Josh Sheluk:
Well, we're probably going to approach this from a two different angles because you've been around a lot longer than I have in the business, so you've probably seen a lot more off the wall ideas than I have, but the last few years have given us some absolute gems. So I want to start there, and I would say the most off the wall investment idea in the last 10 years for me is NFTs.
Colin White:
Yeah, no, I knew we would get here. And my problem with putting this on the list is, it's almost mainstream. There's many, many people that don't think this is off the wall. This is out there. So I'm not sure if this is obscures. Some people are looking for. It does absolutely fit the definition of off the wall. And maybe you can give me an update. Are these still a thing? Are people still making them and buying them?
Josh Sheluk:
Well, okay, so better than, Are they still a thing? I'll actually share with you, I actually have NFTs, and I didn't know that I had NFTs until earlier this week. So I was buying a concert ticket and they said, "Oh, do you want your digital asset?" I think that's what they call it, a digital asset.
Colin White:
Oh, that's much better.
Josh Sheluk:
Yes. So I went in and I was like, "Oh, I might as well claim this. Might as well see what it's all about." And so I have the virtual ticket stub from the concert that I'm going to this summer, and I had got one from the same concert that I went to last summer as well. So are they still a thing? Yes, they are. They're still a thing. I think some of them still have some value. I find it completely bizarre because, how is my ticket stub from this concert worth anything? I don't know. Maybe if I put it in a virtual scrapbook or something, it would be cool for me personally. But I haven't done any scrapbooking since I was 10. I don't think so. Maybe not the most exciting thing for me.
Colin White:
Well, people do collect ticket stubs. That is a thing. But the most genius thing, and what you just told me is that they have repositioned this whole thing. It's an asset now. It's right in the name. A digital. Ooh, digital is powerful. Digital is way better than analog. Assets are good things. I have a digital asset. Those are powerful words, that must be worth something.
Josh Sheluk:
Must be. Anyway, the whole concept of these is kind of bizarre. It's like here's something that's by the definition of the word non-fungible, so you can't copy it, but it's technically copyable because I can just copy and paste it or take a screenshot or whatever it is. So that's the part that I really struggle with, and then the hype that built around this. I guess just to take it back to the off the wall concept, I looked at these in a variety of different ways. Ones that are just totally obscure, and then ones that just from an investment perspective really break my brain. And I guess this is the one that just breaks my brain. I understand what they are and how people could like them, but I just don't see any value to them.
Colin White:
People spend money on them, more than two people spent money on them. You own something, but it doesn't give you any rights to it. You can't prevent other people from using it. No, I don't know what combination of hallucinating jugs were required to actually cook this up and put it out there. And I'm just gobsmacked that it still exists. And last I was aware, they were still actually able to be sold now at a fraction of what they went to market at the Donald Trump things that are being sold, not at their peak, but people are still buying and selling them. Yeah, you're right. This is a completely off the wall idea. It was almost like a Saturday Night Live skit that was brought to life by the magic. Eddie Murphy walked in and waved his hands and it became real. That's really what this smacks of.
Josh Sheluk:
Yeah. Well, we're one idea in, and we have already hit the hallucinogenic drug cocktail point of the podcast, so we got a lot to go. What do you got?
Colin White:
Oh, I'm going to go back and kick it old school, because a lot of the off the wall stuff that I've seen in my career has been cloaked in something that's very comfortable for people, and that's real estate. So the number of people that go down south for a vacation and come back saying, "I'm going to build a house in Costa Rica," or, "I bought a condo in a project that's going to be built sometime next year," and wherever. It's like, "Wow. You really seriously thought that was a good idea?" Now, "Oh, real estate always goes up." No, no, no. You're buying real estate in an underdeveloped country as a foreigner with no understanding of the local laws, rules or expectations. You think the contracts, the contract. Do you understand the law of foreign country that you're dealing in? Well, my buddy, oh, here we go. The buddy defense, you had a buddy that did this. So the number of clients that have lost six figures on various projects like this is way too high for me to count or want to remember.
The thing about this one, and we were going to get into this, Josh, is to how we can tell upfront that something is an off the wall idea. The number of people that, "Ooh, it's real estate," therefore they equate buying real estate in Costa Rica with buying real estate in North America. Well, it's the same thing. No, it just isn't. There's a whole bunch of follow up questions there about contract law, taxation, who you're dealing with on the other side? How well do you really know them? We understand the game because we've been brought up in the game in North America. You sign a contract, there's recourse to the courts. You understand what's acceptable, what isn't. That could be completely different somewhere else. Not even in the same hemisphere, literally and figuratively, but number of people that have put their faith into that, shipped money out of the country and just kissed it goodbye. Yeah. That's way, way too. I don't know that. I haven't heard of it happening more recently. Josh, has anybody brought this to you but wanting to build a home in the Maldives or anything?
Josh Sheluk:
Yeah. Not so much like a pre-construction project or something like that. Obviously we hear about foreign investment in real estate and we're not poo-pooing every foreign real estate purchase outside of Canada. That's not by any means what you're doing here. But investing in an undeveloped project in some developing country, I haven't come across that.
Colin White:
Well, yeah, and I am to a certain extent, I am pulling it because the level of complexity to execute these things and stay on side going forward is not small. You need to keep track of changes to local law, you need to keep track of change of international tax treaties, you need to keep track of the local political landscape. The property you were built on has just been seized by the government for some kind of project. So complications there is almost unimaginable. And I'm going to keep it simple stupid guy. It is way easier to have a regular rental spot you go to, and if the government seizes it to build a hotel or something, you just rent somewhere else next year you go down. No harm, no foul. So yeah, those ones.
And yeah, there can be legit ones and typically more developed markets, it's safer. Or if you've got a family connection or you've got a family that live in another country then there are ways to mitigate that. But just taking a flyer and saying, "Wow. I think Costa Rica is a great place. There's huge development. I saw this presentation and the government's investing all kinds of money, blah, blah, blah, blah, blah. And I bought two units in a building they're putting up. Wow. Just people to know, just know.
Josh Sheluk:
All right. Can I move on to another new school one that I know we both are racking our brains with, obviously cryptocurrency? A close cousin of the NFT, and equally as bizarre for the same reasons. You can't value it. It's hard to understand what's going on under the hood. You don't know where your money's going, really. We've seen all kinds of fraud in this space. And when you hear something like Dogecoin being created as a joke and actually becoming what some people view as a legitimate investment opportunity, but in their defense, it went up astronomically high. Just again, kind of breaks my brain as to how people throw money after this stuff.
Colin White:
Well, I've never seen a more clear demonstration of the halo effect. Let's just, when you look at something, it's like, "Well, that's stupid," And all of a sudden it starts to make money for people. It's like, "Well, if it's making money, I'm in," and that's pretty much all there was to it, right? And we're seeing it blow up. But now that some of the glitter has come off, it's just getting eviscerated, all of the complaining about what it wasn't is now coming to the forefront that's what's being talked about. But I mean, there's some parallels, I think, obviously not all, but there's some parallels to the valuations we've seen on some tech companies, right? It just went to a super level that was never really completely understood by current metrics.
Why did it go there? Because it did. Is it going to stay there? Probably. Why? Because that's where people put it. So there's this illusion that something detaches from reality and has success. Well, FOMO, fear of missing out. I don't want to miss out, so I'm going to jump in. And FOMO is powerful enough apparently to take Dogecoin from being a joke currency that was created as a lark into something that actually I'm still talking about. So yeah, it is probably the power of FOMO would be probably the biggest wind beneath the wings of the crypto world. And every time I'd had a little bit of success, that momentum just picked up.
Josh Sheluk:
Yeah. And I think that's something you'll find as a common denominator with all of these things that we're talking about. When people are throwing money at them, it is the FOMO thing, or you mentioned it before, it's the, "My buddy said this is cool." And it's like, "Okay. Well, if my buddy said it must be legit." And a lot of these things start with, "My buddy did this," or, "My buddy thought that." Yeah. So NFTs and cryptocurrencies I think are probably two of the best examples of, we'll call them buddy investment ideas, or FOMO investment ideas. I think both those make total sense.
Colin White:
Yep. Is it my turn?
Josh Sheluk:
Go for it.
Colin White:
All right. So I'm going to go hardcore Nelson. So for all of the people out there who have any connection to us, Nelson is a small community in South Kootenays in BC that we have an office, and I spent a lot of time at. And this really isn't off the wall, and this really happened. So I met a guy, and he was talking about this company that had this wonderful product that had all kinds of uses, and it was a special metal that they had found somewhere in the mountains, blah, blah, blah. So he actually had a piece of it with him. So he said, "Here, take that hot cup of coffee." Okay. And he took the metal rod and he put it in the coffee, and it instantly transferred the heat from the coffee all the way up the rod. So your hand got hot right away.
It was magic as to how quick it transferred the heat. And he started rhyming off all the stats about how fast this material was able to transfer heat and all the industrial uses were going to be for this. And it was all this wonderful things. And this was an investment idea. He was walking around with a stick of magic metal, extolling the virtues of, "We should invest in this." It's like, "Wow." Yeah. I don't even know a follow up question.
Josh Sheluk:
Did you find out what metal it actually was?
Colin White:
I knew at the time, but I didn't retain it, because, well, I put other more important information in my head. But yeah, this guy was earnest. And in a community that's mining based and there's a lot of mining history, when you have that community around you, there are going to be people that you're going to get an audience, right? You found. Wow. I wonder how they refined that, and oh, there was a guy up at the tech site and da, da, da, da. Oh, there's only one spot in the mountain you can get it. Really only one spot? So again, it grows. And this was the pitch. Yeah, we just need to get together some money. I bet you do.
Josh Sheluk:
I feel like it's a stick of iron ore or something some super common metal.
Colin White:
Well, he showed me something and I'm not smart enough to know. You're right. It could have been.
Josh Sheluk:
Well, and that's the other thing is I don't have any real counterfactual is like, what would a piece of iron do in that same situation? Or piece of copper, coppers known for its heat conductive ability. So do you stick a piece of copper in there and it gets just as hot, just as fast?
Colin White:
This is where you and I play the game a little bit different. When somebody starts talking to me like that, I'm keeping all the follow up questions in my head. I'm fighting a principled retreat. I'm just trying to get out of the conversation. Because if I start going down the bunny hole, they may think I'm one of them, and I might stuck.
Josh Sheluk:
Yeah. And I might be there going some few on the fire just like, "Okay. How deep does this go? How deep does this go?"
Colin White:
How much can I learn from this conversation?
Josh Sheluk:
Yeah, exactly. Well, that's a good one. So I have another client related story, same province. And this one has to do with diamond mining. So the guy was given an option to have a private investment in a diamond mine. So I don't know a ton about diamond mining. I know that there's not a ton of profitable diamond mining companies out there. And anytime again, buddy theory, my buddy is giving me the opportunity to 10 times my money on a private diamond mine. It's like, okay, any junior mining, we will get into junior mining later. Gives me some skepticism because it's very hit-and-miss and a whole lot more miss than hit. But yeah, when you start talking about private companies and diamonds especially, that's a bit of a unique one.
Colin White:
Well, yeah, you have to wonder, because again, the world operates somewhat efficiently. So if there's this huge opportunity, the person who has the opportunity is going to want to keep the profit for themselves. It's human nature. Very seldom to spontaneously people decide, I'm going to give everybody around me a huge opportunity to invest in something because I'm just being magnanimous this is, right? That doesn't happen often. In fact, very, very rarely. And to think that there's an opportunity out there that just because somebody who knows somebody, you're going to get a chance to 10 times your money with no risk or any certainty. Every once in a while those things pay off, but it's often, it's not always by accident. So yeah, whenever somebody comes to me with something that's too good to be true, I need to understand the business model. Why are you offering it? Why didn't you offer this to somebody else? Why isn't somebody else willing to pay more for this opportunity you're offering me?
Josh Sheluk:
Yeah, too good to be true. Big thing should be something that creates a lot of skepticism. And if you don't know what I'm talking about, just go look at the Bernie Madoff Netflix special.
Colin White:
There you go. No, don't go look at that. It makes this whole industry look bad. No. It's true, but doesn't make us look good.
Josh Sheluk:
What else have you got, Colin?
Colin White:
Josh, do you remember labor-sponsored venture capital funds?
Josh Sheluk:
Yeah. I do. I still see accounts with the remnants of them all the time.
Colin White:
The shrapnel?
Josh Sheluk:
Yeah. Zero balance, $0 value securities. So yes, yes.
Colin White:
So this was, and again, probably people listening to the podcast who took part in these. So the labor-sponsor venture capital were back in the day when economic development was a problem, unemployment was an issue, and they needed programs to try to spark the employment. So what they did was we had one here in Atlantic Canada, and it was Atlantic Canada Opportunities fund. So you got to raise money and the province signed on to give additional tax benefits. So you got more than just an RSP receipt, you could actually get more tax benefits by putting money into these things. But the mandate was they had to invest it in the region to create jobs. So you tell somebody that you can save them more in their income tax, well, you're going to get a line at your door. They're not going to listen to much rest of the details.
So these things sold like hotcakes. Now, but there was, depending on which one you're in, there was a hold, like you had to leave it in there for five, six, seven years or whatever. But so little of your own money was at risk. A lot of people that didn't matter to them because, "I'm saving my taxes, right? I get more back in my taxes, I'm in." Well, the funny thing about them was that they were so successful at raising money, they couldn't find anywhere to invest it. So I had accounting buddies who were accountants for local firms, and these guys would call them up to get a presentation. And one guy literally said the guy fell asleep during the presentation, woke up and wrote him a $3 million check, because they had to get the money invested in order to take in new money. So there was no, it was basically they were just throwing money out the door because if they kept it on the books, the government was going to shut the down and said, "You guys can't raise any more money until you invest that money."
And the amount of money exceeded the opportunities to invest. And by definition, they were investing in startups and venture capitals, stuff that's completely illiquid, and that end of the spectrum, which is super high risk and very illiquid. And yes, Josh, even today, we're still seeing shrapnel and remnants of this sitting in people's accounts. Well, there's a different version of this that we'll talk about later that has some parallels that I'll circle back to this and tie it in as to when there's a tax benefit to doing something, that's a big red flag.
Josh Sheluk:
Yeah. So I started the business in 2011, and I've seen literally thousands, maybe tens of thousands of client accounts, because I used to work out of our companies corporate offices. So I saw clients all across the country, I saw accounts, and regularly I will come across these investments that are sitting there with a $0 market value and they can't be moved off the books. And me being a curious guy, it's like, "What are these?" Because labor-sponsored funds really haven't been issued since I've come into the business as far as I know, maybe the odd one here and there, but it is probably pre-2010, right? Colin, most of these are?
Colin White:
Well, you're testing my memory because everything was five years ago to me. Yeah, probably pre-2010.
Josh Sheluk:
Yeah. Bottom line, I haven't seen a lot of these deals come freshly to the table over the last little while in my career. But I have seen a lot of these $0, zero value securities in client accounts, and they're just sitting there because maybe one day there's some remnants of value there as some of these private companies get sold off or make some type of profit longer term. And just to explain what these things were, you invest, say $5,000 in them, you got a pretty significant tax credit. So you get immediate tax savings. People love that. And the proposition of here's a high risk investment that I'm sure were positioned as lower risk investments at the time, that would make people a lot of money. Well, it didn't ended up happening. Well, a whole bunch of them went to zero. So you made zero money, you lost all your investment. Yeah, you got some tax savings, but you lost a whole lot more dollars than you got in the tax savings.
Colin White:
Well, no, the pitch from the companies was, look, you're going to put $5,000 in, you're going to get $3,000 back in taxes. You only have $2,000 at risk.
Josh Sheluk:
Yep.
Colin White:
So even if it just keeps its head above water at five grand, you're going to more than double your money. Well, fuck, if it just has to break even, that must be easy.
Josh Sheluk:
Yeah. Exactly. Yeah. Here it is at zero and you lost all your money anyway. Okay. Good stuff. I know we're going with the closely related one, and I had that one on my list too. Because these ones have been issued a little bit more during my career flow through shares, which are pretty much the same idea. You get a tax credit for making the investment. These ones are specific to junior mining companies, junior oil, junior mining companies. So that Diamond mine I was talking about, you're throwing money at something that probably has, I don't know, I'm going to say one in a 100 chance of big success. Do you think that's fair? I just made that number up totally. I have nothing to go on, but it's probably in that ballpark.
Colin White:
Well, so there's two categories in the flow throughs, that's one of them. Like the complete throwaway money. I hope there's something in the ground. I'm going to dig a hole and I'll let you know. But there's also the actual producers, right? So some of the producing companies also had some exploration going on. So the way the game worked there is, and these refer more interesting because, hey, it was an operating business that's better than some guy digging a hole and hoping. But the way the system would work is the flow through guys would raise the capital, and then they'd go out and they start calling all these companies because they had to get them to issue shares from treasury. So it was dilutive to the firm in order to get the tax credit, because there was only treasury shares that got the tax credit.
And depending how much money was floating around there, you were paying a premium, you weren't paying market price, you were paying some kind of a premium. Because the company had to be willing to give up its tax credit. So there's behind the scenes you're already in the hole, and you never knew until after the fact because they raised the capital and they went out and deployed it. So in every year, depending on how much competition was, how far you were in the hole to begin with, and then the whole period on them was two years. Josh, I think I've seen two-
Josh Sheluk:
I think that's right. It's been a while since I looked at them, but I think that's right.
Colin White:
Yeah. So you're basically investing in a commodity pay that you paid a premium to get in, now you got to flow through the tax credit for it, which is the offset. Both use the same math. It's like, "Oh, you invest $5,000, but you really only have $2,000 at risk. As long as this holds its value, you'll be good." It's like, "Oh, okay." But it's works against you and you're investing in something that's very volatile with it. You don't have to necessarily sell it at the end of two years, but if you're expecting to roll these every two years, that's a really short period in the commodity world that it could move with you or against you.
Josh Sheluk:
Yeah. Well, and a lot of these, they don't have liquidity after two years as well, like the labor-sponsored funds and the flow throughs. So just because you can doesn't mean you'll be able to after that couple year holding period. And it's funny because you had the flow throughs, and then they came out with super flow throughs. It's like, "Oh, if a flow throughs good, the super flow through has to be awesome."
Colin White:
Was it a super asset flow through?
Josh Sheluk:
I have to think that anytime you add super to the name of an investment, you have to run the other way. Right? Prove me wrong on that.
Colin White:
No, no. I'm pretty sure that's pretty safe. You're not going to go too far wrong if super is in front of your investment, then yes, that's probably not a good investment.
Josh Sheluk:
Yeah. Super. I'm just waiting for Super NFTs or Super Coin or whatever it is next.
Colin White:
Josh, don't say it out loud. We could launch Super Coin.
Josh Sheluk:
This is our promotional video.
Colin White:
It could go. We'll get Catherine to edit this out later so nobody knows about the upcoming Super Coin.
Josh Sheluk:
All right. I got another new school one for you, Collin. The whole meme stock game, and specifically GameStop. It's the dumbest smart investment I've ever seen, I think, if that makes sense. On the one hand, the actual technical thought process behind the people that came up with the GameStop thing and creating a short squeeze, manufacturing a short squeeze using an internet forum. Hey, that's pretty freaking brilliant. But you're also throwing money at something that is almost a defunct company that is totally unprofitable, that doesn't really have a path to any profits.
Colin White:
Well, that's just said. I mean, to me, this is pure speculation. It's not an investment, right? So you're right. Last I saw, it wasn't creating any value or nominal value compared to the valuation they had on it. So yeah, you're just completely playing a game that's being controlled by others. And if you think you're plugged in, hey, you go for it. But chances are you're not as plugged in as you think you are. There's forces at play that you should not trifle with and certainly don't make it the cornerstone of anything you're doing.
Josh Sheluk:
So I haven't looked at GameStop stock in a while just to see where it's at. Now, it's still from a couple years ago before this whole thing started. It's still up four and a half times from where it was. So some of these I struggle with because it is totally off the wall. I think it's stupid, but it's made people a ton of money if they got in at that really early time. So the whole, it's bizarre. Again, breaking my brain.
Colin White:
Well, I mean, to be an investible ID, you have to understand what's going to unlock the wealth and what's the catalyst. What was the catalyst to cause it to go where we're going? What's going to be the catalyst for the undermining of this thing? And Josh, you're on record of not being a Tesla fan for a long time. Tesla didn't make any sense to you, and you're starting to look more right now, but for a long time you were wrong. And delusions can persist. That doesn't make them predictable. That doesn't make them a good investment. Just because you made money at something doesn't make it a good investment. There's things in the world that we can take a look at and have some idea or expectation that things are going to work out well, and other things are just going to be a complete surprise. And if you're stumbling through life looking for the big surprises to make you rich, you better play a lot of games. You better bet on a lot of different things in order for one of those to pay off, because they're completely unforeseeable.
Josh Sheluk:
And on the, how wrong was Josh White? As it relates to Tesla. Now, up about 70% this year, if you can believe it. So I don't get it still, but we'll keep updating our audience on how wrong I've been on that over time.
Colin White:
There you go. See, sorry. Is this causing you to trigger? Should I stop bringing up Tesla as an example?
Josh Sheluk:
Nope, it's a great one. It's a great one.
Colin White:
All right. So it's my turn?
Josh Sheluk:
Yep, go for it.
Colin White:
Are you ready for me to go controversial?
Josh Sheluk:
Yeah.
Colin White:
You ready for us to get hate mail?
Josh Sheluk:
Yep.
Colin White:
One of the stupidest and wildest off the cuff investment ideas that I've ever seen in my entire career, gold.
Josh Sheluk:
The whole concept of gold?
Colin White:
The whole thing. The whole concept of gold. The Canadian gold mining industry has set fire to more shareholder capital than I think any other industry could without going to jail.
Josh Sheluk:
So are you talking about actual gold stocks or the physical battle of gold? Okay.
Colin White:
All of it. Just the whole delusion of the whole thing.
Josh Sheluk:
Yeah.
Colin White:
Again, what are the practical uses for it? It's the greater fool theory. I'm going to buy it hoping somebody else is going to pay more for it later. It's just a lump of metal that does not play the role it once played in our financial system, has not behaved as anybody foretold gold would behave during any of the financial crisis or any of the global crisis that we've had. So I'm still waiting for it to go to $10,000 an ounce, and people have been telling me it's going to $10,000 an ounce pretty much since I came in the business.
Josh Sheluk:
But it's a store of value, Colin.
Colin White:
Oh, here we go. Yes. Yes. If you define a store as a place that you put a piece of meat in a freezer and let it slowly decay over time till eventually it's with nothing. Yeah, okay, I'll buy that.
Josh Sheluk:
So I think I saw recently that we... After almost 40 years of trading below the inflation adjusted breakeven point, gold recently ticked above that level. I think that was last year. Because it previously hit a peak, an inflation adjusted peak in the '80s and just went back above that level recently. So I guess you could say it's been a store of value over that time, but it's a hard argument to make I think when you look at the actual data. What makes a bit more sense to me is the people that claim it as a diversifying asset in a well-diversified portfolio. It has some merit, is that I believe, but I still have a hard time throwing money after something like this for the reasons that you outlined.
Colin White:
Buying beer is a diversifier because you get to take the empties back for the refund. I mean, holding it out as a diversifier like, "Oh, I'm sorry," anything could be a diversifier. I could buy a nice bottle of scotch, call that a diversifier. I guess I should stop using alcohol references, but you get my point. No, if you listen to the people in the space, and I've tried, because one of these days I could be wrong and I'd like to be aware when I was being wrong. But nothing in the space has ever made the remotest amount of sense to me. And watching it behaves like, "Okay. We're having global instability. What's gold doing?" "Well, it's just sitting there." "Well, isn't it supposed to run to the front now? Isn't it supposed to actually kick in?" "It's not going to $10,000 an ounce."
So anyway, for me, and I'm an outlier on this, I say that's one of the more off the wall investment ideas. And everybody's still participating in the universal delusion that this is someday going to be a thing. And there's still an audience for it, and there's people still willing to buy and sell it, which goes back to the capital that's been raised by the Canadian mining industry looking for gold. And some of the stories about digging holes with millions and millions of dollars and there's absolutely nothing there. But that's not going to stop them from raising millions and millions to dig another hole.
Josh Sheluk:
Yeah, one of my good friends who works in the business and has been in the business a long time has said that gold mining companies have destroyed more shareholder wealth than any type of company on the planet, which I don't think it's been fact tested, but it's probably not far off from the truth. So I'm glad you mentioned scotch, Colin, because the client that actually asked us to do this podcast was mentioning whiskey casks as an investment idea. This is something that came across his desk, and I haven't heard whiskey casks specifically, although, I mean, you can always, I guess, take a boat to Scotland and buy a whiskey cask. But I have heard that wine investing is becoming a little bit more mainstream to the extent that one of my clients actually has some type of online platform that allows him to buy physical bottles of wine and store these bottles of wine. So that's getting up there and the off the wall type of ideas.
Colin White:
Well, no, but the business of catering to these people, that sounds like a real business, like the guy operating-
Josh Sheluk:
That's a business I want to own. Yeah.
Colin White:
Yeah. That guy operating the website who's providing that service, there's a business, he's actually adding value, answering a need, cashing a check, making a profit. I could get behind that guy.
Josh Sheluk:
Yeah. To the extent that you would consider whiskey or wine or whatever as a collectible. There is some merit to that as an investment idea, collectibles like that, and you could throw art in there and coins in there have shown some ability to keep up with inflation over time. But I just don't think your average Joe should be trying to invest in bottles of Cabernet Sauvignon from California.
Colin White:
And then calling it his retirement. And calling this retirement. Where's my retirement? In the basement? You can have some bunch of wines like, "Holy shit. You're going to be drunk your whole retirement? "No, no, I'm going to sell it." Yeah. The problem in all of the space is the efficiency of the market. The one thing capital markets are going for them is there's efficient price discovery, and there's identifiable catalysts that move prices one direction or another. You get into these other spaces and like trading cards and things like that, and you have all of the scams of people producing fake trading cards and diminishing value and stuff like that. The market, there's just not efficient, it's not liquid. Well, sorry, it is liquid, but hey, you know what I mean? But as a hobby, sure. If somebody shows up in my office and they have their wine collection listed as an asset on their spreadsheet for their net worth, I'm deleting it. I'm sorry. No. Unless you own a winery, I'm not counting that.
Josh Sheluk:
Yeah. How much of that wine are you going to drink as well? If your retirement asset is consumable and you are going to do the consuming, then it's probably a little bit questionable.
Colin White:
Yeah. Well, it's prepaid groceries. I mean, maybe that'll be the entry that on the balance sheet. Who knows? You have one more, right?
Josh Sheluk:
I do. It's probably not what you think.
Colin White:
Oh, well, we have to do the one I think.
Josh Sheluk:
Yeah. Go.
Colin White:
Okay. You. Oh, you do the one that you don't think I think.
Josh Sheluk:
Okay. Well, so this one has been probably around forever as far as I know, but penny stocks. And this is another sort of, my buddy said this, or a get rich quick type of thing. And the penny stocks have been replaced by cryptocurrencies over the last few years as that the apple of the get rich quick eye. But these are, they're literally stocks worth pennies, first of all. But the idea of, well, if it just goes up one penny, I double my money. That's pretty enticing. But most of them don't, and they're so fraught with risk and scams, and pump and dump, and oh, it's not a money maker for people. People lose money at it.
Colin White:
Well, it's the entire basis of the movie Wolf of Wall Street.
Josh Sheluk:
Yeah.
Colin White:
That was how they made all of their money. And the smaller companies are more easy to manipulate, and it's just more easy to move around. Now, with technology, we've seen the GameStop things play out. So there's different venues for things to play out, but I do know that the small cafes, it's also very expensive to raise those offerings when they come to the investment shops and say, "Hey, I got this idea. I want to raise some money." The fees that are charged on those are ginormous, right? So there's a lot of appetite to want to make these things work. I mean, I actually was at an event one time, and a guy was pitching me the idea, because they used to refer to BC as Las Vegas North. Because most of the penny stocks traded on the BC Stock Exchange, because again, BC's very mineral rich, and there's a whole bunch of that prospector kind of vibe out there.
But they've really struggled recently. It hasn't been going all that well. It's a difficult space to carve out, and there's a whole lot of disappointment and clients lose their money and don't go back. So they were pitching the idea, and they were lobbying quite hard that they wanted the federal government to allow Canadians to sell blue chip stocks and not pay capital gains on the sale of the blue chip stock, if it got reinvested in junior companies to help fuel the growth of Canada.
Josh Sheluk:
Oh no, I've never heard this.
Colin White:
They thought that that was a really good idea, and they actually hired lobbyists. And they were lobbying hard for this idea, like they said, "Oh wow. No, that's just no." And fortunately, it never did go anywhere, but there was a lobby group in BC that thought this was going to unlock all of the value that's trapped in these ridiculous blue chip stocks. And allow Canadians to redeploy that money into the growth sector to aid the growth of the Canadian mining sector.
Josh Sheluk:
Yeah. That's the definition of taking good money and throwing it after bad.
Colin White:
Yeah. You don't have to pay tax on it if you put it up against the wall.
Josh Sheluk:
Seems like a good idea to me.
Colin White:
Okay. No tax. I stopped listening at no tax.
Josh Sheluk:
All right. What's your last one?
Colin White:
The SHAC SPAC.
Josh Sheluk:
Oh, well, the SPACs. How did I not have a SPAC on you?
Colin White:
I thought you were going to lead with it. I thought there was a big buildup to it, but a pool of money that you put together for no apparent reason, hoping to do something with sometime in the future. Is that not what a SPAC was?
Josh Sheluk:
Yeah. Basically, in a nutshell. Yeah. Yeah.
Colin White:
Special purpose acquisition corporation, and SHAC launched one.
Josh Sheluk:
Another word that you don't want to associate it with your investments, special. If it's special, move on for a minute, but it's probably not special in the way that you want it to be.
Colin White:
Yeah, no. No, that was the most obvious grift since Bernie Madoff. Well, I can't call Bernie Madoff obvious. It was a very obvious grift like, "We're going to put together this pool of capital. What are you doing with it?" "We don't know yet. Trust us," and it worked. It's just, wow, I mean, maybe that's a good cue that there was too much money around.
Josh Sheluk:
Yeah. For the record, not all of them were frauds. We're not saying that, but it has a little, oh, defraud, if you want to call it that.
Colin White:
On the way in. None of them smelled good. Now, if some of them actually worked out, then okay. But I'm not calling it all a criminal enterprise.
Josh Sheluk:
Yeah. Sorry to cut you off there. As we wrap up here, if we can look at some common themes from one to the next. What are a few that you would highlight as, that's a little bit too off the wall to be a legitimate investment idea?
Colin White:
Investing in things that don't create value, that's often where I start. Just to keep it simple, if I bought a share in Tim Hortons, which you can't do, but if I bought a share in Tim Hortons, I want to buy my coffee from them, they're going to make a profit. They're going to create economic value over time. I understand that relationship. I'm investing in something that is everyday working, operating, creating value. If you're investing in something or putting money into something where you can't see how the value is being created, that's your first red flag. What is this doing every day that's creating value that I can profit from in the future? That's one of the things I look for. What's the business model of what I'm getting involved here? Because a lot of what we've talked about comes down to the greater fool theory. I need to find somebody that's going to buy this from me for their own reasons, right? It's not apparent.
Josh Sheluk:
Yeah. Yeah. And the more anecdotal type, I'll call them factors. I'd say if there's an element of FOMO to it, probably not something you want to jump into. If there's an element of, my buddy said this, probably not something you want to jump into. And if you're in the hockey dressing room and everybody's talking about something, that's probably the time you want to go the other way, not get into it.
Colin White:
Yeah. Well, stuff that seems really super complicated, because that's one of the hallmarks of a fraud, it seems really, really complicated on some level.
Josh Sheluk:
Yeah. That's another one.
Colin White:
And then a miracle happens, right? "Here. Watch this 20 minute video on foreign exchange trading and trade on our platform. You can be an expert in 20 minutes and make $5,000 a month just trading foreign exchange on your lunch break," that kind of stuff, right?
Josh Sheluk:
Yeah. So that's another one. The quick buck type of idea. That's huge in this space, and definitely something you want to avoid for sure. I think with that, people need to understand that risk and return are always going to be related. So if you have a chance to make your money 10 times over, then there's probably a 10 times greater likelihood that you end up in zero, maybe more.
Colin White:
Well, yeah. And this is how we define risk, right? When we talk risk with our clients was time, it's risk of volatility. Unless the global economy all shuts down the same day and all the companies go to business, client with us can't lose their entire account. But if you're investing in a night, "Hey, I hope there's diamonds in that hole," that can go to zero. So you're actually risking a go to zero event. No, I think I, for me, talk to a professional advisor. Yes, there's a lot of hair on the professional advising community and all the rest of it. But run it past a professional somewhere and let them make a case against it and see if it makes sense. And if you have a good trusting relationship, then that's even better. But there's a lot of things out there, and it's funny, I mean, we have this conversation internally.
One of our big value props to our clients is we're going to keep you out of the fads because we can recognize them. We have the perspective to know, yeah, that's weird. No, we can't trust that. And listen, some of the stuff we avoid actually makes money, like marijuana made money for a while. So some of the stuff that we stay out of makes money, but that doesn't make it a good idea. Just because somebody made money at something doesn't make it a good idea. That's what you know at the moment you make a decision to go into something, that's where you have either made a mistake or not. How it turns out could be completely random.
Josh Sheluk:
And if you want to know what not to look for in a professional advisor, watch the Wolf of Wall Street. And what was the other one you referenced earlier?
Colin White:
Oh, Bernie Madoff?
Josh Sheluk:
Bernie Madoff, yes. So that'll give you a couple highlights of what you want to avoid when you're looking for a professional.
Colin White:
And to be clear, those are not how to videos for anybody. So for any young people out there who want get in the business, neither one of those are how to videos. Don't look at them that way.
Josh Sheluk:
Seems a good spot to end it. Thanks, Colin.
Colin White:
Thanks, Josh. Based on observation, it seems that the time an investor is most likely to move his or her portfolio to a new advisor is when the old advisor dies. Let us go on record of saying that having a pulse is not a great reason to trust someone with your entire financial future. Stop putting your life in the hands of still breathing wealthplanners.com and call us.
Announcer:
This information has been prepared by White LeBlanc Wealth Planners, who is a portfolio manager for iA Private Wealth. Opinions expressed in this podcast are those of the portfolio manager only and do not necessarily reflect those of iA Private Wealth, Inc. IA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. IA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates. This should not be construed as legal, tax, or campaign advice. This podcast has been prepared for information purposes only. The tax information provided in this podcast is general in nature, and each client should consult with their own tax advisor, accountant, and lawyer before pursuing any strategy described herein as each client's individual circumstances are unique.
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