Investing in public markets
Before investing in public markets, my primary aim is to raise my savings rate by increasing profits inside my businesses. After that, I try to pay myself a low salary, just enough to pay for personal expenses and to max out tax-free accounts: TFSA first and RRSP second. The extra earnings inside my HoldCo get invested into a low-cost index fund that tracks the S&P 500 in Canadian dollars.
Strategy
- Hold large positions of 10%+ in 5 businesses, at most.
- The best idea should be 25% of the portfolio at cost.
- Hold for years, not months, trade less.
- Aim to buy 10x more shares than you sell.
- Buy businesses that trade in CAD or buy the index.
- Maintain a portfolio of uncorrelated bets.
Portfolio allocation
These are moving targets:| Asset Class | Ideal Allocation | Actual Allocation | Difference |
|---|
| ETFs | 40% | 25% | -15% |
| Growth | 40% | 45% | +5% |
| Compounders | 20% | 20% | 0% |
| T-Bills | 0% | 10% | +10% |
As of April 1, 2025Checklist for growth
- Potential to compound at 33%, 2x in 2.5 years, 4x in 5 years.
- Founder or new management with:
- Concrete plans to 4x revenue, earnings, and cash flow.
- Track record of success.
- Lots of insider ownership.
- Beautiful business model worth geeking out over.
- Possesses long-term upside so that I can continue adding to the position as the team executes.
Checklist for compounders
- Simple business model.
- Easy-to-understand competitive advantage.
- 80% or more recurring revenue.
- Premium earnings multiple that can be maintained for the long term.
- Ability to outperform SPY over the next 3-5 years.
- Positioned at the top of its industry.