The Rational Reminder Podcast

Cameron Passmore & Benjamin Felix

A conversational, topical back and forth about recent blogs, client questions, observations to help our clients become more rational investors.

All Episodes

Of all of the possible disruptive uses of cryptocurrency and blockchain, decentralised finance (or DeFi) might be the one most likely to bring this technology to a wider audience; and challenge the established finance industry in the process. For this week’s episode on crypto-based decentralised finance, we welcome economist and faculty member in the Finance Unit at Harvard Business School, Professor Marco Di Maggio. Tuning in, you’ll learn everything you need to know about DeFi and cryptocurrency, from the most basic definitions to the potential macroeconomic and geopolitical implications of a decentralised reserve currency and the effects  of decentralisation on monetary policy transmission. Tuning in, you’ll learn the definitions for DAOs, DEX, NFTs and more, and Marco elaborates on some of the reasons that decentralisation is seen as an improvement over central systems as well as some of the issues that it represents. Make sure not to miss this enlightening conversation with Professor Marco Di Maggio as he shares his powerful contrasting perspectives on this inherently libertarian technology.   Key Points From This Episode:   Marco defines cryptocurrency; simply put, it’s digital currency. [0:02:59] Find out what a DAO is; a community-led entity with no central authority. [0:03:58] How a DAO is different from a corporation in the way it values decentralisation. [0:05:56] Stablecoins as cryptocurrency pegged to fiat currency and backed by collateral. [0:07:07] Learn about decentralised exchanges or DEX, the bonding curve, and Uniswap. [0:09:28] Why decentralisation is seen as an improvement over centralisation; greater transparency and access requiring no counterparty. [0:12:32] When decentralisation is not a good solution given the lack of accountability. [0:14:40] Marco expands on some other issues with the technology, including its environmental impact, volatility, and regulatory uncertainty. [0:16:07] Understanding counterparty risk, returns, and interest rates in the DeFi space. [0:18:39] Why Marco considers blockchain and crypto DeFi a technological revolution. [0:21:41] How someone who owns a total stock market index fund, for example, can benefit from the potential economic gains of this revolution. [0:23:45] Bitcoin versus Ethereum and how Ethereum is used to develop DeFi apps. [0:26:06] Whether Marco predicts a winner-take-all outcome for blockchain technology. [0:28:23] Why rubber stamp regulation and clarity are important for the success of DeFi. [0:29:37] How to approach investing in the DeFi space, looking at risk, exposure, and value. [0:31:30] Marco explains why the Chinese central bank has launched the digital yuan and how the US is lagging behind this innovation [0:34:21] Find out how DeFi ‘super apps’ provide better solutions than online banks. [0:38:33] Distinguishing crypto from fiat currency and the macroeconomic and geopolitical implications of a decentralised reserve currency. [0:40:17] Marco on the potential effect of crypto-based DeFi on monetary policy transmission. [0:42:44] What NFTs are, why they sell for such high prices, and how they can be useful. [0:46:22] How Marco defines success: through the lens of others in his life. [0:49:30]  

Dec 9

51 min 1 sec

In today’s episode of The Rational Reminder, we tackle the subject of inflation in a twofold manner. Firstly, there are details around how people perceive inflation that often get overlooked, and secondly, these expectations have investment implications that are worth unpacking. Before diving into the main topic, we talk about Colin Bryar’s Working Backwards which tracks the role of failure and customer obsession in Amazon’s growth path. After getting into this week's news and listener question, we begin the first part of our session on inflation. Some of the main points we make here are that everybody experiences inflation differently, that perceptions of inflation are connected to experience, and that biased inflation estimates can explain household borrowing and investing behaviour. This leads us to part two of our discussion, where we unpack how expected inflation influences asset pricing and the role of unexpected inflation in the performance of stocks and bonds. We attempt to locate other asset classes that can act as inflation hedges, but find that with the tradeoffs and poor correlations involved, it makes the most sense to vouch for a properly diversified portfolio of stocks and bonds with exposure to multiple sources of expected return. So before you base too much of your decision-making on inflation, be sure to consider some of the points we make in today’s show.   Key Points From This Episode: TV shows, listener feedback, Peloton’s stock price, and RRP updates. [0:00:19.2] Lessons from Amazon’s growth story in this week’s book, Working Backwards. [0:07:55.2] News: Vanguard’s ‘High-Conviction Active Funds’ and Wealthfront’s intention to sell. [0:14:23.1] Whether size premium is influenced by a reduction in IPOs and publicly traded companies. [0:17:36.2] Main topic: Overlooked aspects of inflation and their implications on investing. [0:23:46.2] Metrics from the CPI and how everybody experiences inflation differently. [0:26:36.2] How to work out your personal inflation rate and what Ben and Cameron’s are. [0:28:07.2] Inflation expectations are influenced by inflation experiences. [0:30:43.2] Biased inflation estimates can explain household borrowing/investing behaviour. [0:34:03.5] The implications of the fact that the CPI doesn’t account for substitution. [0:36:07.2] Debunking the assumption that those close to retirement are most exposed to inflation. [0:39:13.2] How financial assets are priced using discount rates and the effects of unexpected inflation on them. [0:43:36.2] The effects of high, low, and expected inflation on stocks and bonds. [0:45:41.2] Whether other asset classes than stocks can be inflation hedges. [0:48:15.2] The relationship of different commodities to inflation at different periods and regions. [0:53:05.2] Questions of status, greed, and decisions in this week’s Talking Sense. [0:56:54.2]

Dec 2

1 hr 2 min

The contemporary world is saturated with ways in which we can experience rewards that were historically much more difficult to access. Although this idea of a world filled with dopamine fixes is not new, it can be continually surprising just how extreme this reality has become. Here on the show today to talk about this issue and her most recent book, Dopamine Nation, is Dr. Anna Lembke, and we have a fascinating and important conversation in which she unpacks the human body and mind in relation to the world around us at present. One of the main points from this chat is the weakness of humans, and how unaware we can be of the way our brains compel us to engage in behaviours and seek pleasure. We get into some strategies and solutions for healthier ways to exist, talking about mindfulness, awareness, and dopamine fasting, in the face of accelerating tech and overabundance. Dr. Lembke gives us a great introduction to dopamine and how it functions in our bodies, unpacks the four properties of addictive substances and activities, the different ways to frame and understand addiction, and shares some realistic ideas about moderation. So to hear all this and much more, tune in to this great episode of the Rational Reminder Podcast.   Key Points From This Episode: An introduction to dopamine and its functions in the human body. [0:03:03.2] The human brain and the current overabundance of addictive experiences and substances. [0:05:36.1] Contemporary increasing in different types of addiction. [0:08:13.8] Considering the inherently negative connotation of the word 'addiction'. [0:11:44.4] The reasons that make gambling so addictive to the human mind. [0:14:12.7] Applying what we know about addiction and gambling to speculation and the stock market. [0:18:03.2] Why working also falls into the category of addictive behaviours. [0:21:46.8] Looking at the addictive nature of spending money and shopping. [0:24:01.5] A shocking story about water addiction from Dr. Lembke's practice. [0:25:12.1] Thoughts on recognizing addiction and possible ways to stop the behaviours. [0:26:22.2] Using in moderation; Dr. Lembke comments on the realities of this idea. [0:29:32.7] Long-term decision making versus a dopamine-laden environment; the battle of our time. [0:31:00.4] Understanding hormesis, seeking pleasure through pain, and embracing volatility in a portfolio. [0:34:54.6] The impacts of increased leisure time and the question of what we need. [0:38:47.6] Lembke's advice around retirement and the dangers of dopamine deficit states. [0:42:43.3] How the era of the pandemic has affected these trends in addiction. [0:45:20.2] The relationship between radical honesty and dopamine; how lying is related to reward pathways. [0:48:39.6] Radical honesty and better parenting; Dr. Lembke's thoughts on transparency. [0:54:01.3] Weighing the value of shame and its power as a socially regulating force. [0:55:51.2] Lembke's definition of success and its connection to being a good parent and becoming a positive force in the world. [1:00:01.6]

Nov 25

1 hr 1 min

Today we have a guest join us on one of our 'us episodes', and we are very lucky to welcome Mathias Hasler to take part in the last section of today's podcast. Mathias is a Visiting Assistant Professor of Finance at Boston College, and his primary research focuses are empirical asset pricing, market efficiency, value investing, and corrections for data mining. In our chat with him today, we zoom in on a specific paper of his and its proposition about 'the six decisions' and their alternatives. Before we dive in with Mathias, we spend a little time with our usual round-up; looking at a new book by Hubert Joly, and fielding a very interesting listener question about value and investing in relation to green investments. Also, make sure to stay tuned for some thought-provoking Talking Sense cards with Mathias at the tail end of today's podcast.   Key Points From This Episode:   This week's book review for The Heart of Business and a look at some of its main ideas. [0:05:12.4] A quick recap of some fundamental information regarding inflation hedging. [0:09:45.1] A listener question about value and ESG investing, and the relationship between factors and sectors. [0:13:40.4] Unpacking the six decisions that Mathias outlines in his recent paper. [0:34:42.8] The process that Mathias went through testing his alternatives to the six decisions. [0:40:18.3] Differences between conditional and unconditional value premiums estimates. [0:43:39.5] The implications of Mathias' findings for investors pursuing value. [0:47:08.2] A round of Talking Sense cards with Mathias relating to saving and spending, job outcomes, and more. [0:49:20.1]

Nov 18

51 min 49 sec

Today we are tackling the vitally important subject of financial literacy from the standpoint of parents wanting to educate their children. We have a true expert on the show today to help us with this discussion, and we cannot wait to share this highly actionable and impactful conversation with our audience. Robin Taub is a former CPA turned author, and her book, The Wisest Investment, approaches the need to educate children from an early age, and the best strategies that parents can use for this task. Robin previously worked at Citibank in derivatives marketing and brings the high-level expertise of accounting to her book and this episode of the podcast. We strongly support her perspective on financial education and believe the framework she discusses here and shares in her book is well worth any parent's time. In our conversation, we cover all the important bases; financial values, summer jobs, investment apps, human capital, and everything in between, so make sure to listen with us to hear it all.   Key Points From This Episode: Unpacking Robin's beliefs about the importance of financial education in the family. [0:02:55.2] Financial education in the Canadian schooling system; Robin weighs in on its success. [0:04:08.6] The assessment that parents can make about being role models to their children. [0:06:53.1] The communication of values through the process of teaching and learning. [0:09:01.8] Ideas for the appropriate time to start teaching kids about money. [0:11:40.5] Using teachable moments to begin the conversation about money. [0:14:35.3] Thoughts about allowances and best practices for parents. [0:18:09.7] The evolution of money conversations as children grow older; increasing sophistication over the years. [0:23:46.9] Benefits and considerations when introducing the concept of working for money. [0:27:30.3] How social media can impact young people's spending, and how to mitigate these effects. [0:31:26.2] Robin weighs in on the question of cellphones and when children should get one. [0:38:42.6] Increasing financial responsibilities as children grow older, and beginning the conversation about investments. [0:40:37.3] The impact of investment apps and how to minimize the damage they can do. [0:45:21.1] Teaching children about philanthropy and the importance of sharing. [0:47:04.6] Weighing up the idea of getting a financial advisor involved in your child's life. [0:49:27.3] The concept of human capital and how to approach it in your family. [0:50:51.1] Robin's thoughts on conversations about entrepreneurship. [0:54:48.6] Breaking the cycle of financial problems in a household that is struggling. [0:57:54.3] Minimizing entitlement in a family of greater financial means. [0:59:42.8] Reasons for the shift that Robin made from her career as a CPA to becoming an author. [1:03:30.1] Robin's personal definition of success; finding satisfaction in the important areas of life. [1:05:20.5]

Nov 11

1 hr 7 min

It sounds reasonable to say that investing in the most popular companies would produce the best returns, but this is just not how asset pricing works. Today on the show, we unpack the ‘good company is a good investment’ fallacy. Before diving into the main topic, we kick off our discussion on the subject of index funds with Robert Wigglesworth’s Trillions. From there, we share some updates about custom indexing and home buying in Canada, along with the immense valuation of Tesla as well as Elon Musk’s net worth. This acts as a great segue into the focus of today’s show: a so-called good company has high historical returns, strong earnings growth, strong forecasted earnings growth, and high prices. But just because the good companies have done well historically, this does not mean they will continue to be a good investment. In fact, there is a premium that says that higher-priced stocks earn lower returns than lower-priced stocks and value stocks. We unpack several papers that explore the concept that it is the lesser-known companies that tend to have better returns. We also get into how growth extrapolation, the skewness effect, and the big market delusion plays into the good company is a good investment fallacy. Our discussion concludes with the idea that investors are better off paying attention to expected returns rather than falling victim to extrapolation errors. Tune in today!   Key Points From This Episode:   Introductory comments: modifications to the show, listener feedback, and more. [0:00:30.2] Book review of the week: Trillions by Robert Wigglesworth. [0:08:28.3] News updates: custom indexing, Tesla valuation, homebuyer gifts, and more. [0:12:23.2] Introducing today’s topic: the ‘good company is a good investment’ fallacy. [0:19:30:9] Investing in good companies is irrational because of how asset pricing works. [0:20:44.7] The threat that crypto and decentralized applications pose to good companies. [0:21:50.5] Higher-priced stocks earn lower returns than lower-priced and value stocks. [0:24:40.3] Findings from papers exploring glamorous stocks and investor bias. [0:27:21.2] The problem of extrapolating growth too far into the future. [0:34:07.1] Behaviour patterns of lottery-like stocks with high expected skewness. [0:37:17.4] Declining prices and the big market delusion. [0:39:51.1] The high prices and low expected returns of the NIFTY 50 companies. [0:44:05.2] What the Fama French Five-Factor Model has to say about how assets are priced. [0:45:30.2] Talking Cents: Questions about the price we pay for riches. [0:46:50.2]

Nov 4

50 min 57 sec

In our conversation this week, we take a deep dive into factor investing. We are joined by the formidable Antonio Picca, Head of Factor Strategies at Vanguard, to help us navigate this complicated topic. Antonio is one of the largest asset managers in the world, with over seven trillion dollars under management. Among his credentials is a Master's in Finance and Economics from the London School of Economics, as well as a Doctorate in Finance and Economics from Chicago, where he was also a teaching assistant with Gene Fama. During our discussion, we cover a broad series of questions on factor investing, while also venturing into deeply technical territory. We examine how one might make the transition to factor investing after gaining confidence in passive investing and unpack important questions around factor investing and risk. Another fascinating topic we cover is how factor investing resembles active investing, including some crucial distinctions. Next, we take a look at some of the negative connotations of active investing and investigate why those issues may not apply to factor investing. Antonio goes on to explain why factor investing is a natural extension of a broad equity market investing and illustrates how it aligns with Vanguard’s philosophy, which is a belief in low-cost, long-term focus, and broad diversification. You won’t want to miss this excellent opportunity to gain a deeper understanding of factor investing from one of the leading experts in the field. Tune in today to hear it all!   Key Points From This Episode:   Introducing today’s guest Antonio Picca, Head of Factor Strategies at Vanguard. [00:00:17] How Antonio would explain factor investing to an existing Vanguard client who's already sold on the idea of low-cost, cap-weighted index investing. [00:03:16] Why clients need to be educated on factor investing, and why factor investing is a form of active investing. [00:04:31] The benefits of targeting other factors in addition to the market risk factor. [00:05:20] Some of the drawbacks to a strategy that targets other factors in addition to the market risk factor. [00:06:41] How Vanguard helps clients determine whether factor investing is the correct course of action for them. [00:08:19] The role that cap-weighted investing plays in the structure of factor products when capital forms the core of your investing, and factor portfolios are secondary. [00:09:35] How investors should think about sizing their factor position, relative to their market cap-weighted position. [00:11:12] How they decide which factors to target in Vanguard's product lineup. [00:12:37] Vanguard’s approach to capacity when considering factors. [00:15:03] How Vanguard decided to target momentum as a standalone factor. [00:16:24] More on the liquidity factor and how Vanguard is targeting it. [00:17:40] A breakdown of what the value factor is. [00:20:12] Why factor investors should want to be active, rather than follow a factor index, despite the negative connotations that come with active investing. [00:22:25] Why negative connotations of active aren’t applicable to active factor investing. [00:24:27] The frequency with which factor funds need to be rebalanced to effectively capture the factor premiums. [00:25:52] Instances where it is possible to quantify the benefit of more frequent rebalancing, or more flexible rebalancing. [00:27:01] Some of the days in early 2020 where there were market movements of multiple percentage points and how Vanguard made decisions accordingly. [00:28:05] Antonio's thoughts on the prospect of quantifying premiums for factors. [00:30:46] The paper that Vanguard is currently working on to determine whether it is possible to time factor premiums, or whether investors maintain consistent exposure to them. [00:32:32] How factor investing is different from traditional active management. [00:33:51] Some of the instances where a factor portfolio can replace an active manager. [00:35:40] Antonio’s experience leading the factor group at Vanguard during a period when large-cap growth stocks have dominated so powerfully. [00:36:43] How Antonio addresses client concerns that factor premiums have changed or decreased. [00:39:30] Antonio’s thoughts on winner-take-all companies and their proliferation. [00:41:47] What Antonio advises investors should be looking for when they're choosing a factor fund. [00:45:49] Some insights into how Antonio’s clients are using factor products. [00:47:15] How Antonio approaches combining multiple factors. [00:48:33] Antonio shares his thoughts on do-it-yourself investors implementing factor portfolios and why he thinks advisors are essential. [00:50:21] How Antonio defines success in life and investing. [00:54:38]

Oct 28

55 min 43 sec

Today we welcome Rob Carrick back to the show to talk about a range of interesting topics, focusing on the Canadian housing market and some of the recent developments from the banking and investment space. Rob has such a balanced and measured approach, qualities that are visible in his long-standing work at The Globe and Mail. We start today's episode with some fun recommendations of books and TV content, before diving into the meat of our conversation. Rob weighs in on the range of perspectives on whether to rent or buy, offering the assurance that renting is a completely acceptable way to manage your needs and means. He also comments on the utility of robo-advisors, the impacts of the recent banking regulations, and shares his surprise at which of his articles have proved most popular. We always feel like we should have Rob on the show more often, and this episode is such a good argument for that very idea. So, to hear all Rob has to say, be sure to join us today.   Key Points From This Episode: This week's book and TV recommendations; Impeachment, Capital, Trillions, and more. [0:00:39.2] A call for applicants here at PWL Capital, and some recent reviews for the show. [0:07:17.7] Looking at an excerpt from Azeem Azhar's book, The Exponential Age. [0:11:45.4] A recent study comparing renting and buying in Canada. [0:18:18.6] Rob's observations on the new banking rules in Canada and what they mean for the advisor community. [0:29:27.2] Thoughts on trends in the banking space and the roles of financial professionals. [0:36:07.1] Canada's adoption of indexing: measuring the speed of changes in the country. [0:38:38.7] The role of robo-advisors and why Rob believes strongly in their value. [0:41:48.5] Rob weighs in on the debate of buying versus renting property. [0:44:39.6] Generational flows of money from boomer parents to millennial and Gen Y children. [0:50:52.3] Rob's message to Canadians feeling like they are stuck renting. [0:54:24.1] Some of Rob's most popular articles from over the years. [0:55:20.7] Lessons from Sweden's housing market and considering Canada's possible future. [0:59:03.6] A round of Talking Sense cards with Rob dealing with most prized possessions, lending, and happiness. [1:02:26.3] Assessing some of Robert Kyosaki's recent comments on a looming crash. [1:08:29.1] The present is exciting in finance; why Rob is enjoying the ride. [1:14:22.5]

Oct 21

1 hr 18 min

For this week’s episode (our longest to date), we get together with the legendary Professor Campbell R. Harvey and take a deep dive into a diverse range of topics that draw on his incredible breadth of knowledge and extensive research. Campbell is the Professor of International Business at Duke University and is also a Research Associate at the National Bureau of Economic Research. In 2016 he served as the President of the American Finance Association, and from 2006 to 2012 he occupied the incredibly demanding role of Editor for the Journal of Finance. One of his earliest achievements was identifying the inverted yield curve’s ability to predict a recession, a highly regarded metric that is near-ubiquitous in its implementation. For the first half of our conversation, we focus on his research in areas like skewness and emerging economies. We cover specific topics like the factor zoo, why it’s problematic, and how Campbell, along with his student Yan Lui, found through their research that approximately half of the published empirical research in finance at the time was, in fact, false. We also unpack his most downloaded paper entitled The Golden Dilemma and get into the intricacies of why gold is an unreliable inflation hedge. For the latter half of our conversation, we hear about Campbell’s latest book DeFi and the Future of Finance along with his most recent research. Discover how Campbell first became interested in the topic several years ago and decided to put together a course for his students. We also delve into the rise of decentralized finance (DeFi) and how we can expect it to shape global finance, trading, and the future of the internet. Join us today for this essential episode on everything from the pitfalls of academia, to emerging markets, to Bitcoin, and much more!   Key Points From This Episode:   Introducing this week’s guest Professor Campbell Harvey. [00:02:46] How Campbell’s research brought him to Chicago's Ph.D. program. [00:03:55] How Campbell identified that an inverted yield curve had preceded the past four recessions and could be a reliable economic predictor. [00:07:03] Hear about Campbell’s research on skewness, as opposed to simply mean and variance, which is often the focus of portfolio theory. [00:11:40] Why it’s surprising that skewness is still largely disregarded in favor of mean and variance. [00:16:42] Why mean and variance are insufficient for measuring risk when comparing a concentrated portfolio with a more diversified portfolio. [00:20:45] Some of the special considerations that Campbell prioritizes when assessing emerging markets in context and managing an overall portfolio.[00:22:04] Observations on the cost of capital being higher before integration and liberalization. [00:25:11] The implications that Campbell’s research on emerging markets has on asset allocation. [00:26:51] Dynamic asset allocation, Campbell’s research in emerging markets, and how those lessons can be applied when investing in emerging markets at a time when the cost of capital is high. [00:30:04] The factor zoo, why it’s problematic, and how it is caused by data mining. [00:32:26] How Campbell and his student Yan Lui estimated that half of the published empirical research in finance was false and how this has occurred in other industries due to data mining. [00:33:02] How economic incentives from the investment industry inform research. [00:39:38] The important distinction between academic research and practitioner research, and asset management. [00:44:15] The extent to which asset management research could be considered to be more reliable than academic research. [00:47:23] Some of the mistakes that investors make when they pursue these factor premiums that have been identified [00:49:29] Machine learning and its impact on investment decisions for retail and institutional investors. [00:56:06] Whether the benefits of potential alpha from machine learning will be passed on to investors or remain within a firm as their scale increases. [01:00:22] Campbell’s research on traditional active management within the context of a firm’s ability to continue delivering alpha in the future, and how that incrementally decreases as their asset base increases. [01:06:23] The arguments in favor of allocating gold to a portfolio, especially at times of higher inflation, and whether it holds up to scrutiny. [01:09:54] How technological changes can affect the real expected return. [01:16:51] Why gold can be a valuable asset in diversifying your portfolio. [01:17:22] How Campbell became interested in DeFi, cryptocurrency, and blockchain technology. [01:19:19] How digitized finance cuts out the inefficiency of having a middle person and fosters inclusion and financial democracy. [01:26:35] Harvey’s thoughts on how cryptocurrencies facilitate criminal and fraudulent activity. [01:31:07] How DeFi could disrupt traditional asset management and how to prepare for those changes. [01:36:43] How to invest in DeFi even though it’s decentralized. [01:38:33] How companies can increase their revenue by using cryptocurrencies in their transactions. [01:43:24] Why the current wave of FinTech will be replaced by DeFi. [01:44:58] Why it’s important to have a very diverse portfolio when investing in DeFi. [01:51:22] How DeFi will allow people to monetize their content and disrupt the money that Google and Facebook make from their users’ data. [01:52:22] Some of the risks of DeFi and investing in cryptocurrencies. [01:55:27] How Campbell defines success: positively impacting the world. [02:00:17]

Oct 14

2 hr 1 min

For decades, owning a home has been seen as a hallmark of the ‘American dream’ and a major life milestone. While we take it for granted that home ownership is good, we make the argument in today’s episode that, from the perspective of subjective well-being, owning a home isn’t necessarily the key to happiness. This conversation covers the non-financial aspects of homeownership and why owning a home isn’t necessarily superior to renting one. This is supported by data from a number of different studies that describe the relationship between experienced happiness and life evaluation, and how the decision to buy or rent relates to effective forecasting, for example. Benjamin unpacks concepts like focalism, hedonic adaptation, and buyer's remorse, as well as social comparison and happiness when it comes to material purchases like homes. He concludes with the following words of wisdom: buying a house will not make you happy, but that doesn’t mean it’s a bad decision. During the course of today’s episode, we also touch on Shane Parrish’s The Great Mental Models Volume 3: Systems and Mathematics, how individuals engage in panic selling according to the recent MIT study, ‘When Do Investors Freak Out?’, and some of the listener discussion points that arose from our in-depth conversation with John Cochrane in Episode 169. Tune in today for all this, plus so much more!   Key Points From This Episode:   Find out why you should listen to Tim Ferriss’ interview with Micheal Dell. [0:07:06] Today’s recommended book: The Great Mental Models Volume 3 by Shane Parrish. [0:08:05] Unpacking how individuals engage in panic selling according to the MIT study, ‘When Do Investors Freak Out?’ [0:11:10] We weigh in on three top Canadian banks halting sales of third-party mutual funds in preparation for Know Your Product (KYP) rule reform. [0:13:53] Ben highlights some listener discussion points following the John Cochrane episode. [0:16:34] Learn how predictable returns result from unpredictable cashflows in the long run. [0:18:23] What this means for long-term investors: focus on cashflow payoffs, not returns. [0:18:59] Why stocks are less risky for long-term investors if returns are predictable, which introduces horizon effects and impacts portfolio theory. [0:20:49] Key takeaways: outside income streams as additional asset classes, value versus growth, pure wealth investors versus labor market investors. [0:21:42] Introducing Ben’s topic for this week: does owning a home make you happy? [0:28:15] Some perceptions about the correlation between homeownership and happiness. [0:29:53] Why the non-financial aspects of renting might make it superior to home ownership. [0:31:50] Expanding on the 2011 paper, ‘The American Dream or the American Delusion?’ [0:32:10] Conclusions from the 2019 paper, ‘Homeownership and Happiness’, that Swiss homeowners are no happier or even less happy than renters. [0:33:57] The relationship between ownership and slightly elevated reflective life satisfaction; the difference between experienced happiness and life evaluation. [0:34:15] Ben reflects on how the decision to buy or rent relates to affective forecasting. [0:35:02] Focalism: how experience is shaped by how we spend our time rather than more stable circumstances like paying for housing. [0:37:50] How to deal with poor affective forecasting, hedonic adaptation, and buyer's remorse by making smaller, more frequent experiential purchases. [0:41:26] What Elizabeth Dunn and Michael Norton have to say about homeownership in Happy Money. [0:43:14] Social comparison and happiness when it comes to material purchases like homes. [0:43:57] How housing impacts life satisfaction: quality, economic effects, prestige, freedom. [0:46:09] Ben on how working from home can exacerbate possible issues for homeowners. [0:51:28] Concluding this topic: why homeowners are not automatically happier than renters. [0:52:05] Personally, Ben shares why he would rather own more of his time than his home. [0:53:27] Suggested reading, including Positive Psychology and The Happiness Hypothesis. [0:54:35] Talking Sense: whether success is based on money, cost versus value, and more! [0:57:38]

Oct 7

1 hr

Today's conversation is an extremely enlightened and highly detailed one, that you may want to return to, in order to accrue all of its value. We host John Cochrane, an economist specializing in financial economics and macroeconomics. John has a popular blog and podcast called The Grumpy Economist and also hosts the GoodFellows Podcast. He is a Rose-Marie and Jack Anderson Senior Fellow at the Hoover Institution and a senior fellow at Stanford Institute for Economic Policy Research, and was a Professor at the Booth School of Business at the University of Chicago. In this fascinating chat, John shares so much of his expertise, going in-depth on the subjects that we and our audience are constantly exploring and excited about. We discuss long-horizon stocks, market inefficiency and return predictability, classic portfolio theory, risk-less assets, and performance evaluation. John also shares his perspectives on the future of centralized finances, digital and cryptocurrencies, and where the business of financial advice is headed. So for all this and more from a leader in his field, be sure to join us for this great episode of the Rational Reminder.   Key Points From This Episode: Breaking down the basics of why stock prices go up and looking at the market as a whole. [0:02:05.8] The information contained in valuation ratios about long-horizon stock returns. [0:04:25.3] Market inefficiency and return predictability; unpacking the opinions on the correlation. [0:07:17.8] What the research on available information and market timing tells us about predictability. [0:12:59.6] Under-appreciating risk and asking important questions about dividend growth in the future. [0:18:46.5] The huge impact that predictability can have on classic portfolio theory. [0:22:36.2] Volatility aversion and communicating important concepts across divides. [0:28:11.7] John explains the risk-less asset for the long-term investor. [0:30:12.6] Using the example of bonds to get to grips with performance evaluation. [0:36:26.8] Unpacking the roots of wealth inequality and the best perspectives for understanding it. [0:40:30.4] Misguided thoughts about the market and the usefulness of keeping general equilibrium in mind. [0:44:14.1] Market portfolios and the zero-sum game; hedging state variable risk. [0:52:40.5] Decisions about the ability to bear the value risk premium and allocation. [0:58:10.7] John's thoughts on the future of financial advice. [1:01:27.8] Describing the fiscal theory of the price level and its predictions about inflation. [1:06:03.6] Cryptocurrencies and value maintenance; John's perspective. [1:13:12.8] Assessing the longevity of traditional or centralized finance. [1:19:15.4] John's own definition of success in the different areas of his life. [01:22:06.1]

Sep 30

1 hr 23 min

Today we have a somewhat unique episode for all of our listeners, rounding up the news and information from the world of finance and investment before we welcome Ben Rabidoux back to the show. Ben was a guest on Episode 96, which aired early during the pandemic last year, and we are so happy to have him here for another appearance, to touch in with his real estate expertise, and his thoughts on the current issues facing the Canadian housing market. Ben is the Founder of Edge Realty Analytics and North Cove Advisors and is essentially a real estate analyst, which means he has many clients that are institutional investors and fund managers, who he helps with the real estate side of their portfolios. In this conversation, Ben gives us loads of insight into the current landscape of Canadian real estate, the roots of the contemporary conditions, and what the data can teach us about the high prices that are so prevalent at present. We also hear from Ben about some potential policy solutions, and how the pandemic has affected the rental market. So for all this and a whole lot more in today's episode, be sure to join us on the Rational Reminder Podcast.   Key Points From This Episode:   Some of the best media we have encountered recently; podcasts, documentaries, and more. [0:02:01.3] News from the community and why we had to ban a user for the first time. [0:03:46.1] Quick book reviews of the illuminating DeFi and the Future of Finance and Blockchain Bubble or Revolution. [0:07:05.8] Changes in the world of finance and investment; Walgreens' new bank account and beyond. [0:12:22.3] Today's listener question dealing with research-based investment decisions and frequently cited papers. [0:15:27.5] Recent research from Robert Novy-Marx and Fama and French on US value premiums and factors that matter. [0:22:01.3] How to view the possibility of a replication crisis in finance. [0:31:10.8] Findings on US exceptionalism and the relationship between national economic growth and returns. [0:33:49.6] Market crashes and the correlations between different countries. [0:37:12.6] Reflecting on Ben's appearance on the podcast during the early weeks of the pandemic. [0:39:38.3] The last few decades of the 20th century and how that explains the current climate. [0:43:50.2] The chronic issue of under-supply of housing from the industry. [0:45:30.1] Housing policies that would support the current rates of population growth. [0:48:20.4] Examples and thoughts on the recent house price increases. [0:48:48.6] Statistics of homes bought by investors; surprising numbers and data on purchases. [0:52:58.2] News from the rental market and the interesting ways the pandemic affected it. [0:57:05.1] Common Canadian perspectives on the potential for housing pricing to decline. [1:00:58.4] Ben's thoughts on possible solutions to the current problems in the housing sector. [1:03:47.6] The significant role of the private debt market in Canadian real estate. [1:08:02.2] What we can learn from historic data about the current housing prices. [1:12:15.1] Ben joins us for a round of questions from our Talking Sense cards about savings, happiness, and flow states! [1:15:27.4]

Sep 23

1 hr 19 min

In many episodes of this podcast we refer to the psychological component of investing, and today we are very happy to host a global authority on the subject and share an absolute masterclass about behavioural psychology as it relates to our finances and the decisions we make. We welcome Professor Hersh Shefrin to the show, who is the author of many books including the seminal Beyond Greed and Fear, which he wrote in the last 1990s, and still holds much value and relevance in today's climate. Professor Shefrin is kind enough to share some reflections on how his understanding of the themes discussed in the book has evolved since those days and unpacks some great pieces from the book for listeners to digest. We get into some specific and technical questions about investing, looking at pursuing the alpha, momentum, and index funds, before our guest also weighs in with some broader, more philosophical responses to our queries. The conversation covers the psychological needs of investors, expected returns, and of course biases. Listeners can expect to come away with a clearer and more detailed picture of ideas we often reference, so make sure to join us for this incredible exploration with Hersh.   Key Points From This Episode:   The key message about market psychology from Beyond Greed and Fear. [0:03:23.1] Beyond Greed and Fear's three themes: heuristic-driven bias, framing effects, and inefficient markets. [0:04:39.3] Reflecting on these themes in a modern context and how our understanding has been refined. [0:12:53.6] Considering index funds in light of market efficiency frameworks. [0:21:08.3] Assessing one's ability to pursue the alpha and Professor Shefrin's advice to this end. [0:27:14.1] Possible reasons for large numbers of active money managers at institutions. [0:30:20.6] Understanding risk-based asset pricing models and expectations of higher returns when investing in riskier stocks. [0:34:41.8] The impact of behaviour-based versus risk-based explanations for investors. [0:40:00.2] Utilizing momentum in a portfolio: Professor Shefrin's explanation of this interesting phenomenon. [0:41:58.6] Comparing the current trading landscape with the advent of online trading in the '90s. [0:46:25.5] The addictive potential of stock trading; what we know about the neuroscience. [0:49:02.3] Unpacking the idea of growth opportunities bias and implicit assumptions about averages. [0:52:14.4] Weighing the relevance of the mean-variance framework to individual investors. [0:57:48.2] 'Carrying a psychological call option'; why Professor Shefrin's depicts advisors in this way. [0:59:09.3] Professor Shefrin's perspective on the interchangeability of dividends and capital gains. [1:04:42.9] The big influence that Professor Shefrin's uncle had on his career! [1:08:53.1] How Professor Shefrin defines success in his personal life and career. [1:12:12.7]

Sep 16

1 hr 13 min

In this week’s episode, Cameron and Benjamin share what’s on their mind and delve into listener questions on subjects ranging from the CAPE ratio to how to go about changing someone’s mind. Tuning in you’ll get a preview of some of the formidable guests featured on future episodes, like John Cochrane and Hersh Shefrin. We also cover book recommendations and unpack the concept of libertarian paternalism from the highly influential best-seller, Nudge: The Final Edition by Richard Thaler and Cass Sunstein, and how it can be a force for good. We cover various facets of passive investing and index funds including how, despite its proven effectiveness, many people continue to take a dim view of it. Learn why certain personality types may be more drawn to active investing and why. We also share tips for reasoning with skeptics, including some useful questions to ask when things get heated. Next, we take an in-depth look at index funds and global returns over the last century based on the research of Dimson, Marsh, and Staunton and their book Triumph of the Optimists. We also answer questions from our Talking Cents Cards and take a look at the best bad advice from the previous week. This episode is packed with fascinating anecdotes and excellent recommendations that you won’t want to miss! Tune in today!   Key Points From This Episode: We reflect on some of the reviews and feedback we’ve received over the past week. [0:03:00.7] An overview of the guests that listeners can look forward to on future episodes. [0:06:15.8] Talking Cents Cards and how they can introduce your family to conversations about money. [0:07:01.2] Introducing Nudge: The Final Edition by Richard Thaler and Cass Sunstein, and the concept of libertarian paternalism. [0:08:50.0] Cameron shares his story of the week, an article from Magnify Money on how emotions can influence investor decisions. [0:13:53.3] An update on our response to a listener question on the CAPE ratio by discussing the work of John Cochrane on determining predictability. [0:17:24.2] We unpack a listener question on whether one should be looking to convert family members who fit into the average, active investor archetype. [0:21:47.6] What Benjamin has learned from Think Again by Adam Grant, about how to talk to people you disagree with. [0:24:15] How Benjamin experienced a revelation on index funds. [0:29:28.5] An examination of index funds and global returns over the last century based on the research of Dimson, Marsh, and Staunton and their book Triumph of the Optimists. [0:36:30.3] An in-depth look at how global events factor into Dimson, Marsh, and Staunton’s data. [0:39:35.9] How dictatorships, civil troubles, wars, unsuccessful economic and monetary policies, and communism have prevented countries from transitioning from emerging to developed. [0:42:43] Cameron and Benjamin answer a Talking Cents card question by sharing the first big purchases that they saved up for. [0:50:47.6] Cameron and Benjamin answer a second card question: What is a creative way to save money in today’s digital era? [0:52:53.8] Hear this week’s bad advice from an Entrepreneur article titled: 7 Downsides to Passive Investing and Why it Can Be Bad for Your Portfolio. [0:54:09.2]

Sep 9

1 hr 3 min

The evergreen subject of retirement planning is something that we prioritize here at the Rational Reminder Podcast, and today we have a very interesting conversation in which we explore the topic from a slightly different perspective. We are joined by Gordon Irlam, who is a notable researcher with a wealth of experience from the world of tech and beyond. We have the chance to ask Gordon about bonds, annuities, and optimal allocations for different outlooks, and also get his perspective on charitable giving, effective altruism, and different spending plans. Gordon has conducted some amazing research and even developed his own tools to help investors calculate the variables of their situations. This episode is a great gateway for listeners to explore these concepts, as well as make use of Gordon's resources. Our guest's personal story is equally fascinating, after working with Google early on, and subsequently starting a company that was then acquired by Google, Gordon has leveraged his experience and finances in order to continue asking questions that interest him and will definitely interest our listeners. So for this standout conversation with a great mind, be sure to take a listen.   Key Points From This Episode: Looking back on the Google equity that Gordon sold and how he feels about the decision now. [0:03:00.8] Google’s acquisition of a company that Gordon started and the impact of this financial windfall. [0:04:33.1] Gordon's explanation of effective altruism and how he utilizes the idea. [0:06:25.3] Approaches to asset allocation for foundations and how this differs from personal funds. [0:10:28.7] Comparing practitioner and economist approaches to financial planning. [0:15:59.7] An explanation of stochastic dynamic programming and its strengths. [0:17:45.5] Why Gordon now favors reinforcement learning over stochastic dynamic programming. [0:20:12.6] Considering the role of annuities in Gordon's optimal model for retirement planning. [0:25:05.3] Constant spending versus variable spending in the optimal retirement plan. [0:27:55.2] Gordon's practical advice for entering retirement and tracking spending. [0:29:35.8] Exploring mean reversion in stock returns for tactical planning. [0:32:16.6] A message from Gordon about fixed guaranteed income and the value of long-duration inflation index bonds. [0:35:18.7] Advice to younger individuals and investors; the importance of saving. [0:36:18.9] Thoughts on possible future innovations for the problem of better portfolio building. [0:37:45.3] Gordon's definition of success: the ability to work on interesting and important problems. [0:40:26.2]

Sep 2

41 min 7 sec

Today’s episode is the first that takes a new format we are piloting, where we compile clips from the most valuable conversations we have had in different episodes on a given topic. To kick it all off we will be devoting this episode to inflation-adjusted retirement spending and the nuances of the 4% rule. We start off with a clip from our conversation with Bill Bengen, creator of the 4% rule, where he explains the concept. From there, we pull up an excerpt from an interview with Wade Pfau, hearing him weigh in on how this rule only works in the context of the US and Canada. Next up, Fred Vetesse talks about the changes in stock and bond yields and how they further problematize the 4% rule. After that, Professor Moshe Molevsky makes the case for flexible spending, followed by Michale Kitces with his favourite variable spending rules. We grab a segment from our chat with Scott Rieckens where he argues that the 4% rule should be seen as more of a guideline for making financial decisions than a rule. Bill Bengen’s interview then features again as we hear his comments on the effects of small-cap value stocks and cyclically adjusted price-earnings on safe withdrawal rates. Tune in for this fascinating set of highlights, the main point of which is that the 4% rule should rather be used as a guideline for financial planning and that where actual spending is concerned, a flexible approach is more sensible.   Key Points From This Episode: Bill Bengen, creator of the 4% rule, explains how the concept relates to inflation-adjusted retirement spending. [0:03:50.8] Wade Pfau speaks about how the 4% rule doesn’t work in an international context. [0:09:15.0] Fred Vettesse lays out the contrast between today and the period Bill studied. [0:12:31.1] The importance of having flexibility in retirement spending with Moshe Milevsky. [0:14:51.8] Variable spending rules with Michael Kitces; ratcheting, guardrails, and more. [0:19:27.3] Scott Rieckens on the 4% rule as a tool for making financial decisions. [0:32:33.8] Bill Bengen comments on the problems that have been found with the 4% rule. [0:38:35.7] The effects of small-cap value stocks on the safe withdrawal rate with Bill Bengen. [0:42:52.8] The effects of cyclically adjusted price-earnings on safe withdrawal rates with Bill Bengen. [0:47:20.6] Final thoughts on the 4% rule with Ben and Cameron. [0:51:37.8]  

Aug 26

56 min 16 sec

Even among rational investors with diversified portfolios, there seems to be less known about the inner workings of the bond portion of their investments. Here on the show today to help us get a better understanding of fixed income investments is none other than Dave Plecha, Global Head of Fixed Income at Dimensional Fund Advisors. Dave is one of the authorities on the subject of bonds and is amazing at articulating the concepts at play in this arena. This conversation goes in-depth, but is also a great starting point for investors to begin thinking about this part of a portfolio, and deepen an understanding of something that is so often misunderstood or misused. As you will hear, Dave has a real passion for this subject and has been presenting and speaking on precisely this work for the last twenty years. We cover a lot of ground with Dave, talking about why his approach might be confused with a certain type of market timing, the impacts of inflation, the current low interest rates and if these affect bond investments, an explanation of forward rates, and so much more that you will not want to miss. We even find time for a quick story about Dave's early days working with Eugene Fama, so make sure to stay tuned in for that.   Key Points From This Episode: Assessing the role of bonds in a portfolio, in relation to the current low interest rates. [0:02:30.3] Concerns over negative interest rates for bond investors. [0:05:30.1] Bonds and real returns; the impact of inflation on Canada's market. [0:09:30.7] Dave's perspective on the argument for long bonds as diversifying assets. [0:15:39.4] Comparing and contrasting the bond market with the stock market. [0:17:55.7] The trading of bonds and what differentiates it from trading stocks. [0:22:29.5] The volatility of last March and Dave's reflections on trading during that period. [0:27:17.8] Differentiating Dimensional's approach to bonds from the other big firms'. [0:29:21.7] The primary factors that influence expected returns in fixed income. [0:31:40.4] Understanding forward rates and the information they provide about expected returns. [0:37:26.7] Building better investing strategies using forwards rates. [0:40:43.5] Clarifying expected premiums for maturity in a variable maturity strategy. [0:44:06.7] Dave explains why market timing does not work with regard to fixed income. [0:46:30.4] Quantifying the differences in expected returns from the index and Dimensional. [0:51:01.7] A great argument from Dave for maintaining a diversified approach to all investments. [0:52:31.51] The connection between present observable credit spreads and future realized payments. [0:55:48.5] The game-changing development of Trace in the bond market. [0:59:40.2] Applying the Dimensional approach as a do-it-yourself investor. [1:05:57.7] A great story from Dave about his early days working with Eugene Fama. [1:10:25.2] How Dave defines success in his life and work these days. [1:11:30.1]

Aug 19

1 hr 12 min

Today our main topic expands on a recent episode in which we talked about what constitutes good financial advice, and here we look at how to go about finding the kind of advice that you want and need. It is one thing to know what it is, but that does mean it is straightforward to locate an advisor or firm that provides it. After our opening salvo of some media recommendations and a review of the fascinating book on different ideas on leadership, called The Starfish and the Spider, we dive into a listener question about where to geographically weight your investments and the idea of underweighting the US equity of your portfolio. This leads to a much bigger consideration of the research, which we try to breeze through, and in sum seems to lead us back to the idea of the non-predictability of markets. For our main subject, we share an extensive list of questions to ask yourself before even beginning any conversations with advisors, and using your answers to determine the kind of advisor you need. From there, we get into the questions you can ask the advisor and firms you approach in order to make sure you find the best fit for your needs. We talk about credentials, investment philosophies, firm policies, and everything in between, and we will be posting this full list on our community platform for your reference too. Stay tuned for today's Talking Sense card, and Bad Advice of the Week too, and make sure to tune in for the great guests we have lined up in the coming weeks.   Key Points From This Episode: The positions that we are currently looking to fill here at the podcast! [0:05:48.2] This week's book of the week: unpacking The Starfish and the Spider and its lessons on leadership. [0:09:53.1] Looking at an interesting blog post about the power of systems over goals. [0:12:57.8] A listener question dealing with underweighting US equity in comparison to emerging markets. [0:14:40.5] Plotting trend lines and the inconsistent relationship between forecasts and outcomes. [0:23:02.4] Adjusting the standard errors, when using overlapping data samples. [0:27:48.3] Bootstrapped simulations for defining predictability and market timing. [0:29:20.2] Good financial advice and how to make sure you find it. [0:32:02.8] The three channels through which you can access advice; commission-based, asset-based fee advice, and fee-only. [0:33:30.2] The conflict of interest that arises with us delivering our thoughts on this topic. [0:36:28.8] Credentials and qualifications to look out for in Canada and abroad. [0:38:20.3] Starting with what you want from an advisor and departing from clearly defined goals. [0:41:12.7] Questions to ask yourself before selecting an advisor about your assets, self-management, and more. [0:45:22.8] The conversations to have with your chosen type of advisor; services provided, compensation, and more. [0:48:55.2] Getting to grips with the investment philosophy of an advisor and their firm. [0:54:50.1] This week's Talking Sense segment: choosing between a lump sum or installments. [0:57:28.2] Bad advice of the week and the seven reasons to own individually-managed portfolios of stocks. [0:58:14.6]

Aug 12

1 hr 4 min

Today we are so happy to welcome the amazing Katy Milkman to the show. Katy is the author of the impressive and inspiring new book, How to Change: The Science of Getting from Where You Are to Where You Want to Be, and in this episode, we get the inside scoop from her about her work, with specific attention to how it can be applied to investment and finances. Emerging from an engineering background, Katy has a powerful and unique skillset to be tackling the social sciences, and we hear from her about how this path has impacted her thoughts on data quality and the areas she has chosen to research. Our guest shares some very interesting and sometimes surprising information on the idea of fresh starts, commitment devices, and ambitious goals, before we tackle the fascinating subjects of laziness and confidence in relation to our saving habits. Listeners can expect to come away with some renewed reasons for data-driven decisions as well as some new impetus to double down on healthy change. We cannot recommend Katy's book highly enough, so tune in to hear what she has to say and make sure to purchase this amazing read.   Key Points From This Episode: Unpacking the idea of a 'fresh start' and the ideal times for this. [00:02:26.2] Instances when fresh starts might be harmful instead of helpful. [00:07:28.1] Better methods for adhering to goals around saving money. [00:12:04.6] Commitment devices and how these can aid people in avoiding dipping into savings. [00:19:04.3] The value of ambitious goals and the impacts of different kinds of goal setting. [00:22:13.7] Using the power of a new identity in the process of goal setting around retirement savings. [00:26:00.8] Katy's suggestions for taking responsibility for independent saving. [00:29:58.7] Thoughts on laziness; utilizing this inherent tendency for our benefit. [00:31:43.6] Katy's perspective on habit-forming; habit loops, consistency, and triggering certain behaviours through rewards. [00:35:40.6] Decision-making and confidence; how much it matters and how to increase it. [00:42:11.4] More productive conversations around advice, assistance, and expertise. [00:46:31.2] The influence of community on our success; how determinant the people around us are. [00:49:38.6] Considering the permanence or perpetual struggle of behavioural change. [00:52:20.6] How accountability and the role of third parties can initiate meaningful change. [00:54:21.1] Katy's concerns over data quality and how this has impacted the areas of her research. [00:55:24.9] How Katy defines success in her life: leaving the world a better place and enjoyment. [00:56:49.8]

Aug 5

58 min 2 sec

Today we get the chance to take some very interesting listener questions and dig into fascinating findings on day trading in 2020. To kick things off we have a quick review of Simon Sinek's insightful new book, The Infinite Game before rounding up some of the news from the investing space. Then it's time to tackle a number of questions from a member of our thriving community and break down some helpful responses to queries about bonds, retirement, convexity, different types of ETFs, and more. We were lucky enough to draw on some great wisdom within our network of advisors to help us answer these complex questions, so you will not want to miss the specifics that we dive into. From there, we dive into the main course of today's show, exploring the topic of day trading in 2020. With the rise of mobile trading on apps like Robinhood, there has been a spike in what some may call casual or free trading. We unpack some of the surprising and not-so-surprising findings on the impact of Robinhood's model, looking at the community's trend towards herding and how the smartphone platforms are changing the way people invest. The main conclusion here may not be a big surprise to any of our listeners, with the higher frequency of transactions leading to worse returns in the long run. For all this, plus some Talking Sense questions cards, and a whole lot more, listen in with us.   Key Points From This Episode: This week's book review of The Infinite Game by Simon Sinek. [0:06:02.7] News from the world of investing: Vanguard's latest move into indexing, and more. [0:10:30.8] A series of listener questions dealing with bonds and retirement. [0:15:51.2] An argument for federal government bonds when prioritizing liquidity. [0:18:26.7] Understanding convexity and 'bullet' portfolios in this context. [0:20:36.7] Ten-year treasury ETFs versus all duration ETFs. [0:23:52.4] Weighing provincial bonds and their lack of liquidity against Canada's governmental bonds. [0:26:12.1] Looking into what the research shows us about day trading during last year. [0:29:01.6] Available data on Robinhood users and their general tendency to herd investments. [0:33:40.7] The losses incurred by the Robinhood community during herding. [0:38:29.0] Digging a little deeper on transaction costs and how this actually plays out at Robinhood. [0:44:20.1] Market efficiency as it relates to these new ways of 'free' trading. [0:48:29.6] Another round of Talking Sense cards; things to save and decision hindsight. [0:52:32.1] Bad advice of the week courtesy of Canada's big banks. [0:59:18.6]

Jul 29

1 hr 3 min

The work of Bill Schultheis has had a profound effect on us here at the Rational Reminder Podcast, and eventually having him join us on the show is truly an honour! Bill is the author of the Coffeehouse Investor series and is currently the Principal and Senior Advisor at Soundmark, in Kirkland, Washington. Throughout his career Bill has dedicated himself to helping his clients make the choices that best serve them and their particular needs, and his approach has continued to grow and improve over the decades he has been in the game. We have a wonderful conversation with Bill, charting his course from his early days on Wall Street, to writing his first book and starting Soundmark, to where is today. Bill gives us some great insider insight into the important concepts from his books and also talks about current issues in the financial world, like the impact of cryptocurrencies. Towards the end of our conversation, we get even more philosophical with our guest sharing some thoughts on what constitutes a 'rich life', and the importance of listening to your heart when it comes to your big decisions. So for this and much more from an inspiring and sensible voice, be sure to join us today!   Key Points From This Episode: Bill's upbringing on a farm in Washington with a large family. [0:04:16.2] The route that Bill took to publishing his first book as a way to share the wisdom of indexing. [0:06:40.7] The beginnings of Soundmark and the first clients that Bill started helping. [0:10:13.4] Bill's most recent book and the three ground rules it lays out for readers. [0:12:36.3] Unpacking the 'coffeehouse investor' model portfolio. [0:18:20.7] How Bill approaches and explains diversification to his clients. [0:21:54.7] Thoughts on presenting data and challenging strongly held views from clients. [0:23:14.1] The impact of cryptocurrencies and commission-free trading on indexing. [0:25:53.6] Comparing the commonly held investing approaches of now and the 1990s. [0:29:01.0] The approaches to wealth building that Bill recommends to younger people. [0:30:52.7] How a persistent attitude served Bill when looking for a publisher for his book. [0:33:07.4] The basic strengths and weaknesses of index funds. [0:34:56.3] Bill's idea of a 'rich life' and what this means to him. [0:39:55.2] How to 'dial in your power settings' with your financial planning and common mistakes to avoid. [0:41:19.2] Listening to your heart and finding the financial and professional life that feels right. [0:44:52.7] How dissatisfaction can lead to unhealthy spending habits! [0:48:37.5] Bill's thoughts on the FIRE concept; pros and cons of adopting the philosophy. [0:50:31.4] The impact that The Millionaire Next Door has had on Bill's life and work. [0:51:48.2] How Bill defines success and the value he places on kindness. [0:52:51.7]

Jul 22

54 min 58 sec

Welcome back to another episode of the Rational Reminder Podcast, where we give you the most considered and evidence-based information about investing in Canada. Our focus for this episode is the topic of tax loss harvesting, a subject we have touched on before but felt warranted a revisit, with some updates. To kick off the show, we review Playing to Win, looking at the illuminating perspective it offers with regards to strategy and preparation. From there we turn to some recent investing news on ETFs and Robinhood, before we get into the main course of today's show. There are plenty of pitches and arguments for why tax loss selling can be very rewarding, and while these are not necessarily false, there are certain ways in which the information can be misleading, or not comprehensive for all investors. We discuss how best to think about the supposed gains, noting the importance of high expected returns and the time frame in which a case study is made. We also think about some of the potentially negative results of letting tax drive your investment decisions, despite the seeming attractiveness of this route. One of the most important points here is the adjustment needed in order to apply these strategies to the Canadian market, as many of the pitches and research are based in the US system, which has significant differences when it comes to taxation. We highlight some red flags to look out for and give some more general warnings around rushing into investments that lean too heavily in this direction. So for all this and a bunch more great advice for your portfolio, join us for the show.   Key Points From This Episode: This week's book review of Playing to Win by Roger Martin and A G Lafley. [0:08:43.3] Continued increases for ETFs and comparing the statistics with recent history. [0:12:30.7] Some amazing statistics about Robinhood users and cryptocurrency investments! [0:15:18.5] A reintroduction to, and revisited analysis of, tax loss harvesting. [0:18:20.8] The best times to consider tax loss selling; waiting for high expected returns. [0:27:55.5] Recent findings on the tax alpha and modifying the arguments and assumptions. [0:33:20.5] Creating a new base case to work from with some helpful adjustments. [0:38:41.3] The importance of the time period when looking at historical returns for tax loss selling. [0:43:10.1] Cases in which we believe tax loss selling makes the most sense. [0:46:14.3] Looking at the tax implications of pooling funds with other investors. [0:49:02.7] Locating these tax loss strategies within a specifically Canadian context. [0:52:18.5] A couple Talking Sense cards dealing with leading and following, and protection. [0:55:25.5] Bad advice of the week; looking at pensions in the UK. [0:58:03.5]

Jul 15

1 hr 2 min

Today we welcome Rob Arnott to the show! Rob is the founder of Research Affiliates and is a prolific writer who has published hundreds of articles for many different journals. We know firsthand, the power of Rob's work, and how it can alter the way you think about investing, and this depth of knowledge, coupled with his ability to make complex topics understandable makes him a dream guest for us! Rob is the co-author of The Fundamental Index, and we get some insight into this subject along with many other groundbreaking areas he has worked on. We cannot stress enough the rarity of Rob's gift for getting difficult ideas across in a deliberate and approachable way, and this is apparent through this illuminating conversation. For us, it was quite surreal to speak to someone so influential, and listeners can expect to come away with a greater understanding of 'smart-beta', intangible assets, forecasting, and some insight into the interesting areas of earnings dilution and 'the big market delusion', before Rob shares some very surprising information on factor momentum at the end of our chat. So for this and a whole lot more, in a truly stand-out episode, be sure to listen in!   Key Points From This Episode: Rob's perspective on the drawbacks of cap-weighted indexing. [0:02:47.2] Getting to grips with 'smart-beta' and its links to RAFI. [0:06:21.6] Building a fundamental index and what the weights are based on. [0:11:17.4] Misconceptions of the value of backtesting when making investment decisions. [0:13:43.3] The prevalence of extreme factor-drawdowns for investments. [0:17:22.7] Weighing the importance of intangible assets and what to trust in this regard. [0:23:32.8] Value stocks in the current drawdown; value's relative cheapening over recent years. [0:25:53.8] Stories about the inner workings of a company and how this can vary in importance. [0:28:41.5] Unpacking 'the big market delusion' and the paper that Rob co-authored on the subject. [0:33:33.2] Rob's work on earnings dilution and how it relates to bubble-formation. [0:37:00.9] How the findings on earnings dilution impact strategies towards disruptive industries. [0:40:19.9] Forecasting the expected returns of a factor portfolio and utilizing Research Affiliates website! [0:44:03.0] The possibility of adding value through timing exposure to factors. [0:47:26.7] The truth about momentum in historical back-tests in the last few decades. [0:49:12.8] Rob explains the real costs of trading! [0:55:42.7] Momentum's primary existence in factors, ahead of individual stocks and sectors. [0:58:44.8] How Rob currently defines success in his life. [1:07:38.7]

Jul 8

1 hr 8 min

The looming issue of climate change has far-reaching implications, not least of which are relevant to the financial and investment world. Today we spend some time considering these impacts, with a focus on the question of whether climate risk is a priced investment. The short answer, conferred by the numerous academic explorations into the subject, is yes. This answer, however, still leaves investors with many options and contrasting possible approaches as to how to act. We get into some of the different avenues to explore when considering your best route, taking into account both ethical constraints and returns, as well as a long-term vision of sustainability. We also talk about why big companies with less of a focus on ethics may be tempted to go green for financial reasons, how investors might enact a moral stance by investing in fewer green companies, and many more surprising possibilities that arise out of the current findings. Rounding out all this serious discussion, we squeeze in an interesting book review from Hans Rosling, some Talking Sense questions, and of course, bad advice of the week, all of which you are not going to want to miss.   Key Points From This Episode: This week's book review, looking at Hans Rosling's Factfulness. [0:08:09.2] Recent financial and investment news; penalties, TFSAs, and a big shift from Wealthfront. [0:14:36.7] The question of climate change and markets connected to the use of fossil fuels. [0:19:04.5] Expected rate of returns in relation to the costs of capital, and the idea of climate hedging. [0:26:46.2] Looking at empirical evidence on the pricing of climate risk. [0:28:40.1] Recent scholarly findings on the subject of whether climate risk is priced. [0:31:50.3] Summing up the academic arguments for why and how pricing of climate risks operates. [0:38:35.7] The cost of capital incentives for companies to reduce their exposure to climate risk. [0:40:19.3] Participating in the transition of companies to greener and more sustainable practices by investing in them. [0:45:12.9] Financial needs for different age groups, at the beginning and the end of a lifetime. [0:48:17.6] Personal savings goals versus generosity towards loved ones. [0:51:47.2] This week's Bad Advice of the Week: making inflation trades in cryptocurrencies and gold. [0:53:27.1]

Jul 1

58 min 44 sec

One of the major topics we hope to help our listeners with is retirement planning, and today we have a really informative and illuminating conversation with a true expert in the field, Don Ezra. His approach is typified by his focus on retirement and happiness, and their important intersection, subjects he has broached in his many published books, notably Life Two, and Happiness. Don is a self-professed financial nerd, so you know that he will fit right in on this podcast! His advice is relatable and easy to understand, a result of working on his own retirement along the way. Don is an actuary by trade and helped establish Russell Investments Canada in 1984, through which he worked on many huge pension funds across the world, endowing him with amazing expertise in the space. In our conversation, Don gives us such a wide-ranging view of his approach, and the amazing conglomeration of ideas he has amassed on the subject of better retirement, or as he likes to call it, graduation from full-time employment! He breaks things down in easy and catchy ways, giving us some fundamental questions that can help initially guide the retiree, around purpose, action, and money. From there he talks about the seven asset classes of your life's abundance portfolio, needs versus wants, and even finds a spot to comment on the strengths and weakness of the FIRE philosophy. So for all this and much more, join us on the Rational Reminder today!    Key Points From This Episode: Don's feelings around the time of his retirement from such a successful career! [0:02:10.4] The common feeling of discombobulation around retirement and Don's thoughts on addressing it. [0:03:41.2] Questions people should be asking and answering as they approach retirement. [0:06:45.8] Safety, growth, longevity; the three things we need for our finances in retirement. [0:08:49.7] Don explains the sequence of returns and some misconceptions about averages. [0:10:21.1] Weighing the uncertainty of life expectancy against that of random stock returns. [0:12:24.8] Better ways to calculate life expectancy for individuals and couples. [0:15:15.7] Don's advice to the average person looking to build a diversified portfolio for retirement. [0:16:54.1] How Don has approached his own portfolio and generating retirement income. [0:21:10.8] The importance of flexibility and adjusting a retirement budget over time. [0:23:48.7] When retirees should be seriously considering annuities. [0:25:52.1] The dimension that inflation adds to these questions for people in retirement. [0:27:49.4] Assumptions that Don uses for his life expectancy planning. [0:34:06.1] Calculating what is needed against what you have; Don explains the personal funded ratio! [0:36:33.7] Lessons that Don learned during his work with huge pension funds before retirement.[0:38:35.4] The question of filling one's time in retirement; staying busy and maintaining purpose. [0:41:29.5] Don breaks down the seven asset classes of your life's abundance portfolio. [0:45:22.1] A look at the different parts of the FIRE movement and its success and failures. [0:48:38.5] A few approaches to challenge below-average advice from any expert. [0:50:42.1] Fostering healthy ambitions and dreams for the years of your retirement. [0:55:24.5] Better conversations with family around money, inheritance, and financial planning. [0:57:21.2] The emotional legacy that Don views as the success of his life! [1:01:16.8]

Jun 24

1 hr 3 min

Welcome back to another episode of the sensible money show. The focus this week is the age-old question of housing; whether to buy or to rent. After our preliminary remarks, book review, and a new TV recommendation, we get down to brass tacks on the important things to look at when assessing your living situation. There are some commonly held views on the expenses and sacrifices associated with real estate, and we do our best to share some of the facts as they stand. We get into some meaningful ways to truly compare the costs of each option, looking at the financial aspects, risk, quality of life, and related psychological elements to the debate. The truth is that there will be costs associated with each, but that they may not always lie where you think they do! For instance, it is commonly believed that it is less risky to own than to rent, however, the evidence suggests otherwise. Similarly, many of us assume that the costs of owning a property are greatly diminished once it is paid off, again, this is not necessarily true. Our main argument here is to base your choices on factors more closely related to your physical and mental health, things like stress and relaxation due to noise and travel times.    Key Points From This Episode: This week's highly recommended book, Noise. [0:05:37.3] Unpacking the new article by Larry Swedroe titled 'The Misguided Faith in the Fiduciary Standard' [0:11:50.7] A few thoughts on FIRE, positive psychology, and moral judgments. [0:16:49.2] The big decision that so many of us are faced with: buy or rent? [0:20:41.7] Flawed logic around mortgage payments and rental costs. [0:25:55.5] Opportunity and maintenance costs and the truth about depreciation. [0:29:51.7] Equating the total costs of renting and owning and making a judgment based on this. [0:36:53.8] The ratio of prices to rent in Canada currently and in the last few decades. [0:39:47.9] Risk and homeownership; why renting is less risky in many ways. [0:40:50.8] Keeping the focus on living a good life when making real estate decisions. [0:45:15.7] The surprising relationship between owning a property and a sense of control. [0:49:16.8] Weighing all the factors and making an informed decision based on wellbeing. [0:55:30.4] This week's Talking Sense segment dealing saving, speed of decision-making. [0:56:08.8] Bad advice of the week: Fidelity's investment initiative aimed at teenagers. [1:00:34.4]  

Jun 17

1 hr 3 min

Today we speak to Professor Johanna Peetz about how the errors people make about predicting their futures affect financial planning and relationships. Professor Peetz is an Associate Professor of Psychology at Carleton University and her three main research interests are time perception, personal spending, and close relationships. We kick the conversation off on the topic of biased spending estimates, the idea that people are bad at budgeting, and Professor Peetz gets into the main causes and implications of this issue. Our guest gives pointers for how to make less biased predictions for spending and makes a great point about how people with more aggressive saving goals often don’t spend less. We move onto the subject of long-term financial planning and motivation, and Professor Peetz weighs in on a few methods to get better at breaking down big goals into steps as a way of keeping motivation up. Another big discussion from today is how this idea of behaviour predictions fits into the context of healthy relationships. We talk about the connection between partner-satisfying decisions and happiness, and how partners should view each other's ability to keep promises. So for all this and more on how to get better at knowing your personality traits and the effects this can have on finances and relationships, tune in today.   Key Points From This Episode: Introducing Professor Johanna Peetz and her research on predictive errors. [0:00:48.2] If people are good at predicting how much money they're going to spend in the future. [0:03:05.2] The causes and implications of these biased spending estimates. [0:04:33.5] What people can do keep their spending in line with their goals. [0:06:53.5] The financial literacy gap between men and women. [0:13:37.5] Increasing motivation to reach long-term financial goals based on a future self. [0:17:05.7] Setting goals using intrinsic over extrinsic reasons. [0:21:40.5] How financial planners can help their clients find and reach their goals. [0:23:56.5] The relationship between pro-social behaviour and happiness. [0:24:51.5] How good people are at predicting relationship-enhancing behaviour. [0:28:27.0] Dealing with money-related relationship conflict amongst being bad at predicting behaviour and spending. [0:32:39.0] How unpacking expenses can help people make less biased spending predictions. [0:34:26.0] Different ways of responding to boredom in a relationship. [0:39:34.0] Taking the perspective of the other person to improve the forecast of relationship-enhancing behaviours. [0:43:10.0] What Professor Peetz is working on now that makes her most excited. [0:46:05.0] How knowing your personality traits can help you make better financial decisions. [0:48:20.0] Our guest’s definition of success. [0:49:09.0]

Jun 10

50 min 15 sec

Welcome back to your favourite Canadian podcast about sensible investing! Today we are focusing on evaluating equity strategies and wondering aloud whether you should be chasing these anomalies, thinking about the costs and turnover, and how these products are being implemented. These are just some of the important questions that can be asked on this subject, and we do our best to cover the most vital points in this episode. We start things off with our customary book review segment, taking a look at Katy Milkman's fascinating new title How to Change and the thesis it lays out on the continuum from now into the future. We then turn to a few interesting and pertinent news stories dealing with the CPP and clarifying the role of fund managers! After the preamble, we get into the main course of today's show and talk about some of the most prominent literature on the subject of equity strategies before laying out some criteria for useful data in this discussion. Our main point can be simplified as such: in the event of selecting systemic equity strategies with hopes of beating the market, there are many additional tradeoffs and costs that should be considered, many more than we even have time here to go through! To close out the show we take on a few questions for our Talking Sense segment and share some somewhat relieving news for our bad advice of the week!   Key Points From This Episode:   A retraction and re-review of the last episode's book of the week, Effortless! [0:04:26.4] This week's book review of the exciting new title from Katy Milkman, How to Change. [0:06:35.6] A round-up of recent news stories from the WSJ, The Globe and Mail. [0:10:32.2] The surprising results of the Canadian year-end SPIVA scorecard. [0:14:55.8] Investment topic of the week: evaluating equity strategies and the inspiration behind it. [0:17:24.5] The identification of systematic factors; Fama and French's original findings and newer research. [0:21:15.9] Conditions for useful data: persistent over time and pervasive across markets, strong economic rationale, and non-reliance on rising valuations. [0:23:44.3] The two forms of implementation costs that the data needs to survive: implicit and explicit. [0:32:40.1] The importance and impact of taking transaction costs into account for your portfolio. [0:35:53.0] The rough estimations that Ben put together in 2019 for a fund premium regression. [0:38:54.6] The 'what if I am wrong' check; the usefulness of maintaining a healthy level of skepticism. [0:42:22.5] Summarizing today's argument about additional costs and tradeoffs when selecting equity strategies. [0:46:01.7] Talking Sense segment; thoughts on money's purpose, and goals and sacrifices. [0:46:39.1] This week's bad advice! The amazing claims of TFSA maximizer schemes. [0:52:21.0]

Jun 3

59 min 42 sec

There is an overarching investment philosophy that permeates most of what we do here at the Rational Reminder Podcast, and while some guests' positions might differ at times, it is rare that we have someone on the show whose approach is as strongly contrasted with ours, as Professor Brad Cornell. Professor Cornell's arguments are so well-founded and researched that they require a re-examination of positions that we feel have been a given for us for a long time. He is the author of about 150 referenced articles, four books, and has conducted hugely interesting work on the current state of value investing. His research with Aswath Damodaran, and insights into Tesla's valuation provide great food for thought, and we get into all of this on today's show! Our conversation also covers ways to go about picking a fund manager and a slightly different lens through which to view past performance. We feel truly grateful to have such a different, yet valid, perspective expressed so well here, and cannot wait to share this highly useful information with all of our listeners. Tune in to hear it all from Professor Brad Cornell!   Key Points From This Episode: The difference between a stock characteristic and a stock risk factor loading. [0:03:30.2] Some of the challenges in using characteristics to develop an investment strategy. [0:05:43.8] The problem of non-stationary frameworks as a starting point for investing. [0:07:33.4] How little we know about the cross-section of expected stock returns. [0:08:32.1] Concentrated, characteristic-focused portfolios versus something more diversified. [0:11:12.7] Unpacking the 'big market delusion' and the huge power of the narrative. [0:12:11.4] Looking at the example of the electric car market and what it teaches us. [0:16:18.4] Professor Cornell's thoughts on how to pick a fund manager. [0:21:23.0] Assessing the issues with mean reverting performance. [00:25:58] The most relevant ratio: price to a value estimat [00:30:35.2] Some thoughts from Professor Cornell on the rise in ESG investment. [00:32:22.5] Approaches to the expected equity risk premium for investors and planners. [00:39:45.0] Bringing in historical context to the conversation about predictability. [0:45:16.1] Professor Cornell's approach to calming down investors' reactivity to volatility. [0:47:56.5] A great definition of success from Professor Cornell! [00:49:57.2]

May 27

50 min 59 sec

Is it possible to hedge your investments against different levels of inflation? This is the question we ask in today's episode, as we run through a variety of different investment approaches and commodities. While the answer may not come as a huge surprise, it is definitely worth the walk-through and getting to grips with what the literature can tell us in each scenario. After rounding up some news and a few reviews relevant to our usual subject matter, we dive straight into this topic, tackling the performance of stocks and bonds, gold, international stocks, value stocks, and more! We also share some general thoughts and questions to ask during periods where inflation is high, before positing our view that there is no single successful hedge against inflation, but rather our usual position of an adjusted and diversified portfolio will serve you as well in this regard as in others. We finish off this episode with a few of our usual quick cards, and this week's disturbing bad advice! So tune in to hear all about what you should know about expected and unexpected inflation and a whole lot more!   Key Points From This Episode:   The exciting recent decisions around succession that were made at PWL! [0:00:22.4] Ben's review of Greg McKeown's new book Effortless and Netflix's Money, Explained. [0:04:51.7] A quick round up of some big money news from around the country. [0:08:25.2] Reflecting on the recent performance of Wealthsimple portfolios. [0:13:26.6] 'The ultimate inflation hedge'; looking at returns under different conditions through the years. [0:19:50.1] Looking at the performance of stocks and bonds during high inflationary periods. [0:25:04.6] What to do and what to ask in situations with higher-than-expected inflation. [0:32:21.0] Weighing the value of gold as an inflation hedge; 'The Golden Dilemma' and 'The Golden Constant'. [0:39:50.3] The performance of international stocks during a period of high inflation. [0:44:05.8] What the research shows about value stocks and and their relation to inflationary periods. [0:45:55.2] The answer to the question: no perfect hedges against inflation! [0:52:04.7] Today's cards; saving versus spending, and tools versus treasures. [0:55:20.3] Bad advice of the week courtesy of the Investment Executive! [0:56:56.0]

May 20

59 min 47 sec

Today’s guest is Professor Robert Novy-Marx, the Lori and Alan Zekelman Distinguished Professor of Business Administration at Simon Business School of the University of Rochester. Professor Novy-Marx is best known for his articulation of the profitability factor and has also done a ton of great work on momentum and low volatility. We kick our conversation off with Professor Novy-Marx’s thoughts on how profitability should inform portfolios. From there we hear why Professor Novy-Marx has a problem with evaluating the performance of a multi-signal strategy the same way that we would a single-signal strategy. He then talks about the trade-off between concentrated versus diversified factor exposure for capturing premiums. Next, we discuss why there is no good empirical evidence that we can time premiums. Professor Novy-Marx makes a great argument for why the regressions people use to say that the value spread works to predict the value premium can't be taken seriously. Our conversation moves to focus on how our guest defines price momentum and what drives it, and the nuances of investing in momentum. We then hear his perspectives on the low volatility anomaly and how profitability helps to explain it. After that, we talk about whether investing in a low-vol fund is a way of accessing value and profitability, and why the five-factor model is a trustworthy factor model for regular investors. In the last part of our conversation, we talk to Professor Novy-Marx about his approach to critiquing other methods before ending off with his definition of success. Tune in for this excellent evergreen conversation.   Key Points From This Episode:   We introduce today’s guest, Professor Robert Novy-Marx, and his work. [0:00:17] The significance of the relationship between profitability and stock returns for asset pricing. [0:02:45] How the risk-based story around profitability is completely counterintuitive. [0:08:51] The best way to go about using profitability in portfolios. [0:12:34] When to target premiums individually and then combine them after the fact. [0:14:48] How profitability is different from quality. [0:16:26] Risks of building strategies that draw insight from different signals to identify a premium. [0:18:10] The trade-off between concentrated versus diversified factor exposure for capturing premiums. [0:23:33] Whether the recent decade’s run of underperformance impacts Professor Novy-Marx’s view of the value premium. [0:25:10] The vagueness of the equity premium and if it is possible to time premiums. [0:27:58] How Professor Novy-Marx defines momentum and what drives it. [0:32:32] Whether investors should be using momentum in portfolios. [0:38:47] Professor Novy-Marx’s perspectives on the low volatility anomaly. [0:44:19] Whether investing in a low-vol fund is a way of accessing value and profitability. [0:32:32] Why regular investors need factor models and how to choose one. [0:51:58] Whether it is reasonable to pursue factor premiums in a smaller market like Canada. [0:57:45] Professor Novy-Marx weighs in on writing papers that critique other methods. [0:58:44] Why Professor Novy-Marx consults for Dimensional Fund Advisors. [1:01:15] Insights Professor Novy-Marx has carried over from his years as a professional triathlete. [1:01:15] How Professor Novy-Marx defines success. [1:01:15]

May 13

1 hr 5 min

Today we dive deep into the connection between happiness and money, looking at a host of theories and studies that have examined the important factors in this discussion. The main material referenced is the fascinating, The Happiness Hypothesis by Jonathan Haidt, and during the episode, we get to look at a great selection of the findings and claims in the book. To kick things off, we consider the broad ideas around how money can stimulate happiness, as well as its addictive aspects, before examining a few of the most prominent lenses used for measuring different kinds of happiness. Talking about the ideas of Hedonia and Eudaimonia, the influence of forecasting and the future, and the effects of different kinds of spending, we see the common threads as well as the distinctions between these models of measurement. Ultimately all of this material should hopefully enable us to live out a better life with this information in mind, and we spend some time reflecting on some of the key takeaways that seem to come to the surface in the happiness debate. To finish off, we field some listener questions on avoiding spending, and returns on investment, before diving into this week's bad advice featuring a video starring Warren Buffett, Charlie Munger, and Mark Cuban!   Key Points From This Episode: A great book recommendation for getting to grips with branding and building relationships with consumers. [0:03:52.2] The interesting statement released by IIROC regarding conflicts of interest. [0:07:14.7] Barry Ritholtz's interview with Jack Brennan and their perspectives on index funds. [0:10:44.1] Books and studies on the subjects of happiness, finances, and addiction. [0:12:21.4] Different theories for the largest determining factors for happiness. [0:20:21.3] Hedonia and Eudaimonia; two different types of pleasure and their measurement. [0:24:47.6] Experienced happiness and experienced unhappiness; statistics from around the world. [0:32:04.1] Spending and happiness and the debate around the human ability to accurately forecast. [0:40:21.7] Designing a happy life based on all the research in the field. [0:44:48.8] Inverting the goal-setting process and working backward from what you don't want! [0:47:33.9] Love and work as the two most crucial ingredients for human happiness. [0:49:47.3] Avoiding the temptation of spending when aiming to save money. [0:51:15.6] Examples of investments that have paid off for Cameron and Benjamin. [0:52:31.1] Bad advice of the week; Buffett, Cuban, and Munger on diversification. [0:54:03.7]

May 6

1 hr 2 min

It takes only a handful of smart choices to convert regular savings into a secure future. Today we welcome famed financial educator Paul Merriman onto the show to discuss how the right habits and investing approach can add millions to your retirement nest egg. After chatting about his personal and professional background, we dive into Paul’s investing philosophy and how it’s been influenced by the work of Eugene Fama. A significant theme in this episode, we then talk about why Vanguard’s portfolio allocation ensures that clients have the smoothest possible emotional relationship with their investments. This leads to a discussion on the benefits of simple versus complex funds and how simple funds fit with the preferences of many do-it-yourself investors. Linked to this, Paul explains why it’s emotion and not strategy that gets in the way of successful investing before exploring the challenges of sticking to portfolios that are heavily weighted in small-cap value stocks. Reflecting on his career as an advisor, we ask Paul about his difficulties in working with clients as well as the role of financial advisors. Later, Paul unpacks some of the top habits and beliefs that lead to investing success; a key focus of his new book, We’re Talking Millions. We wrap up our conversation by touching on target date glide paths, how Paul’s foundation educates investors, and the relationship between money and a life well-lived. With such an illustrious career in financial education, tune in to benefit from Paul’s investing advice.   Key Points From This Episode: We introduce today’s episode with financial educator Paul Merriman. [0:00:17] Paul shares details about his personal and professional history. [0:03:16] How Eugene Fama’s work impacted the way that Paul built his firm. [0:06:55] What PWL Advisors went through to access Dimensional’s products. [0:08:21] Insights into the fateful chat that Paul had with Jack Bogle in 2017. [0:09:08] How Paul helps his clients balance fee frugality with expected returns. [0:13:29] Exploring the trade-offs between simple and complex funds. [0:16:49] Paul compares his former buy-and-hold strategy with his simpler new approach. [0:19:06] The costs of do-it-yourself investors having an overly-complicated portfolio. [0:22:46] The rationale underpinning the small-cap value strategy. [0:27:20] Why it’s so difficult to only invest in small-cap value stocks. [0:25:36] What Paul would say to clients who want to ditch their small-cap value stocks. [0:37:32] Paul reflects on challenges when communicating with investors. [0:40:39] We ask Paul about the value of financial advice and financial advisors. [0:46:32] Discover the habits that every investor should follow. [0:51:29] What Paul is trying to achieve with the Merriman Education Foundation. [0:58:21] Pros and cons to target date glide path funds. [01:02:00] We chat about Paul's radio show from the previous decade. [0:50:35] Hear Paul’s top lessons on the relationship between money and a life well-lived. [01:08:51] How Paul defines success. [01:16:29]

Apr 29

1 hr 19 min

As many of you already know, we have been working hard to figure out the best way to model expected stock returns for financial planning and asset allocation. It has a lot of history in financial literature, which is to be expected, given the importance of the figure. In today’s episode, we’re looking all the way back to 1985, when Rajnish Mehra and Edward C.Prescott called the equity premium a puzzle, through to the present day, when the equity risk premium has only gotten larger. We dive into some of the theories for resolving the equity premium puzzle, explain why US stock market data isn’t the best way to estimate future premiums, thanks to its survivorship bias, and some of the general issues with interpreting past returns. Benjamin also gets into predictability, which is not as obvious as it seems, and highlights some of the information from the simulation he performed, and the big breakthroughs from running the numbers. All this and more in today’s episode on expected stock returns, so make sure to tune in today!   Key Points From This Episode: Kicking off with the fallout from the collapse of Archegos Capital, the death of Bernie Madoff, and the story of the $100 million New Jersey deli. [0:06:35] Reflecting on the recent article, ‘Could Index Funds be ‘Worse Than Marxism’?’. [0:11:05] On to today’s topic: do expected stock returns wear a cape? [0:13:05] Theories for resolving the equity premium puzzle; either the model is wrong or the historical premium was higher than it will be in the future. [0:14:14] Hear John H. Cochrane’s theory from his 1997 paper, ‘Where is the Market Going?’ [0:14:42] Why we can’t use historic US stock market data to approximate future premiums. [0:14:57] Other issues with looking to past returns, like no proof that the equity premium was stationary. [0:15:23] Why time periods characterized by decreasing risk should effectively see decreased discount rates too. [0:16:04] Dimson, Marsh, and Staunton (DMS) on expected stock returns using out of sample data. [0:16:40] Hear some of the equity risk premium stats from their world index versus the US. [0:19:38] How annual returns have been relatively unaffected by global financial crises. [0:21:15] From looking back, to what to expect going forward: the issues with interpreting past returns. [0:22:10] Why, according to DMS, expected returns equal the growth rate in dividends plus the dividend yield. [0:25:26] Hear the actual figures, which reflect the minor contribution of multiple expansion. [0:26:49] What a company is worth if it doesn’t distribute capital to shareholders. [0:29:03] Find out why the expected geometric equity risk premium works out to 3.5 percent. [0:30:13] While the DMS approach is reasonable, it still doesn’t account for whether expected returns are constant through time or if they vary. [0:32:21] Predictable stock returns dictate that changing risk aversion over time measurably affects risk premiums after good and bad events. [0:34:45] Diving into the vast literature on return predictability, including a paper by Goyal and Welch. [0:35:12] Why predictability is not as obvious as it seems, thanks to our sample data. [0:36:15] What we can learn from ‘Long Horizon Predictability’ by Boudoukh, Israel, and Richardson. [0:39:30] R-squared and market timing decisions; why it would need to be higher than it was historically. [0:40:32] Hear about the world index analysis Benjamin performed and what it proves about risk premiums over 30 and 60 year periods. [0:42:31] Bootstrap simulations and why they are criticized; because they ignore mean relationship, you get a much wider distribution of outcomes. [0:44:50] Big breakthroughs from running through these numbers, like noting the upward bias and tighter distribution in long-run historical data. [0:50:34] How to apply this on your own, using the 3.5 percent risk premium in the long run. [0:52:23] Some of the other interesting things we noted during these simulations. [0:53:10] We pull two cards: choosing between a holiday and a pet, and borrowing money with interest. [0:53:56] Bad advice of the week: a free lunch-esque article on investing in private credit. [0:55:53]

Apr 22

59 min 39 sec

From YouTube channels to get-rich playbooks, whole industries are devoted to the subject of building wealth. But few books present a clear and honest view of what it’s like to have a lot of money. Today we welcome author Jennifer Risher onto the show to share her insights on living with wealth. Early in the episode, we explore how Jennifer and her husband ‘hit the lottery twice’ by being given stock options for both Microsoft and Amazon before they went public. Jennifer then shares details about the key premise of her book: people with wealth never talk about their money. Informed by her experience of having sudden wealth, we discuss why gaining wealth doesn’t significantly change people despite it leading to feelings of isolation. After talking about how wealthy people rarely feel that they have enough, we unpack the many benefits that come from talking about your wealth. As Jennifer explains, using examples from her life, communicating your feelings about money is a solution to many relationship issues that arise from having wealth. Linked to this, we dive into how you can raise balanced children whose outlooks aren’t spoiled by affluence. Later, we touch on the role of giving, Jennifer's top advice for newly wealthy people, and how Jennifer views work now that it’s optional for her. We wrap up our conversation by hearing about how the wealthy make a positive impact on society. In this episode, we dispel many myths about being rich. Tune in for more on why we need to be talking about wealth.   Key Points From This Episode: Details about author Jennifer Risher, today’s guest. [0:00:17] Jennifer shares why she wrote her book and the problems that it addresses. [0:02:43] Exploring the question: how much does wealth change you? [0:06:55] What wealth has given to Jennifer and what it hasn’t. [0:09:10] Jennifer describes the feelings that came with suddenly becoming wealthy. [0:10:14] The process informing Jennifer’s decision that she had ‘enough.’ [0:13:41] Hear Jennifer’s advice for couples who have different definitions of ‘enough.’ [0:16:49] How few wealthy people don’t feel that they have sufficient wealth. [0:19:03] The important role that financial advisors play aligning wealth with people’s values. [0:20:13] How Jennifer’s book is opening up the conversation on wealth. [0:23:09] Challenges around raising children in a state of affluence. [0:25:36] Why modelling virtuous behaviour is key in raising balanced children. [0:28:40] What Jennifer learned from speaking to other wealthy couples. [0:30:23] How having wealth can impact your relationships. [0:34:06] Overcoming the taboo of talking about money. [0:38:52] Ways to view work when working is optional for you. [0:42:28] Jennifer unpacks her biggest lessons on giving. [0:44:00] Jennifer shares her advice for newly wealthy people. [0:50:35] What the wealthy can do to improve society. [0:51:59] Hear how Jennifer defines success for herself. [0:53:34]

Apr 15

54 min 57 sec

Today’s episode doesn’t have an external guest, but Benjamin and Cameron provide fascinating information on a vast range of topics. First, the discussion centers around the book that Cameron is currently reading and what it is teaching him about social networks, the ego-driven world of social media, and the benefits of anonymity online. The hosts share some of the findings from a very insightful discussion which took place on their anonymous community board platform around people’s thoughts on the positive and negative impacts of work. Happiness and the factors that cause it are a big theme in today’s show, as is the practice of ‘buying the dip.’ If you aren’t familiar with this term, you should have a decent understanding of what it is and why you shouldn’t do it by the time you finish listening. The hosts also discuss the incident that has been called “the largest financial meltdown since 2008,” who the RR Model Portfolios are aimed at, and some of the ways people react to crises (in terms of their investments.) Tune in for a whirlwind education on some very important topics!   Key Points From This Episode: Benjamin and Cameron share statistics which show how the podcast is growing. [0:02:53] How the hosts find the guests that they interview on the podcast. [0:03:10] Staggering one year stock performance numbers. [0:04:22] Why Cameron is reading The Hidden Psychology of Social Networks, and what he is learning from it. [0:06:56] Community boards and the arguments for and against anonymous online communities. [0:08:02] The “epic meltdown” which makes up the news story for today’s episode. [0:10:17] Where the value of the Rational Reminder Model Portfolios lies, who will benefit from them, and who probably won’t. [0:13:53] Tools which make implementation easy. [0:21:00] Data on individuals participating in 401(k) plans and a discussion around how humans deal with crises. [0:22:12] The conversation around connection, control, competence, context that was sparked by the question of whether the goal of retiring is a good one to have. [0:26:43] Jonathan Haidt’s Happiness Hypothesis; the importance of love and work. [0:29:34] People don’t tend to prioritize time over money to a point where it is detrimental. [0:32:53] What it means to ‘Buy the Dip,’ the reasons that people do it and the problems with engaging in this practice. [0:33:15] The paper that Benjamin has produced on ‘buying the dip’ which will be out by the time you listen to this episode. [0:40:34] Why the ‘buying the dip’ strategy has been particularly costly for Americans, and the contrast between the cases Benjamin looked at in the USA, Australia, Canada and Japan. [0:45:45] What people don’t realize about leverage and how this impacts their decision to ‘buy the dip.’ [0:52:00] The cards created by the University of Chicago Financial Education Initiative. [0:53:53] Cameron asks Benjamin a question from one of the cards; coincidentally it is about happiness. [0:55:00] The qualities that Cameron and Benjamin believe are most important in someone who is starting a business. [0:57:05]

Apr 8

59 min 52 sec

Technology has made our lives easier but it has also fragmented our leisure time, creating a near-universal feeling that we have too much to do and not enough time to do it. Today we speak with Harvard Business School Assistant Professor Ashley Whillans about how our views of money and experience of time poverty impact our sense of well-being. We open our conversation by exploring the idea of time poverty, with Ashley unpacking the many factors that contribute towards feeling time-poor. Diving into the specifics, we talk about how different income groups experience time poverty and how these feelings are influenced by job satisfaction. After looking into differences in how we value time and money, Ashley shares research into how lower-income women benefit as much from being given extra time as they do from being given money. We then discuss the predictors of whether someone will prioritize time or money before chatting about the best practices and tips that will save you time and boost your well-being. Later, we hear Ashley’s insights into why wealth doesn’t lead to happiness and the need to engage in meaningful activities that increase the value of your time. With such radical changes in our work environments, we reflect on how work-from-home often deepens our feelings of time poverty. We wrap our discussion with Ashley by touching on retiring early versus working for longer, why you don’t need wealth to feel consistent happiness, and how you can incorporate time poverty into your financial planning. As Ashley’s research shows, money can be as integral as time in living a happier, more fulfilling life. Tune in to hear more about the connection between time poverty and your well-being. Key Points From This Episode: Introducing today’s guest, Assistant Professor Ashley Whillans. [0:00:02] Ashley unpacks the concept of time poverty. [0:02:24] Exploring the relationship between time poverty and well-being. [0:03:17] Whether financially wealthy people feel less time-poor. [0:06:58] How job satisfaction impacts dissatisfaction and feelings of being time-poor. [0:10:00] The data underpinning why people are so bad at valuing their time. [0:10:59] Why, for lower-income earners, it can be valuable to trade money for time. [0:13:37] What predisposes people to feel more time-poor than others. [0:16:12] The causal link between preferences for money, time, and well-being. [0:21:51] Hear how Ashley designs her studies to get truthful answers. [0:23:22] How you can think of time while boosting your well-being. [0:26:20] Ashley shares her best practices for maximizing your time. [0:28:22] How our mindsets can influence our sense of time poverty. [0:31:08] Time-focussed versus money-focused and why money doesn’t lead to happiness. [0:33:14] Tips in making small changes that increase the value of your time. [0:37:08] How work-from-home has affected our time-poverty. [0:38:28] We hear Ashley’s views on the value of working longer to have a more secure retirement. [0:40:49] Why you don’t need to be wealthy to experience consistent happiness. [0:44:17] Incorporating time poverty into your financial planning. [0:46:06] How Ashley first became interested in time poverty and happiness. [0:47:46] Ashley shares how she defines success in her life. [0:49:47]

Apr 1

50 min 55 sec

While there is no way of knowing what the best portfolio is, empirical data and financial economics have fixed the problems surrounding investing. But if we’ve fixed investing, then what’s the point of financial advisors? Today we dive into this topic and reveal why financial advice is still valuable to the everyday investor. We open the episode by touching on our movies and books for the week, as well as the latest from the financial world. We then explore why, despite their failure at making predictions, experts are so important across many industries. After defining what financial advice is, co-host Benjamin Felix systematically unpacks the value that financial advisors provide as they relate to key areas including goal-setting and quantification; asset allocation; understanding your human capital and insurance needs; selecting the right financial products; and tailoring strategies to tax considerations. Later, Benjamin highlights how financial advisors can help investors overcome their biases while helping them align their investing goals with living a meaningful life. We close the episode with our Talking Sense segment, followed by the bad financial advice of the week. When so much data is available, it’s necessary to revisit the relevancy of financial advisors. Join us to hear why they continue to play such a valuable role in helping people meet their investing goals.   Key Points From This Episode: Cameron shares the birthday message he received from Seinfeld’s ‘Soup Nazi.’ [0:00:35] We discuss community feedback and the documentary The Last Blockbuster. [0:02:53] Details on financial educator Paul Merrimen, our next guest. [0:06:10] Updates on podcast merchandise and shipping times. [0:07:32] Elon Musk and Mark Carney; hear about our books of the week. [0:09:00] We talk about the latest from the financial world. [0:10:14] Introducing today’s planning topic: What is financial advice? [0:18:40] The role of financial planners when index fund investing is so easily available. [0:19:45] Exploring what financial advice is and what it isn’t. [0:23:37] We unpack the link between goal-formation and quantification and sound financial advice. [0:24:35] The challenge of trying to predict what will make us happy in the future. [0:27:07] Happiness, life satisfaction, and goal-setting as it relates to financial advice. [0:29:00] Pricing your goal and avoiding the hedonic trap of never ‘having enough.’ [0:32:00] Asset allocation as key to the value of financial advice. [0:34:02] Quantifying human capital and your insurance needs. [0:37:00] Why knowledge of financial products is the basis of financial advice. [0:37:50] How taxes impact investing strategies. [0:39:05] Why managing wealth and getting financial advice is an iterative process. [0:40:02] How financial advisors help you eliminate biases that affect decision-making. [0:40:40] The many reasons that people seek expert advice. [0:43:28] We summarise the arguments for the value of financial advisors. [0:47:00] Advice on determining a financial advisor’s level of expertise. [0:48:34] Hear our answers to the profound questions posed in our ‘Talking Sense’ section. [0:51:02] Courtesy of TikTok, we share our bad financial advice of the week. [0:53:30]

Mar 25

59 min 12 sec

How do your perceptions of time influence your long-term decision-making and financial well-being? Today we speak with psychologist and UCLA Associate Professor Hal Hershfield to answer this abstract question. We open our conversation with Hal by exploring the concept of well-being. After chatting about the factors that impact financial well-being, Hal unpacks the balancing act that’s required to live in the present while safeguarding your wealth to support your future self. Hal shares exercises that can help you develop a more vivid sense of your future self and we discuss how this can lead to better financial decisions. We then dive into the role that free time plays in determining your well-being, leading into a discussion on how financial advisors can steer their clients towards achieving their idea of well-being. Returning to the notion of your future self, Hal shares insight into the importance of self-compassion, dealing with life and preference changes, and how hitting age milestones lead to periods of personal reflection and financial reevaluation. Later, Hal gives listeners his take on annuities and how retirees perceive them. We wrap up another informative episode by looking into the link between perceived wealth and spending before touching on how Hal views success. Tune in to hear more about Hal’s research and how it can give you a stronger and deeper conception of your financial future.   Key Points From This Episode: Introducing today’s guest, decision-making expert Hal Hershfield. [0:00:03] Exploring the definition of ‘well-being.’ [0:02:28] Ways that Hal measures well-being. [0:03:46] How financial behaviours and psychological factors impact financial well-being. [0:05:17] Hear how your relationship with your future self affects wealth savings. [0:06:52] Hal talks about how we can get closer to our future selves. [0:10:14] Reflecting on exercises that can help you imagine your future self. [0:13:14] We ask Hal when the present and the future begin. [0:17:01] The link between well-being and your perception of your present and future self. [0:20:32] Distinguishing between your present and future self versus having no distinction. [0:22:18] Whether not having little free time is detrimental to life satisfaction. [0:23:51] Hal discusses whether people would rather have more time or more money. [0:28:06] How financial advisors can help people achieve higher well-being. [0:30:59] How changes in your chronological age can trigger moments of reflection. [0:35:48] Differences in how retirees view lump sum and monthly income streams. [0:41:49] Helping people get a clearer idea of the value behind annuities. [0:44:42] How people can develop opposing ideas about when they’ll die. [0:47:33] Hal’s work on the relationship between meaning and spending. [0:49:21] Hear how Hal defines success in his life. [0:52:40]

Mar 18

54 min 47 sec

Where do stock returns actually come from? The answers to this deceptively simple question might change your investing perspective. We dive into this foundational investing topic after sharing community updates and chatting about our books and TV series of the week. A key concept in understanding where returns come from, we unpack how stock returns are impacted when companies migrate across size and value portfolios. While exploring how migration differently affects value and growth stocks, we also break down why book equity and growth drive capital gains for growth portfolios but not for value stocks. Linked to this, we discuss stock convergence as they relate to growth and value stocks. Looking deeper into the stock returns, we assess research on why valuation changes in asset classes are critical in determining expected returns. We touch on how valuations lead to an unfair depiction of international stock performance before asking: how justified are valuation changes to value and growth stocks? From understanding stock returns, we jump into our mini-planning topic on Canadian work from home tax reductions, followed by our Talking Sense segment. We wrap our conversation by sharing some bad financial advice. Join us to hear what it is, and to learn more about the anatomy of stock returns.   Key Points From This Episode: More updates from the community and co-host Benjamin’s battle bot building. [0:00:20] Hear about The Defiant Ones, our TV series of the week. [0:02:50] From The Coaching Habit to Elon Musk, we share our latest book reviews. [0:04:50] Introducing our investing topic: the anatomy of stock returns. [0:10:00] Exploring how changes to a stock type affect value premiums and returns. [0:13:40] Why small stocks tend to have high returns compared with big stocks. [0:17:00] Understanding the value premiums that underpin stock types. [0:18:45] What happens when a stock improves in type. [0:21:32] Factors that lead to price increases in growth and value stocks. [0:25:19] The concept of stock convergence and how convergence impacts value and growth stocks. [0:28:45] Behavioural explanations for the capital gains of value and growth stocks and the role played by stock drift and convergence. [0:32:25] Whether historical returns tell us anything about expected returns. [0:34:15] Why you should always include international stocks when assessing value stock performance. [0:39:18] Using value spread to determine expected value premiums. [0:41:39] We ask the question, “what if the trend in valuation changes to value and growth stocks are justified?” [0:44:17] Diving into our planning topic: Canadian work from home tax deductions. [0:50:12] How renters get a better deal than owners on work from home tax reductions. [0:52:25] Hear our answers to the profound questions posed in our ‘Talking Sense’ section. [0:54:06] Courtesy of Forbes, we share our bad financial advice of the week. [0:57:16]

Mar 11

1 hr 2 min

We’ve previously compared IPOs to lotteries that are prone to inflated valuations and low returns. Today we welcome “Mr. IPO,” Professor Jay Ritter onto the show for a deeper dive into IPO performance, for his insights into SPACs, and to hear his research into why economic growth doesn’t correlate with stock returns. Early in the episode, Jay unpacks how long-term IPO returns perform against first-day trading. While exploring the role that venture capital plays in tech IPOs, Jay talks about why negative earnings don’t affect tech IPOs in the short-term before sharing how skewness factors tend to impact young companies. Reflecting on how IPOs are usually underpriced, Jay discusses how the interests of companies are not aligned with the interests of IPO underwriters. After looking into IPO allocation, Jay compares the 2020 ‘hot IPO market’ with the internet bubble of the late 90s. Later, we ask Jay about what special-purpose acquisition companies (SPACs) are and why they’ve exploded in recent years. His answers highlight their investing benefits, risks, and why SPACs might be a better option for companies than IPOs. We examine how SPACs have historically performed and then jump into our next topic; why economic growth isn’t a good indicator that a country is worth investing in. He touches on why returns don’t correlate with economic growth, the place of capital gains and dividend yields when investing abroad, and how innovations in an industry can lead to higher stock returns. We wrap up our conversation by asking Jay for his take on whether the stock market is efficient before hearing how he defines success in his life. Tune in to hear our incredible and informative talk with Jay Ritter.   Key Points From This Episode: Introducing today’s guest, finance professor Jay Ritter. [0:00:03] How long-run returns of IPOs perform against the first trading day. [0:03:06] Industry differences in IPO returns and how venture capital affects tech IPOs. [0:03:33] Why it’s not always a bad idea to invest in IPOs. [0:05:22] Whether negative earnings for tech companies affect IPO performance. [0:07:32] Exploring the idea of skewness in IPO valuations and returns. [0:08:56] Jay shares advice on investing in IPOs. [0:11:07] Why IPOs tend to be underpriced. [0:12:44] Whether individuals get IPO allocations compared with hedge funds and brokerages. [0:18:00] The factors that lead to ‘hot IPO markets.’ [0:20:53] How technical innovation is linked to an increase in IPOs. [0:23:32] Whether hot IPO markets tell us anything about future expected returns. [0:26:33] Why 2020 was a hot IPO market and how it compares with the late 90s. [0:28:19] The dubious value of individual investors getting exposure in the private market. [0:30:50] Jay unpacks what special purpose acquisition companies (SPACs) are. [0:33:51] How new SPAC prices are rising despite not having acquired an operating company. [0:37:11] Ways that promoters benefit from launching SPACs. [0:38:34] Whether SPACs are a better route for going public than traditional IPOs. [0:42:44] We talk about the risks and historical performance of SPAC investing. [0:44:06] Jay details the upsides and downsides of investing in SPACs. [0:48:02] Insights into which foreign countries have been the best to invest in. [0:50:11] How industry growth can lead to higher returns in that industry. [0:56:30] What Jay uses to work out expected stock returns. [0:59:58] We ask Jay the big question; “Is the stock market efficient?” [01:04:29] Hear how Jay defines success in his life. [01:05:57]

Mar 4

1 hr 7 min

How we model our expected returns hugely impacts our financial decision-making, with poor models leading us to retire either too early or too late. Today’s episode is a deep dive into two topics: how we model expected returns and how fixed income bonds fit into your portfolio allocation. We open the show by talking about the books and news of the week before unpacking the relationship between bond terms, credit, and fixed income returns. We then explore why it’s easier to forecast the expected returns of bonds than stocks, with insights into how this affects your allocation. After reflecting on the predictive power of yield curves and expected capital appreciation and depreciation, we look into how the forward rate can be used to forecast expected term premiums. Touching on conflicting research, we present our conclusions on how you can determine your expected bond returns while also providing a summary of your risk premiums. We round off the topic by assessing alternatives to fixed income investments. From fixed income, we leap into the world of expected return assumptions and how they can best be modelled. We chat about the dangers of operating from poor expected returns models and discuss the successes and drawbacks of the most commonly used ones. While establishing the predictability underpinning average returns, we explain the limits on using historical returns to forecast expected returns. Later, we open up about PWL Capital’s approach to measuring expected returns. We close off another informative episode by sharing this week’s bad advice and answering left-field questions in our ‘Talking Sense’ segment. Tune in to hear more about the role of fixed income bonds and returns models in your portfolio.   Key Points From This Episode: We touch on future guest Jennifer Risher’s book, We Need to Talk. [0:05:34] Hear about the new Bitcoin ETFs and other cryptocurrency news. [0:08:30] Introducing today’s investment topic; fixed income products. [0:12:45] Approaches to building fixed income portfolios and forecasting expected returns. [0:15:31] Exploring the factors that impact fixed income risks and returns. [0:20:50] Using forward rates to predict your fixed income returns. [0:22:31] Conflicting research on the power of forward rates to predict term premiums. [0:24:52] Why forward rates do contain information about expected term premiums. [0:27:51] What Barclays’ intermediate indexes say about fixed income allocation. [0:31:49] The summarised formulas for expected bond returns. [0:34:03] Evidence on why credit spreads have low explanatory power for default rates. [0:35:07] The main takeaways on how we should view bonds and returns. [0:38:20] Comparing fixed income with cap-weighted indexing. [0:40:27] Why Dimensional Funds looks at credit spreads and yield curves around the world. [0:42:20] Introducing today’s planning topic: expected return assumptions. [0:44:55] How important expected returns models are to financial decision-making. [0:45:55] Different models that are used to derive expected returns. [0:47:20] Planning for short-term versus long-term predictability. [0:50:08] The danger of using historical returns as the basis for your expected returns. [0:53:20] Damodaran’s research on how different forecasting models perform. [0:53:48] Insights into PWL Capital’s expected return models. [0:55:07] We answer questions in our ‘Talking Sense’ segment. [0:59:26] This week’s bad advice; incorporate Bitcoin into your retirement investments. [01:01:36]

Feb 25

1 hr 5 min

Today’s extensive conversation with David Blanchett covers nearly all aspects of retirement planning. As the Head of Retirement Research for Morningstar, David has published extensively on the topic and speaks energetically about how you can best manage your retirement wealth. After a brief digression on Kentucky's Bourbon Chase Relay, we open the episode by discussing how an increase in your pre-retirement income can impact your plan. David shares his insights on what your plan should factor in, including earlier than anticipated retirement, inflation, healthcare costs, and whether you should invest in high-risk options to increase your retirement income. While reflecting on why success rate is a poor metric for weighing your strategy, we then chat about David’s view on flexible retirement spending. A controversial subject for some, we dive into the role of annuities and how different annuities cater to varying retirement scenarios. Later, we touch on how human capital affects portfolio allocation and why it’s challenging to evaluate real estate before hearing David’s take on why financial advice is about helping a client accomplish their goals — and not about beating the market. Tune in for an ever-relevant overview of top retirement planning considerations. Key Points From This Episode: Introducing today’s guest, Morningstar Research Head David Blanchett. [0:00:03] Swapping experiences of running the Bourbon Chase Relay. [0:02:34] How rising pre-retirement income impacts your ability to retire comfortably. [0:04:19] Rules of thumb in how you should approach salary increases. [0:05:21] Why people end up retiring earlier than they expected to. [0:06:47] What percentage of working income retirees should aim to replace. [0:08:06] Whether your retirement plan should cover inflation and healthcare costs. [0:08:59] Using worst-case scenarios to explain the consequences of risky investing. [0:11:52] Why success rate can be a poor metric for retirement planning. [0:13:41] Gauging your minimum and maximum levels of retirement comfort. [0:14:50] David’s advice on implementing a flexible retirement spending strategy. [0:17:23] Exploring the role that annuities play in a retirement portfolio. [0:18:32] How the alpha of your portfolio can be equivalent to annuity benefits. [0:20:11] Conflicts in how financial advisors help you allocate for your retirement. [0:23:06] Further insights into the factors behind whether you should get an annuity. [0:24:47] Why pension benefits have a higher value than most are aware of. [0:28:03] Why bond ETFs can’t recreate the cash flow stream offered by annuities. [0:30:45] Are you a stock or a bond? Revisiting the human capital question. [0:34:10] How your profession might impact your portfolio allocation. [0:36:41] The difficulty of accounting for the value of real estate. [0:38:11] David’s view on how financial advisors can justify their fees. [00:42:09] Evidence showing that those with financial planners have healthy finances. [00:47:18] Hear how David defines success for himself. [00:51:13]

Feb 18

53 min 4 sec

When you see funds performing monumentally well, you may feel regretful for not investing in them earlier. There is, however, a long history of funds that skyrocketed only to have major falls from grace a brief period after. The bulk of today’s episode is spent exploring this idea in the portfolio topic section but before getting into that, we kick the show off with some updates. We begin by talking about the GameStop short and whether this casts any new light on the concept of market efficiency. From there, we take a look at some recent news, particularly one story about the meteoric growth of New York-based investment managers ARK Invest, who recently hit $50B in assets under management up from $3B this time last year. This story acts as a great segue into the portfolio topic where Ben traces a history of funds that performed colossally well for a brief period but then plummeted thereafter. These funds were under the direction of ‘star’ fund managers with a focus on investing in tech disruptors. The discussion acts as a cautionary tale about overpaying for growth leading to poor realized returns. For the planning topic, we continue to shine a light on the ‘Talking Cents’ card game, a financial literacy outreach strategy created by The University of Chicago Financial Education Initiative. We invite the director of the Financial Education Initiative, Rebecca Maxcy, onto the show to speak about some of the thinking around this project and then discuss a few of the questions posed by the cards ourselves. Tune in today!   Key Points From This Episode: This week’s updates: Gerard O’Reilly on The Long View podcast and more. [0:00:25.3] Exploring the theme of questioning our beliefs with this week’s book. [0:03:15.3] News: What does the GameStop short mean for market efficiency? [0:06:10.3] More news: The meteoric growth of the investment managers ARK Invest. [0:12:15.3] Portfolio topic: Why funds with star managers have skyrocketed and subsequently plummeted. [0:15:13.3] Why overpaying for growth leading to poor returns is relevant to indexes too. [0:31:31.3] Do fund returns mean revert? Questions of luck and skill in fund management. [0:39:00.3] Planning topic: Rebecca Maxcy speaks about the ‘Talking Cents’ initiative. [0:45:41.3] Other financial education tools developed by the Financial Education Initiative. [0:52:51.3] Discussing Talking Cents questions about outsourcing financial planning and more.[0:55:09.3] Bad advice of the week: Michelle Schneider’s investing resources. [0:58:33.3]

Feb 11

1 hr 2 min

At a time when the financial community provided inconsistent retirement advice, the 4% withdrawal rate was a data-backed strategy that revolutionized retirement planning. Today we speak with William Bengen, a literal rocket scientist and the influential personal advisor who popularised the 4% withdrawal rate, A.K.A, the 4% rule. After exploring what the 4% rule entails and the impact that it had on the financial industry, we talk about updates that William has made to his theory since first publishing about it in 1994. We then unpack more of the rule, talking about its conservative nature, whether young retirees should adhere to it, and if there are situations where you should break the rule. Reflecting on criticisms of the 4% rule, we ask William about how it fits with the notion of dynamic spending. His answers highlight his approach in helping his clients to maintain the same lifestyle that they have when they enter retirement. Later, we touch on tips to keep track of your expenses, whether you should taper your retirement income, the role of bonds and small-cap stocks in your portfolio, and William’s view that financial planning should be fee and not commission-based. We wrap up by discussing William’s career and how he defines success for himself. For more insights into the 4% rule from the man who created it, tune in to hear our incredible conversation with William Bengen. Key Points From This Episode: Introducing today’s guest, financial advisor and 4% rule creator William Bengen. [0:00:15] Exploring William’s original 1994 research that led to the 4% rule. [0:03:58] Hear why the 4% rule has been so impactful to the world of financial planning. [0:05:06] William shares details about the ‘hate mail’ his findings inspired. [0:06:07] Why William updated his theory to include small-cap stocks. [0:07:43] William’s view that you might be able to get away with withdrawal rates that are higher than 4.5%. [0:08:26] Whether young retirees should adhere to the 4% rule. [0:11:48] The scenarios that break the 4% rule. [0:13:02] How the 4% rule applies in countries outside of Canada and the US. [0:13:55] Insights into how much you should be spending in your retirement. [0:15:28] What your triggers should be if you want to deviate from the 4% rule. [0:17:45] William’s views on dynamic spending. [0:20:09] Tips on keeping track of your expenses and William’s throughs on fixed annuities. [0:21:20] Whether you should taper your retirement income. [0:22:54] The role of bonds versus small-cap stocks in your retirement portfolio. [0:24:04] From rocket scientist to financial advisor, hear about William’s extraordinary career. [0:28:29] Reasons why financial planning should be fee and not commission-based. [0:32:02] Reflecting on the impact that William has made on his client’s lives and in the financial world. [0:32:55] Details on William’s current research and what most excites him. [0:34:48] How William defines success for himself. [0:37:01]

Feb 4

38 min 53 sec

Skewed Factor IPO Investing and Financial Well-being   Episode 134: Show Notes.   Many IPOs start with a bang, resulting in high first-day closing prices that attract retail investors. Today we unpack new and established research to explore how the hottest IPOs compare with average market returns. We open our conversation by first sharing community updates and details about the book and news of the week. After reflecting on how 2020 was one of the biggest IPO years since 2000, we talk about why IPOs tend to release in waves. We then chat about where IPO allocation usually goes and why most investors aren’t given access to huge early returns. A key insight this episode, we dive into how retail investors impact IPO pricing and why IPO buy and hold returns often trail the market. Following this, we discuss the factors that skew IPO prices, why IPOs resemble lotteries, and whether there is an optimal model for when companies make an IPO. From IPOs we jump into our planning topic on well-being and behavioural coaching. We start by looking into the differences between financial well-being and funded contentment. Linked to this, we talk about other forms of capital that range from human and social capital to temporal capital. We examine the factors that impact your well-being before touching on why you should make decisions while considering all your forms of capital. Later, we debut a new feature and then offer our bad advice of the week. Tune in for another informative conversation on rational investing.   Key Points From This Episode:   From building battlebots to what they’ve been watching, hosts Benjamin and Cameron catch-up with listeners. [0:00:23] Rational Reminder community updates and added features. [0:02:53] Being a generalist over a specialist? Hear about the book of the week. [0:06:23] Hear our news roundup for the week. [0:09:14] Introducing today’s portfolio topic: investing in IPOs. [0:15:30] Exploring IPO waves, pricing, and why only high-value investors are given IPO offerings. [0:19:54] How institutions and retail investors impact IPO pricing. [0:23:00] Examining the historical buy and hold returns for IPO stocks. [0:25:37] Why IPO stocks might be the “worst of all worlds.” [0:29:31] Research that shows why IPOs are like lotteries. [0:30:48] How ‘skewness factors’ hype up the value of IPOs. [0:34:01] Why waves of companies tend to make IPOs near the same time. [0:37:11] Benjamin summarizes his arguments for and against IPOs. [0:42:54] Introducing today’s planning topic: your well-being. [0:44:22] Financial well-being versus funded contentment and the different forms of capital. [0:47:11] The importance of weighing your other forms of capital when making decisions. [0:51:12] Why high-income doesn’t correlate with higher well-being. [0:53:28] How nationality and social factors affect self-reported well-being. [0:56:54] Consequences from people being generally bad at predicting what will make us happy. [01:00:37] Setting financial goals that consider your well-being and sense of purpose. [01:02:58] How unemployment can affect your well-being. [01:04:26] Why you should consider other forms of capital when saving for retirement. [01:06:30] We answer a conversation card from the University of Chicago Financial Education Initiative. [01:09:30] Hear our bad advice of the week, courtesy of TikTok. [01:12:20]

Jan 28

1 hr 14 min

The terms passive investing and index investing are often intertwined, but they are not exactly the same thing. Today’s guest is Adriana Robertson, the Honourable Justice Frank Iacobucci Chair in Capital Markets Regulation and an associate professor of Law and Finance at the University of Toronto Faculty of Law and Rotman School of Management. Adriana is interested in index investing and, in this episode, we hear her views on whether or not index investing is passive. Hear facts from her paper on the S&P 500 Index fund specifically, and all of the reasons that it's not passive, as well as some of the issues that are potentially arising from the creation of so many indexes or so-called passive investments. A more recent paper by Adriana, published in The Journal of Finance, surveyed a representative sample of U.S. individual investors about how well leading academic theories describe their financial beliefs and decisions, and Adriana shares the differences in something like value growth from an academic perspective versus a real-world perspective. Find out how investors can go about evaluating the performance of their portfolios and what they should be looking for when deciding which index fund to invest in, as well as why index funds aren’t a meaningful category anyway, factors from Adriana’s surveys that might influence investor’s equity allocation, and the trend towards indexing and whether it will overtake active portfolios. Tune in today for all this and more!   Key Points From This Episode: Whether or not it’s sensible to call the S&P 500 Index fund a passive investment. [0:03:20] How discretion affects the S&P 500 Index constituents and performance. [0:04:14] Adriana reflects on Tesla joining the S&P 500 Index and the speculation there. [0:04:49] Adriana’s view of benchmarking and comparing other investments to the S&P 500. [0:05:34] Why calling it rules-based investing rather than passive depends on the index. [0:07:35] How investors can go about evaluating the performance of their portfolios. [0:04:14] Why Adriana believes there are so many indexes and how they differ. [0:09:29] Value growth from an academic perspective versus a real-world perspective. [0:11:28] Why methodology differences between indices aren’t necessarily well-documented. [0:13:14] The marketing strategies involved in fund managers creating affiliated versus bespoke indices. [0:14:50] Common differences in index fund tracking and one-to-one mapping. [0:15:45] What investors should be looking for when evaluating which index fund to invest in. [0:16:53] Tilting towards factors versus using the market cap as the de facto benchmark. [0:18:19] Why Adriana’s advice is to compare an investment to the other options available. [0:20:11] Ex-ante versus ex-post and whether funds choosing a benchmark ex-post to inflate performance is a concern. [0:21:31] Concerns over asset growth in index funds and why it’s not a meaningful category. [0:23:47] Factors from the survey results of Adriana’s recent paper that might influence investor’s equity allocation. [0:26:16] The results that were surprising to her, like the need for cash for routine expenses. [0:28:21] Reasons there is still so much money invested in active funds – for example, a belief in higher returns and advisor recommendations. [0:29:57] Notably, how equity allocation is reliant upon professional financial advice. [0:32:12] Whether or not a year like 2020 will affect the asset allocation of investors. [0:35:17] The trend towards indexing and whether it will overtake active portfolios. [0:37:02] The implications of risk on the theoretical explanations for asset pricing anomalies. [0:39:00] The role of professional financial advisors in high net worth investor’s decisions. [0:37:02] How Adriana came to be so interested in and passionate about indexing. [0:44:49] Adriana’s defines success by figuring out what she wants to doing it do it well. [0:47:24]

Jan 21

48 min 2 sec

With so many moving parts, it’s difficult to develop a clear view of the US monetary system. Today we speak with Pragmatic Capitalism author and Founder of Orcam Financial Group Cullen Roche, leveraging his expertise to build a comprehensive understanding of the monetary system. We open our interview with Cullen by asking him the deceptively simple question, “what is money?” We then explore where money comes from, the role of the central bank in securing our money supply, and why poor capitalization restrains banks. After discussing where the value of money derives from, Cullen shares his insights on how decentralized digital currencies are challenged by their lack of flexibility and credit options. We talk more about the role of central banks before diving into quantitative easing; what it is, why it’s used, and how interest rates impact its usage. Following this, Cullen unpacks whether quantitative easing leads to asset inflation along with the influence that stimulus policies have on inflation. Reflecting on the relationship between the Federal Reserve and US Treasury, Cullen shows why the US government is in no danger of becoming insolvent. We touch on the dollar’s purchasing power, Cullen’s view that time really is money, the role of gold in your portfolio, and why Cullen is such a big proponent of global investing. We wrap up our informative discussion by asking Cullen how he defines success in his life. Tune in to benefit from Cullen’s clever and concise explanation of our modern economic system.   Key Points From This Episode: Introducing today’s episode featuring Cullen Roche. [0:00:15] We open our interview with Cullen asking the question, “What is money?” [0:03:50] Exploring where money comes from and the role of banks in ensuring money supply. [0:06:14] The factors that constrain a bank’s lending ability. [0:09:26] Cullen unpacks where the value of money comes from. [0:12:36] Economic constraints posed by decentralized digital currencies. [0:15:08] What central banks are and why they’re such good ideas. [0:20:46] Cullen explains what bank reserves are. [0:25:00] How quantitative easing tries to stimulate the economy. [0:25:45] Why quantitative easing isn’t the same as printing money. [0:30:01] Cullen evaluates the success of quantitative easing as a policy tool. [0:33:19] Whether quantitative easing leads to asset inflation. [0:33:57] The impact that stimulus policies have on inflation. [0:39:38] The relationship between the US Federal Reserve and Treasury. [0:43:04] Why the US government will most likely never go insolvent. [0:47:44] Why low inflation trumps high inflation and how increasing government debt might or might not harm future generations. [0:51:17] Why the dollar’s purchasing power doesn’t reflect the reality of our modern standards of living. [0:55:26] Hear about Cullen’s view that time really is money. [0:59:14] How Cullen sees gold as a hedge against the dollar’s decreasing purchasing power. [1:00:41] Cullen explains why he’s such a big proponent of global investing. [1:05:04] There’s more to life than money; Cullen defines success in his own life. [1:06:48]

Jan 14

1 hr 12 min

At its core, managing wealth is about finding the best solutions for your clients. As he mentions in today’s discussion with him, this sentiment has guided David Booth’s storied career. As the Co-Founder and Executive Chairman of Dimensional Fund Advisors, David’s career is so illustrious that he’s been called the father of evidence-based investment products. We open our conversation by exploring David’s career, beginning with his job as a shoe salesman in Kansas to developing the first index fund. We ask David if he had been able to foresee the power that “geeks” would have over the asset management business. His answers highlight how immature the industry was when he founded Dimensional Fund Advisors and how they had to first convince people before selling them on small cap funds. Reflecting on his early successes and challenges, David opens up about how his clients reacted when small caps underperformed. A key theme this episode, David emphasizes the importance of making decisions that are grounded in academic research. We then dive into several topics ranging from David’s views on value portfolios to the stroke of luck that led Dimensional to open their products to financial advisors. After chatting about why Dimensional is now entering the ETF space, David shares his take on direct indexing and why he still favors simplicity over complexity. Near the end of the episode, we discuss how David built his company culture, how luck factored into his life, and how he defines success. An incredible conversation that touches on pivotal moments in the history of financial services, tune for more insights into the life and work of David Booth.   Key Points From This Episode: Introducing today’s guest, Dimensional Fund Advisor Co-Founder David Booth. [0:00:14] David talks about how his background informed his professional career. [0:03:57] Hear about David’s role in developing one of the first index funds. [0:06:13] Why David’s work creating index funds for Wells Fargo came to a close. [0:07:28] Exploring the origins of Dimensional Fund Advisors. [0:10:24] How David saw the future of his industry when he started Dimensional and how they created the first small cap funds. [0:15:18] The reaction from David’s early clients when small caps underperformed. [0:27:04] David recalls the “borderline character assassination” that he faced when pushing for small caps. [0:24:16] How and why Dimensional first added value portfolios. [0:26:03] Unpacking David’s view that values struggle relative to growth. [0:28:37] The recent lessons that Dimensional has learned about value relative to growth stocks. [0:33:17] What it would take for Dimensional to reconsider their entire approach. [0:37:50] The importance of flexibility and believing in your solutions when dealing with uncertainty. [0:43:19] David emphasizes that your financial solutions should be based on robust data. [0:47:00] How Dimensional began giving financial advisors access to their products. [0:48:46] Why, after so many years, Dimensional is now entering the ETF space. [0:52:25] With widespread fee compression, hear how Dimensional is handling fee cuts. [0:55:53] Answering the question — what’s the next big thing for Dimensional? [0:57:29] David shares his take on direct indexing and customizable portfolios. [1:00:59] How David built his company culture and the role that luck plays in his life and in business outcomes. [01:02:59] We ask David how he defines success in his life. [01:06:48]

Jan 7

1 hr 9 min

For this episode of the Rational Reminder Podcast, we review our year by playing back and discussing a collection of the most impactful moments of the show from 2020. This has been a drastic year filled with many learnings for us all, and in today’s show, we cover topics of happiness, decision making, dealing with uncertainty, and the connection that financial planning and investing have to all of this. We collect some amazing gems of wisdom from guests like Annie Duke, Ken French, Michael Kitces, Patricia Lovett-Reid, and a whole lot more, whittling down an original list of over one hundred of this year’s finest moments to a collection of just 45. The show starts out exploring themes of the connection between wealth and happiness, keeping cool in stressful times, and the transformations that crises kickstart. From there, we talk about the importance of models and systems for informing investing and behaviour in general, and the idea that unexpected outcomes swamp expected ones in the short term. We also look at what market history has to say about staying in your seat rather than market timing when things look bleak. Next up, we cover themes of the value of a flexible approach to retirement spending, how families should think about financial planning, whether 60/40 portfolios are dead, and why stock market returns in the U.S. are higher under Democratic presidents. Moving onto the subject of decision making, we explore some of our guests’ thoughts on evaluating decisions, outcomes bias and the role of luck, and more. We also consider the topic of human capital, how it relates to investing, and what we should really be spending our time on. The subject of the convergence of brokerage firms and financial advisors then leads to a great exploration of the role of financial advisors. We wrap up with some extra special perspectives on how optimal financial planning should be geared around the person that you want to be rather than maximizing wealth for the sake of it. Tune in today for an amazing overview of the year and to hear all the ways we have changed and grown thanks to our incredible guests.   Key Points From This Episode: Looking back on the year: Pandemic adjustments and how this podcast has grown. [0:00:15] Shoutouts and Cameron’s method of putting past clips together for today’s show. [0:06:20] Brian Portnoy and Andrew Hallam on wealth and happiness. [0:09:15] Dealing with stress and volatility with Dr. Moira Somers and Dave Goetsch. [0:13:48] Craig Alexander on market volatility and Jim Stanford on crisis and revolution. [0:18:27] Dave Goetsch and Greg Zuckerman on the benefit of models and systems. [0:23:11] The role of unexpected returns in outcomes and how to deal with this. [0:27:04] Small and value stocks relative to the market with Dr. William Bernstein. [0:33:09] Ken French and Cliff Asness on whether ‘this time is different’. [0:35:29] Enduring tracking error with Cliff Asness and Andrew Hallam. [0:38:37] Cliff Asness on whether 60/40 is dead and Lubos Pastor on why stock market returns in the US are higher under Democratic presidents. [0:41:00] Changing your risk portfolio when the market is dropping with Ken French. [0:45:25] Market timing versus awareness of investing history with Mark Hebner and Dr. Bernstein. [0:48:20] Wade Pfau on how expected returns fit into financial planning and the ‘safety first’ approach. [0:52:15] Moshe Milevsky on retirement spending and Pattie Lovett Reid on addressing one’s financial situation. [0:56:13] Annie Duke, Ken French, and Victor Ricciardi on making and evaluating decisions. [1:00:05] Greg Zuckerman on the role of luck in decisions leading to positive outcomes. [1:08:15] Forecasting as a way of knowing the range of outcomes with Craig Alexander. [1:11:15] Moshe Milevsky and Dr. Bernstein on human capital, financial planning, investing and asset allocation. [1:13:34] Josh Brown on what to spend your time on and Fred Vettesse on when to start saving. [01:16:28] Michael Kitces on the convergence of brokerage firms and financial advisors. [01:19:20] Dennis Mosey Williams and Ken French on financial advice for gaining wealth and being content. [01:20:57] Allison Schrager on the role of financial advisors for mitigating systematic risk. [01:25:00] Mark Hebner on the role of financial advisors for explaining a range of outcomes. [01:26:38] Scott Rieckens and Dennis Mosey Williams on what finding happiness means. [01:30:03]

Dec 2020

1 hr 35 min