Transcript
Happy New Year and welcome to The Download. I'm your host, Dave Richardson, and this is our first episode of 2025. So when we want to do a look-forward/look-back, and we want to have some good data to talk about, we always like to bring in our good friend Scott Lysakowski, head of Canadian Equities at Phillips, Hager and North Investments in Vancouver. Happy New Year to you, Scott. Did you and the family have a good holiday period?
We did. Happy New Year to you, Dave. Yeah, it was a nice break. I was feeling like it wasn't much of a break. I had some really nice time with family, but maybe a little bit of running around. But I really can't complain. I had great time with the family, got a few ski days in. I was in Ontario. Actually, I sent you that picture of our little coffee shop down in Leslieville. It was for my mom's 80th birthday on January 1st. So shout out, mom. I think between my mom, your mom, and Stu's mom, that's probably about a third of our audience covered there. Moms are huge fans of the podcast as my mom's 80th on Jan 1. So happy birthday, mom. I spent some time with her, and then we were back to Vancouver and did a bit of skiing, so I really can't complain. I was ready to send the kids back to school, though, that's for sure, and get back to a bit of normalcy. I don't think I spent more than three nights in one place since Christmas. So a lot of moving around, but all good.
A lot of moving around. So kids are back at school in Vancouver now?
Kids are back at school. I look out the window. I can't even see the building across from us. We're covered in fog. So we're in the thick of the dark days of winter here in Vancouver, but there's snow on the ski hill, so I can't complain.
Winter in Vancouver, January in particular, this is where we really put you to work. This is where you make big money for investors.
There's not much else to do. So, yes, we're pretty focused on looking through the fog here. I guess that's probably pretty appropriate as we look forward. I guess you want to do a bit of a look back into what 2024 was like, but certainly a foggy outlook for 2025. But thinking about the year in review—and I'll focus on the TSX because I know I'm here to talk Canadian equities—TSX was up a 21% total return, which is a pretty good year. If you would have said the TSX was up 21%, I'd say that's a fantastic year, and it was. It didn't always feel like it was a good year. I think the fact that the TSX has lagged the broader US market—and certainly we've talked about it at length and don't need to drill into it too much—but those mega cap stocks in the US really led the way in terms of performance. While Canada had a strong year, it did lag the US, so that's a little bit disappointing. A couple of other things to observe. I guess the last time I was on was just a day or two after the election, maybe the day after the election. So it's only been two months, but lots happening in those two months. And I think if I were to think back to that day, one of the things we observed was an increase in breadth. So there was a strong day for equity markets, a strong day for US markets. Canada was up on that day as well. But what we really saw on that day and in the few days after was an increase in breadth. Instead of having all the returns driven by those large mega-cap stocks, we actually saw mid caps and small caps outperform. And that lasted for about a week, maybe two. And then the year really finished back with that old trend of the large cap—not even large cap, the mega cap dominance. And actually, the top ten stocks, you've seen a lot of these stats get printed out, but the mega cap stocks ended the year at their highest percentage of the total market. I think they delivered over half the return of the market. And that gap between the equal weighted S&P 500 and the weighted S&P 500 was the widest it had been. We thought we were into a bit of a regime change, but it just ended the way it always was. What I think is interesting just in that last period is that, if you're just thinking in local currency terms, Canada did okay. Now we have to think about it in Canadian dollar terms. There's lots of news, I guess, but the biggest reaction that happened on the day and actually continued to get worse was the weakness in the Canadian dollar. That's something that we are very mindful of, and we're not currency experts by any stretch, but it does play into the macro outlook for Canada for the upcoming year. That's something that we're quite mindful of. Maybe I’ll just finish with one more thought on the breadth. One of the things I always think is really interesting to look at when you're studying performance over a period of time is to break the composition of returns. So I said the TSX was up 21%, maybe just under 22%. And you think about where did those returns come from? You got a 3% dividend yield. You're going to have some earnings growth and you're going to have some valuation change. In Canada, you had 3% dividend yield, and the remaining 18% was kind of split evenly. Maybe there was about 9% earnings growth and about 7% multiple expansions. But if you think about the US, it's very different, especially when you look across the different size segments. So the mega cap stocks, they delivered, I think 30% returns. 14 of that is earnings growth and 13 is multiple expansion. As you move through going from mega, large, mid, and small, it becomes very obvious of why the mega cap stocks are outperforming. I said the mega stocks delivered 14% earnings growth on the year. Mid-caps, only 5, small-caps only 2. And so I think that's what is required. Everyone looks at the equal weighted or mid- and small-cap markets and say, wow, the valuations are so cheap compared to these mega-cap stocks. But the earnings growth is just not there. And I think maybe post-election, there was a moment that this is going to be positive for the economy and we're going to see more broader participation. Like I said, we saw it for about a week, and then we just went back to the old ways. That's something that I'm going to be very mindful of this year. I do think an increasing breadth does have a positive impact, maybe on a second derivative point of view for Canada. But that's an interesting observation. You look at that and you go, well, it's obvious why these mega cap stocks keep dominating. They're the only ones delivering that consistent and a reasonably high level of earnings growth. And until you see those smaller-cap names deliver earnings growth, I think you're going to continue to see this divergence in return. So that's something that we're quite mindful of.
It's been such a challenge. You look at a 20% rate of return in Canada for a year. I mean, that's a phenomenal year, as you'd say, by any standard. You put it on a historical scale, you do the distribution. That's going to be in the top 10% of years. Would it not be in terms of performance?
It would be top quartile for sure. We had high absolute return, so above average return and below average drawdown. But it's a good year. You have great returns and you don't get sloshed around. That's a great year. It didn't feel like a great year as a Canadian investor. Maybe that's always the case.
Well, and that's the rub, right? If I toss some money south of the border, instead of investing here in Canada, not only did I get better performance, but I also picked up another 7 or 8% on currency. So I get that juice as well if I'm buying it on an un-hedged basis. Of course, when I buy a US stock and I convert my Canadian dollars to US dollars at a particular level, the US dollar appreciates when I sell that US stock, I bring the money back to Canada, I buy those dollars at a lower level, so I make that currency exchange as well. And of course, this happens more broadly in the portfolios that you or your colleagues would be running, across the US. But it really makes people sit there in a great year in Canada and go, wow, I wish I'd been somewhere else. Canada still presents some really interesting opportunities, as you say, on an ongoing basis around investors, and particularly Canadian investors, looking for dividends, for that diversification into energy, resources, precious metals, metals in general, commodity, the commodity complex overall. So Canada kind of made it not a disaster to be an investor in on a relative basis to the US last year. I argue that having our little 2 or 3% in Canada as Canadians was not an awful thing in 2024.
No, that's right. And it's interesting that when we're thinking about the outlook, the calendar turns and you we're always thinking forward a year or two. It's not something we only do in January, but I guess that's the world we live in. I was saying, I look out my window here in Vancouver and it's quite foggy. The outlook for Canada is very foggy. We have quite a bit of concern. We're going to have some political change happening in our own country. So we're having political change south of the border, which has some implications for Canada. I guess that probably the big story coming out of the US is a threat of tariffs. And so that would not be a good thing on the margin. I don't think it would be a good thing for the US, but that's just my opinion. And that certainly has weighed on certain parts of the market, although not overly dramatically. Actually, I was looking at a table that some of the sectors that got hit the most actually had recovered. They got hit the most on those first couple of days but have recovered a lot of that weakness. So I thought that was interesting. Then, of course, the Canadian dollar, that's something that's a real concern. A lot of things that we import are going to cost a lot more now. And so that's an issue. So there's a lot of uncertainty out there. I think the government's change to immigration is going to have an effect on GDP. And we got a Bank of Canada that is fairly accommodative and has been cutting rates. That should be helpful for the debt that Canadians carry currently. I'm not too sure if it's going to spur a lot of new loan growth. It may be helpful on the margin. For people buying homes, it would be a little bit more reasonable to get your borrowing. With all that uncertainty, a couple of interesting observations. One is that the consensus forecast of the market is still looking for 10% earnings growth from Canada in the TSX across the sectors in 2025, and then another 10% plus in 2026. Lots can happen between now and then. And I think I probably mentioned this before, January is when the analysts who put this consensus forecast together are at their most optimistic, and there's a steady trend downwards as the year kicks in. We'll watch that very closely, but as of right now, the earnings forecast for Canada over the next two years, you're looking at an average of around 10% per year earnings growth, which is pretty good. That comes from a number of places. It doesn't just come from one sector, so that's helpful. Valuation has improved slightly. I think the TSX would be trading at just north of 15 times earnings on a one-year-forward basis, which is slightly above average or around average. It used to be very cheap in absolute and in relative terms, and now we're just cheap relative to the US. I always say that valuation is not a thesis. You need more of a catalyst. I guess we've probably talked about this on the podcast, I'm not a very good predictor of the future. I can't see the future, so I think about scenarios. If I thought about the bull case for Canada, it would be this: lot of the concern around the tariff and trade talk is more of a bargaining chip, a negotiation tactic, more bark than bite, as they say. The impact on immigration would shave a few points off our GDP growth, but still we got a supportive Bank of Canada, and we continue to grind along, generating decent economic growth, which then filters into the rest of the economy and into the market through the earnings stream. If we deliver that 10% earnings growth, that's a pretty good outcome. I think I've walked you through—and I don't need to bore people with it this early in the year—of the equity risk premium, but if you're thinking about 15 times earnings, that's a 6 to 7% earnings yield. And then you think about a 3.25% 10-year bonds. You're getting 300 basis points above that. You get a nice dividend yield. So if we deliver that earnings growth. And that earnings growth, interestingly, is converging. For most of '23 and '24, we saw a divergence in earnings growth between Canada and the US. And probably around the midpoint of 2024, we start to see that more converging. So if the US is forecasted to deliver just over 10% earnings growth—I think it's maybe 13 or 14% in the forecast today—and Canada is around 10%, we're seeing that convergence of earnings growth, a reasonable valuation. That would be more of the bull case. The bear case, obviously, would be the things that you're reading about. We've got political uncertainty, we've got trade tariff talks, we've got a weak dollar, we've got immigration that is going to have a larger impact, and those factors are going to significantly reduce the market's ability to deliver that 10% earnings growth. And so then you can start to see maybe further weakness in the TSX. Those are the two things. The one thing I find quite interesting—and this is obviously pre all of the election results and news down south—but in September, we saw some of the largest equity inflows from foreign investors in the last couple of years. Despite all this concern, the consensus forecast is actually for earnings growth, but the consensus narrative is that Canada is in a really tough spot. I don't have a strong view either way. These are very difficult macro scenarios to really unfold. But just thinking about those two bookends when we're doing our work, and then the stocks will trade somewhere in between. When they're discounting one scenario too heavily, we'll adjust our portfolios accordingly and the opposite when they swing to the other side. A bit of a foggy outlook, but you could paint a picture that would be reasonably constructive for Canada. It's something we're looking at very closely.
Yeah. I mean, it's been really amazing. It started to look like Canada maybe starting a little bit of a resurgence relative to the US as we moved into the back half of the year. Then the Trump election and the talk about tariffs and the additional strength in the US dollar really beat that down in a way. Because I think most people had thought pre-Trump election and perhaps even post-Trump election—and this may still play out if you look at longer term trends—but that the US dollar would weaken, and typically in a US dollar weakening cycle, the relative performance of US stocks to other areas the world, in Canada in particular, weakens as well. But we just didn't see that reversal. A couple of stories I tell, and I think I've told them over the last year— and since we're reviewing 2024 as we start to look ahead, it's worth repeating—when I'm out and talking to investors and to advisors—and that's what I do all the time, other than doing this podcast for our mothers, I'm out talking to investors and advisors—when I get out, as I have in the back half of 2024, the question I'm getting asked is: why don't I own all US stocks instead of other stocks around the world? Why don't I own just this set of mega cap stocks in the US relative to anything else in the world? Well, now I'm starting to get nervous when the pendulum swings so far over in any one direction. And then I think I told the story, and I'll tell it in very general terms, so as not to directly impune anyone for legal reasons as we're podcasting. But I remember, I think it was February of 2011, which is when you had a reversion from the Canadian market outperforming the US for about 10 years, and it reverted to the US dominance that we've seen since then. And I remember on the day of that reversion, a particular analyst was fired by an investment management firm because he had been recommending an overweight in US equities, and Canada had kept performing. And the day that they fired that analyst is when the US started winning. So it's just one of those signs that when you get everybody loaded up on one side and this is never going to change, that's sometimes when you see that change happen. Right now, everyone is so positive about the US relative to everywhere else in the world. You look at Canada and it's just all bad news. Sentiment around the Canadian markets, Trump's going to be tough on the oil price, he's going to have the tariffs. We've got the political issue, the currency is weak. There's so much negative that you almost have to look and go, is this an opportunity right now? And start to think, particularly as Canadians, is this the time when Canada is maybe bottoming out? Is this our time as we look into 2025 and beyond? We're not going to be able to define a specific moment that that's going to happen—that's very hard to do—but if I look out 10 years from now, will Canada at least keep pace or maybe even outperform the US over the next decade, given where we are from a valuation standpoint?
Yeah. I think it's quite plausible. One of my favorite charts is to show that exact thing and you got to zoom out and look over a long period of time. And what we observe, and when you think about that relationship, Canada versus the US, it's not an oscillator that just ticks back and forth. It actually goes in these long periods. They can be 10-year long. You were talking about 2011, it just made me think back that the 10 years prior to that, Canada significantly outperformed the US. People were probably saying, why do I even have money in the US? There's lots of those anecdotal stories. Then basically, from that point until today, it's been the exact opposite. There’s lots of things that can happen over a 10-year time frame, but you think about those patterns. The other image I have in my head when we think about those long-term patterns is just thinking about stocks versus commodities and how that relationship, if you took the S&P 500 and you had a ratio of the S&P 500 relative to the Goldman Sachs Commodity Index, that follows a very similar pattern. That would be something that you’d think about, especially if you said, I've got 10 years. Who knows where we'll be podcasting 10 years from now? Hopefully, it'll be with your background in there instead of my foggy outlook here in Vancouver. But you could paint a picture where we go into more of a structural bull market in commodities. I've talked about this in the past that the next cycle for commodities will look different than the last cycle. History doesn't repeat, but it rhymes, and there's nuance, and things that are going to look differently. But you could see that in the last 10 years, we've had a fairly significant structural underinvestment in commodities. That's going to catch up to us at some point. You think about the fact that the new economy is still fueled by commodities. The whole emergence of AI. You don't think about that being a real commodity play, but there are commodity implications. You think about the electricity demand and the need for natural gas. That's a commodity we don't often talk about. It's near and dear to our hearts here in Canada because we produce a lot of it. And there are some significant companies in our universe that produce a lot of natural gas. Just thinking about those types of things, it's really great to go through that exercise of what could the next 10 years look like. We obviously think long term—we're a little bit more in the near term and how we construct our portfolios and think about our positioning—but it is a very helpful exercise to think long term and see what could happen. We're not huge contrarians, but I agree with you when you talk about your anecdotes about people saying, why would I even bother with Canada? The contrarian in me makes me say, well, that's a great time to be buying some Canada, or at least not to be selling Canada. That's why I always say, just don't sell.
Yeah. And there is the argument of a value trap, or sometimes things are undervalued for a reason. But again, when you look at the history of the Canadian US relationship from a market perspective, as you say, there are these long, drawn out cycles where one outperforms the other for a significant period of time. I remember back in the 1990s when if you looked at your RRSP, you had to have 80% of it in Canada, in Canadian assets. You could only hold 20% foreign content. And that was another period where the US was outperforming. A lot of Canadians got frustrated that they couldn't hold more foreign assets in their RRSP. Then you move forward into the mid 2000s, and that's where we have the boom in energy prices. We had a boom in oil, in gold prices, other commodities. And those rules are relaxed because now it's no problem. I'm quite happy to be in Canada. And so we don't have to have any restrictions on it. And then we go into a period of US outperformance for a fairly significant period of time. But I wanted to zero in because we do talk a lot with you about commodities and commodity prices. As I've watched your presentations when you're out talking to investors and advisors, you've been talking about this super cycle in commodities. And if we're sitting there a year ago, we're pretty optimistic about the long-term positioning of the commodity complex to outperform. And then you've articulated reasons why, as we're looking forward at the front end of 2025, why there may be reasons to be positive about that again. And as we've also talked a lot about on this podcast, no market moves in a straight line—straight line up, straight line down. So we could still be in the midst of that super cycle, having been through a period over the last four or five years coming out of COVID, where we've seen a spike in those prices with inflation. And now we've seen some of that settle down over the last few months, but it could re-accelerate again. Where do you see us overall with the commodity complex? I think your point is so brilliant in terms of just people think of commodities as the old economy, and then I can throw in steel and I can throw in other things, other materials. And yet when you look at the new economy and where technology is going, it needs this stuff. It's not like the demand for this stuff is going away. Even if you look at housing in Canada. Maybe we're going to slow down immigration in the near term, but you still have about three million houses that we need to build in Canada, and you don't build those with straw, right? And even that's a commodity. So there's lots of reasons why commodities are still going to have a pretty good run, and that favors the Canadian market.
Yeah. A couple of things with commodities. It's not my most favorite subject to discuss because it's very macro and it's very hard to predict, especially in short term periods. But because we invest in Canada, that's a big part of our market, so we're forced to understand them. A couple of things we've learned in studying commodity cycles. The one thing that sticks out to me, and I've probably said it on the podcast before, are we in a super cycle? Well, every commodity cycle is a super cycle. I think I've talked about the fact that the length and duration of a cycle for stocks matches the capital cycle for the industry that they're in. That sounds pretty intuitive and straightforward, and don’t ask me to prove it, but I just think that the history would show that. If you think about commodity industry, it's a long cycle business. The time it takes to discover, permit, build, extract, recover your capital, and earn a return on your capital of anything—whether it's an oil well, an oil sands project, a copper mine—is significant. The capital cycle is long, therefore the stock cycle, the industry cycles are long. I think that that's probably what confuses people the most. Every cycle is a super cycle. They just take a long time to play out. There's a couple of major phases of these cycles. The one we're in right now is we're coming out of underinvestment. You think about the typical cycle would be, you're in underinvestment mode because commodity prices have been weak, and people have been burned and don't want to allocate any more capital. Basically, we're in excess supply. The price is saying, no more. Thank you. We're good. The companies stop investing. Then you work through some of that oversupply as the economy continues to grow. And most commodities are consumable. They just disappear after. You need to replace them eventually. And we get into the scarcity cycle, which is where we are right now. Scarcity means that supply and demand are more balanced. You can see spikes in commodity prices. It's inflationary. We saw that when Russia invaded Ukraine, oil prices spiked. There's scarcity concerns, and you start to get that price response. That takes a bit of time for the companies to believe in that price signal. We've seen a lot of volatility, is this something we're going to see persistently? Should we be allocating capital? I always think about if we were running a commodity business and we were going to invest billions—and it might even be tens of billions of dollars—in a new copper mine, we're going to think very carefully if we're going to actually go through with this. It's going to be tens of billions of dollars. It's going to be a decade of investment and to get our money back and to earn a return on that capital. So we're going to think very deeply about the prospects of that and whether we should go ahead. Then, of course, time takes on. And then as the scarcity persists, the price signal becomes stronger. People say, okay, now we need it. Then you go into this investment cycle. And of course, the investment cycle, people are building new mines. And you think about the quintessential commodity boom in Canada in the early 2000s, up until the financial crisis, that's when it was. Prices are high, companies are building things, the stocks are going up. If we go back, Dave, it'll be fantastic, but it might take some time to get there. Then, of course, you overbuild, you overinvest, and then you crush the market, and you do it all over again. And these take a decade to play out, if not longer. We're in that. We're moving from scarcity into investment, and it takes a lot of time. And like I said, if I think back to those early or mid 2000s, that was a great time to be an investor in Canada. The animal spirits get moving and the commodity prices are going higher, and the companies are raising capital and there's junior resource companies coming out. It's an interesting time. I don't know if it'll be exactly like that. Like I said, cycles are like snowflakes. They're all snowflakes, but they're a little bit different. We think about that, and that's not something that we're investing. That's not an investment thesis that we would have today, but it's a scenario that we're mindful of and we've learned from history. That's our framework for thinking about commodities. Then to the last point, cycles are different. Last cycle, it was oil and coal and things like this. The next cycle, we’re probably going to see a larger investment in things like nuclear energy. I think even just the definition of energy. The previous commodity cycle, the definition was oil and gas. That was what we dealt with. The new definition of energy is broadened. It's renewable. You're building renewables. It's electricity as a commodity that we have to think about. It's different. You can store a billion dollars of gold in your closet. You cannot store a billion dollars’ worth of electricity anywhere. You can try, but it's very difficult. We’re very mindful of those types of nuances and differences between each cycle. We got to think that the next phase of commodity investment is going to look very different. And that does actually have some exciting implications. I was talking about natural gas. There's a big cold snap heading through the mid-Atlantic right now. I think it's funny when you're reading the US press and they're saying the Arctic flow from Canada. You get blamed for everything. Blame Canada. And so there's a big cold snap heading through the US right now. Natural gas is very weather dependent, and we're not making investments based on that. But you think about supply demand, and then you have this catalyst event where you have a cold snap for gas. That got the commodity moving and it's got the stocks moving. Canada is about to be an exporter of liquefied natural gas in the next year or so. And so that's an important shift in terms of Canada accessing global markets for a relatively new commodity. There's lots of change of foot, I think, in the commodity complex. It's not going to happen overnight, but there are some positive implications for the TSX and for Canadian stocks as we move into that investment phase, which, of course, would happen over the next 5 to 10 years.
Yeah, I see here in the Azores, we've just got the volcanoes. The hot water generates all the electricity we need here. So let me just finish, and we'll keep this fairly brief because we have gone pretty long. This is the first of about more than a dozen review of 2024, preview of 2025 that we're going to do in all different markets and all different asset classes. So please subscribe to the podcast if you haven't already, and then you'll see all of those episodes drop in over the next three or four weeks, and you'll be all set for investing in 2025. But let's just briefly touch on the politics in Canada. I think Canadians start to think about the politics locally and nationally within Canada and think of those as big forces that have huge impacts across the entire economy. Whereas I think we sometimes argue that what's going on in the US and larger economies around the world tends to have a much bigger impact. We're more the tail than the dog, so to speak. But what you're seeing from a political perspective, could that influence individual investment decisions in individual companies or sectors that you have in Canada as you look to what's happening now in the very short term and what may or what seems like is likely to happen over the next twelve months in terms of policy changes?
Yeah. Okay. So that would officially be my least favorite question. Can we talk about commodities again? A couple of things. One, my political views are irrelevant to this discussion. I think you said it's not a political podcast.
Not asking for views. Think of it in general terms. You've got a new prime minister. He could be of one stripe or another. And he shifts policy, dramatically or not. Do you need to factor that into the decisions about the companies you're buying, or is it really just a very small part of what you're thinking? You're looking more at the company, the opportunity?
We talked after the US election. A couple of things. These things are really the macro stuff. The higher you go up in the macro forecast, the harder it is. We like to drill down into the company specifics here. Then predicting them is very difficult. I'm not going to have a strong view. The higher we go up in the macro forecast, the less conviction I would have in that view. And I go back to this. It's hard to predict these things. And so we think in scenarios. So what we will do—and we've been doing it with companies that have strong relationships with the US, that have cross-border in those tariff industries—is we need to start adjusting our scenarios, probably widening the range of outcomes. While it probably does have some implications, I think once we get down to the company-specific level, I'm not entirely sure there will be huge direct impacts. I think the other thing that we do is that even if there were large impacts, that would just cause us to maybe adjust our position so that we don't have a view on that outcome. I think you could paint the picture of that a new government in Canada is proposing to be more economically friendly and trying to be more supportive of business, which should be helpful for the economy. I’m not entirely sure specifically how that plays into the different parts of the market. But I saw a headline this morning, there won't be any change to the capital gains tax. They're going to keep going ahead with that. It's something that when we're adjusting the scenarios, we'll take this into consideration. But right now, I can't say that there's a huge impact, or at least if there is an impact, it's not an investible outcome for us. What we'll do from our process is we'll revisit our scenarios. Maybe the increased level of uncertainty widens the range of outcomes. Maybe you can conclude that a change in government would be supportive for small businesses and business in general in the economy and then make adjustments as we see fit into the company-specific forecast. But like you said, the biggest impact to the outcomes, the range of outcomes for our stocks, are what's happening south of the border. They're our largest trading partner. We're very connected from an economic standpoint. So long as the rhetoric around tariffs and trade threats are more bark than bite, then I think actually Canada will participate. That's probably the biggest out-of-consensus view is that if the US is strong and these tariffs are more bark than bite, then actually Canada will be strong. And going back to that, our ability to deliver that forecasted earnings growth will generate, I think, reasonable returns for the TSX as we go through. Bringing it all back home.
Because the expectations are low. And so I'm glad I asked the question because it highlighted a very important point that investors need to walk away with from listening to this podcast. As much as you study this, as much as you're on top of it—and you've got hundreds of analysts that you work with that all have spent their whole life learning about this stuff and have an opinion on where the price of oil is going to be tomorrow and five days from now and six months from now—but it is virtually impossible to make those calls. You can make them within a range, and then different things can make that range wider or narrower. Narrower is always nicer when you have more certainty about it. But that's not how you generate value as a portfolio manager or investor over time. Because if you're making those calls, you're going to be wrong as often as you're right. So that wipes out the wins that you get. What you need to do is buy good companies. You need to understand those range of outcomes where you're taking too much risk or where you want to take less risk. That is how you add value and improve the performance of your portfolio. See? I'm happy I asked you the question because I know I can just ask Stu Kedwell where the price of oil is going to be in the next six months, and that really ticks him off. So now I know I can ask you about politics, and I’ll get you mad. I'll have to buy you a coffee.
Yeah, it goes like this: commodities, housing, politics. Those are my least favorite subjects. Maybe next time we could talk hockey or something like that. Or skiing. Those are my favorite subjects. Coffee, music. Commodities, politics and housing are my least favorite subjects.
How about we finish here? Happy birthday to your mom from everyone listening to the podcast. Scott, thank you so much for joining us, and we look forward to seeing you in the next couple of months to see if some of this fog lifts in 2025.
Great. Thanks for having me, Dave.