This was initially going to be a twitter thread, but it was too long, and since I haven’t published a blog post in a while, I might as well divulge some 2026 wisdom regarding the stock market.

I remember when I used to be deep into fundamentals of stocks. I realized though, there’s someone out there already mentioning potential stocks. The only skill you really need is determining if the market’s long-term trajectory of a stock is wrong.

Some really good examples. Back in 2024, my friend told me about how he missed out on $ATH.TO in 2020. Well me? I was 18 years old, looking back I didn’t know what I was doing for 3 whole years (2020, 2021, 2022). How was I supposed to comprehend that the low price of oil stocks reflected that the market was only thinking about short-term losses rather than the future 20+ years of operations. Of course bankruptcy risk is higher for smaller capitalized companies, but if you buy say 5 so called distressed $100M market cap companies in the same industry, you are avoiding the need to do much. I even held OVV.TO at one point.

When Does Cofee Can Investing Apply

The coffee can mindset can be applied to small-mid cap stocks that you believe has long-term cashflows that simply are either not materializing currently, or are being ignored (yellow flag). Coffee can investing is one and done type of investments, where you don’t act on the value of the position for multiple years, maybe even a decade. This prevents selling too early, which happens if you have some insight into where profit will be in the future.

Vetting an Undervalued Company

Dividend Yield Traps (FCF Yield Traps)

A high dividend yield should always have an explanation

RED FLAG: A high dividend yield is usually due to a unsustainable payout ratio

At some point the cash flows will fail to materialize and a company will be unable to pay dividend without selling assets (SCM) RED FLAG: A high dividend yield could be due to a company carrying a lot of debt

debt servicing is a risk towards maintaining the dividend (XIFR, BCE.TO) YELLOW FLAG: Political risk (BABA, PBR-A, EC) YELLOW FLAG: Taboo / trends (BTI)

Degree of Monopolistic Competition

Monopolistic Competition is defined as companies that sell similar products but customers beleive there is differentiation between them (there will be a degree of the substition effect). A good example of monopolistic competition are cars. They are differing and even cars that compete on price are differing. This is a distinct market where one would be willing to own and speculate on publicly traded car companies (e.g. GM, F).

Common examples however will say: Restaurants and Clothing. The problem with this is that the degree of monopolistic competition is very low and on a general basis, these markets also contain sub-markets where products are so generalized that price is the only thing that matter. With restaurants for example, restaurants can choose to have a distinction or provide generic food. Will a unqiue restaurant of today be unique forever? No. Clothing: aside from the generics, the other problem is Consumer TRENDS. Trends make a monopolistic competition riskier to invest in. With generalized goods & service, microeconomics is key. With consumer trends, investors have to keep up to date with culture.

Two examples I’ll provide are HITI.V and LULU.

High Tide is a cannabis company. Lofty minded investors will claim this cannabis company can differentiate itself. Reality is that cannabis is basically a price first industry - ignoring deflation - and thus microeconomic trends is all that matters. Why invest unless you know that the industry CAGR is under projected.

My Lululemon fashion/clothing example is too long for this article, however if you are interested, feel free to read Fashion Investors: A Tale of Exuberance and Hysteria.

Alpha Seeking Participants

Alpha seeking market participants are always focused on earnings guidance rather than whether a company will survive (yearsOfLifeRemaining = current assets / net loss)

Guidance is adjusted all the time, and when earning don’t materialize (e.g. Nortel), the stock takes a plunge, signalling that the company was never valued for its real cash flows, but based on lofty growth dreams (e.g. $ZM).

LOFTY GROWTH DREAMS != VALUE PLAY. When you buy a stock at the highs and it drops down, you were in it to go higher, it’s not suddenly a value play. It was a momentum play and the only thing keeping it going was if there is a greater fool rather than true growth picks where significant earnings show up on the income statement.

Of course, there is more a stock than simply an overexagerated failure to a stock. Alpha is also generated by getting a read on the precipice of financial success; $NVDA, $PNG.V, $MU, $MDA.TO ($RKLB makes no sense).