Afleveringen
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What if the hardest part of investing isn’t building a portfolio—but sticking to it? In this AMA edition of the Rational Reminder podcast, Ben Felix and Dan Bortolotti tackle listener questions ranging from sustainable retirement withdrawals to the dangers of structured products, with plenty of philosophical insights on risk, behavior, and financial planning. The episode opens with a deep dive into the 4% rule, exploring how time horizon, asset allocation, and global data can shift the definition of “safe.” They also explore the behavioral challenges of the “boring middle” of investing and why consistency may be the greatest alpha. Other standout segments include a sharp critique of bank-sold structured notes, an evidence-based takedown of trend following, and a fascinating discussion on the long-term impact of demographic shifts and index investing. Throughout, Ben and Dan blend technical insight with practical wisdom and academic research, delivering a thoughtful and entertaining conversation for both DIY investors and those working with advisors.
Key Points From This Episode:
(0:01:07) What the latest data says about safe withdrawal rates, especially for early retirees with 100% equity exposure.
(0:08:45) How variable vs. fixed withdrawals affect outcomes—and the trade-offs retirees must consider.
(0:17:01) The behavioral risks of the “boring middle” and how automation or advice helps investors stay disciplined.
(0:26:13) Reflections on market crashes—why hindsight downplays the emotional reality of volatility.
(0:33:27) Commission conflicts: Why bank advisors push structured notes and the incentives behind them.
(0:44:22) Education vs. malice: Are bad financial advisors untrained, conflicted, or both?
(0:49:08) Are structured notes ever justified? (Spoiler: very rarely.)
(0:56:44) Trend following: Legitimate strategy or fancy market timing? Examining the live track records.
(1:02:52) Diversifying your life like a portfolio: Applying the PERMA model to personal growth.
(1:10:18) The one use of leverage that actually makes sense—and why most others don’t.
(1:14:20) Will aging demographics crash ETF markets? What the data and theory suggest.
(1:19:02) Why even complex macro trends don’t justify deviating from a simple, low-cost investment plan.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Dan Bortolotti — https://pwlcapital.com/our-team/
Dan Bortolotti on LinkedIn — https://ca.linkedin.com/in/dan-bortolotti-8a482310
Episode 261: Felix Fattinger - https://rationalreminder.ca/podcast/261
Episode 314: Valentin Haddad - https://rationalreminder.ca/podcast/314
Episode 302: Michael Green - https://rationalreminder.ca/podcast/302
Episode 222: Cassie Holmes - https://rationalreminder.ca/podcast/222
Episode 278: Juhani Linnainmaa - https://rationalreminder.ca/podcast/278
Episode 212: Ralph S.J. Koijen - https://rationalreminder.ca/podcast/212
Episode 322: Marco Sammon — https://rationalreminder.ca/podcast/322Marco Sammon
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Today, Ben plays lone host for the first time as we welcome Alex Edmans to the show. Alex is a Professor of Finance at London Business School as well as an accomplished speaker, author, investment banker, and financial advisor. To start, Alex describes his involvement in the formation of a new law in the UK before defining ‘misinformation’ and where confirmation bias fits in. Then, we assess the impact severity of confirmation bias, biased search versus biased interpretation, the role of generative AI in confirmation bias, and the levels of susceptibility within confirmation bias. We also explore the role of black-and-white thinking in concealing the truth, Alex’s Ladder of Misinference as seen in May Contain Lies, the 10,000-hour rule and other famous statements of misinformation, and how the idea of a narrative may influence how people interpret and misinterpret facts. We end with how to guard against the plague of data mining in research, data as evidence and what this implies for evidence in financial economics, and Alex shares helpful advice for determining truth in any circumstance.
Key Points From This Episode:(0:03:27) Alex Edmans walks us through the erroneous evidence that influenced a new UK law.
(0:07:13) Misinformation; living in a post-truth world; and where confirmation bias fits in.
(0:12:06) The severity of confirmation bias, and biased search versus biased interpretation.
(0:18:19) Unpacking generative AI and the susceptibility thresholds of confirmation bias.
(0:21:25) How black-and-white thinking makes the truth more elusive.
(0:25:40) Understanding Alex’s Ladder of Misinference as seen in May Contain Lies.
(0:28:17) Debunking the 10,000-hour rule and other enduring statements of misinformation.
(0:38:10) The second step on the Ladder of Misinference: Why facts are not data.
(0:42:42) How the idea of a narrative influences how people interpret or misinterpret facts.
(0:44:25) Why data is not evidence, and examining the plague of data mining in research.
(0:48:36) Guarding against data mining and the consequences of investing with misinformation.
(0:53:01) When data is evidence, and what this says about evidence in financial economics.
(0:55:49) Why evidence may not be proof.
(0:59:14) Practical advice for seeking the truth for important decisions and in everyday life.
Links From Today’s Episode:
Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Alex Edmans — https://alexedmans.com/
Alex Edmans on LinkedIn — https://www.linkedin.com/in/aedmans
Alex Edmans on X — https://x.com/aedmans
London Business School — https://www.london.edu/
Fulbright Fellows | MIT — https://ir.mit.edu/projects/fulbright-fellows/
Atkins — https://www.atkins.com/
‘Matthew Walker's “Why We Sleep” Is Riddled with Scientific and Factual Errors’ — https://guzey.com/books/why-we-sleep/
‘Grit: The Power of Passion and Perseverance | Angela Lee Duckworth | TED’ — https://www.youtube.com/watch?v=H14bBuluwB8
Books From Today’s Episode:
May Contain Lies — https://maycontainlies.com/
Grow the Pie — https://mybook.to/Grow-the-Pie
Outliers — https://www.amazon.com/Outliers-Story-Success-Malcolm-Gladwell/dp/0316017930
Why We Sleep — https://www.goodreads.com/book/show/34466963-why-we-sleep
Start with Why — https://www.amazon.com/Start-Why-Leaders-Inspire-Everyone/dp/1591846447
Grit — https://www.amazon.com/Grit-Passion-Perseverance-Angela-Duckworth/dp/1501111108
Papers From Today’s Episode:
‘CEO-Employees Pay Ratio, Employees’ Productivity and Firm Performance: Evidence from UK’ — https://www.researchgate.net/publication/391787593_CEO-Employees_pay_ratio_employees'_productivity_and_firm_performance_evidence_from_UK
‘A Theory of Fair CEO Pay’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4294589
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Zijn er afleveringen die ontbreken?
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What if “just buying the market” isn’t the end of the story? In this episode, we are joined by Gerard O’Reilly, Co-CEO and Co-CIO of Dimensional Fund Advisors, for a deep dive into what really drives net investment returns. Gerard returns to the Rational Reminder podcast to explain the key principles that differentiate Dimensional’s approach from traditional indexing—and why implementation, flexibility, and detail matter so much more than investors might think. We explore the concept of hidden costs in index investing, how index reconstitution and trading frictions erode returns, and the nuanced decisions that shape a market portfolio: defining the market, excluding low-returning stocks, optimizing tax efficiency, and more. Gerard breaks down how Dimensional’s rules-based, evidence-backed process improves outcomes through smart exclusions (like IPOs and high asset-growth firms), precise trading, securities lending, and better handling of corporate actions. From the dangers of chasing low fees to the surprising benefits of thoughtful execution, this conversation is a masterclass in next-level investing.
Key Points From This Episode:
(0:01:07) Why Gerard was invited back: Dimensional’s approach to hidden costs and net returns.
(0:02:38) Looking beyond “index good, fees bad”—why investors should dig deeper.
(0:04:21) Gerard’s background: From Caltech rocket scientist to Dimensional co-CEO.
(0:06:22) How Dimensional differs from market-cap weighted index funds.
(0:08:42) Four components of net returns: Two increase returns, two decrease them.
(0:12:45) Defining the market: Free float, liquidity thresholds, and dynamic inclusion.
(0:17:52) How small-cap index definitions can create return differentials as high as 10%.
(0:22:03) What securities Dimensional excludes—and why: low-profitability growth, high asset growth, IPOs, and REITs.
(0:29:26) Why IPOs are excluded for 6–12 months and the mechanics behind inclusion.
(0:33:16) Why Dimensional’s exclusions aren’t like traditional active management.
(0:35:09) The “Great British Bake-Off” analogy: baking better portfolios with the same ingredients.
(0:38:13) How securities lending boosts returns—and how Dimensional does it better.
(0:42:09) Managing corporate actions (like M&A) to reduce cash drag.
(0:45:18) How Dimensional deals with buybacks and new share issuance.
(0:47:29) Momentum, short-term reversals, and securities lending fees as trading signals.
(0:50:36) Why Dimensional may lend out stocks that have negative momentum.
(0:52:42) How trading costs affect net returns and Dimensional’s execution edge.
(0:56:06) Hidden costs of indexing: Index fund rebalancing and price impact.
(1:03:19) Why focusing solely on fees is misleading—and what “value for service” really means.
(1:06:18) DFUS: A case study of Dimensional’s market series outperforming index funds.
(1:08:44) How Dimensional builds portfolios with intentional tilts toward higher expected returns.
(1:12:35) What excites Gerard: Expanding access, ETF innovations, and global growth.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
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/
Gerard O’Reilly — https://www.dimensional.com/us-en/bios/gerard-k-oreilly
Dimensional Fund Advisors: https://www.dimensional.com/
Episode 322: Marco Sammon — https://rationalreminder.ca/podcast/322Marco Sammon
Episode 198: Gerard O’Reilly — https://rationalreminder.ca/podcast/198
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For the first time as a host combination, Ben, Dan, and Cameron sit down to discuss the most controversial topics in personal finance. We begin with identity and how it informs decision-making. Then, we revisit the renting versus buying debate, why this remains a highly controversial topic, the ins and outs of income investing, and understating the fervor of dividend investing. We also unpack FIRE as a branch of self-help; how it informs happiness; and how personality influences one’s approach to the FIRE principle. To end, we closely examine Bill Bengen’s 4% rule, and the Aftershow encourages us to maintain high podcasting standards while revealing what you can look forward to in our latest Rational Reminder t-shirt release.
Key Points From This Episode:
(0:01:25) Cameron’s positive LinkedIn experience regarding insurance.
(0:08:10) How identity informs decision-making.
(0:15:24) Why renting versus buying a home remains a controversial topic.
(0:27:50) Income investing, covered calls, and the fervor of dividend investing.
(0:46:34) FIRE: Financial independence, retire early.
(0:54:36) Unpacking FIRE as a branch of self-help, and the role of FIRE in happiness.
(1:07:07) How personality and identity inform one’s approach to FIRE.
(1:10:34) Addressing the 4% rule.
(1:14:16) The Aftershow: Setting and keeping high standards, and Rational Reminder t-shirts.
Links From Today’s Episode:
Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3pRational 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 — https://www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Rational Reminder Merchandise — https://shop.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/
Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/
Episode 358: Eli Beracha: An Academic Perspective on Renting vs. Owning a Home — https://rationalreminder.ca/podcast/358
Episode 214: Jay Van Bavel: Shared Identities and Decision Making — https://rationalreminder.ca/podcast/214
Episode 260: Prof. James Choi: Practical Finance — https://rationalreminder.ca/podcast/260
Episode 273: Professor Samuel Hartzmark: Asset Pricing, Behavioural Finance, and Sustainability Rankings — https://rationalreminder.ca/podcast/273
Episode 95: Scott Rieckens (Playing with FIRE): Finding Financial Education, Perspective, and Freedom — https://rationalreminder.ca/podcast/95
Episode 258: Prof. Meir Statman: Financial Decisions for Normal People — https://rationalreminder.ca/podcast/258
Bonus Episode - Prof. Meir Statman: A Wealth of Well-Being — https://rationalreminder.ca/podcast/2024/4/18/bonus-episode-prof-meir-statman-a-wealth-of-well-being
Episode 230: Prof. Robert Frank: Success, Luck, and Luxury — https://rationalreminder.ca/podcast/230
Episode 135: William Bengen: The 5% Rule for Retirement Spending — https://rationalreminder.ca/podcast/135
Episode 164: Comprehensive Overview: The 4% Rule — https://rationalreminder.ca/podcast/164
Episode 357: AMA #6 — https://rationalreminder.ca/podcast/357
Morgan Housel — https://www.morganhousel.com/
‘Renting vs. Buying a Home: What People Get Wrong’ — https://www.youtube.com/watch?v=j4H9LL7A-nQ
MobLand — https://www.imdb.com/title/tt31510819/
Ray Donovan — https://www.imdb.com/title/tt2249007/
Animal Kingdom — https://www.imdb.com/title/tt5574490/
Books From Today’s Episode:
Rich Dad Poor Dad — https://www.amazon.com/Rich-Dad-Poor-Teach-Middle/dp/1612680194
Self Help, Inc.: Makeover Culture in American Life — https://www.amazon.com/Self-Help-Inc-Makeover-American/dp/0195337263
Papers From Today’s Episode:
'Motivated Numeracy and Enlightened Self-Government' - https://www.cambridge.org/core/journals/behavioural-public-policy/article/abs/motivated-numeracy-and-enlightened-selfgovernment/EC9F2410D5562EF10B7A5E2539063806
‘Nevertheless, They Persist: Cross-country differences in homeownership behavior’ — https://www.sciencedirect.com/science/article/abs/pii/S1051137721000590
‘Rent or Buy? Inflation Experiences and Homeownership within and across Countries’ — https://www.researchgate.net/publication/379974645_Rent_or_Buy_Inflation_Experiences_and_Homeownership_within_and_across_Countries
‘Dividend Policy, Growth, and the Valuation of Shares’ — https://www.researchgate.net/publication/24102112_Dividend_Policy_Growth_and_the_Valuation_Of_Shares
‘Chapter 3 - Behavioral Household Finance*’ — https://www.sciencedirect.com/science/article/abs/pii/S2352239918300046
‘Common Risk Factors in the Returns on Stocks and Bonds’ — https://www.sciencedirect.com/science/article/abs/pii/0304405X93900235
‘The Dividend Disconnect’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2876373
‘A Devil's Bargain: When Generating Income Undermines Investment Returns’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4580048
‘The Financialization of Anti-Capitalism? The Case of the “Financial Independence Retire Early” Community’ — https://www.tandfonline.com/doi/full/10.1080/17530350.2021.1891951
‘High Income Improves Evaluation of Life But Not Emotional Well-Being’ — https://www.pnas.org/doi/10.1073/pnas.1011492107
‘Income And Emotional Well-Being: A Conflict Resolved’ — https://www.pnas.org/doi/10.1073/pnas.2208661120
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Dr. Eli Beracha has recently been recognized by The Journal of Real Estate Literature as the world’s third best in research productivity, and today, we are honoured to be joined by this top industry expert to bring more clarity to the renting versus buying debate. We use Dr. Beracha’s ‘Lessons from Over 30 Years of Buy Versus Rent Decisions: Is the American Dream Always Wise?’ and ‘Housing Ownership Decision-Making in the Framework of Household Portfolio Choice’ papers as the basis for most of today’s conversation, beginning with why owning a home is deeply rooted in the perception of the American dream. Then, we discover how to measure the true price of home ownership, how the American dream and other psychological factors influence one’s decision-making, how hard assets perform compared to stocks and bonds, and why renting comes out ahead of buying nine times out of ten. We also learn why owning is for the inherently wealthy, the ins and outs of Dr. Beracha’s rent versus buy index, the rate of property appreciation versus stock appreciation, and how renting influences saving habits compared to owning a home. To end, we dive deeper into the risk-adjusted wealth accumulation of home ownership versus renting, and Dr. Beracha compares the efficiency of the real estate market to the stock market while detailing everything to take into account to be fully-equipped to make your decision to rent or buy.
Key Points From This Episode:
(0:00:00) Why Dr. Eli Beracha is one of the world’s best to discuss renting vs buying a home.
(0:05:32) Understanding why owning a home is deeply entrenched in the American dream.
(0:06:10) The various aspects to consider when measuring the price of home ownership.
(0:07:57) Weather Dr. Beracha agrees with the adage “renting is throwing money away.”
(0:09:36) What the price of a home should represent, and how psychology influences decisions.
(0:16:48) Unpacking Dr. Beracha’s 2012 paper subtitled, ‘Is the American Dream Always Wise?’
(0:19:51) Hard assets versus stocks and bonds, and why renting pips buying most of the time.
(0:26:00) Why many still choose to own a home despite long-term financial discrepancies.
(0:30:53) The ins and outs of Dr. Beracha’s rent versus buy index.
(0:39:46) Why homeowners are usually wealthier than renters even though renting is “cheaper.”
(0:42:03) Property appreciation, stock appreciation, and the renter’s savings rate.
(0:47:41) How home ownership influences saving habits compared to renting.
(0:49:46) The risk-adjusted wealth accumulation of home ownership versus renting.
(0:58:40) Dr. Beracha compares the efficiency of the real estate market to the stock market.
(1:03:22) Everything you need to take into account to make your decision to rent or buy.
Links From Today’s Episode:
Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin 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 325: Addressing 200+ Comments on Renting vs. Owning a Home — https://rationalreminder.ca/podcast/325
Episode 196: Sebastien Betermier: Hedging, Sentiment, and the Cross-Section of Equity Premia — https://rationalreminder.ca/podcast/196
Dr. Eli Beracha — https://www.theberachateam.com/
Dr. Eli Beracha on LinkedIn — https://www.linkedin.com/in/eli-beracha-b8082250/
Dr. Eli Beracha on Instagram — https://www.instagram.com/dreliberacha/
Tibor and Sheila Hollo School of Real Estate | FIU — https://business.fiu.edu/academics/departments/real-estate/
KBIS Capital — https://kbiscapital.com/
Journal of Real Estate Literature — https://www.tandfonline.com/journals/rjel20
Papers From Today’s Episode:
‘Lessons from Over 30 Years of Buy Versus Rent Decisions: Is the American Dream Always Wise?’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1814227
‘Housing Ownership Decision-Making in the Framework of Household Portfolio Choice’ — https://www.tandfonline.com/doi/abs/10.1080/10835547.2017.12091472
‘Findings from a Cross-Sectional Housing Risk-Factor Model’ — https://www.researchgate.net/publication/236023682_Findings_from_a_Cross-Sectional_Housing_Risk-Factor_Model -
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-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
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/
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
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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-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
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/
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-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin 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 — [email protected]
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
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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 — [email protected]
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
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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-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin 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/MarkMcGrathCFPEpisode 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/
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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-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin 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
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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-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin 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
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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-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
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/MarkMcGrathCFPProfessor 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
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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-h3pRational 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 — [email protected]
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
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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-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
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/MarkMcGrathCFPAndrew 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-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
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/MarkMcGrathCFPDan 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=
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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-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
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/MarkMcGrathCFPProfessor 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
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As we continue to answer your questions from our most recent AMA, Ben, Mark, and Dan begin today’s episode with Bitcoin and how its value as an investment has changed over the years. Then, after briefly explaining how to find short clips of this podcast online, we discuss why many companies choose not to list directly on the TXS, how to implement factor investing without factor EFTS, the best way to invest if you could only make one EFT investment in your lifetime, and, and understanding buffered EFTs and market-linked GICs. We also cover expected returns in a corrupt market, return stacking for individuals, academia versus real-world applications, and why stock valuations will never be the same as they were in the past. To end, we look at lump sum investing versus dollar-cost averaging, what to remember regarding asset allocation, how we rebalance portfolios here at PWL Capital, and we wish Ben well as he awaits his diagnosis.
Key Points From This Episode:
(0:03:30) Unpacking the value of Bitcoin as an investment; past, present, and future.
(0:09:58) Why we don’t use YouTube Shorts anymore and how to find our bite-sized clips.
(0:10:29) Understanding why many companies refrain from directly listing on the TXS.
(0:11:29) An interlude on how we take care of our bodies.
(0:14:22) Implementing factor investing without factor ETFs, and Manulife’s multifactor ETFs.
(0:19:21) What we would do if we could only invest in one ETF until retirement.
(0:22:23) Buffered EFTs and market-linked GICs.
(0:26:15) Market efficiency and expected returns in a low transparency/high corruption market.
(0:29:50) Whether return stacking is a good idea for individuals, and unpacking leverage.
(0:40:44) Balancing proven business philosophies with academic thinking.
(0:47:39) The Shiller PE Ratio; why stock valuations are permanently higher than in the past.
(0:54:58) Lump sum investing versus dollar-cost averaging.
(1:00:09) Asset allocation and how to know which assets to sell first.
(1:04:57) How PWL Capital rebalances client portfolios – an operational perspective.
(1:10:42) The after show: Testicular cancer and heartwarming reviews.
Links From Today’s Episode:
Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
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/MarkMcGrathCFPDan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/
‘Episode 80: A Planning Checklist, Portfolio Concentration, and Leverage’ — https://rationalreminder.ca/podcast/80
‘Episode 343: How to Choose an Asset Allocation’ — https://rationalreminder.ca/podcast/343
‘Episode 234: Prof. Robert C. Merton: ICAPM, Retirement, and Models in Finance’ — https://rationalreminder.ca/podcast/234
‘Episode 335: What About Warren Buffett?’ — https://rationalreminder.ca/podcast/335
‘Episode 202: Antti Ilmanen: The Building Blocks of Long-Run Returns’ — https://rationalreminder.ca/podcast/202
‘Episode 262: Prof. Francisco Gomes: Consumption and Portfolio Choice over the Life Cycle’ — https://rationalreminder.ca/podcast/262
‘Dan Bortolotti: Index Investing, ETFs and Financial Planning’ — https://thewealthybarber.com/podcast/dan-bortolotti-index-investing-etfs-and-financial-planning-twb-podcast-9/
Manulife Investment Management — https://www.manulifeim.com/retail/ca/en
Dimensional Fund Advisors — https://www.dimensional.com/hk-en/financial-professionals
Scott Cederburg on LinkedIn — https://www.linkedin.com/in/scott-cederburg-0917b0121/
Corey Hoffstein on LinkedIn — https://www.linkedin.com/in/coreyhoffstein/
We Study Billionaires — https://www.theinvestorspodcast.com/we-study-billionaires/
Hendrik Bessembinder | ASU Search — https://search.asu.edu/profile/2717225
Shiller PE Ratio — https://www.multpl.com/shiller-pe
‘What if You Only Invested at Market Peaks?’ — https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/
Books From Today’s Episode:
The Only Guide You'll Ever Need for the Right Financial Plan — https://www.amazon.com/Only-Guide-Youll-Right-Financial/dp/1576603660
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
‘Why Not 100% Equities’ — https://ibs-masters.narod.ru/olderfiles/1/asness_100equities.pdf
‘A Conversation with Benjamin Graham’ — https://www.jstor.org/stable/4477960
‘Forecasting Stock Returns: What signals matter, and what do they say now?’ — https://fairwaywealth.com/wp-content/uploads/Vanguard-Research-11-30-2014.pdf
‘Dollar Cost Averaging vs. Lump Sum Investing’ — https://pwlcapital.com/wp-content/uploads/2024/08/Dollar-Cost-Averaging-vs-Lump-Sum-Investing.pdf
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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-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
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/
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
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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
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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-h3pRational 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/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
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/MarkMcGrathCFPDan 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 - Laat meer zien
