I Made My Own Index! Questrade Custom Indexing Tutorial
Summary
Daniel presents a strategy for long-term investing focused on identifying companies with wide economic moats, durable cash flows, and sustainable business models. He expresses concern that standard index funds, such as the S&P 500, have become overly concentrated in tech and specific sectors, leading to a risk profile that may not suit every investor. To combat this, he demonstrates how to use the Questrade custom indexing platform to curate a bespoke portfolio that aligns with individual investment philosophies.
His own creation, the 'Fortress Index,' consists of 33 equally weighted, high-quality companies. He emphasizes that this index is not a recommendation for a blind copy-paste, but rather a template designed to show how one can select companies based on pricing power, switching costs, irreplaceable market positions, and free cash flow durability. By removing companies he dislikes and including those he trusts, he aims for a more robust, long-term compounding strategy.
Key stocks mentioned in his Fortress Index include:
Mentioned Stocks
Reasoning: Daniel views Visa and Mastercard as the 'rails' of global commerce with extreme durability. He notes their status as a long-standing duopoly, indicating they are high-margin cash-flowing businesses he finds ideal for a long-term portfolio.
Reasoning: Daniel considers these railroads essential, irreplaceable, and highly unlikely to be disrupted. He believes these are some of the most durable businesses in the world, capable of compounding profits for decades or centuries.
Reasoning: Daniel highlights these as the strongest physical retail businesses in the world. He notes they are critical for consumers and have shown consistent growth for decades, making them prime candidates for his durable 'Fortress Index'.