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Cameron joins Ben for his first AMA as we bring you the sixth edition of our Listener Questions and Investing Lessons mini-series. Diving right in, Ben and Cameron share their stance on the multi-host format of the Rational Reminder podcast before walking us through the new PWL Retirement Planning Tool. Then, we unpack our venture with OneDigital, recent changes at PWL Capital, how we make each episode of this show, and how we allocate our time across podcast and business responsibilities. We also examine our protocol regarding guests, why Cameron and Ben would never gamble with their own money, how the human condition prevents the full comprehension of investing as a principle, and smart money moves to make under current market conditions. To end, we discuss the effects of a capital gains tax increase, common mistakes to avoid in managing personal finances, programs and technologies for financial advisors, and the After Show, which ends with an important discussion on testicular cancer. Key Points From This Episode: (0:00:00) How Ben and Cameron feel about the multi-host format of this podcast. (0:01:12) The new PWL Retirement Planning Tool, developed by Braden Warwick. (0:03:13) Joining OneDigital and other PWL changes from the past four months. (0:09:05) Behind the scenes: Making a Rational Reminder podcast episode. (0:12:38) Allocating time for research, preparation, creating content, and business. (0:17:27) How guests inform our approach to research and preparation. (0:19:29) The reasons why we're not risk-averse but have no appetite for gambling. (0:24:26) Why investing has been largely solved, except for the human aspect. (0:30:13) The most “rational” investing practices under current market conditions. (0:34:25) How to approach a capital gains tax increase, and why banks do what they do. (0:38:03) The most costly mistakes when it comes to managing personal finances. (0:40:12) Why we don't offer advice-only planning for DIY investors. (0:44:07) Financial app tips and tricks and programs and technologies to be aware of. (0:48:23) The After Show: Alternate personalities, noise filtering, and testicular cancer. Links From Today's Episode: Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Braden Warwick on LinkedIn — https://www.linkedin.com/in/braden-warwick-a40b48a3 PWL Capital Retirement Planning Tool — https://research-tools.pwlcapital.com/research/retirement OneDigital — https://www.onedigital.com/ Episode 341: PWL's Next Chapter — https://rationalreminder.ca/podcast/341 Episode 355: Do Index Funds Incur Adverse Selection Costs? — https://rationalreminder.ca/podcast/355 Episode 200: Prof. Eugene Fama — https://rationalreminder.ca/podcast/200 Episode 100: Prof. Kenneth French: Expect the Unexpected — https://rationalreminder.ca/podcast/100 Episode 93: Cliff Asness from AQR: The Impact of Stories, Behaviour and Risk — https://rationalreminder.ca/podcast/93 Episode 270: What Happened to All the Billionaires? with Victor Haghani and James White — https://rationalreminder.ca/podcast/270 Episode 11: Robb Engen: Simple vs. Complex — https://rationalreminder.ca/podcast/11 Episode 203: S*** (Misguided) Financial Advisors Say — https://rationalreminder.ca/podcast/203 The Money Scope Podcast — https://moneyscope.ca/ Financial Advisor Success Ep 433: When You 10X Your Advisory Firm to over $20M of Revenue…And Want to 10X Again, with Cameron Passmore — https://www.kitces.com/blog/cameron-passmore-pwl-capital-10x-revenue-growth-advisory-firm/ The Podcast Consultant — https://thepodcastconsultant.com/ The Long View — https://www.morningstar.com/podcasts/the-long-view Eli Beracha on LinkedIn — https://www.linkedin.com/in/eli-beracha-b8082250/ CIBC Mutual Funds — https://www.cibc.com/en/personal-banking/investments/mutual-funds.html Microsoft Excel — https://www.microsoft.com/microsoft-365/excel Python — https://www.python.org/ Monte Carlo — https://www.montecarlodata.com/ ChatGPT — https://chatgpt.com/ Papers From Today's Episode: ‘The Arithmetic of Active Management' — https://www.jstor.org/stable/4479386 ‘Lifetime Portfolio Selection under Uncertainty: The Continuous-Time Case' — https://www.jstor.org/stable/1926560
— Подпишись на Telegram-канал RationalAnswer — https://t.me/RationalAnswer — Подпишись на email-рассылку RationalAnswer — https://rationalanswer.substack.com/ Бонусные посты от RationalAnswer: — Кто зарабатывает на ребалансировках индексов, часть 3 — https://t.me/RationalAnswer/1307 — Пост про мой день рождения — https://t.me/RationalAnswer/1306 — Проблемы российских инвесторов в Interactive Brokers с ирландскими ETF — https://t.me/RationalShitposting/131 — Защитные свойства золота — https://t.me/RationalShitposting/127 — Самые длинные просадки рынков акций — https://t.me/RationalShitposting/123 Дополнительные материалы к выпуску: — Как произносить Berkshire — https://t.me/RationalShitposting/130 — Zwi про реорганизацию OpenAI — https://thezvi.substack.com/p/openai-claims-nonprofit-will-retain — Интервью недели: Rational Reminder с Марко Сэммоном — https://www.youtube.com/watch?v=CtjlF4hwv-M Текстовая версия выпуска со ссылками: https://habr.com/ru/articles/908326/ Посмотреть выпуск на YouTube: https://www.youtube.com/watch?v=-Zk3rw2J8ng Поддержи проект RationalAnswer и попади в титры: — Patreon (в валюте) – https://www.patreon.com/RationalAnswer — Boosty (в рублях) – https://boosty.to/RationalAnswer СОДЕРЖАНИЕ: 00:00 - Баффет уходит из Berkshire 03:45 - Российский рынок: ВВП начал снижаться 05:52 - США: Импортозамещение добралось до Голливуда 09:48 - 19 сигм тайваньского курса 12:44 - Испанская ФНС хочет пересчитать ваши евро 13:36 - OpenAI изменили план 19:44 - Другие новости AI 21:38 - Новости замены человечества роботами 24:10 - Крипта: WAGMI 26:17 - Новости криптотрампия 27:53 - Интервью недели 31:15 - Хорошая новость недели 32:01 - Бонусные посты недели из моих ТГ-каналов
How do we make the most important decisions in life with intention rather than impulse? In this episode, we are joined by Abby Davisson to unpack her practical framework for better decision-making. Abby is a Yale and Stanford alumnus, a former executive at Gap Inc., and the co-author of Money and Love. She is also the founder of the Money and Love Institute, which is dedicated to helping individuals and professionals navigate life's most significant decisions. In today's conversation, Abby unpacks her practical, research-backed “5Cs Framework” for decision-making and demonstrates how it can guide all the decisions couples need to make through life. We explore the idea of financial transparency, progressive pooling of finances, equitable division of housework, deciding when to outsource help, and navigating career pauses or transitions. Abby also shares how she applied the framework in her own life and offers an honest perspective for individuals navigating change. Join us to learn how to approach choices and the “life stuff” that doesn't always show up in spreadsheets with Abby Davisson. Tune in now! Key Points From This Episode: (0:04:16) Myra Strober's Work and Family course and how it led to writing Money and Love. (0:07:21) The drivers of poor decisions and the five Cs in Abby's decision-making framework. (0:11:15) Discover the four big topics every couple should discuss and how to approach them. (0:15:09) Learn the fundamentals of how couples should handle and combine money. (0:17:49) Why division of housework is vital, how to approach it, and the role of gender norms. (0:21:49) Outsourcing tasks and the impacts of not taking the division of housework seriously. (0:24:27) How to decide where to live as a couple, and whether to rent or buy a house. (0:29:08) A real-life example of how to apply to 5C Framework for decision-making. (0:33:34) Navigating career ambitions, division of childcare, and stay-at-home parenting. (0:37:16) Hear how the 5C Framework helps deal with separation and family dynamics. (0:40:31) Ways the concept of retirement has changed and why families should discuss it. (0:44:12) Find out how involved adult children should be in their parents' retirement planning. (0:47:02) Advice for finding the right life partner and how to stress-test a relationship. (0:52:05) What to consider before getting married and having children, and why. (0:55:37) Abby's biggest lessons from writing the book and her definition of success. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Abby Davisson — https://www.abbydavisson.com/ Abby Davisson — https://linkedin.com/in/abbydavisson/ Money and Love Institute — https://moneyloveinstitute.com/ Practically Deliberate Newsletter — https://abbydavisson.substack.com/ Gap Inc. — https://www.gapinc.com Myra Strober on LinkedIn — https://linkedin.com/in/myra-strober-a8b2846a/ Eve Rodsky — https://www.everodsky.com/ Carefull — https://getcarefull.com/ Baba Shiv — https://linkedin.com/in/baba-shiv-a859882/ Books From Today's Episode: Money and Love — https://www.moneylovebook.com/
Marco Sammon joins Ben and Dan to unpack his latest paper, ‘Index Rebalancing and Stock Market Composition', beginning with how Marco's work (co-written by John Shim) compares to the Nobel Prize-winner Bill Sharpe's paper, ‘Arithmetic of Active Management.' We investigate the missing links in Sharpe's logic before defining “the market” and ascertaining the main objectives of index funds. Then, we dive deeper into the mechanics of Marco's paper, index and market tracking errors, why delayed rebalancing is more beneficial than instant rebalancing, and the role of technology in the modern tracking error obsession. We also assess the passive-active spectrum of index funds in portfolio management and learn how investors should choose their optimal excess return. To end, Marco shares practical applications for improving performance benchmarked against traditional indexes, and The Aftershow is all about bridging the gap between PWL Capital and you, our listeners. Key Points From This Episode: (0:00:00) Key takeaways from Marco Sammon's latest paper and how it compares to Bill Sharpe's ‘Arithmetic of Active Management.' (0:08:10) Marco describes what's missing from the ‘Arithmetic of Active Management' logic. (0:09:11) Defining ‘the market', the main objective of an index fund, and how index funds track the market. (0:15:57) The mechanics of Marco's paper, ‘Index Rebalancing and Stock Market Composition.' (0:18:38) Factor exposure, index and market tracking errors, and how often index funds trade. (0:26:28) Rebalancing less frequently; why delayed does better than instant rebalancing. (0:31:59) The tech run-up and lazy rebalancing, and the modern tracking error obsession. (0:36:51) Assessing the passive-active spectrum of index funds in portfolio management. (0:41:02) Exploring how investors should decide on their optimal excess return. (0:45:14) How the rising index fund ownership of stocks impacts the implicit cost of indexing (0:46:58) Practical ways to improve performance benchmarked against traditional indexes. (0:52:30) The Aftershow: Canadian finances, more airtime for Cameron, and PWL – OneDigital. Links From Today's Episode: Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Episode 322: Prof. Marco Sammon: How are Passive Investors Affecting the Stock Market? — https://rationalreminder.ca/podcast/322 Episode 200: Prof. Eugene Fama — https://rationalreminder.ca/podcast/200 Episode 268: Itzhak Ben-David: ETFs, Investor Behavior, and Hedge Fund Fees — https://rationalreminder.ca/podcast/268 Episode 112: Michael Kitces: Retirement Research and the Business of Financial Advice — https://rationalreminder.ca/podcast/112 Marco Sammon — https://marcosammon.com/ Marco Sammon on LinkedIn — https://www.linkedin.com/in/marco-sammon-b3b81456/ Marco Sammon on X — https://x.com/mcsammon19 Marco Sammon | Harvard Business School — https://www.hbs.edu/faculty/Pages/profile.aspx?facId=1326895 Marco Sammon Email — mcsammon@gmail.com John Shim on LinkedIn — https://www.linkedin.com/in/john-shim-2931271b/ Vanguard — https://global.vanguard.com/ Sheridan Titman on LinkedIn — https://www.linkedin.com/in/sheridan-titman-226b0811/ Alex Chinko — https://alexchinco.com/ Erik Stafford | Harvard Business School — https://www.hbs.edu/faculty/Pages/profile.aspx?facId=6625 Itzhak (Zahi) Ben-David on LinkedIn — https://www.linkedin.com/in/ibendavi/ Bill Ackman on X — https://x.com/billackman ‘Millennium Loses $900 Million on Strategy Roiled by Market Chaos' — https://www.bloomberg.com/news/articles/2025-03-08/millennium-loses-900-million-on-strategy-roiled-by-market-chaos Bogleheads — https://www.bogleheads.org/ The Money Scope Podcast Episode 8: Canadian Investment Accounts — https://moneyscope.ca/2024/03/01/episode-8-canadian-investment-accounts/ The Wealthy Barber Podcast — https://thewealthybarber.com/podcast/ Financial Advisor Success Podcast — https://www.kitces.com/blog/category/21-financial-advisor-success-podcast/ Financial Advisor Success Podcast Episode 433: When You 10X Your Advisory Firm To Over $20M Of Revenue…And Want To 10X Again, With Cameron Passmore — https://www.kitces.com/blog/cameron-passmore-pwl-capital-10x-revenue-growth-advisory-firm/ OneDigital — https://www.onedigital.com/ The Longview Podcast: Ben Felix Papers From Today's Episode: ‘The Arithmetic of Active Management' — https://www.jstor.org/stable/4479386 ‘Index Rebalancing and Stock Market Composition: Do Index Funds Incur Adverse Selection Costs?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5080459 ‘Luck versus Skill in the Cross-Section of Mutual Fund Returns' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1356021 ‘The Passive-Ownership Share Is Double What You Think It Is' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4188052 ‘Long-Term Returns on the Original S&P 500 Companies' — https://www.researchgate.net/publication/247884354_Long-Term_Returns_on_the_Original_SP_500_Companies ‘The Price of Immediacy' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1001762 ‘Competition for Attention in the ETF Space' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3765063 ‘Passive in Name Only: Delegated Management and “Index” Investing' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3244991 Jeremy Stein — “Unanchored” Strategy
Our guest on the podcast today is David Booth. He's the Chairman of Dimensional Fund Advisors, a firm he founded in 1981. David led Dimensional as CEO and later Co-CEO until 2017, when he stepped back from the daily management of the firm. David helped create one of the world's first index funds in the 1970s and launched the first passively managed small-company strategy in the early 1980s. He received a bachelor's degree in economics in 1968 and a master's degree in business in 1969 from the University of Kansas. In 1971, he received an MBA from the University of Chicago. Over the years, David has been a benefactor to both schools, and the University of Chicago Booth School of Business is named in David's honor. David, welcome to The Long View.BackgroundBioTune Out the NoiseDFA US Small CapDFA US Micro CapPapers Mentioned“Stocks, Bonds, Bills and Inflation: Year-by-Year Historical Returns (1926-1974),” by Roger Ibbotson and Rex Siquefield, The Journal of Business, January 1976.“The Cross-Section of Expected Stock Returns,” by Eugene Fama and Kenneth French, jstor.org, June 1992.“Why Investors Missed Out on 15% of Total Fund Returns,” by Jeffrey Ptak, Morningstar.com, Aug. 15, 2024.OtherErrol MorrisMerton MillerEugene FamaMac McQuownRex SinquefieldRobert MertonDan WheelerDaniel Kahneman“Everything You Need to Know About ‘MADOFF: The Monster of Wall Street,'” by Ingrid Ostby, netflix.com, Jan. 4, 2023.“DFA vs. Vanguard,” The Rational Reminder podcast, Episode 351, youtube.com.“PHOTOS: A Look Inside the Booth Estate,” Austin American-Statesman, Feb. 13, 2020.
Beyond the sales pitches, acronyms, and product talk, what does it mean to be a financial planner? In this episode of the Rational Reminder Podcast, we sit down with long-time industry leader and advocate Jason Pereira. Jason is a Canadian financial planner with over 20 years of experience, dual CFP certification (Canada and US), and a passion for professionalizing the field. In our conversation, Jason shares details about his client-centred investment philosophy, explains why fiduciary duty is foundational, and unpacks the complexities of index fund adoption in Canada. We also delve into the barriers to transparent, evidence-based advice, the true role of a financial planner, the impact of the Fintech revolution, and the pros and cons of mortality pooling. He also challenges common myths surrounding financial planning, shares best practices for vetting financial advisors, and explains why the industry is long overdue for a transformation. Join us for career insights, cautionary tales, and forward-looking ideas that challenge the conventional thinking of what financial planning is, with Jason Pereira! Key Points From This Episode: (0:05:13) Jason's core investment philosophy and perspective on factor-based indexing. (0:07:15) Environmental, Social, and Governance (ESG) trends and client conversations. (0:12:36) What fiduciary duty means, why it matters, and why some institutions fight against it. (0:18:09) Unpack the complexities of why Canada is behind the US in index fund adoption. (0:20:52) Learn about the true role and common misconceptions of a financial planner. (0:24:30) Explore how technology and the rise of generative AI are changing financial planning. (0:31:55) How advisors can maintain strong personal relationships with clients in a digital world. (0:37:00) Find out what a high-quality financial plan looks like and what it covers. (0:39:44) His favourite financial planning-related argument to get into on the internet. (0:41:20) Uncover how mortality and annuities should influence financial planning. (0:48:06) Permanent life insurance explained: best use cases and when to avoid. (0:50:48) Jason shares his nerdiest and most broadly applicable financial planning advice. (0:53:29) He explains the best practices for estimating a client's life expectancy. (0:56:48) A breakdown of financial planner designations and how to vet a financial planner. (1:03:59) Hear about his expert witness work and the costs of bad advice. (1:08:55) Discover why Jason chooses to fight against financial misinformation online. (1:11:18) The origins and vision of FPAC and Jason's definition of success. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.ca Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/` Jason Pereira — https://jasonpereira.ca/ Jason Pereira on Facebook — https://facebook.com/jasonpereirafinancialplanner/ Jason Pereira on X — https://x.com/jasonpereira Jason Pereira on LinkedIn — https://linkedin.com/in/pereirajm Jason Pereira on YouTube — https://youtube.com/@jasonperieraFP The Fintech Impact Podcast — https://jasonpereira.ca/the-fintech-impact-podcast-jason-pereira Conquest Planning — https://conquestplanning.com/en-ca/home Replit — https://replit.com/ FP Canada — https://fpcanada.ca/ Financial Planning Association of Canada (FPAC) — https://fpassociation.ca/ Episode 188: Prof. Ayelet Fishbach — https://rationalreminder.ca/podcast/188 Episode 236: Harold Geller — https://rationalreminder.ca/podcast/236 Papers From Today's Episode: ‘Current Practices for Risk Profiling in Canada and Review of Global Best Practices' — https://osc.ca/sites/default/files/2021-02/iap_20151112_risk-profiling-report.pdf ‘Financial Risk Tolerance: A Psychometric Review' — https://dx.doi.org/10.2139/ssrn.3088292
The fifth installment of our Ask Me Anything sessions begins with the inevitable volatility of the stock market as we urge investors to remain calm amidst recent US stock declines. Similarly, we unpack the historical resilience of stock markets and offer advice for dealing with market crashes before discussing why bonds are not the best strategy for boosting returns. We examine the proposed Alberta Pension Plan, the Rational Reminder Podcast guests whose impact still ripples across PWL, how to be a PWL-style advisor, and we revisit the DFA versus Vanguard debate. We also explain why spending rules aren't for us at PWL, the relationship between the amount to withdraw and the stock/bond allocation, and alternatives for short-term horizon investing, saving, and equities. To end, we hear feedback from Atti Ilmanen as well as reviews from listeners, but before all that, Mark McGrath shares bittersweet news! Stay tuned for an episode full of reflection, strategy, and insight. Key Points From This Episode: (0:01:13) The inevitability of market volatility and the historical resilience of stock markets. (0:13:04) How to approach a volatile market and advice for dealing with a market crash. (0:18:06) Why bonds are not a return-enhancing strategy. (0:21:04) A brief examination of the proposed Alberta Pension Plan. (0:25:02) Impactful guests who have influenced how we work at PWL Capital. (0:33:25) How to be a PWL-style advisor. (0:35:37) Weighing Dimensional funds (DFA) against Vanguard and others. (0:41:57) Why spending rules aren't really our thing. (0:44:56) The relationship between the amount to withdraw and the stock/bond allocation. (0:49:50) Exploring alternatives for short-term horizon investing, saving, and equities. (0:57:00) An important announcement from Mark! (1:02:51) The Aftershow: feedback from Antti Ilmanen, listener reviews, and final thoughts. Links From Today's Episode: Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Episode 248: Prof. William Goetzmann: Learning from Financial Market History — https://rationalreminder.ca/podcast/248 Episode 100: Prof. Kenneth French: Expect the Unexpected — https://rationalreminder.ca/podcast/100 Episode 352: Jessica Moorhouse: Everything But Money — https://rationalreminder.ca/podcast/352 Episode 316: Andrew Chen: "Is everything I was taught about cross-sectional asset pricing wrong?!" — https://rationalreminder.ca/podcast/316 Episode 224: Prof. Scott Cederburg: Long-Horizon Losses in Stocks, Bonds, and Bills — https://rationalreminder.ca/podcast/224 Episode 284: Prof. Scott Cederburg: Challenging the Status Quo on Lifecycle Asset Allocation — https://rationalreminder.ca/podcast/284 Episode 350: Scott Cederburg: A Critical Assessment of Lifecycle Investment Advice — https://rationalreminder.ca/podcast/350 Episode 89: Wade Pfau: Safety-First: A Sensible Approach to Retirement Income Planning — https://rationalreminder.ca/podcast/89 Episode 289: Retiring Retirement Income Myths with the Retirement Income Dream Team — https://rationalreminder.ca/podcast/289 Episode 122: Prof. Moshe Milevsky: Solving the Retirement Equation — https://rationalreminder.ca/podcast/122 Episode 59: Alexandra Macqueen: Financial Economics and Annuities: Rational Planning for Retirement — https://rationalreminder.ca/podcast/59 Episode 283: When Volatility is Risk, and Introducing The Money Scope Podcast — https://rationalreminder.ca/podcast/283 Episode 351: DFA vs. Vanguard — https://rationalreminder.ca/podcast/351 Episode 254: David Blanchett: Regret Optimized Portfolios, and Optimal Retirement Income — https://rationalreminder.ca/podcast/254 Episode 152: Evaluating Systematic Equity Strategies — https://rationalreminder.ca/podcast/152 Episode 347: The Case for Index Funds — https://rationalreminder.ca/podcast/347 Episode 281: Lifecycle Asset Allocation, and Retiring Successfully with Justin King — https://rationalreminder.ca/podcast/281 Episode 315: An Update from Avantis with Eduardo Repetto — https://rationalreminder.ca/podcast/315 Alberta Pension Plan — https://www.albertapensionplan.ca/ Financial Planning Association of Canada — https://www.fpassociation.ca/ Hook — https://www.imdb.com/title/tt0102057/ Antti Ilmanen | AQR — https://www.aqr.com/About-Us/OurFirm/Antti-Ilmanen Books From Today's Episode: The Great Depression: A Diary — https://www.amazon.com/dp/1586489011 Narrative Economics: How Stories Go Viral and Drive — https://www.amazon.com/dp/0691182299 Papers From Today's Episode: ‘Negative Bubbles: What Happens after a Crash' — https://ssrn.com/abstract=3038658 ‘Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice' — https://ssrn.com/abstract=4590406 ‘Financially Sound Households Use Financial Planners, Not Transactional Advisers' — https://www.financialplanningassociation.org/sites/default/files/2023-01/APR19%20Blanchett.pdf ‘Finding and Funding a Good Life' — https://pwlcapital.com/finding-and-funding-a-good-life/
What if the key to financial success isn't just a better budget, but a better understanding of your relationship with money? In this episode of the Rational Reminder Podcast, Ben and Dan sit down with Jessica Moorhouse to delve into the ins and outs of personal finance. Jessica is a money expert, Accredited Financial Counsellor Canada®, speaker, and bestselling author of Everything but Money. She is also the host of the More Money Podcast, one of Canada's leading personal finance shows. During today's conversation, Jessica unpacks the difference between a financial planner and a counsellor and why empathy is the missing piece in personal finance. Find out how different emotions and early memories of money can influence our perspective on personal finance, hear why understanding your relationship with money is so important, and learn about common financial behaviours to avoid. Jessica also delves into the value of understanding past traumas, the power of intergenerational money experiences, and whether mental health or a financial foundation is more important. Tune in now! Key Points From This Episode: (0:02:50) Uncover the difference between a financial counsellor and a financial planner. (0:05:55) Her approach to working with clients and meeting their non-financial needs. (0:09:15) Find out what is missing in personal finance and why it is essential. (0:11:39) How shame impacts financial decision-making and common sources of shame. (0:14:50) Ways relative financial well-being and privilege shape our perspective of money. (0:19:46) Hear how to overcome financial shame and how it differs from feelings of guilt. (0:22:35) Rational versus irrational guilt and how fear affects financial decisions. (0:25:46) Learn about jealousy and envy as well as their impact on personal finance. (0:27:31) Early money memories and pragmatic money exercises to help frame your mindset. (0:36:54) Explore the power of understanding your money story for better financial decisions. (0:39:04) Unpack the common money habits to break and examples of toxic behaviours. (0:43:34) The interconnection between trauma and money and why it is important. (0:48:01) Jessica shares how learning about trauma informed her counselling approach. (0:53:05) Navigating mental health challenges and intergenerational money experiences. (0:58:11) Discover why spending money will not lead to long-term happiness. (1:02:33) Tips to begin rewriting your money story and Jessica's definition of success. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Canadian Couch Potato — https://canadiancouchpotato.com/ Jessica Moorhouse — https://jessicamoorhouse.com/ Jessica Moorhouse on LinkedIn — https://www.linkedin.com/in/jessicaimoorhouse/ Jessica Moorhouse on YouTube — https://www.youtube.com/c/jessicamoorhouse1 Jessica Moorhouse on TikTok — https://www.tiktok.com/@jessicaimoorhouse Jessica Moorhouse on Facebook — https://www.facebook.com/jessicaimoorhouse Jessica Moorhouse on Instagram — https://www.instagram.com/jessicaimoorhouse/ More Money Podcast — https://podcasts.apple.com/za/podcast/more-money-podcast/id996219697 Everything but Money — https://www.amazon.com/Everything-but-Money-Barriers-Financial/dp/1443472174
Dimensional Fund Advisors (DFA) and Vanguard have intersecting histories rooted in the development of the first-ever index fund. Vanguard's market-cap weighted index funds have been nothing short of revolutionary and they became synonymous with sensible investing for many good reasons, but Dimensional took implementing the ideas from academic finance a few steps further, leading to their own deserved acclaim. In today's episode, Ben and Dan analyze over 30 years of history between DFA and Vanguard, from their founding and relationship to their rise as global leaders in asset management. We discover how their approaches to foundational finance theory differ, whether diversification is mostly semantics, and how DFA and Vanguard compare to one another over 25 years of matched US-domiciled mutual funds. We also discuss which approach is easier to implement, essential insights for fund advisors, DFA's downsides despite its long-term outperformance of the Vanguard 500, and an uplifting cancer update from Ben in today's After Show. For practical investment takeaways, tune in today! Key Points From This Episode: (0:01:14) Unpacking DFA and Vanguard's history and relationship. (0:03:10) Mac McQuown and the birth of index funds at Wells Fargo in 1964. (0:07:48) How DFA and Vanguard became global leaders in asset management. (0:10:43) Understanding DFA and Vanguard's approach to foundational finance theory. (0:19:34) The semantics of diversification. (0:22:22) Comparing 25 years of matched Dimensional and Vanguard US mutual funds. (0:33:36) Which fund advisor's approach is easier for others to implement and why. (0:39:30) How DFA has outperformed Vanguard in the long run (with downsides to consider). (0:43:09) Recapping today's conversation: what every fund advisor needs to know. (0:46:41) The After Show: Ben's cancer update, Dan as co-host, and listener reviews. Links From Today's Episode: Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582 Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Canadian Couch Potato — https://canadiancouchpotato.com/ Dimensional — https://www.dimensional.com/ Vanguard — https://investor.vanguard.com/ ‘Remembering John “Mac” McQuown, Whose Curiosity Drove a Life of Innovation' — https://www.dimensional.com/dk-en/insights/remembering-john-mac-mcquown-whose-curiosity-drove-a-life-of-innovation ‘Episode 182: John “Mac” McQuown: The Data Will Sort That Out' — https://rationalreminder.ca/podcast/182 Wells Fargo — https://www.wellsfargo.com/ ‘Episode 131: David Booth: The First Index Fund, Competing Fiercely, and Keeping it Simple' — https://rationalreminder.ca/podcast/131 William F. Sharpe | Stanford University — http://web.stanford.edu/~wfsharpe/bio/bio.htm ‘Episode 316 - Andrew Chen: "Is everything I was taught about cross-sectional asset pricing wrong?!"' — https://rationalreminder.ca/podcast/316 Marco Salmon on LinkedIn — https://www.linkedin.com/in/marco-a-salmon-a63512284 Books From Today's Episode: The Incredible Shrinking Alpha — https://www.amazon.com/dp/0857198246 Papers From Today's Episode: ‘The relationship between return and market value of common stocks' — https://doi.org/10.1016/0304-405X(81)90018-0 ‘Market Efficiency' — https://www.jstor.org/stable/246460 ‘The Cross-Section of Expected Stock Returns' — https://doi.org/10.2307/2329112 ‘A Five-Factor Asset Pricing Model' — https://dx.doi.org/10.2139/ssrn.2287202 ‘The Performance of Mutual Funds in the Period 1945-1964' — https://dx.doi.org/10.2139/ssrn.244153 ‘The Death of Diversification Has Been Greatly Exaggerated' — https://ssrn.com/abstract=2998754
Our conversations with Professor Scott Cederburg from Eller College of Management have led to the most heated debates among our listeners! Today, Prof. Cederburg returns to discuss the changes he's made to his paper that was the foundation of previous conversations - ‘Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice'. We begin with the data setup and headline findings of the paper before Prof. Cederburg defines “domestic” and “international” as they appear in his paper, why the block bootstrap approach is vital to his work, how and why the results of his paper differ from the status quo, and the evaluation metrics he uses to compare different investment strategies. Then, we explore his optimal base portfolio, the strategy he uses to derive it, how it performs in simulated worst-case scenarios, and how it changes when ditching the bootstrap approach or changing strategies from constant spending to proportional spending. To end, we learn of the importance of including the US in international stock portfolios, how it changes when the US is viewed as special above others, the correlation between labor income and domestic stock returns, and how the reviews of academics and practitioners have changed since the first iteration of the paper until this latest edition. Key Points From This Episode: (0:00:00) What to look forward to in today's conversation with Prof. Scott Cederburg (0:04:49) The data setup and headline findings from his paper, ‘Beyond the Status Quo.' (0:07:01) Defining “domestic” and “international” as they appear in Prof. Cederburg's paper. (0:08:34) Why the bootstrap approach is necessary for his work. (0:12:17) How and why the results of his paper differ from the status quo. (0:15:11) Unpacking the evaluation metrics he uses to compare different investment strategies. (0:16:05) Exploring his optimal base case portfolio and strategy, and how it performs in worst-case simulations. (0:23:05) How the optimal allocation changes when households vary their portfolio weights. (0:27:13) What to consider when ditching the block bootstrap in time-varying optimal portfolios. (0:29:46) Constant spending versus proportional spending: How the optimal portfolio changes. (0:30:49) Examining the sequence of returns risk. (0:42:14) The importance of including the US market in international stock portfolios. (0:43:40) Why the US is treated the same as any other domestic country in the paper, and how the data changes if it's viewed as special. (0:51:40) The extent of the relationship between labor income and domestic stock returns. (0:53:01) How leverage affects optimal portfolio results. (1:05:20) Assessing how sensitive the paper's results are to risk aversion. (1:06:35) How academics and practitioners have responded to this paper across all iterations. Links From Today's Episode: Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Professor Scott Cederburg — https://eller.arizona.edu/people/scott-cederburg Professor Scott Cederburg on LinkedIn — https://www.linkedin.com/in/scott-cederburg-0917b0121/ Professor Scott Cederburg on Google Scholar — https://scholar.google.com/citations?user=CZKf3WEAAAAJ Eller College of Management — https://eller.arizona.edu/ Episode 224: Prof. Scott Cederburg: Long-Horizon Losses in Stocks, Bonds, and Bills — https://rationalreminder.ca/podcast/224 Episode 284: Prof. Scott Cederburg: Challenging the Status Quo on Lifecycle Asset Allocation — https://rationalreminder.ca/podcast/284 Vanguard — https://investor.vanguard.com/ ‘The Portfolio Size Effect and Using a Bond Tent to Navigate the Retirement Danger Zone' — https://www.kitces.com/blog/managing-portfolio-size-effect-with-bond-tent-in-retirement-red-zone/ Papers From Today's Episode: ‘Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4590406 ‘Is The United States a Lucky Survivor: A Hierarchical Bayesian Approach' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3689958 ‘Risk-Free Interest Rates' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3242836
In questa puntata di Too Big To Fail, il podcast di finanza più originale dopo ChatGPT parliamo di quello di cui hanno parlato al Rational Reminder… che era… Ah, sì, la asset allocation!I consigli di oggi:Nicola: Under The Banner of HeavenVittorio: Adam SomethingAlain: John Mulaney: il cavallo all'ospedale
In this episode, Ben, Dan, and Mark tackle another Ask Me Anything (AMA) session, covering a wide range of investing and financial planning topics. They begin with a highly requested debate on factor investing versus market cap-weighted portfolios and unpack the theory, research, and practical considerations behind both strategies. Ben explains why he prefers factor tilts when managing client portfolios, while Dan shares his perspective on why a simple market cap-weighted approach is more practical and sustainable. Then, they delve into the drivers of investor behaviour, common mistakes investors make, and powerful strategies to help investors overcome biases and improve their decision-making abilities. They also discuss the role of bonds in a portfolio, whether international bonds offer additional benefits, key retirement planning strategies, and the impact of sequence-of-returns risk. Join the conversation to discover how large corporations manage cash reserves, unpack the SPIVA Canada 2024 report findings, and explore the continued struggles of active management. Tune in now! Key Points From This Episode: (0:01:06) Ben explains why market cap weighting is a valid strategy but prefers factor tilting. (0:06:58) Dan shares why he prefers market cap weighting approaches over factor tilting. (0:13:45) Hear how client expectations shape their investment approaches. (0:18:12) How to overcome the psychological challenges of investing and reframe your mindset. (0:22:02) The role of bonds and fixed income in a portfolio and sequence of withdrawal risk. (0:36:19) Recommendations for factor ETFs and the home biases associated with them. (0:39:48) Unpack the 4% rule for retirement planning and amortization-based withdrawals. (0:47:47) Expected returns for a “millennial” portfolio and why 10% annualized is unrealistic. (0:52:38) Find out if PWL would ever open a branch in the US and about their US partnerships. (0:53:20) Explore how corporate cash management differs from typical household investing. (0:55:59) Uncover the value of bonds and the common misconceptions surrounding them. (1:00:40) Learn about the pros and cons of investing in stocks and ETFs. (1:09:13) Aftershow: the SPIVA Canada 2024 report, activate management struggles, updates, and more. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.ca Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Dan Bortolotti — https://pwlcapital.com/our-team/ Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Canadian Couch Potato Blog — https://canadiancouchpotato.com/ Canadian Couch Potato Podcast — https://canadiancouchpotato.com/podcast/ Dimensional (DFA) vs. Vanguard — https://www.youtube.com/watch?v=JfknibBat2A Episode 93: Cliff Asness from AQR — https://rationalreminder.ca/podcast/93 Episode 135: William Bengen — https://rationalreminder.ca/podcast/135 Episode 297: Do Stocks Return 10-12% On Average? — https://rationalreminder.ca/podcast/297 Episode 340: Ben Mathew — https://rationalreminder.ca/podcast/340 Episode 343: How to Choose an Asset Allocation — https://rationalreminder.ca/podcast/343 Credit Suisse Data — https://marketdata.credit-suisse.com/pmdr/en/index.html#/ SPIVA® Canada Year-End 2024 — https://www.spglobal.com/spdji/en/spiva/article/spiva-canada/ The Wealthy Barber Podcast — https://thewealthybarber.com/podcast/ Books From Today's Episode: Wealthier — https://www.amazon.com/Wealthier-Investing-Field-Guide-Millennials-ebook/dp/B0CX2VD1CW
Is the government manipulating inflation data? Why do so many people feel like their personal costs are rising faster than official inflation numbers suggest? In this episode of the Rational Reminder Podcast, we dive deep into one of the most debated and misunderstood economic topics: inflation. Today, we are joined by Andrew Barclay, an economist and senior analyst in the Consumer Price Division at Statistics Canada, to discuss everything you need to know about inflation and the Consumer Price Index (CPI). Statistics Canada is Canada's national statistical agency dedicated to producing accurate, relevant, and timely data to help Canadians better understand their country. In our conversation, we unpack how inflation and the CPI are calculated and why it is so important. We explore the controversy around CPI calculations and the influence of inflation on government benefits, tax brackets, and the overall economy. Andrew also addresses scepticism and conspiracy theories about government inflation reporting, uncovers drivers of the perception gap, and explains how Statistics Canada ensures the accuracy and integrity of its data. Join us to hear the real story behind CPI and inflation with Andrew Barclay! Key Points From This Episode: (0:00:00) Background about Andrew and what inspired today's topic. (0:05:33) Find out why measuring inflation is important and how the CPI is calculated. (0:10:08) What goes into the CPI basket and how frequently the contents are updated. (0:12:42) How consumer choices impact inflation and how 'shrinkflation' is accounted for. (0:15:43) Learn how quality adjustments are accounted for in the CPI and why they matter. (0:19:01) Scepticism surrounding quality adjustments and how the CPI adapts to crises. (0:25:21) The role of grocery price tracking and why Canada uses a single CPI measure. (0:28:08) Explore the idea of personal inflation and why it is usually different to the CPI. (0:31:10) The difference between home prices and housing costs and how they are calculated. (0:35:41) Hear how Statistics Canada's approach for housing compares to other methodologies. (0:41:15) Perceived inflation versus actual inflation and drivers of the inflation perception gap. (0:51:58) Statistics Canada's method of dealing with the perception gap and ensuring quality. (0:55:51) Uncover the most criticized indexes and how Statistics Canada includes feedback. (1:01:52) Andrew's message for those who do not trust the CPI and his definition of success. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Andrew Barclay on LinkedIn — https://www.linkedin.com/in/andrew-barclay-a38b6035/ Statistics Canada — https://www.statcan.gc.ca/ Canadian System of National Accounts | 'Catalogue of products' — https://publications.gc.ca/Collection/Statcan/13F0029X/13F0029XIE2000001.pdf Bank of Canada — https://www.bankofcanada.ca/ Canadian Real Estate Association (CREA) — https://www.crea.ca/ Episode 323: Renting Versus Buying a Home in Canada 2005-2024 — https://rationalreminder.ca/podcast/323 Surveys of Consumers | University of Michigan — https://data.sca.isr.umich.edu/ Statistics Canada | The Daily — https://www150.statcan.gc.ca/n1/dai-quo/index-eng.htm Books From Today's Episode: The Courage to Be Disliked — https://www.amazon.com/Courage-Be-Disliked-Phenomenon-Happiness/dp/1501197274 Papers From Today's Episode: 'The naked eye versus the CPI: How does our perception of inflation stack up against the data?' — https://www.statcan.gc.ca/o1/en/plus/256-naked-eye-versus-cpi-how-does-our-perception-inflation-stack-against-data
Are index funds the best investment strategy for most investors? In this episode of Rational Reminder, Benjamin Felix, Dan Bortolotti, and Mark McGrath explore why low-cost index funds should be the primary investment strategy for most people. They explain how index funds evolved from a niche concept to a widely accepted strategy and outline their six key benefits. Learn about the fees associated with index funds, why index funds outperform most actively managed funds, and how to avoid the risks of picking individual stocks. They also explore academic research on long-term mutual fund performance, the persistence (or lack thereof) in active management, and the dangers of alternative indexing schemes. Discover how behaviour impacts investment decisions and why a globally diversified portfolio is crucial. Finally, in the aftershow, Ben shares an update regarding his health and listener feedback from the Rational Reminder community. Join the conversation and uncover why index funds are the best investment strategy and how to leverage them effectively to maximize your portfolio for long-term gains. Tune in now! Key Points From This Episode: (0:01:58) Outline of today's topic and why index funds should be everyone's main investment strategy. (0:05:10) Index fund fundamentals, market cap weighting, and why not all ETFs are index funds. (0:10:03) Learn about the transition of index funds into mainstream finance and their low-fee advantages. (0:13:30) Linking fees to index performance and why lower fees gives them an advantage over managed funds. (0:19:50) The general awareness about index funds and what impact the lack of diversification has on actively managed funds. (0:26:35) Explore critical research comparing the returns on investment between index funds and actively managed funds. (0:33:32) Unpack why the size of the active management industry matters and common misconceptions surrounding the long-term returns of mutual funds. (0:42:26) Discover why some fund managers do well and how sector-specific performance influences stock returns. (0:48:28) Unpack why average returns are better than beating the market and what makes index funds tax efficient. (0:51:08) Find out what makes index funds easy to use and how this results in higher returns in the long term. (0:55:25) How index funds are consistent with foundational finance theory and why thematic ETFs and sector-specific index funds should be avoided. (1:05:40) The aftershow: Ben shares a personal health update, Rational Reminder news, and a request for listener AMA questions. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Dan Bortolotti — https://pwlcapital.com/our-team/ Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Canadian Couch Potato Blog — https://canadiancouchpotato.com/ Canadian Couch Potato Podcast — https://canadiancouchpotato.com/podcast/ Episode 54: Dr. David Blitzer — https://rationalreminder.ca/podcast/54 Episode 124: Prof. Lubos Pastor — https://rationalreminder.ca/podcast/124 Episode 133: Adriana Robertson — https://rationalreminder.ca/podcast/133 Episode 220: Jonathan Berk and Jules van Binsbergen — https://rationalreminder.ca/podcast/220 Episode 244: Charles D. Ellis — https://rationalreminder.ca/podcast/244 Episode 268: Itzhak Ben-David — https://rationalreminder.ca/podcast/268 Episode 302: Michael Green — https://rationalreminder.ca/podcast/302 Episode 346: Hendrik Bessembinder — https://rationalreminder.ca/podcast/346 Coffeezilla — https://www.youtube.com/@Coffeezilla Coffeezilla: Investing for Idiots — https://www.youtube.com/watch?v=hoGm61I52YQ YCharts — https://ycharts.com/ Papers From Today's Episode: 'The Arithmetic of Active Management' — https://www.tandfonline.com/doi/pdf/10.2469/faj.v47.n1.7 'Sharpening Sharpe's Arithmetic' — https://www.tandfonline.com/doi/full/10.2469/faj.v74.n1.4 'Mutual Fund Flows and Performance in Rational Markets' — https://www.journals.uchicago.edu/doi/abs/10.1086/424739 'Why Indexing Works' — https://onlinelibrary.wiley.com/doi/abs/10.1002/asmb.2271 'Long-Term Shareholder Returns: Evidence from 64,000 Global Stocks' — https://www.tandfonline.com/doi/abs/10.1080/0015198X.2023.2188870 'The Performance of Mutual Funds in the Period 1945-1964' — https://www.jstor.org/stable/2325404 'On Persistence in Mutual Fund Performance' — https://doi.org/10.1111/j.1540-6261.1997.tb03808.x 'Capital Asset Prices: A Theory of Market Equilibrium Under Conditions of Risk' — https://onlinelibrary.wiley.com/doi/full/10.1111/j.1540-6261.1964.tb02865.x 'Passive in name only: Delegated management and index investing' — https://heinonline.org/HOL/LandingPage?handle=hein.journals/yjor36&div=20&id=&page=
Did you know that just a handful of stocks drive nearly all of the stock market's long-term gains? In this episode, we sit down with Hendrik Bessembinder to discuss his groundbreaking research on why most stocks fail to outperform Treasury bills and how a small fraction of stocks generate the most long-term market returns. Hendrik is a Professor in the Department of Finance at Arizona State University whose research focuses on market design, trading, and long-term investment performance across stock, foreign exchange, fixed income, futures, and energy markets. In addition to his academic contributions, Professor Bessembinder has over 25 years of consulting experience, advising major firms, financial markets, and government agencies. In our conversation, we delve into the findings of his research and find out how a small fraction of stocks generate the majority of long-term returns. We explore why traditional investment strategies often overlook the impact of skewness, the impacts of broad diversification and passive investing, and why active fund managers struggle to beat the market. Discover why chasing past returns can lead to costly mistakes, his latest research on 'sustainable returns', what type of industries have the highest stock returns, common investing mistakes, and more. Join us to uncover the surprising realities of stock market returns and how you can build a portfolio that stands the test of time with Professor Hendrik Bessembinder. Key Points From This Episode: (0:03:54) Explore Hendrik's research on long-term stock returns and how most returns come from a small group of stocks. (0:08:30) Learn how company size interacts with the skewness in stock returns and what it means for individual investors. (0:11:39) Considering fundamentals in stock returns and the implications of skewness for measuring portfolio performance. (0:15:42) Unpack how he used bootstrap simulations in his paper and the performance of stock returns versus Treasury bills. (0:19:01) Find out the proportion of US firms responsible for dollar wealth creation and why diversification is essential for long-term stock returns. (0:25:23) Navigating volatility in the market and why it is difficult to identify skilled managers in time to leverage the market. (0:28:00) Compare the performance of US stocks versus global stocks and what is driving their performance. (0:32:04) What the findings of his research means for financial planners and individual investors. (0:35:35) Uncover which US firms generated the highest returns and what type of industries these companies are in. (0:42:07) Hear about the long-term performance of US mutual funds and how investor behaviour contributes to it. (0:49:54) How passive investing and index funds have reduced the contributions of actively managed mutual funds and the lessons for investors. (0:55:48) Discover Professor Bessembinder's broader research interests and his definition of success. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Professor Hendrik Bessembinder — https://search.asu.edu/profile/2717225 Arizona State University — https://www.asu.edu/ KRIS — https://www.kris-online.com/ Professor Hendrik Bessembinder papers on SSRN — https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=667 SPIVA — https://www.spglobal.com/spdji/en/research-insights/spiva/ Episode 322: Professor Marco Sammon — https://rationalreminder.ca/podcast/322 Episode 124: Professor Lubos Pastor — https://rationalreminder.ca/podcast/124 Papers From Today's Episode: 'Do Stocks Outperform Treasury Bills?' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X18301521 'Extending Portfolio Theory to Compound Returns' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3875870 'Luck versus Skill in the Cross-Section of Mutual Fund Returns' — https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.2010.01598.x 'Measuring Skill in the Mutual Fund Industry' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X15000628 'Long-Term Shareholder Returns: Evidence from 64,000 Global Stocks' — https://www.tandfonline.com/doi/abs/10.1080/0015198X.2023.2188870 'Which U.S. Stocks Generated the Highest Long-Term Returns?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4897069 'How Should Investors' Long-Term Returns Be Measured?' — https://www.tandfonline.com/doi/abs/10.1080/0015198X.2024.2401765
What are the investment implications of Bitcoin's past performance? How should investors think about market efficiency in places with high corruption and low transparency? Is return stacking a game changer for individual investors? In this AMA episode, Ben Felix, Dan Bortolotti, and Mark McGrath tackle some of the most pressing financial and investment questions from listeners. They explore the efficiency of markets, the role of leverage in portfolios, and whether valuation metrics like the Shiller PE are still relevant today. Join us for insights on modern investing, behavioral finance, and the principles guiding long-term wealth building. Key Points From This Episode: (0:00) Introduction and AMA format discussion (3:32) Bitcoin as an investment and its role in a portfolio (14:29) The debate on factor investing in markets where factor ETFs are unavailable (19:40) The role of ETFs and whether a single all-equity fund is optimal (22:22) The risks and opportunities of buffered ETFs (26:25) Investing in markets with high corruption and low transparency (29:42) Emerging market investing and its place in a diversified portfolio (30:06) The concept of "Return Stacking" and its viability for investors (38:55) Should individual investors use leverage for higher returns? (40:51) Balancing Benjamin Graham's philosophy with modern portfolio theory (47:51) The role of valuation metrics like the Shiller PE ratio in predicting returns (50:16) The impact of AI and tech stocks on market performance (56:12) The psychology of investing and resisting market noise Links From Today's Episode: Rational Reminder on Apple Podcasts — https://podcasts.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582 Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on YouTube — https://www.youtube.com/@rationalreminder/ Rational Reminder Email — info@rationalreminder.ca Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin Felix on X — https://x.com/benjaminwfelix Benjamin Felix on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Dan Bortolotti — https://pwlcapital.com/our-team/ Dan Borltolotti — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP
What if the key to successful investing is about understanding how market expectations, intangible assets, and even your own biases shape the outcome? In this episode, Cameron sits down with Michael Mauboussin, a renowned expert in investment strategies and behavioural finance, to explore how the evolving dynamics of investing influence valuation, investor decision-making, and market efficiency. Michael is the head of Consilient Research at Counterpoint Global, part of Morgan Stanley Investment Management, and an adjunct professor at Columbia Business School, where he teaches courses on investing and decision-making. His work focuses on behavioural biases, skill versus luck, complex adaptive systems, and valuation. In our conversation, we discuss the core principles of equity investing, unpack the evolution of intangible assets, and explore how market dynamics are influenced by index funds. You'll learn about capital allocation strategies, the shifting landscape of private equity, accounting challenges with intangibles, and how traditional investment frameworks are being redefined. Michael also provides insight into the "free dividend" fallacy, the importance of understanding the basic unit of analysis, the paradox of skill in active management, and more. Join us to learn about market and investing fundamentals to improve your strategy with Michael Mauboussin. Tune in now! Key Points From This Episode: (0:03:08) What the primary job of an equity investor is and the origin of stock returns. (0:05:37) Why dividends are less critical to total shareholder return unless fully reinvested. (0:08:43) Dissect the behaviour of investors in dividend stocks and the "free dividend fallacy." (0:10:01) Value versus growth classifications and how intangible assets impact valuations. (0:16:39) Learn about the potential advantages for companies investing in intangible assets. (0:20:20) How to determine a company's position in the competitive advantage life cycle. (0:24:42) The phase that offers the highest returns and what to consider about newer industries. (0:26:18) Explore the tradeoffs of intangible-intensive companies and the impact on base rates. (0:29:22) Pitfalls of valuation multiples and the implications for systematic value investors. (0:32:25) Relevance of market metrics and how index funds have affected alpha opportunities. (0:38:14) Effects of rising indexed assets and what to consider about market concentration. (0:45:01) Discover the historical link between market concentration and future returns. (0:46:31) How active managers benefit markets and misconceptions about skilled managers. (0:48:46) The value of active managers and advice for structuring investment portfolios. (0:52:44) Unpack the shift from public to private equities and why it happened. (0:55:40) Insights into the benefits of private over public equities for investors. (0:58:00) Ways intangible assets influenced the rise of private equity. (0:59:27) What the market says about future returns and using public equity for diversification. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Michael Mauboussin — https://www.michaelmauboussin.com/ Michael Mauboussin on LinkedIn — https://www.linkedin.com/in/michael-mauboussin-12519b2/ Michael Mauboussin on X — https://x.com/mjmauboussin Columbia Business School — https://business.columbia.edu/ Morgan Stanley | Counterpoint Global — https://www.morganstanley.com/im/en-us/individual-investor/about-us/investment-teams/active-fundamental-equity/counterpoint-global-team.html The Heilbrunn Center for Graham and Dodd Investing — https://business.columbia.edu/heilbrunn Episode 332: Randolph Cohen and Michael Green — https://rationalreminder.ca/podcast/332 Books From Today's Episode: The Success Equation — https://www.amazon.com/Success-Equation-Untangling-Business-Investing/dp/1422184234 More Than You Know — https://www.amazon.com/More-Than-You-Know-Unconventional/dp/0231143729 Expectations Investing — https://www.amazon.com/Expectations-Investing-Reading-Prices-Returns/dp/159139127X Think Twice — https://www.amazon.com/Think-Twice-Harnessing-Power-Counterintuition/dp/1422187381 Creating Shareholder Value — https://www.amazon.com/Creating-Shareholder-Value-Managers-Investors/dp/0684844109 Capitalism Without Capital — https://www.amazon.com/Capitalism-without-Capital-Intangible-Economy/dp/0691175039 The New Goliaths — https://www.amazon.com/New-Goliaths-Corporations-Industries-Innovation/dp/0300255047 Security Analysis — https://www.amazon.com/Security-Analysis-Foreword-Buffett-Editions/dp/0071592539 — Papers From Today's Episode: 'The Dividend Disconnect' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2876373 'Trading Stages in the Company Life Cycle' — https://www.morganstanley.com/im/en-gb/intermediary-investor/insights/articles/trading-stages-in-the-company-life-cycle.html
Choosing an asset allocation is a crucial investment decision, as it determines expected returns and risk exposure. During this episode, we uncover what this means, exploring topics such as why risk may not always be the best assessment method. We unpack the three factors that John Grable's risk profiling framework considers: behavioural loss tolerance, the ability to take risk (which assesses the financial capacity to withstand losses without affecting lifestyle), and the need to take risk. Many investors sabotage their returns by selling after losses and buying after gains, and we discuss the reasons behind this. We also explore why stocks tend to become less risky over long horizons, while bonds can be vulnerable to inflation and interest rate changes, before explaining why investors should focus on compensated risks. In the aftershow, we address listener comments on absolute returns, XEQT, why we have made certain sponsorship decisions, and more. To gain a deeper understanding of risk and avoid common pitfalls that can undermine your returns, tune in today! Key Points From This Episode: (0:05:10) The critical importance of choosing an asset allocation and understanding risk. (0:08:35) How behavioural loss tolerance impacts asset allocation. (0:18:42) Psychological theory on risk tolerance and willingness to engage in financial behavior. (0:30:48) Assessing your need to take risks. (0:39:24) Why market volatility is not where the true risks lie. (0:47:42) Private credit, other portfolio alternatives, and GICs. (0:53:03) The aftershow: demystifying the AMA controversy. (1:00:20) Absolute returns, XEQT, and sponsorship on the Rational Reminder. (1:12:05) An update on Ben's health and what he has learned from this experience. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Dan Bortolotti — https://pwlcapital.com/our-team/ Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Canadian Couch Potato Blog — https://canadiancouchpotato.com/ Canadian Couch Potato Podcast — https://canadiancouchpotato.com/podcast/ Papers From Today's Episode: 'The Grable and Lytton risk-tolerance scale: a 15-year retrospective' — https://static.arnaudsylvain.fr/2017/03/The-Grable-and-Lytton-risk-tolerance-scale-15-year-retrospective.pdf
Today we are joined by the Professor of Finance at the University of Utah, Matt Ringgenberg to discuss everything related to anomaly returns. Matt's research – mainly centred on the actions of short sellers – has been published in all the major journals including the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies. We begin with the definition of an asset pricing anomaly before learning about the anomalies that Matt's research is primarily focused on. Then, we unpack anomaly returns and how they relate to anomaly signal information, what causes anomalies, the risk versus mispricing debate, and the barriers to accessing financial data that allow anomalies to persist. We also weigh Matt's research against its anomaly-denying counterparts, assess anomaly behaviour before and after publicly available signal information, explore models that help to predict future anomalies, and learn more about the economic mechanism underlying asset pricing anomalies. To end, we dive into Matt's paper, ‘The Loan Fee Anomaly' and explore the relationship between cross-sectional predictors and market returns, and Matt explains why long-term happiness is the only true marker of success. Key Points From This Episode: (0:05:07) Matt Ringgenberg defines an asset pricing anomaly and describes the anomalies his research is focused on. (0:06:27) When anomaly returns appear relative to the release of anomaly signal information. (0:07:57) How the annual forming of portfolios in June affects anomaly returns. (0:08:50) The cause of anomalies, and the risk versus mispricing debate on anomaly returns. (0:10:35) Unpacking the barriers to accessing financial data that allow anomalies to persist. (0:13:41) How Matt's rebalancing approach could affect anomaly-denying research. (0:14:37) Applying his work to valuation-based anomalies and to investors capturing anomaly returns in live-traded portfolios. (0:16:04) How anomalies behave before anomaly signal information is publicly available. (0:17:48) Exploring the models that can be used to predict future anomaly signals. (0:19:05) How anomaly premiums traded on predicted signals compare to trades on actual information release dates. (0:19:37) Understanding the economic mechanism underlying asset pricing anomalies. (0:24:38) Dissecting one of Matt's short-selling papers, ‘The Loan Fee Anomaly'. (0:32:51) The relationship between cross-sectional predictors and market returns. (0:39:11) What Matt hopes to pass on to his students in his Introduction to Investments course. (0:40:48) How Matthew Ringgenberg defines success. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Matthew Ringgenberg on Google Scholar — https://scholar.google.com/citations?user=NArgYXUAAAAJ Matthew Ringgenberg on LinkedIn — https://www.linkedin.com/in/matthewringgenberg/ Matthew Ringgenberg on X — https://x.com/Ringgenberg_M University of Utah — https://www.utah.edu/ Davidson Heath on LinkedIn — https://www.linkedin.com/in/davidson-heath-5a28999a/ Management Science — https://pubsonline.informs.org/journal/mnsc Journal of Financial and Quantitative Analysis — https://jfqa.org/ Morningstar Direct — https://www.morningstar.com/business/brands/data-analytics/products/direct YCharts — https://ycharts.com/ Andre Chen — https://andrewchen.substack.com/ David Booth | Dimensional Fund Advisors — https://www.dimensional.com/hk-en/bios/david-booth Papers From Today's Episode: ‘A Conversation with Benjamin Graham' — https://www.jstor.org/stable/4477960 ‘The Loan Fee Anomaly: A Short Seller's Best Ideas' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3707166 ‘Do Cross-Sectional Predictors Contain Systematic Information?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3459229
PWL Capital is undergoing an exciting change that will help the company bring a greater positive impact to the Canadian Wealth Management space and serve more clients effectively. In this episode, Ben Felix and Cameron Passmore welcome Mike Sullivan, co-founder of OneDigital, to share the inside story behind PWL Capital's recent decision to join forces with OneDigital. With nearly 25 years of experience in growth through acquisitions, Mike explains how their unique culture and strategic vision led to this exciting collaboration. We discuss Mike's role in driving OneDigital's expansion and how the company's values align with PWL's mission to offer low-cost, client-centric, systematic investing. He provides insights into why this partnership represents more than just a business transaction by amplifying a shared vision for Canadian investors. Our conversation also delves into the dynamics of mergers and acquisitions and examines the importance of culture and purpose in making these critical decisions. Today's episode offers a rare inside look at an M&A transaction with key players that many listeners will already be well-acquainted with. Tune in now to hear it all! Key Points From This Episode: (0:00:16) Details on PWL Capital's decision to partner with OneDigital. (0:14:31) An introduction to co-founder Mike Sullivan and OneDigital. (0:16:38) How Mike knows when an acquisition will be a good fit. (0:19:13) The opportunities for building a different kind of wealth management firm in Canada. (0:21:14) What attracted Mike to PWL as a potential OneDigital partner. (0:34:05) Mike's insights on applying what's worked to the Canadian marketplace. (0:36:14) How being part of OneDigital will make PWL better. (0:37:59) Mike and his co-founder Adam Bruckman's objectives for OneDigital. (0:40:20) Why you shouldn't expect changes to PWL's service offerings or teams. (0:45:02) How being part of OneDigital will help PWL assist other like-minded advisors. (0:46:36) The typical advisor profile that PWL/OneDigital Canada would like to attract. (0:53:15) Reflections on our hopes and goals: what we are looking forward to at PWL. (0:57:45) Mike's definition of success, plus Cam and Ben's answer to the success question! Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Mike Sullivan on LinkedIn — https://www.linkedin.com/in/mikesullivanatdigital/ OneDigital — https://www.onedigital.com/
What drives the best financial planning decisions? In this episode, Ben Felix and Mark McGrath sit down with Ben Mathew, a PhD in economics from the University of Chicago and author of Economics: The Remarkable Story of How the Economy Works. The discussion explores the lifecycle model of economics, a powerful yet underutilized framework for financial planning, and contrasts it with traditional approaches like safe withdrawal rates (SWR). Ben Mathew shares insights into the lifecycle model, its origins, and its practical applications in aligning financial decisions with personal goals over a lifetime. We also dig into Ben's innovative financial planning tool, TPAW (Total Portfolio Allocation and Withdrawal) Planner, designed to bring the lifecycle model into practice. While the discussion delves into the complexities of financial planning, it's packed with actionable insights for listeners seeking smarter, evidence-based strategies. Join us for a deep dive into the lifecycle model and discover how it compares to traditional safe withdrawal rates. Key Points From This Episode: (0:02:31) Identifying the main problem financial planning aims to solve and the biggest challenges in creating a plan for saving and spending across a lifetime. (0:05:49) Exploring the effectiveness of simple rules of thumb, like the 4% rule, and the economic models available to analyze financial planning problems. (0:09:16) Why the lifecycle model isn't more widely adopted. (0:12:06) The basic premise of the lifecycle model. (0:16:45) How withdrawals in the lifecycle model relate to amortization and how risk affects amortization-based withdrawals. (0:21:12) Examining how amortization-based variable spending aligns with consumption smoothing and responds to portfolio drops. (0:25:25) How updating expected return assumptions mitigates behavioural worry during market drops. (0:26:37) The variability in spending seen in historical simulations, how variable spending can be tailored to individual preferences, and the recommended frequency for updating financial calculations. (0:38:30) What the lifecycle model advises about asset allocation. (0:42:00) The importance of expected return assumptions in lifecycle asset allocation advice. (0:45:28) Adjusting lifecycle advice for when you have limited information about expected returns and how retirement glide paths compare to the lifecycle model. (0:50:03) How asset allocation in the model changes based on the time horizon of the goal. (0:54:10) The influence of different wealth levels on asset allocation in the lifecycle model. (0:56:43) How the safe withdrawal rate methodology works and key problems with its approach. (01:08:11) Connecting the probability of success metric to the utility function and differentiating variable safe withdrawal rates (SWR) from amortization-based withdrawals. (01:17:02) An overview of Ben's exciting online tool, TPAW (Total Portfolio Allocation and Withdrawal) Planner, for bringing the lifecycle model into practice. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Ben Mathew — http://www.benmatheweconomics.com/ Ben Mathew on LinkedIn — https://www.linkedin.com/in/bmathecon/ TPAW Planner — tpawplanner.com Bogleheads — https://www.bogleheads.org/wiki/Main_Page Books From Today's Episode: Economics: The Remarkable Story of How the Economy Works — https://www.amazon.com/Economics-Remarkable-Story-Economy-Works/dp/0988669102 The Missing Billionaires: A Guide to Better Financial Decisions — https://www.amazon.com/Missing-Billionaires-Better-Financial-Decisions/dp/1119747910
In our second episode of 2025, Ben, Mark, and Dan continue to work through the listener questions we received in our 2024 AMA. We begin with home country biases and how to continue to grow your money from an already diversified portfolio before comparing the benefits of stock trading strategies and EFT portfolio strategies. Then, we discuss the impact of volatile blockchains on the wider securities market, whether you need to adjust your investment strategy when new tariffs are imposed, the ins and outs of terminal wealth management, the benefits of focusing on a total market index, and the personal finance perspective of renting versus buying in Canada. To end, we explore the best practices for increasing risk exposure, take a closer look at FIRE (financial impendence, retire early), assess investing behavioural biases and misconceptions that still pose a threat to even literate investors, and learn about how the Rational Reminder podcast is changing the lives of our listeners. Key Points From This Episode: (0:01:59) Whether owning a home affects your home country bias and financial asset portfolio. (0:02:43) The correlation between the economic risks of housing and the local stock market. (0:07:21) How to keep growing your money if you already have a diversified portfolio. (0:14:16) When to split your portfolio, and stock trading strategy versus EFT portfolio strategy. (0:22:20) The impact of Bitcoin and volatile blockchains on the wider securities market. (0:24:46) Adapting your investment strategy after the introduction or increase of trading tariffs. (0:26:20) Maxing out tax-free savings accounts for non-incorporated high-income professionals. (0:33:22) Switching to a total market index to avoid index funds that overvalue the market. (0:37:48) Renting versus buying in Canada, from a personal finance perspective. (0:42:39) The best practices for increasing risk exposure. (0:51:19) Unpacking FIRE – financial independence, retire early. (0:56:05) Balancing allocations between traditional retirement savings vehicles and real estate. (1:00:56) Investing behavioural biases and misconceptions that harm even literate investors. (1:09:24) Whether bonds actually exist, and everything we've changed our minds about in 2024. (1:19:21) Shaping worldviews, on-demand information, and other highlights from your reviews. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Peter Mladina on LinkedIn — https://www.linkedin.com/in/peter-mladina-177194125/ Benjamin Felix Quote on X — https://x.com/benjaminwfelix/status/1760356591000301739 Robb Engen — https://boomerandecho.com/robb-engen/ Renaissance Technologies — https://www.rentec.com/Home.action?index=true Long Blockchain Corp — https://cryptohead.io/acquisitions/long-blockchain/ Nick Maggiulli on X — https://x.com/dollarsanddata Canadian Couch Potato Podcast — https://canadiancouchpotato.com/podcast/ Bitcoin Uncensored — https://www.podchaser.com/podcasts/bitcoin-uncensored-463350 Episode 335 - What About Warren Buffett — https://rationalreminder.ca/podcast/335 Episode 332: Randolph Cohen & Michael Green — https://rationalreminder.ca/podcast/332 Papers From Today's Episode: 'Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice' — https://dx.doi.org/10.2139/ssrn.4590406 ‘Action Bias among Elite Soccer Goalkeepers: The Case of Penalty Kicks' — https://www.researchgate.net/publication/222676583_Action_Bias_among_Elite_Soccer_Goalkeepers_The_Case_of_Penalty_Kicks
In today's episode, we unpack how rigorous research translates into actionable strategies for wealth management. Ben and Mark are joined by Peter Mladina, Executive Director of Portfolio Research at Northern Trust Wealth Management and professor at UCLA. With an impressive body of published work and practical innovations like his goals-based asset allocation software, Peter offers a unique perspective on bridging the gap between theory and practice. The conversation delves into foundational topics like asset allocation and factor models, with a special focus on practical applications of research in wealth management. Peter shares insights from his research, including intriguing findings on factor investing and joint tests of market efficiency. From real estate investment trusts to the nuances of the Intertemporal Capital Asset Pricing Model (ICAPM), the discussion covers how these concepts can directly inform financial planning and portfolio construction. Tune in to explore the intersection of academic insight and everyday financial decision-making! Key Points From This Episode: (0:00:17) Introducing Peter Mladina and his wealth management research. (0:04:00) Theoretical and practical shortcomings of Markowitz's Modern Portfolio Theory (MPT). (0:05:24) How the Capital Asset Pricing Model (CAPM) resolves MPT's shortcomings, and how the Intertemporal CAPM (ICAPM) resolves the CAPM and MPT's shortcomings. (0:10:16) Key distinctions between an optimal ICAPM portfolio and an optimal CAPM portfolio. (0:15:33) Allocating between liability hedge assets and risky assets, and when it's sensible for individual investors to try to fully hedge consumption liabilities. (0:20:14) The role of Monte Carlo simulation and human capital in building ICAPM portfolios. (0:24:15) Steps for practitioners starting with ICAPM and how to advise their clients. (0:37:18) Insights from Peter's papers on factor models: why common risk factors should explain returns across most asset classes. (0:40:11) The value of looking at asset classes through a factor lens. (0:41:54) Main factors Peter uses in his research and observations on the zoo of factors. (0:46:23) Takeaways from Peter's paper on real estate (and why he doesn't like it that much). (0:56:45) Unpacking hedge fund returns and factor models and Yale's endowment performance. (01:02:44) Peter's research on traded portfolios and jointly testing factor models and manager performance. (01:07:14) How Peter defines success, both professionally and personally. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Peter Mladina on LinkedIn — https://www.linkedin.com/in/peter-mladina-177194125/ Peter Mladina on SSRN — https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=890472 Northern Trust — https://www.northerntrust.com/ Episode 169: John Cochrane — https://rationalreminder.ca/podcast/169 Papers From Today's Episode: ‘Real Estate Betas and the Implications for Asset Allocation' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3134732 ‘An ICAPM Framework for Asset Allocation' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4319731 ‘An ICAPM for Goals-Based Investing' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4943241 'Portfolios for Long-Term Investors' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3790823 ‘Yale's Endowment Returns: Manager Skill or Risk Exposure?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2959074
As the year draws to a close, the Rational Reminder Podcast team delivers an engaging year-end special with a unique twist. Rather than curating clips from previous episodes, Ben Felix, Dan Bortolotti, and Mark McGrath dive into an AMA-style episode, answering listener-submitted questions. They share reflections on lessons learned, highlight impactful community discussions, and provide thoughtful takes on investing strategies, personal growth, and financial planning. They discuss their evolving views on human capital integration, portfolio diversification, and the importance of behavioural finance in long-term planning. They also revisit key themes from earlier episodes and offer heartfelt thank-yous to their team and audience for a remarkable year. Join us for a mix of practical insights, entertaining banter, and a glimpse into what's ahead for the Rational Reminder Podcast. Don't miss this memorable year-end wrap-up! Key Points From This Episode: (0:00:00) Episode format and a thank you to the PWL Capital team, producers, and audience. (0:05:14) Influential community discussions and their insights on efficient ETF design. (0:10:14) Hear the reason behind Ben's decision to shave his head for so long. (0:13:51) How to integrate human capital into useful financial planning and strategy. (0:19:33) They share their thoughts on the evolving definition of success in life and work. (0:23:33) Their top finance and investment book recommendations for retail investors. (0:28:50) Uncover the nuances of assessing a value premium within an ETF. (0:30:46) How real-life events shaped their approach to providing guidance and financial advice. (0:37:18) Return stacking and a comparison of Dimensional's and Avantis' vector portfolios. (0:41:05) Risks of bonds, bills, and credit and why past returns do not guarantee future results. (0:48:27) Explore the complexities of tax-efficient ETFs and Thrift Savings Plan (TSP) options. (0:56:50) Balancing long-term investment assumptions with short-term market dynamics. (1:03:23) We debate the U.S. market's valuation and the implications for asset allocation. (1:10:15) Hard financial lessons from Ben, Mark, and Dan's investment journeys. (1:16:29) Unpack the pros and cons of life insurance, infinite banking, and whole life insurance. (1:28:35) Aftershow: reviews, Marks's beard, a final thank you, and more. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Canadian Couch Potato — https://canadiancouchpotato.com/ The Podcast Consultant — https://thepodcastconsultant.com/ Morgan Housel — https://www.morganhousel.com Dimensional Fund Advisors — https://dimensional.com/ Avantis — https://avantisfi.com/ Dan Solin — https://danielsolin.com/ Global X — https://globalxetfs.com/ Episode 138: Factor Investing in Fixed Income — https://rationalreminder.ca/podcast/138 Episode 163: Dave Plecha — https://rationalreminder.ca/podcast/163 Episode 198: Gerard O'Reilly — https://rationalreminder.ca/podcast/198 Episode 316: Andrew Chen — https://rationalreminder.ca/podcast/316 Episode 332: Randolph Cohen & Michael Green — https://rationalreminder.ca/podcast/332 Books From Today's Episode: Are You a Stock or a Bond? — https://amazon.com/Are-You-Stock-Bond-Financial/dp/0133115291 Reboot Your Portfolio — https://amazon.com/Reboot-Your-Portfolio-Successful-Investing-ebook/dp/B09P4G9LR7 Wealthier — https://amazon.com/Wealthier-Investing-Field-Guide-Millennials-ebook/dp/B0CX2VD1CW The Psychology of Money — https://amazon.com/Psychology-Money-Timeless-lessons-happiness/dp/0857197681 Thinking, Fast and Slow — https://amazon.com/Thinking-Fast-Slow-Daniel-Kahneman/dp/0374533555 A Random Walk Down Wall Street — https://amazon.com/Random-Walk-Down-Wall-Street/dp/0393330338/ Winning the Loser's Game — https://amazon.com/Winning-Losers-Game-Strategies-Successful/dp/1264258461/ Wealth Planning Strategies for Canadians 2024 — https://amazon.ca/Wealth-Planning-Strategies-Canadians-2024/dp/166871504X Becoming Your Own Banker — https://amazon.com/Becoming-Your-Own-Banker-Infinite/dp/B001NZO1DS — Papers From Today's Episode: 'Who Are the Value and Growth Investors?' — https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12473 'Portfolios for Long-Term Investors' — https://academic.oup.com/rof/article/26/1/1/6484661 'Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice' — https://dx.doi.org/10.2139/ssrn.4590406
What shapes investor beliefs and behaviours? Steve Utkus, a leading expert in investor behaviour and former Global Head of Investor and Retirement Research at Vanguard, brings decades of groundbreaking insights to this episode. Drawing on exclusive access to Vanguard's anonymized client data and investor surveys, Steve uncovers the intricate links between what people believe and how they invest. In the first half, he reveals surprising findings from his research into investor beliefs and portfolio decisions. The second half dives into the impact of financial advisors, both human and robotic, on improving investor outcomes. Steve's reflections, enriched by years of collaboration with academic leaders and personal conversations with Vanguard founder Jack Bogle, offer a rare window into the world of data-driven financial research. Join us today for this fascinating conversation as we unpack fresh perspectives on investor behaviour and the evolving role of financial advice! Key Points From This Episode: (0:00:20) The importance of understanding investor belief, Steve's unique approach to studying it, and the benefits of using survey data. (0:08:37) Understanding the effects of individual beliefs on portfolio equity shares. (0:13:40) How equity sensitivity varies with things like trading frequency and how observed sensitivity compares with predictions of an asset pricing model. (0:17:27) The variation of beliefs across different groups and the strong effect of being a pessimist, optimist, or having a middle-of-the-road perspective. (0:21:29) Investor cash flow expectations, how it affects stock return expectations, and how it aligns with models of equilibrium. (0:24:35) The impact of stock market disaster expectations on future stock returns and the effect of COVID-19 on investor expectations. (0:33:37) ESG investing motives, portfolio impact, and the role of financial returns. (0:38:35) Unpacking the impact of robo-advisors on previously DIY investors and who benefits. (0:45:21) Pros and cons of human financial advisors: the needs they satisfy over robo-advisors. (0:53:12) How unadvised investors' needs differ from those who get financial advice. (0:54:04) What determines how much value investors place on financial advice and how they think about the trade-offs between fees and the value of advice. (01:00:00) Reasons traditionally-advised people give for not switching to robo-advising. (01:03:15) Having a relationship with a good advisor: how it impacts investor behaviour through poor market performance periods, and the importance of frequent quality communication. (01:13:07) The key attributes of a high-retention advisor and what they should be focusing on. (01:19:02) Success, retirement, timing, and knowing when to leave, according to Steve. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Steve Utkus on LinkedIn — https://www.linkedin.com/in/steveutkus/ Episode 278: Juhani Linnainmaa — https://rationalreminder.ca/podcast/278 Books From Today's Episode: Bogle on Mutual Funds — https://www.amazon.com/Bogle-Mutual-Funds-Perspectives-Intelligent/dp/111908833X Papers From Today's Episode: ‘Political Cycles and Stock Returns' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2920401 Scott Cederburg Paper — ‘The Diversification and Welfare Effects of Robo-advising' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X24000928 ‘Who Benefits from Robo-advising? Evidence from Machine Learning' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3552671 ‘Human Financial Advice in the Age of Automation' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4301514 ‘The Misguided Beliefs of Financial Advisors' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3101426
What makes Warren Buffett's investment legacy so iconic, and how has his advice shaped the world of investing? In this episode, we delve into Warren Buffet's investment philosophy and the lessons he offers everyday investors. In our conversation, we unpack the impact of his investment strategies on the financial world, debunk common misconceptions, and discuss how his strategies have changed over time. We also examine the structural barriers to replicating his success, the complexities of scale and changing market dynamics, and the parallels between his approach and modern asset pricing models. Discover Warren Buffett's astonishing historical returns, his perspectives on diminishing returns for active managers, and the misunderstood nuances of his advice regarding index funds. Gain insight into academic research on Warren Buffett's success, his pragmatic view on cash holdings, and his opinion on the value of dividends for investors. Tune in to learn about the world's greatest investor and how you can apply his wisdom to your own portfolio! Key Points From This Episode: (0:04:55) Warren Buffett's legacy and Berkshire Hathaway's performance history. (0:13:04) The problem of diminishing returns to scale and finding skilled active managers. (0:18:37) Reasons Buffett repeatedly advises most investors to choose low-cost index funds. (0:23:14) Why identifying skilled managers before they outperform the market is impossible. (0:30:15) Research explaining Buffett's success using multi-factor asset pricing models. (0:35:30) Insight into why Berkshire Hathaway holds large cash reserves as part of its strategy. (0:44:02) Buffett's views on dividends and why his focus remains on reinvestment. (0:48:16) Why diversification concentration is a bad strategy and Buffett's investing superpower. (0:57:07) Aftershow: Ben's experience of being on The Wealthy Barber podcast. (0:58:07) Reviews and feedback from the episode with Randolph Cohen and Michael Green. (1:04:58) Changes to our year-end episode format and what listeners can expect. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ CPP by the Fire — https://pages.pwlcapital.com/webinar_cpp_by_the_fire Braden Warwick on LinkedIn — https://linkedin.com/in/braden-warwick-a40b48a3/ PWL Capital CPP Tool — https://research-tools.pwlcapital.com/research/cpp Berkshire Hathaway — https://berkshirehathaway.com/ Berkshire Hathaway Shareholder Letters — https://berkshirehathaway.com/letters/letters.html Richard Ennis — https://richardmennis.com/author/richard-m-ennis Home Trust — https://hometrust.ca/ Ben on The Wealthy Barber Podcast — https://thewealthybarber.com/podcast/ben-felix-a-deep-dive-into-the-world-of-investing-twb-podcast-5/ Episode 61: Ted Seides — https://rationalreminder.ca/podcast/61 Episode 220: Jonathan Berk and Jules van Binsbergen — https://rationalreminder.ca/podcast/220 Episode 332 - Randolph Cohen & Michael Green — https://rationalreminder.ca/podcast/332 Books From Today's Episode: The Intelligent Investor — https://amazon.com/dp/B0CBQ18KDB/ Papers From Today's Episode: 'Buffett's Alpha' — https://doi.org/10.2469/faj.v74.n4.3 'Mutual Fund Flows and Performance in Rational Markets'— https://journals.uchicago.edu/doi/abs/10.1086/424739
How do you balance family values, evidence-based investing, and building long-term wealth? In this episode, we are joined by Magnus Reitan, CEO of Reitan Kapital, to discuss his evidence-based approach to wealth management. Reitan Kapital is a leading investment firm specializing in index fund strategies and innovative portfolio optimization techniques. Under his leadership, the firm has become a key player in the investment industry, known for its analytical approach and commitment to sustainable and effective financial solutions. In our conversation, we delve into the disciplined, evidence-based philosophy driving Reitan Kapital's investment strategy, the importance of simplicity in managing wealth, and the lessons he's learned as an investor and a leader. We also explore the nuances around managing family wealth, unpack the importance of aligning investment strategies with family and business goals, and uncover the influence of Norway's Sovereign Wealth Fund on Reitan Kapital's approach. Join us as we explore the intersection of finance, legacy, and innovation and learn why a low-cost, evidence-based investment strategy works with Magnus Reitan. Tune in now! Key Points From This Episode: (0:03:27) The Reitan family's journey from a single grocery store to a multinational group. (0:04:20) How Reitan Kapital fits into the broader Reitan Group and how it started. (0:06:35) Discover how Reitan Kapital defines risk and the role of access liquidity. (0:08:06) Magnus shares how he developed his personal investment philosophy. (0:09:33) Hear how his personal interest in finance led to founding Reitan Kapital. (0:11:24) Explore the differences between managing a business and a family portfolio. (0:12:26) Why the company chose to hire a CIO who was not part of the Reitan family. (0:13:59) Reitan Kapital's values: long-term perspective, diversification, liquidity, and low costs. (0:17:37) Hear how the family decided on and agreed to the company's investment approach. (0:18:58) Asset allocation at Reitan Kapital and the reasons behind its approach. (0:21:50) Avoiding portfolio complexity and the benefits of evidence-based investing. (0:24:30) The influence of Norway's Sovereign Wealth Fund on Reitan Kapital's philosophy. (0:26:07) Sources of information for learning about portfolio management and financial markets. (0:27:00) Lessons and key takeaways from the recent Reitan Kapital investor conference. (0:29:38) He shares his definition of success and why passion is important. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Magnus Reitan on LinkedIn — https://linkedin.com/in/magnus-reitan-3a6b90225/ Reitan Kapital — https://reitan.no/no/selskap/170/reitan-kapital Reitan Retail — https://reitanretail.no/en Reitan Eiendom — https://reitan.no/no/selskap/171/reitan-eiendom Episode 321: Evidence in Practice with Håkon Kavli — https://rationalreminder.ca/podcast/321 Håkon Kavli on LinkedIn — https://linkedin.com/in/haakonkavli/ Sindre Drevland on LinkedIn — https://linkedin.com/in/sindredrevland/
What does Trump's re-election mean for the markets? In this episode, Ben and Mark explore The Presidential Puzzle, a phenomenon revealing that equity risk premiums have historically been higher under Democratic presidencies than Republican ones. With Trump returning to office as the 47th U.S. president, they examine how voter risk aversion shapes political outcomes and market expectations, offering surprising insights into this intriguing connection between politics and investing. They also delve into market timing pitfalls, the importance of diversification, and how financial advisors can help investors navigate emotionally charged decisions. To wrap up, Ben and Mark reflect on listener perspectives and explore the intriguing future of Bitcoin in finance. Tune in to learn what Trump's win means for expected stock returns and more! Key Points From This Episode: (0:00:18) Mark and Ben's experiences at the Physician Financial Independence Conference. (0:06:53) Republicans vs. Democrats: What the election results mean for the stock market. (0:09:09) The Presidential Puzzle and how belief informs asset choices among voters. (0:15:12) How risk aversion and the economy impact election outcomes and expected returns. (0:20:08) What investors should and should not do with this information. (0:24:38) The dangers of making financial decisions based on emotional predictions. (0:30:02) Unpacking the relationship between global risk aversion and U.S. presidencies. (0:31:20) Our aftershow segment: digging into recent reviews, the podcast topic puzzle, Ben's recent trip to Boston, and Bitcoin. Links From Today's Episode: Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582 Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.ca Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Episode 217: The Expected Returns of Financial Literacy — https://rationalreminder.ca/podcast/217 Episode 313: When Should You Hire a Financial Advisor? — https://rationalreminder.ca/podcast/313 Episode 124: Ľuboš Pástor — https://rationalreminder.ca/podcast/124 Papers From Today's Episode: ‘Belief Disagreement and Portfolio Choice' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3934061 ‘Political Cycles and Stock Returns' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2920401 ‘The Presidential Puzzle: Political Cycles and the Stock Market' — https://www.jstor.org/stable/3648176
Hosts Ben Felix and Cameron Passmore welcome Harvard Business School senior lecturer Randy Cohen and Simplify Asset Management's Mike Green for an in-depth debate about passive investing's impact on financial markets. They explore whether the rise of index funds and target date funds poses systemic risks, discussing market efficiency, price elasticity, and implications for investors. Whether you're trying to understand the mechanics of passive investing or evaluating potential market risks, this episode provides a balanced debate between two leading thinkers with contrasting views on one of today's most important market structure questions. Key Points From This Episode: (0:00:15) Introduction and context setting from Cameron and Ben (0:06:03) Defining passive investing and discussion of current market share (estimated 45%) (0:16:10) Mike Green's critical concerns about the rise of passive investing (0:28:11) Debate on target date funds and their impact on market stability (0:54:57) Analysis of elasticity, valuations, and market structure (1:24:33) Discussion of forward market returns and investment implications (1:36:00) Practical implications for individual investors (1:44:38) Examining why many experts seem unconcerned about passive risks (1:50:56) Concluding thoughts on market valuations and policy implications Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on Apple Podcasts — https://podcasts.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582 Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on YouTube — https://www.youtube.com/@rationalreminder/ Rational Reminder Email — info@rationalreminder.ca Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Randy Cohen on LinkedIn — https://www.linkedin.com/in/randolph-cohen-ph-d-49a52410b/ Mike Green on LinkedIn — https://www.linkedin.com/in/michael-green-9a15142/
In today's episode, Cameron sits down with Mark McGrath to talk about his trip to Trondheim, Norway, the event he attended there, and his presentation in which he shared top lessons from prestigious Rational Reminder Podcast guests. Tuning in, you'll hear Cameron's top takeaways from conversations with Nobel laureate Eugene Fama and his collaborator Kenneth French, as well as Robert Merton, Antti Ilmanen, Professor Ludovic Phalippou, and more. We also delve into the changing industry trends regarding index investing and the many benefits that come with embracing it, including how it helps financial advisors better serve their clients. Stay tuned for our after-show section, where we discuss advice for new advisors, from developing a robust investment philosophy to building a network, along with insights to help consumers navigate the industry and much more. To learn all about Cameron's trip to Norway, top guest takeaways, and industry trends around index investing, be sure to tune in! Key Points From This Episode: (0:01:13) An overview of today's episode and a discussion on industry trends. (0:03:56) Our conversation with Håkon Kavli on managing Reitan Kapital. (0:04:38) What it was like for Cameron to meet Håkon Kavli and Magnus Reitan in Norway. (0:05:42) The excellent event in Trondheim, Norway, and their impressive lineup of speakers. (0:08:56) Unpacking industry trends in index investing and why more people are embracing it. (0:09:42) The light bulb moment for Mark and Cameron regarding index investing. (0:19:07) Highlights from our interviews with Eugene Fama, Ken French, and Robert Merton. (0:25:28) Dr. Annamaria Lusardi's insights and takeaways from our John Cochrane interview. (0:29:05) Top lessons from our conversation with Antti Ilmanen on low-expected returns. (0:30:58) Insights from talking with Professor Ludovic Phalippou about private equity. (0:32:22) Closing thoughts on Cameron's presentation in Norway and index investing trends. (0:39:44) Our aftershow segment: advice for new advisors, ways the industry has changed, tips for consumers, technology insights, personal updates, and more. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Episode 321: Evidence in Practice with Håkon Kavli – https://rationalreminder.ca/podcast/321 Professor Marcos López de Prado — https://www.orie.cornell.edu/faculty-directory/marcos-lopez-de-prado Erik Hilde — https://www.linkedin.com/in/erik-hilde-9570a785/?originalSubdomain=no Dan Bortolotti — https://www.canadianmoneysaver.ca/authors/dan-bortolotti Canadian Couch Potato Blog — https://canadiancouchpotato.com/ Canadian Couch Potato Podcast — https://canadiancouchpotato.com/podcast/ Justin Bender — https://www.linkedin.com/in/justin-bender-cfa-cfp%C2%AE-tep-195b8b27/?originalSubdomain=ca Episode 200: Prof. Eugene Fama — https://rationalreminder.ca/podcast/200 Tune Out the Noise — https://www.dimensional.com/film Episode 100: Prof. Kenneth French — https://rationalreminder.ca/podcast/100 Episode 234: Prof. Robert C. Merton — https://rationalreminder.ca/podcast/234 Episode 232: Dr. Annamaria Lusardi — https://rationalreminder.ca/podcast/232 Episode 169: Prof. John Cochrane — https://rationalreminder.ca/podcast/169 Episode 202: Antti Ilmanen – https://rationalreminder.ca/podcast/202 Episode 210: Prof. Ludovic Phalippou — https://rationalreminder.ca/podcast/210 Fama and French Three Factor Model — https://www.investopedia.com/terms/f/famaandfrenchthreefactormodel.asp Books From Today's Episode: Investing Amid Low Expected Returns — http://www.aqr.com/serenity The Empowered Investor — https://www.amazon.ca/Empowered-Investor-Canadian-Investment-Experience/dp/0991978307
What happens when index investing dominates the market? In this episode, we're joined by Davidson Heath, Assistant Professor of Finance at the University of Utah David Eccles School of Business, to explore this question and its surprising answers. Davidson's research dives into the unintended impacts of passive investing, examining how it influences price stability, corporate governance, and even the way we define shareholder responsibility. He unpacks how index funds, while supporting price efficiency, may be weakening governance structures by reducing shareholder oversight, a shift that could have lasting effects on corporate accountability. We also discuss the promise and limitations of socially responsible investing (SRI), as Davidson introduces the term “impact washing” to describe how some SRI funds fail to achieve real change despite their green branding. In a forward-looking segment, Davidson shares insights on the collaboration between AI and human intelligence in finance, giving a reassuring perspective on the future of machine and human co-existence in complex decision-making. This episode is a must-listen for anyone curious about the hidden dynamics of passive investing and the evolving role of technology in finance! Key Points From This Episode: (0:02:22) Davidson's paper On Index Investing; Why active managers are important to indexing. (0:08:42) Conclusions on how index investing is affecting price efficiency. (0:11:10) The role of shareholders in corporate governance. (0:13:06) How the incentives of index funds to monitor portfolio firms differ from active funds. (0:15:10) Measuring how well index or active funds are monitoring the companies they own. (0:16:54) How the expense ratios of index funds affect their quality of monitoring. (0:18:08) What shareholders can do to monitor and make themselves heard. (0:20:31) How index fund ownership affects other firm-level governance issues. (0:21:30) Recap and takeaways on index funds and the market. (0:25:39) The impact of socially responsible investing (SRI) and how successful they are at selecting firms with better environmental, social, and governance (ESG) characteristics. (0:28:08) Unpacking “impact washing” in SRI funds and its consequences. (0:33:04) Insights on how ETFs are replicating index funds. (0:37:03) The implications of Davidson's findings for index ETF investors and the markets. (0:38:57) Details on Davidson's Cyborg Trading project and how it's using AI to complement human intelligence. (0:42:42) How Davidson defines success: being a part of a worthwhile endeavour. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Davidson Heath — https://davidsontheath.github.io/ Davidson Heath on LinkedIn — https://www.linkedin.com/in/davidson-heath-5a28999a/ Davidson Heath on Google Scholar — https://scholar.google.com/citations?user=Fr-HyLEAAAAJ&hl=en Cyborg — https://www.imdb.com/title/tt0097138/ Papers From Today's Episode: ‘On Index Investing' — https://dx.doi.org/10.2139/ssrn.3055324 ‘Do Index Funds Monitor?' — https://doi.org/10.1093/rfs/hhab023 ‘Does Socially Responsible Investing Change Firm Behavior?' — https://doi.org/10.1093/rof/rfad002 ‘The Rise of Passive Investing and Active Mutual Fund Skill' — https://dx.doi.org/10.2139/ssrn.4190266 ‘Counterproductive Sustainable Investing: The Impact Elasticity of Brown and Green Firms' — https://dx.doi.org/10.2139/ssrn.4359282
Hosts Ben Felix, Dan Bortolotti, and Mark McGrath delve into the intricacies of the Registered Education Savings Plan (RESP), a tax-advantaged account designed to help Canadian families save for their children's post-secondary education. They explore optimal contribution strategies, debating whether to front-load contributions or maximize government grants over time. The conversation covers the complexities of RESP withdrawals, including the different types of payments and the importance of strategic timing to minimize taxes. They also discuss asset allocation strategies within an RESP, touching on whether a glide path approach makes sense. Dan shares a critical perspective on the RESP system, highlighting its shortcomings in assisting low-income families and offering suggestions for improvement. Whether you're a parent planning for your child's education or simply interested in financial planning and investment strategies, this episode provides valuable insights into making the most of RESPs. Key Points From This Episode: (0:03:00) Overview of the Registered Education Savings Plan (RESP) in Canada. (0:04:33) Discussion on contribution limits and government grants for RESPs. (0:07:15) Explanation of the Canada Learning Bond and provincial grants. (0:10:00) The flexibility and complexities of family RESPs. (0:12:51) Contribution strategies: front-loading vs. maximizing grants. (0:17:54) Optimal RESP withdrawal strategies and timing. (0:28:11) Asset allocation strategies within an RESP, including glide paths. (0:43:45) Dan's critique of the RESP system and suggestions for improvement. (0:55:37) Discussion on the inadequacy of RESP incentives for low-income families. (1:04:26) Positive observations about RESPs and their benefits. (1:09:19) Listener feedback and appreciation for the podcast hosts. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on Apple Podcasts — https://podcasts.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582 Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on YouTube — https://www.youtube.com/@rationalreminder/ Rational Reminder Email — info@rationalreminder.ca Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Dan Bortolotti on LinkedIn — https://linkedin.com/in/dan-bortolotti-8a482310/
Have you ever wondered how the world's top financial thinkers shaped the way we invest today? In this episode, Ben and Cameron sit down with Professor Stephen Foerster from the Ivey Business School to explore the evolution of modern investing. As a distinguished financial expert and co-author of In Pursuit of the Perfect Portfolio, Professor Foerster dives into the groundbreaking work of financial pioneers like Harry Markowitz, Bill Sharpe, Gene Fama, and others, unpacking their remarkable contributions to portfolio management, risk assessment, and market efficiency as we know it today. Tuning in, you'll gain a deeper understanding of Markowitz's revolutionary diversification theory, Sharpe's introduction of beta as a risk measure, and Fama's Efficient Market Hypothesis, as well as each of their perspectives on the “perfect portfolio,” tying together the history, theory, and practical application of modern investment strategies. Whether you're looking to sharpen your strategy or build your investment knowledge from the ground up, this conversation with Professor Foerster is packed with actionable takeaways and fascinating stories that could change the way you approach your financial future. Don't miss this opportunity to learn from the thought leaders who shaped the market! Key Points From This Episode: (0:03:29) Contrasting the historical art of investing with the modern science of investing. (0:04:44) Markowitz's diversification theory and the importance of balancing risk and return. (0:09:39) Sharpe's capital asset pricing model (CAPM) and his contribution to measuring risk. (0:16:13) Insight into Fama's Efficient Markets Hypothesis and the joint hypothesis problem. (0:19:13) The rise of factor investing and the significance of Fama-French's three-factor model. (0:23:26) Unpacking Shiller and Fama's main point of disagreement on bubbles. (0:26:50) Bogle's perfect portfolio and persistence about the index fund, despite resistance. (0:29:37) How the Black-Scholes-Merton (BSM) option pricing formula changed the world. (0:34:37) Ways that Merton contributed to portfolio theory and his take on TIPS. (0:36:20) Key takeaways from talks with Martin Leibowitz, Charlie Ellis, and Jeremy Siegel. (0:37:35) An interesting analogy for Professor Foerster's take on the “perfect portfolio.” (0:40:53) Correlation vs. causation in stock pricing and how it applies to factor investing. (0:46:38) Examples of masterly inactivity and investor lessons from Madoff's Ponzi scheme. (0:52:07) The dangers of FOMO, a SPACs cautionary tale, and lessons from value investors. (1:00:43) Winning at tennis vs. investing and risks of over-reliance on automated decisions. (1:06:02) Long-term lessons from pioneers in finance to improve investment strategies today. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — https://www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Professor Stephen Foerster — https://stephenrfoerster.com/ Ivey Business School — https://www.ivey.uwo.ca/ Stephen Foerster on LinkedIn – https://www.linkedin.com/in/stephen-foerster-26b85319/ Stephen Foerster on X – https://x.com/profsfoerster Stephen Foerster Books — https://www.amazon.com/stores/author/B001KDO1L0 ‘Cristiano Ronaldo snubbed Coca-Cola. The company's market value fell $4 billion.' — https://www.washingtonpost.com/sports/2021/06/16/cristiano-ronaldo-coca-cola/ Books From Today's Episode: In Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest — https://www.amazon.com/dp/0691229880 Trailblazers, Heroes, and Crooks: Stories to Make You a Smarter Investor — https://www.amazon.com/dp/B0DHLVYK1Q In Pursuit of the Unknown: 17 Equations That Changed the World — https://www.amazon.com/dp/0465085989 A History of Interest Rates — https://www.amazon.com/dp/0471732834 Winning the Loser's Game: Timeless Strategies for Successful Investing — https://www.amazon.com/dp/0071813659 Stocks for the Long Run — https://www.amazon.com/dp/1264269803/ Extraordinary Tennis For The Ordinary Player — https://www.amazon.com/dp/0517511991 Papers From Today's Episode: ‘Efficient Capital Markets: A Review of Theory and Empirical Work' — https://doi.org/10.2307/2325486 ‘The Loser's Game' — https://doi.org/10.2469/faj.v31.n4.19 'The Pricing of Options and Corporate Liabilities' — https://doi.org/10.1142/9789814759588_0001
What does it take to manage a $60 billion wealth management firm while keeping investment strategies grounded in scientific thinking? In this episode, we're joined by Don Calcagni, Chief Investment Officer at Mercer Advisors. Don chairs the firm's investment committee and provides guidance on mergers and acquisitions, investment integration, and long-term strategic planning. His expertise spans fiduciary oversight, portfolio management, private equity, and financial mathematics. In our conversation, we discuss how his firm constructs client portfolios, engages with academic and industry experts, and leverages a factor-based investment approach. He also explains the importance of having an investment philosophy rooted in fiduciary principles and delves into how Mercer Advisors manages fiduciary oversight for billions of dollars in assets across thousands of families. Explore the details of portfolio governance and the role of the firms's alternative investment platform space. Gain insights on value metrics, factor investing, and how Mercer works to provide a family-office experience for everyday clients. Tune in for a deep dive into portfolio construction and the evolving landscape of wealth management with Don Calcagni! Key Points From This Episode: (0:05:22) Learn about Mercer Advisors and the range of services it has on offer. (0:07:10) Unpack Mercer Advisors' approach and philosophy to portfolio construction. (0:11:55) The Building Better Portfolio Summit and the purpose of the event. (0:17:08) How the meetings are structured and the main takeaways from the last event. (0:24:45) What topics cause extreme points of agreement and disagreement at the meetings. (0:29:21) Find out how takeaways from the events are implemented into client portfolios. (0:31:19) Mercer Advisors' recently launched alternative investment platform space. (0:40:23) Don shares valuable recommendations and advice for the average investor. (0:42:23) Aftershow: the controversy surrounding the RBC options trading incident. (0:49:57) Listener feedback, reviews, updates, and upcoming events. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Dan Bortolotti on LinkedIn — https://linkedin.com/in/dan-bortolotti-8a482310/ Canadian Couch Potato — https://canadiancouchpotato.com/blog/ Don Calcagni on LinkedIn — https://linkedin.com/in/donald-calcagni-8104b546/ Mercer Advisors — https://merceradvisors.com/ ‘Building Better Portfolios | 2023 Summit' — https://youtu.be/TWYukQogQPA Dimensional Fund Advisors — https://dimensional.com/ BlackRock — https://blackrock.com/ Avantis — https://avantisfi.com/ AQR — https://aqr.com Carlyle — https://carlyle.com/ Royal Bank of Canada (RBC) — https://www.rbcroyalbank.com Future Proof Festival — https://futureproofhq.com/festival/ Episode 316: Andrew Chen — https://rationalreminder.ca/podcast/316 Episode 323: Renting Versus Buying a Home in Canada 2005-2024 — https://rationalreminder.ca/podcast/323 Episode 325: Addressing 200+ Comments on Renting vs. Owning a Home — https://rationalreminder.ca/podcast/325 Papers From Today's Episode: ‘Portfolio Selection' — https://doi.org/10.1111/j.1540-6261.1952.tb01525.x
What are the critical factors driving investment success? How can investors balance profitability and risk? In this episode, we sit down with Dr. Sunil Wahal, the Jack D. Furst Professor of Finance and Director of the Center for Responsible Investing at the W.P Carey School of Business at Arizona State University, to delve into the intricacies of financial science. With over 25 years of academic and practical experience, Dr. Wahal shares his unique perspective on factor investing, profitability premiums, and how to approach value investing in today's complex financial environment. He talks about the joint distribution of value and profitability, explains how profitability premiums work, and discusses the challenges faced when integrating academic research into practical investing strategies. Dr. Wahal also touches on common misconceptions in financial theory, the long-term benefits of maintaining a diversified investor base, and why understanding the nuances of financial risk is key to avoiding costly mistakes. Gain insights into building a successful investment portfolio grounded in the principles of financial science and how to avoid common pitfalls in factor investing. Join us to hear actionable strategies for balancing risk, understanding factors, and applying academic research to real-world scenarios with Dr. Sunil Wahal! Key Points From This Episode: (0:04:15) Dr. Wahal's work on profitability, data sourcing challenges, and its significance. (0:08:01) The impact of controlling the value of the profitability premium. (0:10:08) Correlations between value and profitability and the benefits of “tilted” portfolios. (0:14:48) Steps for unleveraged long-term investors to build profitable portfolios. (0:17:27) How the joint distribution of value and profitability differs from a profitability screen. (0:20:43) Approaches of large financial firms to implementing value and profitability in portfolios. (0:24:41) Time horizons for tiled portfolios and their expected returns after cost. (0:30:53) Insight into how institutions decide on which investment managers to hire and fire. (0:38:00) Exploring how the hiring and firing of managers affects institutional performance. (0:40:16) Ways the relationships with institutions influence hiring decisions and performance. (0:44:35) Uncover how institutions select which private market firms to invest in. (0:48:58) Key takeaway lessons from Dr. Wahal's research for institutional investors. (0:50:52) Why frequently hiring and terminating managers may not be the best approach. (0:52:32) Advice for retail investors and the importance of cost in managing portfolios. (0:59:22) Reasons that institutions avoid indexing and the competitiveness of mutual funds. (1:02:29) How diversification among mutual fund investors affects performance. (1:09:19) Performance overview of actively managed global equity mutual funds. (1:12:35) The role of practitioner interaction and his concept of success. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Sunil Wahal on LinkedIn — https://www.linkedin.com/in/sunil-wahal/ W. P. Carey School of Business — https://wpcarey.asu.edu/ Avantis Investors — https://www.avantisinvestors.com/ Dimensional Fund Advisors — https://www.dimensional.com/ UpWork — https://www.upwork.com NVIDIA — https://www.nvidia.com Episode 316: Andrew Chen — https://rationalreminder.ca/podcast/316 Books From Today's Episode: The Interpretation of Financial Statements — https://www.amazon.com/dp/0887309135 Papers From Today's Episode: ‘Long-Term Shareholder Returns: Evidence from 64,000 Global Stocks' — https://doi.org/10.1080/0015198X.2023.2188870 ‘Long-Run Stock Market Returns: Probabilities of Big Gains and Post-Event Returns' — https://dx.doi.org/10.2139/ssrn.3873010 ‘Prudential Uncertainty Causes Time-Varying Risk Premiums' — https://dx.doi.org/10.2139/ssrn.2176896 ‘A Five-Factor Asset Pricing Model' — https://dx.doi.org/10.2139/ssrn.2287202 ‘Do Institutional Investors Exacerbate Managerial Myopia?' — https://doi.org/10.1016/S0929-1199(00)00005-5
There are many different considerations behind housing when you are in the position to choose between renting or buying. During this episode, hosted by Ben Felix and Dan Bortolotti, we address user questions and comments on homeownership, rentals, and the factors that may lead to choosing one over the other. We discuss what makes homeownership more attractive as your financial situation evolves, consider whether or not landlords are making money on their properties in 2024, and explore the explanations behind whether or not renters are less wealthy than owners. This conversation also touches on one of the most common misconceptions about housing, why it is untrue, and how to make this key decision of renting or buying based on both lifestyle and financial considerations and the difference in mindset between renters and buyers. Join us today to hear all this and more. Key Points From This Episode: (0:02:06) Homeownership versus renting with renovations and rental evictions in mind. (0:08:40) Understanding the risks and rewards associated with securitive tenure. (0:10:09) Factors that may influence changing needs that may influence whether you rent or buy. (0:15:58) Three factors that one user would include in an argument of renting versus buying. (0:18:25) Addressing the idea that it is equally expensive for a family or landlord to own a home. (0:21:00) How the cost of homeownership evolves with time and other factors. (0:24:50) Why owning a home is not above and beyond better than renting or owning with a mortgage. (0:27:50) Understanding factors beyond financial considerations when it comes to renting versus owning. (0:34:10) The difference in mindset between homeowners and renters and the benefits of both. (0:38:10) Why it is so beneficial to be open-minded and add to conversations rather than rejecting other people's ideas. (0:40:25) Ben tells the story from the start of his career and Dan shares his experience of feedback on the Canadian Couch Potato blog. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/?team-search=benjamin+felix Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Canadian Couch Potato — https://canadiancouchpotato.com/blog/
Have you ever wondered how financial markets performed centuries ago or how world events impacted stock prices? Today, we sit down with Dr. Bryan Taylor, President and Chief Economist at Global Financial Data, to unpack the world's fascinating financial history. Dr. Taylor is known for his extensive work in collecting and analyzing historical financial data that spans several centuries and his valuable knowledge of stock, bond, and commodity market trends, which led to the creation of Global Financial Data. In our conversation, Dr. Taylor shares insights from his extensive research, covering stock and bond returns from as far back as the 1600s. From the impact of the French Revolution on financial markets to the performance of commodities, Dr. Taylor provides a rare view of the long-term trends shaping today's financial decisions. Learn about the value of historical financial data, its importance for investment decision-making, and how long-term trends can provide insights into future market behaviour. We discuss the creation of Global Financial Data's extensive historical financial database, the challenges of gathering centuries-old data, and the long-term performance of stocks versus bonds. Explore the impact of major geopolitical events on financial markets, the importance of studying historical market trends for modern investment decisions, and how his data-driven research has been utilized. Join us as we delve into the world's financial history and its relevance to today's investment landscape with Dr. Bryan Taylor. Tune in now! Key Points From This Episode: (0:03:41) Background about Global Financial Data, their data sources, and the challenges of collecting historical data. (0:09:27) What he finds fascinating about historical data, who uses the database, and the role of historical data in financial decision-making. (0:14:49) How stocks have performed relative to bonds throughout the financial records. (0:17:34) Uncover the main historical factors that limit returns and increase risk for investors and the five financial eras. (0:23:18) Explore the trends in stocks and bonds during the five financial eras and the impact of government debt and inflation on returns. (0:29:04) Common characteristics of countries that have had bad long-term market outcomes and the effect of world events on markets. (0:35:11) Learn about the best and worst-performing markets and what makes the US market so resilient. (0:38:36) His outlook for stocks and bonds and how the recent bear market compared to past market upheavals. (0:41:36) Compare past and current interest rates and the return on commodities versus stocks and bonds. (0:46:20) Overcoming the lack of historical data for emerging market returns and what defines an emerging market. (0:52:29) Find out how emerging markets have performed throughout history and how often they make the transition to developed. (0:59:04) Unpack the historical market concentration in the US and his thoughts on the expected returns of the US stock market. (1:03:42) Final takeaways and Dr. Bryan Taylor shares his definition of success. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Dr. Bryan Taylor — https://www.linkedin.com/in/bryan-taylor-46a92032/ Global Financial Data — https://globalfinancialdata.com/ Dr. Bryan Taylor on SSRN — https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=4320002 Papers From Today's Episode: ‘France and the Four Horsemen of the Market' — https://globalfinancialdata.com/france-and-the-four-horsemen-of-the-market ‘The Financial History of Emerging Markets: New Indices' — https://dx.doi.org/10.2139/ssrn.4193062
Is renting just “throwing money away,” or could it be the smarter financial choice? In this episode, we dive deep into one of the most debated topics in personal finance: renting versus owning a home. In our conversation, we discuss the nuances of renting versus owning, the hidden costs of buying a home, and the importance of saving discipline. Tuning in, you'll discover how emotional biases may inflate real estate prices and how societal pressures influence housing decisions. Then, we shift our focus to a listener's question about interest rates and bonds. Dan explains how bond prices and yields work inversely and delves into the concept of bond duration. He also breaks down how long and short-term bonds react to interest rate changes and why the Bank of Canada's influence on bond markets may not always be straightforward. Join us as we investigate the pros and cons of renting versus buying and how to leverage bonds effectively in a dynamic interest rate environment! Key Points From This Episode: (0:03:54) Exploring the common belief that owning a home is universally better. (0:09:13) How buying and renting in Canada compares to other countries. (0:10:58) Some of the inherent risks of renting versus buying in Canada. (0:17:01) Methods to test how housing performed as an asset with examples. (0:21:04) The importance of analyzing real data, and Ben presents his findings. (0:31:03) How housing costs influence the financial outcome of renting versus owning. (0:35:51) Ways that mortgages, housing costs, and forced savings affect wealth accumulation. (0:47:34) Unpacking how maintenance costs serve as a proportion of the building value. (0:52:45) Renting versus buying takeaways and the associated psychological factors. (1:00:37) Dan's take on whether long-term bonds can take advantage of falling interest rates. (1:10:55) Insight into how various market-driven factors influence the long-term return on bonds. (1:13:30) Aftershow: final takeaways, catch-up, news, and more. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310 Canadian Couch Potato — https://canadiancouchpotato.com/ Future Proof Conference — https://futureproofhq.com/ CMHC (Canada Mortgage and Housing Corporation) Rental Market Survey Data — https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-data/data-tables/rental-market/rental-market-report-data-tables Episode 196: Sebastien Betermier — https://rationalreminder.ca/podcast/196 Episode 308: Dan Bortolotti — https://rationalreminder.ca/podcast/308 Statistics Canada — https://www.statcan.gc.ca/ Bank of Canada — https://www.bankofcanada.ca/ National Council of Real Estate Investment Fiduciaries (NCREIF) — https://www.ncreif.org/ REALTOR.ca — https://www.realtor.ca/ Kevin Prins — https://www.bmoetfs.ca/specialists/kevin-prins BMO Canadian ETF — https://www.bmoetfs.ca/ Financial Planning Association of Canada — https://www.fpassociation.ca/ Papers From Today's Episode: ‘Assessing High House Prices: Bubbles, Fundamentals and Misperceptions' — https://www.aeaweb.org/articles?id=10.1257/089533005775196769&ref=josephnoelwalker.com ‘Lessons from Over 30 Years of Buy versus Rent Decisions: Is the American Dream Always Wise?' — https://doi.org/10.1111/j.1540-6229.2011.00321.x ‘Perception of House Price Risk and Homeownership' — https://www.nber.org/papers/w25090 ‘Owner-Occupied Housing as a Hedge Against Rent Risk' — https://doi.org/10.1093/qje/120.2.763 ‘To Rent or Buy? A 30-Year Perspective' — https://www.financialplanningassociation.org/article/journal/MAY18-rent-or-buy-30-year-perspective ‘Are Renters Being Left Behind?: Homeownership and Wealth Accumulation in Canadian Cities' — http://hdl.handle.net/2429/50413 ‘The Life-Cycle Effects of House Price Changes' — https://www.philadelphiafed.org/-/media/frbp/assets/working-papers/2005/wp05-7.pdf ‘Depreciation of Housing Capital, Maintenance, and House Price Inflation: Estimates From a Repeat Sales Model' — https://doi.org/10.1016/j.jue.2006.07.007 ‘Characteristics of Depreciation in Commercial and Multifamily Property: An Investment Perspective' — https://doi.org/10.1111/1540-6229.12156 ‘Homeownership and Psychological Resources Among Older Adults: Do Gender and Mortgage Status Moderate Homeownership Effects?' — https://doi.org/10.1177/08982643211029174
Can we really understand the impact of passive ownership on the US market? Marco Sammon is an Assistant Professor in the Finance Unit at Harvard Business School. During this episode, he joins us to share deep insights into the complex and counter-intuitive nature of the index fund revolution. To kick off our conversation, we discuss some of the challenges associated with getting a true understanding of the scope of passive ownership across the US. Distinguishing between different approaches to investment, we begin to unpack Marco's paper with Alex Chinco, titled ‘The Passive-Ownership Share Is Double What You Think It Is'. We touch on the relevance of Grossman Stiglitz in 2024, pricing and reconstitution, and the ins and outs of employee stock and compensation. Using the case studies of huge global firms, we consider how to best accommodate passive demand. Lastly, as an index investor who does not own index funds, Marco shares his opinion on whether index funds have had a net positive or negative impact on financial markets. Tune in today to get a more dynamic view of the complex world of index funding and investment. Key Points From This Episode: (0:00:45) Index funds, index and passive investments, and why Professor Marco Sammon is perfectly positioned to unpack these concepts. (0:03:36) The challenges of understanding just how big passive ownership is in the US market. (0:08:16) Distinguishing between partial investment, direct investment and passive funds. (0:10:14) Important concepts on the closing auction and which indexes Marco focuses on. (0:15:50) Defining the Grossman-Stiglitz framework and its validity in 2024. (0:20:36) Evolving ideas around pricing and reconstitution over time. (0:23:05) Why indexing is a fixed-point problem and how to measure market efficiency. (0:32:19) Nuances of security demands around indexing and how it differs from other investors. (0:38:02) Employee compensation and reverse causality as illustrated by Marco's friend. (0:42:10) Why it is important to distinguish between equal-weighted and value-weighted. (0:44:13) How huge firms like Facebook and Tesla accommodate passive demand. (0:48:19) Conditions that affect the responsiveness of firms in accommodating passive demand. (0:51:13) The ‘Dead Reckoning' metaphor to describe how we can know who is clearing the market. (01:02:22) Marco's thoughts on whether index funds have had a net positive or negative impact. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Marco Sammon — https://marcosammon.com/ Marco Sammon on X — https://x.com/mcsammon19 Episode 302: Michael Green — https://rationalreminder.ca/podcast/302 Papers From Today's Episode: ‘The Passive-Ownership Share Is Double What You Think It Is' — https://www.hbs.edu/ris/Publication%20Files/double-what-you-think-it-is%20may%2023_3c1ae213-5aec-407d-b656-13e3822f0b8b.pdf ‘On the Impossibility of Informationally Efficient Markets' — http://www.dklevine.com/archive/refs41908.pdf ‘Capital Asset Prices With and Without Negative Holding' — https://ideas.repec.org/p/ris/nobelp/1990_003.html Do Demand Curves for Stock Slope Down? — https://www.jstor.org/stable/2328486/
How can the Rational Reminder Podcast get even better? By bringing back one of its most beloved voices, Dan Bortolotti, also known as "The Spud." In this exciting episode, hosts Ben Felix, Cameron Passmore, and Mark McGrath announce that Dan, the mind behind the Canadian Couch Potato Podcast, will now be a regular guest, contributing segments like "Bad Investment Advice" or "Ask the Spud.” Before Dan joins the conversation, we have an insightful discussion with Håkon Kavli, CIO of Reitan Kapital. Håkon shares how his team manages the wealth of one of Norway's most prominent families, comparable to Canada's Weston family. We discuss Reitan Kapital's evidence-based investing approach, their robust methods for overcoming portfolio optimization challenges, and much more. Håkon also sheds light on their upcoming investing conference in Norway, featuring speakers like our very own, Cameron Passmore, and Marcos López de Prado. Following this, Dan kicks off his return by dissecting an article that advocates going all-in on the QQQ ETF in an RRSP, exposing the dangers of such a concentrated and risky strategy. He contrasts this approach with the wisdom of diversifying across global markets, using examples like Vanguard's VEQT ETF, which offers exposure to over 13,000 stocks worldwide. Additionally, if you're a financial advisor interested in joining a planning-focused, fiduciary firm like PWL Capital, we encourage you to reach out. Our team is growing, and we're looking for like-minded individuals to join our mission. Tune in for a rich mix of expert advice, thoughtful discussions, and exciting announcements! Key Points From This Episode: (0:00:28) Announcements: a new regular guest, PWL's call for like-minded advisors, and more. (0:04:15) Introducing Håkon Kavli, the Reitan family, and the origins of Reitan Kapital. (0:08:06) Reitan Kapital's investment philosophy and asset allocation strategy. (0:10:29) The biggest differences between a Reitan Kapital portfolio and a market portfolio. (0:13:19) Capital market assumptions; how they influence Reitan Kapital's investment process. (0:20:38) Portfolio optimization challenges and Reitan's robust methods for addressing these. (0:35:06) The role of private equity in a diversified portfolio and how it differs from public equity. (0:38:40) Fee structure significance in private equity investments and their impact on returns. (0:40:38) Risks associated with private equity and how they compare to public markets. (0:43:36) Reitan Kapital's view on how private equity fits into a diversified portfolio. (0:49:08) Challenges of investing in private equity for retail investors. (0:50:26) Why so many institutions and firms have substantial allocations to private markets. (0:53:58) An overview of the research Håkon is most excited about. (0:56:20) Details for the upcoming conference in Norway, featuring Cameron Passmore. (0:59:16) Dan's Bad Investment Advice segment; going all-in on the QQQ ETF in an RRSP. (01:13:12) Our aftershow segment: listener feedback, our next meetup in Ottawa, a shoutout to Jason Pereira, and more. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Dan Bortolotti — https://www.canadianmoneysaver.ca/authors/dan-bortolotti Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Canadian Couch Potato Blog — https://canadiancouchpotato.com/ Canadian Couch Potato Podcast — https://canadiancouchpotato.com/podcast/ Episode 308: Dan Bortolotti — https://rationalreminder.ca/podcast/308 Håkon Kavli on LinkedIn — https://www.linkedin.com/in/haakonkavli/ Reitan — https://reitan.no/no Reitan Kapital — http://www.reitankapital.no/ Weston — https://www.weston.ca/en/Home.aspx Marcos Lopez de Prado — https://www.orie.cornell.edu/faculty-directory/marcos-lopez-de-prado Antti Ilmanen — https://www.aqr.com/About-Us/OurFirm/Antti-Ilmanen Episode 224: Prof. Scott Cederburg — https://rationalreminder.ca/podcast/224 Sharpe ratio — https://www.investopedia.com/terms/s/sharperatio.asp Episode 210: Prof. Ludovic Phalippou — https://rationalreminder.ca/podcast/210 Reitan Kapital Conference — ‘An interesting RRSP idea – all in on QQQ?' — https://www.tawcan.com/all-in-on-qqq/ VEQT Vanguard All-Equity ETF Portfolio — https://www.vanguard.ca/en/investor/products/products-group/etfs/VEQT Mark Mid Graph on X — Jason Pereira — https://jasonpereira.ca/ Papers From Today's Episode: ‘Estimating Private Equity Returns from Limited Partner Cash Flows' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2356553 ‘Mutual Fund Flows and Performance in Rational Markets' — https://www.nber.org/papers/w9275 ‘What are Stock Investors' Actual Historical Returns? Evidence from Dollar-Weighted Returns' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=544142
Economics can often seem daunting, filled with complex theories and jargon that can leave the average person scratching their head. But today's guest, Kyla Scanlon, is on a mission to change that. In this episode, we have an insightful conversation with Kyla, a financial educator, content creator, and host of Wealthsimple's TLDR podcast, who has built a significant following by making economics accessible and engaging. Kyla's ability to break down complex topics into digestible, relatable content has resonated with a broad audience, from TikTok to YouTube, and today, she shares her journey with us. Kyla began her career creating content during the GameStop frenzy, which quickly propelled her into the spotlight. She has since become a voice for the new generation, offering a fresh perspective on economics that is both informative and entertaining. Her book, In This Economy, provides a plain language overview of economics, aiming to help everyday people understand what's happening in the world around them. In this episode, we explore various topics, including the role of vibes in the economy, the housing market, and the future of financial markets. Kyla also discusses her thoughts on the differences between investing, speculating, and gambling, and how these concepts play out in today's financial landscape. Key Points From This Episode: (00:03:22) Introduction to Kyla Scanlon and her journey into financial education. (00:07:12) The importance of making complex topics accessible to a broad audience. (00:10:45) Discussion on how Kyla's content creation career took off with GameStop. (00:14:32) The role of vibes and sentiment in the economy and how it influences market behavior. (00:17:55) Kyla's perspective on the housing market and why it's crucial for the economy. (00:22:06) The distinction between investing, speculating, and gambling. (00:26:43) Kyla's thoughts on the impact of social media on financial markets. (00:31:19) The importance of understanding economic indicators like GDP and inflation. (00:36:02) Why the Federal Reserve exists and its impact on the economy. (00:37:56) Fed's toolkit: rates, balance, guidance, market support. (00:42:03) Understanding economics can be difficult for many. (00:45:17) Social media: Tool with impact on economy. (00:46:47) Media's business model based on clicks, negativity. (00:49:53) Constantly seeking new projects, connecting people to economics. (00:53:10) Younger generation relies on social media for news. Links From Today's Episode: Rational Reminder on Apple Podcasts — https://podcasts.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582 Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on YouTube — https://www.youtube.com/@rationalreminder/ Rational Reminder Email — info@rationalreminder.ca Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP
Which account should you choose, a registered retirement savings plan (RRSP) or a Tax-free savings account (TFSA)? This is one of the most common decisions that Canadians must make when it comes to investing, but it will also elicit some of the most passionate responses. RRSPs especially get a lot of undue skepticism, with some even labelling it as a scam. Today we take a deep dive into both of these savings accounts, exploring the downsides and benefits of each, and how to decide which account is right for you based on your savings goals. With the help of Conquest Planning, a specialized, in-depth modelling tool, we look at a range of scenarios incorporating different variables, like income and family size, and break down our analysis regarding the RRSP vs. TFSA decision for each scenario. We discuss key factors to consider, including the basic personal amount tax credit, which allows RRSPs to act as a tax flow-through, and the guaranteed income supplement (GIS), which can impact retirement planning. Our conversation also examines how to approach family size and longevity, as RRSPs become more advantageous with longer lifespans. Join us today to learn about the benefits and flexibility of each of these accounts, the surprising ways RRSPs often outperform TFSAs, and find out which one is right for you! Key Points From This Episode: (0:00:20) An introduction to the RRSP vs. TFSA debate. (0:08:11) How we used the Conquest Planning tool and the scenarios we analyzed. (0:10:34) Taxation and contribution considerations and strategies for RRSPs and TFSAs. (0:20:11) An analysis of scenario one; $60,000 income and no children. (0:22:38) Basic personal amount tax credit; how it allows RRSPs to act as a tax flow-through. (0:27:20) The Guaranteed Income Supplement (GIS) and its impact on RRSP vs. TFSA analysis in different scenarios. (0:36:16) How GIS is tied to Old Age Security (OAS) payments. (0:41:12) An analysis of scenario two; a couple with two children, and the impact of the Canada Child Benefit on RRSP vs. TFSA contributions. (0:45:21) The impact of mortality and longevity on RRSP and TFSA in various scenarios. (0:47:01) Main takeaways from today's scenarios and the advice our hosts would give to different clients regarding TFSAs and RRSPs. (0:50:50) Why RRSPs are of greater benefit if you live longer compared to TFSAs. (0:52:13) Our aftershow section: listener feedback, what Ben is working on regarding renting versus buying, the zombie apocalypse, and more. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Brady Plunkett on LinkedIn — https://www.linkedin.com/in/brady-plunkett-712489105/ Lukas Fleck on LinkedIn — https://www.linkedin.com/in/lukasfleck/ Flossing for your Finances, Personal Financial Strategies for Dentists — https://us06web.zoom.us/webinar/register/9017236574029/WN_7O_JdvejRhmh-_LleBNRmQ#/registration Episode 317: Kevin Milligan — https://rationalreminder.ca/podcast/317 Papers From Today's Episode: ‘Tax Uncertainty and Retirement Savings Diversification' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2799288
If you're in the Canada Pension Plan (CPP), then you won't want to miss today's conversation with Canada's Chief Actuary, Assia Billig. Assia's knowledge of the CPP is extensive, having joined the Office of the Chief Actuary (OCA) in 2008, where she was involved in the preparation of statutory actuarial reports on the Canada Pension Plan and Old Age Security Program. She has served as Chief Actuary of the Government of Canada since 2019, and, before joining the OCA, she worked in private pension consulting. She is also a Fellow of the Society of Actuaries and the Canadian Institute of Actuaries. Assia joins us today for a deep dive into the most common questions about the Canada Pension Plan, from the inner workings of its financial components to the quality of governance that drives it. Discover the world-leading topics she and her team investigate, the immense power and research behind their analysis, and why the CPP is set to be sustainable for the next 75 years. We also discuss the concerns some people have about the CPP's longevity, before examining how the actuarial report on the sustainability of the CPP, conducted every three years, reliably addresses this. If today's conversation with Canada's chief actuary does not instill confidence and pride in Canada's investment in our collective retirement, then we don't know what will! Tune in, to hear all of Assia's keen insights and discover why she is unequivocally the best person to talk about the sustainability of the CPP. Key Points From This Episode: (0:00:18) Introducing today's guest, Assia Billig and the Canada Pension Plan (CPP). (0:04:53) What the main function of the Office of the Chief Actuary is. (0:06:28) The independence of Assia's office and the work that they do. (0:07:09) Unpacking the main purpose of the actuarial report on the Canada Pension Plan. (0:09:22) Changes that the report triggers to contribution or benefit rates. (0:13:04) Main revenue sources for the CPP and how base CPP benefit payments are funded. (0:14:56) Base CPP's funded status and how funding differs for additional CPP. (0:20:32) The sustainability of base and additional CPP and how sustainability is measured. (0:23:22) Primary assumptions that go into sustainability analysis at the high level. (0:27:31) Estimating expected returns for assets managed by CPP investments. (0:30:37) The plan's level of sensitivity to lower realized returns and other variables. (0:35:22) How lower overall economic growth and inequality affect the plan's sustainability. (0:37:15) Measuring the impact of variables like climate change and other catastrophic events. (0:43:01) When the minimum contribution rate exceeds the current legislated contribution rate. (0:44:12) Assia's response to people who are skeptical of the CPP's future sustainability. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Assia Billig — https://www.osfi-bsif.gc.ca/en/oca Assia Billig on LinkedIn — https://www.linkedin.com/in/assia-billig-9b861587/?originalSubdomain=ca
Today, we sit down with Professor Kevin Milligan to unpack the recent capital gain changes and the complexities of the Canadian tax system. Kevin Milligan is a Professor of Economics at the Vancouver School of Economics, University of British Columbia. He holds positions as a Scholar-in-Residence at the C.D. Howe Institute and a Research Associate at the National Bureau of Economic Research. A two-time recipient of the Purvis Prize, Professor Milligan's work is recognized for its significant contributions to Canadian economic policy. His research focuses on public and labour economics, particularly concerning the economics of children and the elderly, along with tax and labour market policy issues. In our conversation, we dive deep into capital gains tax, the progressivity of the tax system, and the distribution of tax burdens among different income groups. We explore the intricate details of who bears the burden of corporate taxes, the impact of recent capital gains changes, and the intriguing relationship between income and longevity in Canada. Professor Milligan also shares insights from his research on longevity and the implications of tax policies on economic behaviour. Join us and uncover the truths about Canada's tax system, capital gains changes, and their profound impacts on Canadians. Tune in now! Key Points From This Episode: (0:07:20) Background about Professor Milligan and an outline of today's topic. (0:10:10) Complexities behind tax policy and recent capital gains changes in Canada. (0:14:22) Distribution of tax rates in Canada and how progressive the tax system is. (0:20:12) Analysis of how the Canadian tax system is applied to the top 1% of earners. (0:22:28) The theory behind capital income and how it relates to personal income tax. (0:26:40) Explanation of tax integration and how income tax accounts for corporate taxes. (0:29:53) Impact of the capital gains tax changes and Canada's overall tax progressivity. (0:40:55) How the new capital gains inclusion rate affects integration for incorporated business. (0:46:32) The interplay between corporate investment, capital taxation, and productivity. (0:54:11) Historical changes in tax rates and the shift of average tax rates over time. (0:57:14) His perspective on the increase of the capital gains inclusion rate in Canada. (0:58:35) Explore the correlation between income levels and longevity in Canada. (1:03:30) Geographic longevity differences and policy implications for longevity. (1:07:55) Implications of longevity trends on personal financial planning. (1:13:24) Takeaways from a past episode, an update on Mark's book, and more. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Professor Kevin Milligan — https://sites.google.com/view/kevin-milligan/home Professor Kevin Milligan on X — https://x.com/kevinmilligan The Vancouver School of Economics — https://economics.ubc.ca/ C.D. Howe Institute — https://www.cdhowe.org/ National Bureau of Economic Research — https://www.nber.org/ Canadian Tax Journal — https://www.ctf.ca/EN/EN/Publications/CTJ.aspx Episode 316: Andrew Chen — https://rationalreminder.ca/podcast/316 Papers From Today's Episode: ‘How Progressive is the Canadian Personal Income Tax? A Buffett Curve Analysis' — https://utpjournals.press/doi/10.3138/cpp.2021-087 ‘The Evolution of Longevity: Evidence from Canada' — https://onlinelibrary.wiley.com/doi/10.1111/caje.12497
Are you curious about the hidden factors driving your investment decisions? Today's guest is Andrew Chen, a Principal Economist at the Federal Reserve Board who focuses on monetary policy and financial stability. Published in leading journals, his research informs key policy decisions and helps shape the Federal Reserve's strategy for managing economic challenges effectively. In this episode, Andrew delves into the intricacies of meta-research and asset pricing, focusing on cross-sectional asset pricing predictors, replication, and out-of-sample performance in factor investing. We discuss the significance of open-source data and transparency, highlighting Andrew's creation of the Open Source Asset Pricing project, an indispensable and comprehensive dataset for asset pricing predictors. We also address the challenges of replicating financial studies, publication bias, data mining, and false discovery rates, with Andrew offering practical insights on how these factors impact financial research and investment decisions. For actionable insights that could refine your investment strategies and enhance your understanding of financial research, don't miss this fascinating conversation! Key Points From This Episode: (0:03:43) What an asset pricing factor is and how it differs from a predictor. (0:04:25) Three plausible explanations for why cross-sectional predictors exist. (0:05:45) Insight into Andrew's Open Source Asset Pricing project and why it's so important. (0:09:49) Where the results of his research diverge from other papers on the subject. (0:11:42) How the returns on anomalies in his data sample change post-publication. (0:12:33) Implications of this research for the “replication crisis” in cross-sectional asset pricing. (0:14:14) Challenges of false discovery rates, publication bias, and out-of-sample returns. (0:18:37) The effect of transaction costs on expected returns from factor investing. (0:22:02) Problems with estimating factor expected returns using historical data. (0:26:08) A big-picture view of the factors with the strongest investable expected returns. (0:29:12) The relative value of peer-reviewed factors with strong theoretical underpinnings. (0:35:13) Whether or not machine learning can be useful for asset pricing research. (0:37:39) Practical advice for using financial research to inform your investment decisions. (0:40:08) Andrew's take on the current state of cross-sectional asset pricing. (0:42:58) The simple way that Andrew defines success for himself. Links From Today's Episode: Rational Reminder on Apple Podcasts — https://podcasts.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582 Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on YouTube — https://www.youtube.com/@rationalreminder/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP Andrew Chen — https://sites.google.com/site/chenandrewy/ Federal Reserve Board — https://www.federalreserve.gov/ Andrew Chen on LinkedIn — https://www.linkedin.com/in/andrew-chen-63394169/ Andrew Chen on X — https://x.com/achenfinance Open Source Asset Pricing Project — https://www.openassetpricing.com/ Center for Research in Security Prices — https://www.crsp.org/ Books From Today's Episode: The Adaptive Markets Hypothesis: An Evolutionary Approach to Understanding Financial System Dynamics — https://www.amazon.com/dp/0199681147 Papers From Today's Episode: Andrew Chen, Tom Zimmermann, 'Open Source Cross-Sectional Asset Pricing'— https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3604626 Kewei Hou, Chen Xue, Lu Zhang, 'Replicating Anomalies' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3275496 R. David McLean, Jeffrey Pontiff, 'Does Academic Research Destroy Stock Return Predictability?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2156623 Ilia D. Dichev, 'Is the Risk of Bankruptcy a Systematic Risk?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=99868 Campbell R. Harvey, Yan Liu, Caroline Zhu, ‘…and the Cross-Section of Expected Returns' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2249314 Andrew Chen, Mihail Velikov, ‘Zeroing in on the Expected Returns of Anomalies' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3073681 Andrew Chen, Alejandro Lopez-Lira, Tom Zimmermann, ‘Does Peer-Reviewed Research Help Predict Stock Returns?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4308069
During this episode, we welcome back Eduardo Repetto, Chief Investment Officer of Avantis Investors. In his leadership capacity, he directs research design and the implementation of strategies and oversees the investment team and marketing initiatives. Our conversation kicks off with Edoardo's explanation of how Avantis systemizes active management before we dive into strategies for launching in Europe and beyond. He weighs in on the most significant capacity issues that people face today, offering solutions to tweak your approach. We touch on what makes Avantis strategies preferable for advisors and Eduardo shares his insights on the future of small-cap value strategies for emerging markets. We discuss short-term reversals, towing the line between growth and value and factors that should inform asset allocation before diving deeper into small-cap value in the US and Canada. Tune in today to hear more. Key Points From This Episode: (0:05:51) What sets Avantis Investors apart from other investment firms. (0:09:26) Five strategies for launching in Europe starting with free and equity UCITS. (0:14:00) Accessing UCITS and adapting strategies in accordance with currencies, geographical regulations and restrictions. (0:22:49) The most significant capacity issue: an inability to invest cashflows. (0:27:59) Feedback from the advisor community on why they are choosing Avantis strategies. (0:32:43) Eduardo's view on the future potential for the emerging markets small cap value strategy. (0:35:58) Improvements and adaptations to portfolio implementation at Avantis since 2019. (0:39:01) The controversial nature of short-term reversals and advice for investors thinking about growth and value. (0:44:40) What should inform asset-allocation decision-making. (0:45:46) The potential of expanding into a Canadian base. (0:50:16) Mark's thoughts on small-cap value in the US and Canada. Quotes: “We have to adapt to the regulatory framework. But the strategies are the same. We manage the strategies in the same way, with the same people, with the same philosophy.” — Eduardo Repetto (0:17:44) “Just expand the offering. Anywhere we go, we do the same because that's the right thing to do. That's the right thing to help people that trust you on day one.” — Eduardo Repetto (0:21:52) “So, if you think about our valuation, we are using today's profits as a proxy for future profits. Can you improve that proxy? Can you have something better to say, about not level, but changes in level?” — Eduardo Repetto (0:41:16) Links From Today's Episode: Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Eduardo Repetto on Linkedin — https://www.linkedin.com/in/eduardo-repetto-653231155/ Avantis Investors — https://www.avantisinvestors.com/ Episode 313 — https://rationalreminder.ca/podcast/313 Econompic — https://econompicdata.blogspot.com/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP
In this episode, we sit down with Professor Valentin Haddad to unpack the intricacies of market elasticity, passive investing, and the dynamic nature of financial markets. Valentin is an Associate Professor of Finance at UCLA Anderson School of Management and a research fellow for the National Bureau of Economic Research's Asset Pricing Program. His research focuses on how financial institutions trade, and manage risk, and their impact on market prices and the broader economy. Notably, his work challenges traditional assumptions, such as the perceived safety of life insurance companies' investments in Treasuries. In our conversation, we delve into the impact of index funds on the market, stock market bubbles around the development of new technology, and the response of investment-grade corporate bonds to the COVID-19 crisis. Discover the definition of demand elasticity, strategic interaction, and how market elasticity has changed over time. Explore how he defines a market bubble, ways stock market bubbles are related to new technology, and how to measure the value of innovation. We also discuss the impact of COVID-19 on investment-grade corporate bonds, the Federal Reserve's response, the implications for bond safety, and much more. Tune in and join us as we uncover the mess of the market with Professor Valentin Haddad! Key Points From This Episode: (0:03:10) The impact of passive investing on financial markets, what investors' demand elasticity is, and the role of index funds. (0:06:07) Learn about strategic interactions, their influence on financial markets, and how they react to rising passive investing. (0:10:10) Why active investors' options are limited in a passive investment landscape and how demand elasticities influence asset prices. (0:13:05) How individual investor elasticities are related to aggregate market elasticity and the ways investor elasticity has changed. (0:20:54) Large and small stock elasticity trends, the implications of his research for asset prices, and the relationship between elasticity and information. (0:25:32) His opinion on a bubble in large stocks forming due to flows into index funds and how market bubbles drive innovation. (0:29:31) Potential measures to address the issues with index funds and how individual investors should be reacting to the situation. (0:34:46) Unpack how he defines a market bubble, measuring the value of innovation, and their effect on the value of technology. (0:42:29) What his research findings mean for innovation policy and what to consider before investing in innovative companies. (0:46:33) Insights from his paper examing the impact of COVID-19 on fixed-income and the different market reactions. (0:53:40) Explore the Fed's intervention during the pandemic, what effect it had, and the safety that bonds offer during a crisis. Quotes: “You choose how you trade based on how other people are trading. So, it's not really just what you like to do, but how you react to others in the market.” — Professor Valentin Haddad (0:06:40) “If nobody's acquiring information, then markets are very inefficient. Then, you should step in, in a way. So, if everybody is becoming passive, there are more gains for being not passive.” — Professor Valentin Haddad (0:22:59) “Speculation often comes with innovation.” — Professor Valentin Haddad (0:28:30) “I think these concerns with passive investing are meaningful. I don't think it's quite yet the time for a very strong regulatory call. Regulators should keep track of this evolution.” — Professor Valentin Haddad (0:31:42) “You can gain from bubbles, but at the end, the end of the bubble comes. The long-term gains of innovation are still there, but many people who partake in the bubble are going to suffer a lot.” — Professor Valentin Haddad (0:43:57) Links From Today's Episode: Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Professor Valentin Haddad — https://sites.google.com/site/valentinhaddadresearch/ Professor Valentin Haddad on LinkedIn — https://www.linkedin.com/in/valentin-haddad-0056843/ Professor Valentin Haddad Email — valentin.haddad@anderson.ucla.edu UCLA Anderson School of Management — https://www.anderson.ucla.edu/ National Bureau of Economic Research (NBER) — https://www.nber.org/ Episode 212: Prof. Ralph Koijen — https://rationalreminder.ca/podcast/212 Papers From Today's Episode: ‘How Competitive is the Stock Market? Theory, Evidence from Portfolios, and Implications for the Rise of Passive Investing' — https://dx.doi.org/10.2139/ssrn.3821263 ‘Concentrated Ownership and Equilibrium Asset Prices' — https://www.stern.nyu.edu/sites/default/files/assets/documents/Princeton- Haddad - Concentrated ownership.pdf ‘Bubbles and the Value of Innovation' — https://drive.google.com/file/d/1tnvZ5L_zUcehn5hR720Nl1vtsTv4VgK0/view ‘When selling becomes viral: Disruptions in debt markets in the COVID-19 crisis and the Fed's response' — https://doi.org/10.1093/rfs/hhaa145 ‘How Speculation Affects the Market and Outcome-Based Values of Innovation' — https://ideas.repec.org/a/fip/fedreb/94686.html
Low-cost index funds and digital tools have revolutionized wealth-building, making it easier than ever before to manage your own investment portfolio. However, additional support and expert advice can be critical to help you reach your financial goals, especially when facing complex financial decisions, feeling overwhelmed, or deciding to change your investment strategy. Today on the Rational Reminder Podcast, we discuss when it makes sense to hire a full-service financial advisor, whether or not every investor needs one, and how professional guidance can enhance your financial outcomes. You'll find out how delegating your financial decision-making can not only boost your wealth but also improve your wellbeing, increase your peace of mind, and mitigate the impact of cognitive decline on your financial decisions as you age, plus so much more. For valuable insights that could transform your financial future, tune in today! Key Points From This Episode: (0:02:15) Why you would hire a financial advisor when DIY investing is so easy. (0:06:35) The services that financial advisors offer and how you can benefit from them. (0:10:09) What investor inertia is, how to overcome it, and what the trade-offs are. (0:16:31) How delegating financial decision-making can improve wealth and wellbeing. (0:18:16) Insight into the value of financial advice for retirement planning. (0:22:17) Your Trusted Contact Person (TCP) and why they matter. (0:23:05) Ways that financial literacy shapes demand and expectations for financial advice. (0:24:21) Common reasons that people seek professional financial advice. (0:26:22) How financial advisors act as a commitment device for good financial behaviours. (0:27:47) Important considerations and questions to ask when hiring a financial advisor. (0:32:43) Our after-show observations, feedback, banter, updates, and more! Links From Today's Episode: Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP ‘Why Do Investors Hire Their Financial Advisor?' — https://www.morningstar.com/financial-advisors/why-do-investors-hire-their-financial-advisor ‘Why Do Investors Keep Their Financial Advisors Around?' — https://www.morningstar.com/financial-advisors/why-do-investors-keep-their-financial-advisors-around Center for Fiduciary Excellence (CEFEX) — https://www.cefex.org/ Papers From Today's Episode: ‘Time Is Money: Rational Life Cycle Inertia and the Delegation of Investment Management' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2350785 ‘The Use and Value of Financial Advice for Retirement Planning' — https://www.pm-research.com/content/iijretire/7/3/46 ‘Professional Financial Advice and Subjective Well-Being' — https://www.researchgate.net/publication/359635224 ‘Smoking Hot Portfolios? Overtrading from Self-Control Failure' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3347625
Discover the hidden underbelly of financial markets in today's episode featuring Professor John M. Griffin, a leading forensic finance expert and the James A. Elkins Centennial Chair in Finance at McCombs School of Business at the University of Texas at Austin. Tuning in, you'll learn how forensic finance exposes illicit activities in crypto markets, revealing how entities like Tether (a cryptocurrency pegged to the US dollar) facilitate scams and money laundering. We also delve into the disturbing world of pig butchering scams, which have stolen more than $75 billion from victims globally, and how the victims of these scams have helped John study the flow of illicit funds in crypto markets. Find out how John uncovered massive fraud in the Paycheck Protection Program during the COVID-19 pandemic, and how this exposed the central role of fintech lenders and social networks in spreading fraud. We also discuss the importance of rigorous academic research and its practical implications in uncovering financial fraud, emphasizing the need for robust oversight and transparency in both emerging and traditional financial systems. Tune in for a thought-provoking discussion that challenges established practices and calls for greater scrutiny in financial systems! Key Points From This Episode: (0:05:23) An overview of John's research, the definition of forensic finance, and what sets forensic finance research apart from more traditional finance papers. (0:09:55) The economics of pig butchering scams and how the victims of these scams help John study the flow of illicit funds in crypto markets. (0:14:42) How crypto exchanges fail to monitor for potential scammer activity. (0:18:44) The role of so-called legitimate crypto exchanges in criminal activity; why Tether (a cryptocurrency pegged to the US dollar) is the most important cryptocurrency in scam activity. (0:21:43) Unpacking the $75 billion figure in John and Kevin Mei's paper on Pig Butchering and how it finances slavery; how this compares to fraud estimates from firms like Chainalysis. (0:26:25) How the methods in John and Kevin's paper can be used to improve the monitoring of crypto exchanges, and how the crypto community has responded to their paper. (0:29:14) An overview of John's paper on Tether with Amin Shams and how often fraud and misinformation are associated with asset price bubbles. (0:30:52) What Tether is, the difference between it being demand-driven or pulled, and supply-driven or pushed, and why Tether creators want to inflate the price of Bitcoin. (0:34:46) Decentralization in the crypto space and why decentralized finance is a misnomer, how to test whether Tether is pushed or pulled, and investigating Tether's relationship to Bitcoin. (0:35:56) How to test whether Tether is pushed or pulled; investigating Tether's relationship to Bitcoin and how it can be exploited by bad actors. (0:42:05) Tether's response to John's paper and why he tries not to listen to nay-sayers with vested interests. (0:46:10) John and his co-writers' findings on the prevalence of fraud in the Paycheck Protection Program (PPP) during the COVID-19 pandemic. (0:48:05) The role of fintech lenders and social networks in the propagation of PPP fraud and the impact PPP fraud had on real estate prices. (0:56:07) Policy implications and recommendations for future financial relief efforts. (0:59:47) John's personal journey and his profound definition of success. Links From Today's Episode: Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Prof. John M. Griffin — https://www.mccombs.utexas.edu/faculty-and-research/faculty-directory/john-griffin/ Episode 260: Prof. James Choi: Practical Finance — https://rationalreminder.ca/podcast/260 Papers From Today's Episode: ‘Is Bitcoin Really Un-Tethered?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066 ‘How Do Crypto Flows Finance Slavery? The Economics of Pig Butchering' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4742235
When witnessing the dramatic payouts of miracle trades, it's easy to be lured into thinking that your big score is just a few trades away. But as is evident in trading options for retail investors, it is neither quick, simple, nor easy to make guaranteed returns on your investments. In today's episode, Ben and Cam walk us through the many reasons why trading options is a losers' game; especially for retail investors. Trading options is definitely today's hot topic and we unpack how the recent resurfacing of Roaring Kitty affirms how life-changing payouts are the exception rather than the rule. We dive deeper into trading options and their uses, the trading demographics of the current market, why trading options are an expensive choice for retail investors, and why people still choose to trade even when doing so at a loss. To end, Ben and Cam highlight the dangers of being a copycat and how social media adds fuel to the fire and we hear some heartwarming Rational Reminder Podcast reviews from a few of our dedicated listeners. Key Points From This Episode: (0:00:48) Why today's topic is widely discussed in the current financial climate. (0:03:34) What we can learn from the resurfacing of Roaring Kitty. (0:05:35) A brief background on stock options and their various uses and the current state of retail trading. (0:08:13) Understanding the trading demographics at play in today's markets. (0:10:24) Discussing why trading options are expensive for retail investors. (0:12:35) Why people keep trading despite losing on average. (0:16:16) Exploring the dangers of copying successful traders and the role of social media. (0:17:17) The after show, headlined by inspirational Rational Reminder Podcast reviews from you, our dear listeners. Links From Today's Episode: Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder Email — info@rationalreminder.ca Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Books From Today's Episode: Wealthier: The Investing Field Guide for Millennials — https://wealthierbook.com/ Papers From Today's Episode: ‘Retail Trading in Options and the Rise of the Big Three Wholesalers' — https://onlinelibrary.wiley.com/doi/full/10.1111/jofi.13285
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