The Market Has Changed. Our Investing Principles Haven’t.

0:00At the moment we don't see any reason to make any adjustments to any of our portfolio holdings. The whole focus of Prime Minister Karney and the government to increase productivity and get these projects built is just how much of a change in tone from the government it is over the last 10 years. Is this an actionable event at the moment? Should we be doing anything with our portfolio? Should we be more bullish on Canada? I think it's a very smart approach to diversify people's portfolios and to not have exposure to one theme. Especially a theme that has a lot of tailwinds today. If we find out that AI is going to cause us an extinction and we want to pull the plug. Welcome to the Long-term Investing Podcast. I'm Barry Schwartz. I'm joined by Ernest Wong.

1:01We've got a great show for you today. We missed you so much and we're so happy to be back. On this podcast we tune out the noise and focus on what actually matters to long-term investors. These are the same conversations we're having every day at Baskin. Now we're bringing those conversations to you. Today we're going to be talking about so many different topics. What's going on over the last few months with the portfolio, what's going on with the economy, the markets. We're going to catch you up on what our thoughts and our thinking and also cover a few portfolio companies and our portfolio. But first, if you'd like to talk about your portfolio or learn more about our services, we offer at Baskin wealth management. We'd be happy to hear from you. Get in touch at baskinwealth.com. And stay tuned for our legal disclaimer at the end of the show. Okay, Ernest, let's get into it. Ernest, welcome back. How was your summer? It was great. I spent most of it in Asia, spending time with family.

2:03And as usual, whenever you're away, I think one of the things that I like doing is just seeing how other people live around the world, appreciating how the culture is different and how that matters from an investment perspective. Excellent. So I think we'll park that topic for another day. But certainly we want to get into some of the highlights that you had on your trip to Hong Kong as well as China. You know, the world's a big place. We're here in Toronto and we're very North American centric. But we have to recognize there's billions and billions of people on this planet. And sometimes it's good idea to get outside and touch grass instead of worrying about AI that may put us all into extinction. So we'll cover that topic too at some point in time. So Ernest, the first thing we want to discuss today, of course, is the move in interest rates in the United States as well as Canada. Fear is about rising inflation. Probably a good news, bad news, good news story kind of thing. Given the economy's done so well, given the corporate profits have been growing tremendously,

3:07we've obviously seen the stock market do very, very well. But we're also still mired in this Iran war. We still have concerns about tariffs, of course, what's going on there, trade situations. So it's caused some lots of uncertainty into the market. One of the things that we've seen is the first interest rate hike in the United States since 2023. And that's pretty meaningful. That being said, of course, the market very much expected these interest rate hikes. We've seen interest rates start to move up pretty much over the last number of months. And that's because of higher oil prices, higher inflation and more positive growth. The point being is it's very interesting. If you look at the beginning of the year, most commentators, including myself, thought interest rates would go down this year. We saw the beginning of the year, the US administration really trying to focus on getting interest rates down, trying to prop up the economy, creating stimulus plans. Those things really haven't happened. But on the flip side, of course, the AI growth, the AI demand has been way more than anybody has expected.

4:10And that's what's really delivered strong corporate earnings across the board. So Ernest, your thoughts on the rising interest rates, what we're thinking here about Baskin on how to, if we need to change your portfolio and just some commentary, go ahead. I think the main thing that everybody is kind of thinking with the recent interest rate increase and the increase in the long bond is this, is this a repeat of what happened in 2022 when, if you remember, in 2021, everyone was having a great time. The economy was thriving. I think everyone was looking ahead to COVID reopening from society reopening from COVID. And then 2022 came when the interest rates started to go up. A lot of tech focused businesses, the shares went down a lot and growth slowed. So I think that's what is at the back of the mind of everybody. I think that the, while interest rates, the direction of interest rates are certainly similar.

5:21There are quite a few differences between this time and 2022. The first being that valuations broadly speaking are already quite a bit lower than what they were in 2021. Where many of the, especially if you're not participating in AI related themes, I think many stocks are trading at 2021, 22 times earnings. And these are good quality growing businesses. So that provides a bit of buffer for the stock market as a whole. Let's keep in mind, of course, Ernest in 2021 and 2022 interest rates were near zero and the fast move up and interest rates from 0% to I think at some point, 7% is going to cause a lot of problems to the stock market and the economy. That was obviously a special situation where we were coming out of COVID, huge supply crunch. The economy started to pick up and no one was available. We didn't have the available supply and resources to meet the economic demand and led to significant inflation. Also the start of the Russia Ukraine war, which caused oil prices and other commodity prices to spike.

6:31Hello, looks like that similar thing is happening again in 2026. So really, you're right, no end to the concerns about rising commodity prices, rising inflation. But this time, of course, interest rates are starting off a much higher base. And at the moment, both the US and Canada central banks are thinking that they may have to raise interest rates a little bit to offset inflation, hoping, of course, that at some point in time, these conflicts around the world will slow down and oil prices could trend back to a more normalized level. How reasonable do you think that is, Ernest? Yeah, I think from a bigger picture, I think the given how reliant the US economy is currently on AI and data center spending, I think the bit of the worry is that rising interest rates are going to obviously impact the ability of data center builders to borrow money and complete these projects, which puts into question the entire viability of the AI build.

7:35The AI build out altogether. No, I think if you listen to what people like Jensen Huang or any of the hyperscores are saying, the returns that the companies are earning on data center investment are so high that a 25 bit move in interest rates or even a 1% increase in high yield spreads, let's say, it just doesn't matter to the economic market. The economics of building data centers, so probably we'll see what happens, but probably won't see too much impact on that front. No, I think you're right. I think obviously a risk to the economy as as interest rates rise and makes capital expenditures all that much more expensive as interest rates go up, obviously the cost of debt goes up, the cost of funding that debt goes up. And of course it could lead to a slowdown in the economy just when we're ready to build out thousands and thousands of data centers. So this is a transaction and activity by the Federal Reserve to cool the economy by I guess some time and hope that things cool down in between US Iran in the Middle East and hopefully oil prices recover more normal level.

8:51But we are where we are right now, obviously we have very high oil prices, oils above $100 barrel and inflation is although not crazy hot running above what people would want it to be. So from a long term perspective, earnest and from our portfolio perspective, what does this mean? Obviously interest rates going up, we all know can't hurt the value of stocks. If you're getting 5% on GICs or money market or bonds and very low risk, then it's a potential that you may not want to put as much money in the stock market. But as Ertis said, the growth has been so phenomenal and let's put this in context. This year we're expecting over 20% earnings growth. Next year we're also expecting over 20% earnings growth, cumulative live, cumulatively for the S&P 500 companies. So the earnings growth is fast, the interest rates hikes are slow and of course we have this temporary issue that's causing uncertainty of the economy. The stock market obviously has been very good over the last year. Things have obviously pulled back. We're recording this in September. So things have been calmer in September.

10:00We've seen a pull back in some of the stock markets. And interest rates are not good. Rising interest rates are not good for really any asset class of course. They push bond prices lower, they make stocks less attractive. A lot of Canadians of course own dividend paying stocks to get income. No question the dividend yields in Canada are very attractive. But as interest rates go up and you can buy GICs or you can buy bonds with higher yields, it may limit the returns on dividend stocks. And lo and behold of course we've seen a big pull back in the number of Canadian dividend stocks over the last number of weeks. We have to remember that Canadian dividend stocks are not risk free. They trade exactly like stocks. And little moves and interest rates can have a magnifying effect on stock price movements. Yes and maybe just to add on to the dividend point, the dividend yield point is that a lot of these companies are very reliant on raising debt and equity to build their projects.

11:01And many of these projects are not very high returning in nature which makes it very very sensitive to interest rates. So for example if you are building a telecom, if you're building a network expansion for your telco, I'm not going to name any companies but these are usually things that assets that earn a 4% return on asset. And if you finance that with 3% or 4% debt, that has a huge impact on the ultimate return that you're going to earn building that out. So I think that for these types of companies, not only from an investment perspective, are investors now more likely to be purchasing bonds and fixed income rather than dividend paying stocks because they're more attractive. But also the fundamentals of these businesses are more likely to be challenged than a high quality compound or type business, the types of businesses that we like to own.

12:12So these are all great talking points of course. The stock market obviously will decide who are the winners and the losers in the short term and over the long term. What we think about here is when interest rates do move up and this is the first time interest rates have moved up since about 2023, we have to look at the playbook. Is there any changes that we need to make to the portfolio of interest rates are going up fast or do we own any companies that will be impacted as maybe their debt cost rise? These are the things we think about and look at at our portfolio. At the moment, we don't see any reason to make any adjustments to any of our portfolio holdings. Obviously, if there's more volatility as a result of rising interest rates or fear of rising interest rates, we'll take a look. But I think we positioned our portfolio earnest quite well. We're very low on dividend paying stocks. Our bond portfolio obviously is very short maturity. So if interest rates go up, we won't get hurt too badly. And our portfolio is really focused more on growth companies. Companies that have the ability to reinvest their capital at high rates of return.

13:16And I think what Ernest said makes a lot of sense if you think about it from a math standpoint, right? The telco can only earn 4% on its expansion plan and has to finance that with 5% debt. Well, the math doesn't make any sense. But if you want a company that is able to reinvest cash flows and earn 15 or 20%, even if interest rates go up and 4% to 5%, that's not going to hurt their long term growth. And so those are things that we think about. And it's really interesting how at the end of the day, math matters when it comes to investing. In the short term, it's all chatter. It's all nervousness, fear, missing out. But at the end of the day, it comes down to what are the values of the cash flows? Will they grow in the future? What's your certainly level? What's your comfort level and what's going on there? So speaking of big projects, we've had a large announcement in Canada, of course, of a stimulus plan of maybe a reducing reliance on the United States as a trading partner. And so the Mark Carney, the Prime Minister of Canada, had an investor summit where he laid out a number of different opportunities and policies to try and stimulate the economy, whether announcing infrastructure projects that hopefully will go ahead or some important tax deductions that will spur business investment, as well as trying to court investors around the world to invest in Canada.

14:39Ernest, you've been following this quite closely. What's your take on Mark Carney's investor summit? Yeah, so what I found fascinating about this entire situation, not just the investment summit itself, but the whole focus of Prime Minister Carney and the government to increase productivity and get these projects built is just how much of a change in tone from the government it is over the last 10 years. Where I think for the last decade, Canada was very focused on not the economy, but focused on other things that, you know, I'm not going to make a judgment on whether they're less or more important, but certainly they were not focused on developing the economy. And now given what has happened with the US and that the trade conflicts that are there, this is really a unique chance for Canada to, you know, get its act together, fortify the economy by completing these mega projects and really show the world that Canada is open for business.

15:51And I think that Mark Carney is doing just that with the investment summit and all of the things that he's doing. But Ernest, talk is cheap and promises are cheap and easy to promise. Do we have any fundamentals? Do we have any economics? Are any of these projects going to pass the test? We know in Canada there's a number of different provinces with different ideologies. We have a number of different stakeholders, whether it's indigenous as well. So a lot of different parties, a lot of different promises. And of course, a lot of these projects could be competitive to existing ones today. So is this an actionable event at the moment? Should we be doing anything with our portfolio? Should we be more bullish on Canada? Should we be looking at investing for example in companies that can provide the infrastructure and the services to grow our economy and improve our, you know, our standing in the world?

16:51Yeah, I think certainly from a short term perspective, the new mega deduction for capital investment is very positive for companies that have domestic operations. And this includes companies that are building Canadian pipelines, building infrastructure, spending on defense, I think making software within Canada or buying trucks or anything like that. Certainly the tax incentives are going to make it much more attractive for these companies to invest in Canada versus other places in the world. I think the, to your point, talk is cheap. I think the challenge for many of these projects before was not lack of funding, but more the regulatory approval landscape. And to that end, I think it was Canada has created a, you know, like a, a new office at the, at the, you know, what they've done is basically created a head office that is in charge of approving major projects that where it allows for streamlining of these projects and a much faster approval process than they previously was.

18:08And I think that is just the first step to really completing things like the, the West Coast pipeline or LNG Canada phase two or, or any of these type of things that are kind of necessary from investment perspective for Canada. Just, just throwing it out there, of course, we saw major projects by Canada, whether it was Trans Mountain LNG. Some of those overrun over budget over cost took sometimes the, even the institutional investor dropped out. So the experience of building infrastructure over the last number of years has not been the most rewarding. We know that with rising inflation, rising price of commodities, building pipelines, finding the key labor, getting the earth-merving equipment. And of course, you know, given the big build out of data centers that's going on in North America, there's a lot of competing resources and talents. So you got to take what's going on with the grain of salt and I don't think there's anything we want to do with our portfolio at the moment.

19:13But I think what we want to do is just quickly drill down on the benefits for two of our companies, Canadian natural resources and termally. I think those companies have the ability to really benefit from a potential growth in infrastructure and demand in Canada. You want to talk about those two companies? First of all, Canadian natural has really been one of the biggest winners or beneficiaries of the conflict in Iran, particularly because of the shortage of diesel and refined products. And so what Canadian natural and some of the other major oil producers, the main thing that they produce is synthetic crude oil, which is upgraded sweet oil that is used for diesel. And so as a result of high diesel prices and high synthetic crude prices, Canadian natural and sun core and some of the other oil science producers have really benefited from higher pricing for these products.

20:16And you know, we'll see what happens in Iran. I don't think anybody really knows how long this is going to go on for, but that is something that they're benefiting from. I think from a same thing with termally in earnest. Well, termally is a natural gas company, so much less so. But I think from a bigger, longer term picture, obviously these big projects that Canada is working to complete are extremely positive for the Canadian oil and gas producers. Because the main constraint for these companies over the last 10 years has been the lack of market access. So, and part of that is not due to the regulatory landscape. Part of that is just due to the fact that the US itself had found a lot of shale oil and no longer needed Canadian oil and gas. It now has Venezuela oil also. Exactly. And so it was important that Canada starts to build market access, especially given Alberta is a landlocked region and needs pipelines and shipping ports and all those kinds of things to get their products to other places.

21:29And so, to the extent that if Canada is able to complete the West Coast pipeline, they're able to complete the various LNG projects that we have on board. I think not only is, are you likely to see higher pricing for Canadian oil and gas, but it will also allow these producers to increase production, which is something that they want to do, given they have a lot of oil and gas reserves. But just haven't been able to do so in the past. And one last thing I would add on both Canadian natural and tourmaline is that both of these companies have spent the last decade of weak oil and Canadian oil and gas pricing to acquire as much reserves as they can, as cheaply as they can. So, really preparing themselves for this moment, and I think shareholders are going to be rewarded in the long term, regardless of what happens to pricing in the near term.

22:29You know, you can envision if obviously nothing ever goes as planned, but you can envision a future in five to 10 years where Canada has significantly more AI data centers, where it has more pipelines, has the ability to export our liquefied natural gas to other markets that need it quite badly. And companies that have the reserves, that have the expertise, the abilities to build these projects will be the beneficiaries. And so, we're actively looking and paying attention to those businesses. And we've given you a couple of names that we think are going to really benefit if Canada becomes a superpower grower in the oil and gas and energy space to really reduce its reliance on trade with the United States. We'll see how this plays out. Ernest, anything that you would do in the short term if you were a long-term investor, would you say it's now time to look at Canada, so to speak?

23:29So, I think this is one of the, when I was in Hong Kong, I did meet with, one of the things I like to do when I go on vacation is I like to meet with other investors, just to see how people are thinking around the world. And one of the topics that came up was, is compounding as a strategy, you know, buying and holding great businesses, is this still a strategy that works today. And I think it's an interesting question, because, and the premise of the question is just partly because many, quote unquote, traditional compounders, so high quality businesses that have recurring revenues, deploy capital at high rates of return. And so on, these types of business, like shares of these types of businesses, have, haven't done very well over the last couple of years. So, the question is, well, should investors be a little bit more opportunistic? Are we being a little bit too stubborn in, you know, not in, not going all in on AI or gold or the theme of the day?

24:35And I think part of this goes back to what we were talking about math, where if you own a business and their target return is, they're investing in new projects or making acquisitions at a 15% return. I think over the long term, if they're able to accomplish that, you're going to have a pretty good result, regardless of kind of the fluctuations and interest rates and, and input prices and all of those things that happen in the near term. So, but the other problem is that if you are constantly flipping stocks, so you're saying, okay, now I think the, you know, I think the near term outlook for a Canadian natural is, is bad because maybe the, the war in Iran is going to resolve and oil prices are going to fall and the stock price is going to fall. And then you sell the stock and now you have to pay capital gains tax, right? And, and if you're in the top marginal bracket in Canada at 50%, that's a 26% tax rate.

25:37So, if you're constant, even if you were the greatest investor, you're constantly able to make these correct predictions every year, you have to make a 26% difference just to make up the gap between just being patient with, with what you own. So, on the gains, not not 26% overall. So, I think the math is still quite compelling to own compounders. Now, I think, I think the, the real question is, is the business that you own really a compounder, and that's something that obviously, you know, we're, we're researching and thinking about for all the names in our portfolio. But, but broadly speaking, I, I don't have any lower conviction about the compounding strategy than, than I did before. And why would we, we never let the stock market dictate our research. And what we mean by that is, stock prices move around like crazy. There's no rhyme or reason to stock price movements. And every single day, you're going to have stocks going up or down 3% to 5% on really no fundamental news. It's just the way it goes.

26:41Someone reached out to me about a great company that three weeks ago was at an all time high, and now it's at a 52 week low. Really in just three weeks, the stock fell. Reported earnings and the earnings were not, were good, but not as good as the market expects. You have to accept volatility when you're going to be holding stocks for the long term. Ignore the stock price movement. We focus on the compounding what we mean by compounding. Of course, his owning companies that can grow their earnings over the long term, reduce shares outstanding, grow free cash flow for share earnings, per share, grow their businesses organically as well as using smart, you know, financial engineering to make acquisitions and do the right things at the right time. There's only a handful of companies that can do that. Companies that have the history and the track record and we'd like to stick with them, especially when the fundamentals are doing so well. So the interesting thing about our portfolio is every single stock at the moment, we feel really comfortable about what's going on with the earnings, what's going on with the fundamentals of the business.

27:45That doesn't necessarily mean that every stock in our portfolio is going to work in the short term, but we have a lot of confidence in sticking with companies where the earnings continue to grow. And even if there's a temporary issue or narrative or worry of the day, we're not going to react to those stock price movements. So Ernest, I also want to cover the, I guess talking about Canada and infrastructure, Brookfield. Everybody knows Brookfield, the Brookfield group, whether you have Brookfield Corporation, Brookfield Asset Management. Brookfield also has a smaller infrastructure company as well as a renewable power company. The stock was much higher earlier than the year. Fundamentals this year for Brookfield have been phenomenal, but we've seen a pullback in the alternative manager space. Companies like KKR or Apollo or Blackstone, these are companies that sell private investments, manage money for other people. And part of the reason these stocks have gone down is really due to worries about rising interest rates.

28:47If interest rates are going up, maybe you don't need as many alternatives in your portfolio if you're getting a say 5% for no risk from a GIC or a bond. So lots of things that discuss there. Brookfield, of course, is having its investor day today. It's September 17th. Brookfield is doing its investor presentation in New York and it usually has some very positive things to say. We'll make sure to cover that in an upcoming episode. But what we found interesting, of course, is Brookfield and its sub Brookfield Asset Management are taking advantage of the Marcarne's New Investors Summit to try and build products where they can invest in infrastructure and hopefully earn lots of fees. So, Arenas, why don't you explain what's how adept and able Brookfield and Brookfield Asset Management is and so smart with their capital allocation? Yeah, so I think what you're referring to is the announcement by Brookfield and CPP that they are going to launch something called the Maple Fund, which is an investment fund that will focus on mega projects and infrastructure type assets within Canada.

29:58And, you know, I think part of this is just the sign of just to go with the times where right now the government of Canada has a mandate to increase infrastructure investment and as any good Asset Manager will do, they'll go where the money is. And so they raised a product that will benefit from this from these types of investment flows and which they can earn fees from. But I think broadly speaking, this is one of the reasons why we like Brookfield Asset Management and have owned it for I think over 20 years now, which is that they have been remarkably good at taking advantage of these types of situations when they come up. And so right now people want to invest in Canada, they launch a Maple Fund. In 2025, when everyone was building data centers, they go out and they launch an AI infrastructure fund. And you see this, this is kind of what Brookfield has done over its past where every time there is great demand for a certain Asset class or anything like that, they'll go out and in 2021 for renewable energy,

31:13they went out and they launched a new renewable power strategy to be able to capture those flows. And I think returns have been decent for investors in those products. That's right. So it's not gimmicky, right? Or an AI's hot, so let's launch an AI fund. But they actually have delivered great results for all their funds pretty much over the long term, right? And that's the function of being great investors, having the right talent pool, having great distribution, having access to a lot of high net worth individuals and institutions, which really gives Brookfield that network effect. Yeah, and I think the other thing is that as given Brookfield corporations push into the insurance space, increasingly a large portion of the AUM growth, the asset growth at Brookfield Asset Management is going to come from Brookfield Corp, the insurance business, which is a little bit less sensitive to the whims of institutional investors to invest in alternative products.

32:20So I think for those who are maybe a little bit less familiar with how all of this works, Brookfield Asset Management is an asset light business. All they do is they launch funds, like the Maple Fund, the AI fund, the renewable energy funds, then they manage the money, they make investments, and they earn fees on it, which is paid back as a dividend. So it's a pretty simple business, they're not taking actually any balance sheet risk, and it's a very high margin cash flowing business that historically has traded at a pretty high multiple. So I think that Brookfield has historically used these kinds of situations to buy back stock or make investments, and I think they'll probably do the same. Very good, very good. So, you know, the stock prices moved down. Of course, Brookfield from the beginning of the year, we have a number of stocks in our portfolio that are down year to date. But the interesting thing is none of those stocks are down because they're reporting worse results in the prior year.

33:23None of those companies are down because they've made any dumb investment mistakes. It's just random movements in the stock market. Sometimes stocks will go up on good earnings, sometimes they will go down on bad earnings, sometimes they will do just the opposite. So it's very hard to focus day to day. That's why watching stock prices every single day is very bad for your health, your portfolio, and lots of other things. You know, focus on the fundamentals. That's where what our North Star is in terms of investing. So, Ernest, I think we've covered a lot of topics. What have you been thinking over the last couple of months as we're heading into the end of the year for our portfolios? You know, everybody likes to talk about, is there anything we should be thinking about upcoming for 2027 just because the calendar flips a date. But where are you in terms of your head space for the markets, valuation, interest rates, and what we're thinking for our portfolio? So I think one of the things that I have been kind of thinking about with regards to passive investing and investing in things like the S&P 500 and the NASDAQ given how strong the returns have been is that I think people are forgetting that if you look at the S&P 500 today, I think, and you break down the various constituents and the various end markets.

34:47And market exposures of some of these companies. So, for example, like, Amphanol, which is a company that makes these sensors and connectors, it is ultimately an AI company because they're benefiting from the AI buildout. Companies like, obviously companies like Nvidia and Micron and those ones, but put together about 40% of the S&P 500 today is directly related to the AI and data center buildout. So the idea that you're investing passively in American corporate business is not what it used to be. You're making, in essence, a large bet on AI today. And so as active investors, I think part of the job that you have to do is decide, well, is that a level of comfort in my portfolio that I'm comfortable with?

35:51Because today, obviously data center construction is very strong, but maybe regulation happens or maybe, you know, there's no shortage of things that can cause these kinds of things to end. And I think you want to be defensively positioned against something like that. I think it's a very smart approach to diversify people's portfolios and to not have an exposure to one theme, especially a theme that has a lot of tailwinds today, but that can reverse if the over build happens, if interest rates go up, if we find out that AI is going to cause us an extinction and we want to pull the plug. There's so many risks and concerns that can happen, obviously diversifying across many different companies and industries is the right approach. Before we let you go, Ernest, you're take on Apple stock. The stock is having a great year. And that's really because of the launch of this iPhone duo, pretty exciting foldable phone. It looks like they've solved the problem of the foldable phone because for a lot of other companies that launch foldable phones are wasn't necessarily the apps or the

37:01games or the ability to use it to its full potential, but it looks like Apple is going to go full-borne have its app store be able to offer lots of different apps that will work properly with the phone. Are you excited about it? Are you going to buy one? I'm actually an Android user. So I won't, unfortunately, I probably won't be buying this and it's pretty expensive. I think 2000, 2000 US dollars, 3000 Canadian if you're buying it here. But I think it is probably will be somewhat material for Apple, not hugely important, but it's good because Apple has a captive user base where everybody who uses iPhone generally stays with iPhone. And so now you have this more expensive product where before maybe you would buy the the Pro Max. Now instead of the Pro Max, if you decide to get the iPhone duo, which is the foldable phone, now you're paying

38:04you're paying 2000 US. So even if let's say 10% of people who were going to buy an iPhone end up choosing the duo instead of what they were going to choose before, there's a pretty meaningful sales lift for Apple's iPhone business. I think the bigger picture for the iPhone duo is that you see a pattern with this with Apple where I think you see a lot of snickering online about, well Samsung has a foldable phone already. So what is Apple really innovating on versus other competitors here? But I think the key is that Apple, well first of all, Apple's foldable is probably likely to be a superior product. I think all the reviews from people who have played around with it have said it's great and unlike most foldable products that exist. Apple has the app ecosystem and the developers to make it work. So where one of the problems with foldable phones before was that apps simply didn't support it.

39:07And there was no need for you to get there was no benefit from having the wider screen. In this case, I think most app developers are going to modify their apps and make a foldable version so that you actually can benefit from the foldable features that are there. And I think with as with most products that Apple typically launches because they are generally superior to what exists, what exists in the marketplace. They actually end up growing the market for foldable phones where you saw this with AirPods where before AirPods, there were wireless headphones, but AirPods were really what drove adoption of wireless earbuds type headphones. So this with the smartwatch where the Apple watch was kind of the was not the first smartwatch, but it created a new category of smartwatches and grew the market that way. And I expect that to happen with the iPhone duo as well.

40:07Yeah, it's it's it's going to be a fascinating product. I'm looking forward to it. Obviously for me going on an airplane, of course, watching a movie on my phone is kind of hard as I get older and with my vision reading news on my phone is hard. So I can't wait to get the Apple foldable iPhone. The only problem is I tend to drop my phone a million times a day. So that's a really risky for me. So better get Apple care. Yeah, I will probably pay for Apple care. So this is our first podcast back. We're so happy that you could join us. And we're going to cover lots of great topics as we head into the end of the year. So many things to discuss AI Magnificent 7 compounders will cover Q3 earnings as they start to come out as well as give us give you guys an update on what we're thinking about for 2027 and any portfolio changes that we're thinking about. So we wish everybody all the best and we'll talk to you real soon. This podcast is for informational purposes only in any forecast on the economy markets or individual securities should not be viewed as investment advice, a recommendation or an offer or solicitation to buy or sell any securities.

41:22Clients of Baskin wealth management and the speakers on this podcast may own shares of the company's discussed information on this podcast is current as of the time of production and a subject to change. If you have any questions or would like to subscribe to these podcasts visit our website at baskinwealth.com