The Rational Reminder Podcast

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

After months of research, number-crunching, and receiving listener requests on the subject, today's episode is devoted to introducing our new model ETF portfolios — which promise to offer a smoother ride to getting reliable returns. We open our conversation with a financial news roundup and by touching on our book of the week. We then dive into the theory behind our model by first exploring how market assets are priced. We discuss historical views on asset pricing models before looking at what academia has done to overcome challenges to the idea of market efficiency. Host Benjamin Felix methodically shows how our model addresses the five systematic risk factors that are included in the Fama-French Five-Factor Model. From emerging markets to stock size, we share insights into what our model accounts for and how this should impact your portfolio distribution and premium expectations. After reflecting on how factor-loaded indexes get higher returns without extra risk, we talk about the ETFs that we use for factor exposure, as well as how you can apply our findings to your portfolio. We round-off today's show by chatting about the latest bad financial advice. Tune in to hear more about our findings in this, our last episode of 2020. Key Points From This Episode: We share community and listener feedback and what you can expect from the show in 2021. [0:00:15] Hear about The Almanack of Naval Ravikant, our book of the week. [0:04:35] Relooking at the drive towards personalized portfolios. [0:07:28] Insights into S&P 500 stocks having a greater dividend yield than the US Treasury. [0:08:52] How ETFs are coming to dominate Wall Street. [0:09:56] Dying without a will; exploring the case of Zappos CEO Tony Hsieh. [0:11:05] Introducing today's portfolio topic — our new model portfolios, and why index funds make sense. [0:12:29] The risks that inform how the market prices assets and your expected returns. [0:18:00] How academics have addressed the joint hypothesis and the brilliance of the Fama-French Five-Factor Model. [0:22:18] The predictive power of the Fama-French Five-Factor Model. [0:30:25] Challenges to the Fama-French Model, what it accounts for, and how links to our new model portfolios. [0:31:20] How our model weighs the value of different markets and stock sizes. [0:36:52] Comparing the returns of a factor-loaded index with the US total market index. [0:40:44] Answering the question — what's special about dividend growth investing? [0:42:15] The role of persistence in being a factor-led investor. [0:45:50] How our model increases the reliability of your investing outcomes compared to historical data. [0:50:10] How to apply all the information presented in this episode. [0:54:38] Hear about the ETFs that we use for our factor exposure. [0:58:10] Details on when you can access our upcoming paper. [01:02:25] This week's bad financial advice; invest in the right region to drive performance. [01:04:05]

As author and financial expert Morgan Housel explains this episode, "people don't make financial decisions on a spreadsheet. They make financial decisions at the dinner table." Today we chat to Morgan about his key insights into financial decision-making — many of which are captured in his book, The Psychology of Money. Our conversation opens with an exploration of how investing success has less to do with what you know and more to do with how you manage your behaviour. We then look into the dangers of emulating top investors and how luck can fuel success. Reflecting the theme that people invest according to their unique circumstances, Morgan shares why he prioritizes endurance as an investor by minimizing his debt and having high cash reserves. After hearing his take on debt and whether young people should use leverage, we dive into how financial expectations impact investing and the importance of deciding what 'enough' means to you. We discuss the virtues of saving like a pessimist and investing like an optimist before looking into the role that financial advisors play in guiding their clients. In the latter part of the end of the episode, Morgan touches on active versus passive investing, the purpose that bonds serve in your portfolio, his top lesson from 2020, and why he's empathetic toward people who sell their portfolios during a downturn. Throughout our discussion, Morgan shares his clear understanding of how our psychology affects our relationship to money. Tune in and benefit from his incredible perspective. Key Points From This Episode: Introducing today's guest, financial author Morgan Housel. [0:00:15] Morgan shares his view that succeeding in investing has little to do with how you behave. [0:02:31] Hear about the problems that can arise from trying to emulate top investors. [0:05:02] Exploring the impact of luck on your success. [0:07:37] The differences between being conservative and having a margin of safety. [0:08:35] Insights into Morgan's personal investing strategy. [0:09:48] Morgan's thoughts on leverage and how debt impacts behaviour and peace of mind. [0:10:31] Stepping off the hedonic treadmill and the importance of defining your financial expectations. [0:14:02] The link between money, independence, and having a high quality of life. [0:16:44] What it means to be wealthy and what motivates the drive to be rich. [0:19:18] Morgan's advice to save like a pessimist and invest like an optimist. [0:21:34] Why no one makes perfectly rational investing decisions. [0:23:54] The role of financial advisors in guiding clients towards their investing decisions. [0:26:22] Why Morgan has embraced the simplest investing strategy available to him. [0:29:02] How you should be thinking about fixed income in your portfolios. [0:31:20] Why financial advisors can be priceless when understanding your finances and goals. [0:33:44] Life is surprising; hear why this is Morgan's top takeaway from 2020. [0:36:29] Morgan's thoughts on the FIRE Movement and retiring early in life. [0:38:53] Hear Morgan's predictions on the next big financial innovation. [0:41:49] Why Morgan is empathetic towards people who sell their portfolios during a downturn. [0:43:50] The tendency for people to embrace more extremist views during times of financial crisis. [0:47:34] We ask Morgan how he defines success in his life. [0:50:25]

There is a sharp divide between those who invest in dividend-paying stocks and those who don't. Underpinning this is the question of whether dividends are relevant to the evaluation of shares. Today we answer this question by digging into the data and parsing the maths before exploring what the future of financial planning looks like. But first, we open our episode with news from the Rational Reminder community — including the fact that we just passed one million podcast downloads. We then touch on lessons from Seth Godin's new inspiring book, along with the latest from the financial world. Following this, we dive into a discussion on dividend stocks. We begin by unpacking the assumptions behind Miller and Modigliani's theory of dividend irrelevance. Host Benjamin Felix presents a case study and applies the Fama-French Model to explain differences in returns on dividend portfolios and if dividends truly affect share valuation. After sharing our practical takeaways from Benjamin's analysis, we move onto our financial planning topic for the week. From technology to retirement decumulation and demographics, we discuss the five key areas which will most impact the future of financial planning. We then wrap up another informative episode with the bad financial advice for the week. Tune in for more insights into the role of dividend stocks and the future of financial planning. Key Points From This Episode: Community news, Benjamin's 3D printing project, and celebrating our 1 millionth download. [0:00:15] Drawing insights from a recent Ted Seides-Shane Parrish interview. [0:03:44] Reflecting on Seth Godin's latest book, Practice: Shipping Creative Work. [0:06:44] How our culture overvalues outcomes while neglecting the creative process. [0:07:46] Why having meals delivered to you helps to limit decision fatigue. [0:08:28] Hear about the new TFSA limits and Tesla's addition to the S&P 500. [0:09:25] Exploring whether size affects premium in the US versus elsewhere. [0:12:28] Why long-only investors may overweight small caps. [0:15:44] How US junk stocks impact value and their place in your portfolio. [0:16:18] Introducing today's portfolio topic; should you invest in dividend stocks? [0:17:53] Unpacking the assumptions behind Miller and Modigliani's theory of dividend irrelevance. [0:18:45] Host Benjamin Felix creates a case study to show Miller and Modigliani's theory in action. [0:22:38] Why Miller and Modigliani's math and idea of financing are based on poor assumptions. [0:26:24] The predictive power and limits of frameworks like the Fama-French 5-Factor Model. [0:27:25] Applying the Fama-French Model to portfolio dividend returns. [0:28:28] Key investing lessons from the notion that dividends are irrelevant to the valuation of shares. [0:31:30] Reasons why people might only want to invest in dividend-paying stocks. [0:33:20] The argument that firms seeking external financing may be subject to greater scrutiny. [0:35:33] Introducing our financial planning topic on the paper 'Financial planning: A research agenda for the next decade.' [0:37:02] Ties between psychology, communication, and financial decision-making. [0:39:02] Exploring the five key research areas informing the future of financial planning. [0:40:16] This week's bad financial advice; invest with active managers. [0:46:31]. What it actually means to say that a fund is actively or passively managed. [0:47:56]

Dr. Brian Portnoy and Josh Brown's book How I Invest My Money, captures the stories and investment strategies of 25 top financial advisors. The book highlights that while there are established dogmas that tell you how and why you ought to invest, there is no 'one-size-fits-all' way to invest. Today we speak with Brian and Josh about the key insights that we can derive from their work. We open our conversation by exploring how they conceived and developed their book before talking about why fully rational investing is a myth. After diving into how we allocate money to solve our unique needs, Brian and Josh share how people use their portfolios to express themselves. We then discuss common investing themes in the book, including how most advisors have an aversion to debt, and how their experiences have guided their strategies and outlooks. From why we should place more value on social and human capital, we look into why financial planning has a profound impact on how you manage your investments. We touch on direct indexing, the relationship between money and happiness, and the unexpected yet incredible perspectives that came from giving advisors a license to tell their stories. Near the end of the episode, Brian and Josh reflect on how their book might have changed their views and how their work fits into their visions for the financial industry. Tune in to hear more on the usually secretive topic of how financial advisors invest their money. Key Points From This Episode: Introducing Brian Portnoy and Josh Brown, authors of How I Invest My Money. [0:0:15] Why we invest and reflections on commentary made by the Rational Reminder community. [0:02:58] Josh shares his motivations for being transparent on where and how he invests. [0:05:25] Hear about the genesis and subsequent development of Brian and Josh's book. [0:07:19] The common needs that individual investors have beyond getting a return. [0:10:18] How the uniqueness of everyone's life affects their investing decisions. [0:13:09] Why there is no strict 'right way' to invest — invest according to what's right for you. [0:14:35] ESG investment and seeing your portfolio as a form of expression. [0:17:21] Exploring common investment themes that arise in Josh and Brian's book. [0:20:07] How Brian and Josh developed their personal investing outlooks. [0:21:44] Why we should place more value in human and social capital. [0:25:16] Brian expands on why we should invest in human and social capital. [0:28:35] The importance of financial planning in managing both your life and investments. [0:31:50] Answering the question: is direct indexing the future for outcome-driven portfolios? [0:36:55] Assessing a client's risk profile as central to modern financial advising. [0:39:34] Portfolio customization and direct indexing versus helping clients create a portfolio around their purposes. [0:40:58] Funding contentment and the relationship between money and happiness. [0:42:22] Whether the stories featured in their book have Brian and Josh's views. [0:46:18] When your life is your benchmark, how do you derive your portfolio benchmark. [0:49:15] How their book fits into Brian and Josh's visions for their industry. [0:54:43]

On today's show, we explore rational explanations for pricing bubbles, how the concept of human capital relates to financial decisions, and a whole lot more! We kick things off with a discussion of Ashley Whillans' book Time Smart, which explores proven strategies for improving your 'time affluence'. Diving into this week's portfolio topic, we use a previous discussion about Carlota Perez's model for technological revolutions as a springboard to introduce Lubos Pastor and Pietro Veronesi's mathematical arguments that present a rational explanation for pricing bubbles. Perez maintains that prices get bid up too high during technological revolutions due to 'frenzy' but we unpack two papers by Pastor and Veronesi where they argue differently, drawing on the concepts of uncertainty and discount rates. From there, we dive into the relationship between human capital, life insurance and asset allocation for our planning topic. We provide some definitions for the term 'human capital' and discuss how it differs from other forms of capital. A key idea we explore here is that the more risky your human capital is, the less life insurance you should take out. Along with this, you'll hear a few quick suggestions for how you should approach life insurance and bonds depending on age, financial wealth, risk aversion, and other factors. Tune in today! Key Points From This Episode: Talking COVID, next week's guests and Rational Reminder Community updates. [0:0:18] Book of the week: Rethinking conventional notions of time well spent in Time Smart. [0:04:07] News updates: Stories about Bitcoin, marijuana stocks, and more. [0:08:56] Portfolio Topic: Whether pricing bubbles are caused by rational behaviour. [0:14:19] Unpacking Pastor and Veronesi's paper connecting uncertainty to high prices. [0:18:25] Pricing bubbles as caused by discount rates; a second Pastor and Veronesi paper. [0:27:48] 'IPO waves' connected to the bubble discussion in a third Pastor and Veronesi paper. [0:37:58] Planning topic: How the concept of human capital relates to financial decisions. [0:44:45] The importance of considering asset allocation decisions and life insurance needs together. [0:54:46] Bad advice of the week: 'The Market's Invisible Guardrails Are Missing'. [1:01:16]

Professor Lubos Pastor's brilliant and varied research has been consistently referenced on this podcast. From how politics impacts stock returns to measuring the skill of active fund managers, Lubos joins us today as we explore some of the 'greatest hits' of his research. With Lubos's position on the board of the Slovakian Central bank, we ask him about how quantitative easing can be used to strengthen the economy. His answers highlight how easing can prop up asset prices and raise inflation — and why inflation is the "least bad" option to deal with post-pandemic debt. We then discuss Lubos's research on how political cycles affect stock returns and why stock returns are higher when a Democrat is in the White House. After diving into how stock prices respond to political uncertainty, we look at why green assets tend to generate higher stock prices but low expected returns. While talking about his research on measuring volatility, Lubos argues against the conventional wisdom that stocks are stable, in the long run. We touch on how this can affect your retirement asset allocation before chatting about whether young people should use leverage. With so many people moving from active to passive and index fund investing, we analyze the relationship between the scale of active funds and the skill of active managers. Near the end of the episode, we talk about the effect that market-wide liquidity has on stock prices and why you cannot diversify away from liquidity risk. Our conversation with Lubos is filled with insights, each of which could inspire hours worth of discussion. Tune in to hear more from our discussion with Professor Lubos Pastor. Key Points From This Episode: Introducing Professor of Finance and today's guest, Lubos Pastor. [0:0:15] The role of central banks and the goal of quantitative easing. [0:05:06] Whether quantitative easing props up asset prices. [0:07:58] Exploring different findings on quantitative easing by central banks and academics. [0:08:51] Why inflation may be the "least bad" option to deal with post-pandemic debt. [0:10:27] How increased inflation helps shift the burden of debt from those who are most impacted by lockdowns. [0:11:17] Lubos explains the relationship between political cycles and stock returns. [0:13:39] Hear how political uncertainty affects stock returns. [0:18:46] Why green assets tend to generate higher stock prices and low expected returns. [0:20:38] What factors would cause green assets to perform well, and how long this might last. [0:25:22] The link between sustainable investing and firms pushing to turn green. [0:27:48] Dispersions among ESG rating organizations and issues related to ESG scoring. [0:29:45] Why green assets will, most likely, never outperform in the long-term. [0:32:37] Exploding the conventional wisdom that stocks are less volatile in the long run. [0:34:26] How long-term stock volatility affects your retirement fund asset allocation. [0:38:30] How human capital and mean reversion should factor into a young person's decision to use leverage. [0:39:54] Analyzing the skill and scale of active fund management. [0:42:49] Why consumers moving towards passive investing will increase active fund performance. [0:46:37] Answering the question: Did active funds do well over the pandemic? [0:52:39] Ways of selecting a good active fund manager. [00:54:28] Buffett's alpha strategies of replicating the decisions of top fund performers. [00:56:55] How market-wide liquidity impacts stock prices. [01:10:42] Whether current liquidity betas can predict future liquidity betas. [01:02:32] Lubos shares how he defines success in his life. [01:05:18]

As counter-intuitive as it may seem, most of the companies that push us into the next technological revolution deliver poor investment returns. Today we look at current and historical data to show why this is the case but first, we chat about the top financial news of the week. Borrowing heavily from Carlota Perez's Technological Revolutions and Financial Capital, we then explore how the links between tech revolutions and investing adhere to a consistent model. Following this model, we discuss how our current information-led revolution is as impactful as revolutions experienced in previous generations. We touch on the factors that lead to innovation, historical perspectives of technology companies, and the many investing phases resulting from tech revolutions. Despite making for poor returns, we talk about why the frenzy of investing that accompanies innovation is good for that industry and leads to a golden age of tech adoption and growth. A key takeaway, we dive into how investors are paying too much for the expected growth of new companies and that there is little to no link between massive growth and high stock returns. From guessing the next IPO winner, we move to our planning topic of the week — how to be a successful household CFO. We close this episode with our bad financial advice of the week. There's a lot of pressure in the market to invest in tech. Despite that, tune in to hear why you shouldn't invest in the next technological revolution. Key Points From This Episode: Hear about host Benjamin Felix's burgeoning 3D printing addiction. [0:0:06] Sharing listener feedback and messages from the Rational Reminder community. [0:02:02] Robinhood and why users are treated as the product, not the customer. [0:04:33] News on what might be the largest cash raise in IPO history. [0:07:25] How most ETF assets are in products that were launched prior to 2015. [0:09:24] Benjamin shares details about his project exploring the value of investing in tech revolutions. [0:11:05] Modelling the consistent sequences that technological revolutions follow. [0:14:38] Why current tech revolutions are as powerful as those experienced in previous generations. [0:16:55] Which common factors lead to tech revolutions. [0:18:31] Looking at historical examples of innovations and the performance of tech companies. [0:20:35] Why innovative big companies become unable to lead the next tech revolution. [0:23:18] How explosive growth and a frenzy of investment is common during early tech breakthroughs. [0:29:30] Signs that our current tech bubble has begun to pop. [0:34:45] The benefits of investment frenzy phases for tech industries and society as a whole. [0:36:15] Exploring what happens after phases of investment frenzy. [0:38:10] Evidence showing that investors pay too much for the expected growth of new companies. [0:42:42] Why there is no link between massive industry growth and stock returns. [0:50:00] Applying lessons from our discussion to our current investing environment. [0:52:03] Why you probably shouldn't put your money in the technological revolution. [0:58:04] How people operate as unofficial CFOs within their households. [01:02:45] The many tasks that household CFOs need to perform. [01:05:20] Bad advice of the week; swap your bonds for dividend-paying stocks. [01:10:42] Why increasing inflation may be a key post-pandemic government strategy. [01:15:40]

There are seven equations that, if understood, will put you in the best possible position to tackle your retirement plan. Today we speak with business professor Moshe Milevsky about these equations, which he's written extensively about in his best-selling book, The 7 Most Important Equations for Your Retirement. After introducing Moshe, we dive straight into the first equation that maps out the longevity of your money. Following this, we talk about determining how long you will live by comparing your biological and chronological ages. Regarding the third equation, Moshe provides his insights into evaluating the usefulness of an annuity plan, and at what age they become relevant to you. We then chat about what annuity plans are offered in Canada versus elsewhere and why people don't want to buy annuities during a bull market. Despite the popularity of the '4% spending rule' — which we also unpack — Moshe discusses the importance of being adaptable with your retirement spending rates. Reflecting on the key theme of another of his books, we explore the question of whether people are stocks or bonds. Moshe shares some investing advice for younger listeners and touches on what the ideal mix of stocks, bonds, and human capital looks like. For the last equation, we look into the impact of probability frameworks and why financial advisors need to understand the math behind retirement plan probabilities to make meaningful recommendations. Throughout our discussion, Moshe presents coherent answers and pragmatic advice. Tune in and learn more about the equations needed to build the best possible retirement plan. Key Points From This Episode: Introducing today's guest, Professor Moshe Milevsky, and his work. [0:0:15] Exploring Moshe's book, The 7 Most Important Equations for Your Retirement. [0:02:57] Mapping the longevity of your money according to Moshe's 'Fibonacci Equation.' [0:03:25] Determining how long you will live when planning your retirement funds. [0:04:37] Understanding the difference between your biological and chronological age. [0:06:22] A challenge to our retirement system; it's based on chronological and not biological age. [0:08:45] Introducing the concept of annuities and how they can be valued. [0:10:03] Striking a balance with your annuity plan and answering — "How much is too much?" [0:11:42] Moshe shares his thoughts on how much insurance companies factor in biological age. [0:14:04] Ideas on using your biological age to your advantage. [0:15:35] Why you probably shouldn't even consider getting an annuity until you're 60. [0:17:16] Canadian annuity plans versus elsewhere; "The shelf feels empty here." [0:18:30] The correlation between being in a bull market and people not wanting annuities. [0:20:35] Establishing your ideal retirement spending rates — flexibility is important. [0:25:25] Unpacking the '4% rule' and why it's a ridiculous spending framework. [0:28:04] What your mix between stocks, bonds, and human capital should be. [0:31:08] Answering the question — are humans stocks or are they bonds? [0:33:28] Leveraging youth to get quicker exposure and equity. [0:36:03] Life insurance and measuring your financial legacy. [0:39:10] Details on the life of Andrey Kolmogorov and his effect on understanding probability. [0:40:54] How important probability frameworks and analysis are to retirement planning. [0:43:17] The impact of low-cost index funds on retirement income planning. [0:45:18] Keeping finance students engaged in the industry. [0:47:24] How Moshe defines success, his other research interests, and reflections on the success of his books. [0:49:53]

Despite the mountain of evidence against it, day trading is thriving. Today we dive into the research and explore why the practice is alive and well before answering the question — "Can too much confidence lose you money?" After touching on investing news, listener feedback, our books of the week, and our take on the 'Ultimate Ned Debate,' we open our discussion on day trading. In our conversation, we look at the results of numerous papers on the topic, none of which present-day trading as sound financial practice. We shed light on the reasons that people day trade, the performance differences between traders, what a day trader's learning process looks like, stock-picking strategies, and why it's impossible, except in outlier cases, to earn a living as a day trader. As we unpack the literature, we discuss key insights on the impact of day trading on the financial world. From one investing sin to another, we talk about how overconfidence can harm your investment performance. We balance the positives and negatives of having confidence, highlighting how too much confidence can lead to poor decision-making and a false sense of how much you know. Tune in to hear some of the latest investing news and to learn more about the pitfalls of day trading and overconfidence. Key Points From This Episode: Acknowledging the 33rd anniversary of Black Monday. [0:01:08] How the podcast is faring against other podcasts within the investing category. [0:02:07] News on past and upcoming episodes and responding to listener feedback. [0:04:09] From technological revolutions to starting with a 'why', we explore the books of the week. [0:07:23] Top news story; Fidelity Magellan Fund is moving to an ETF format. [0:12:06] Weighing in on the "Ultimate Nerd Debate" on the value and risks of small-cap allocation. [0:14:45] Why performance doesn't change when you invest in a fund using a different currency. [0:19:12] Introducing today's portfolio and planning topics — day trading and overconfidence. [0:21:56] Examining the data sets and papers that assess the effectiveness of day trading. [0:23:48] Analyzing two competing theories that explain the behaviour of day trading. [0:25:57] Attributing a portion of all portfolio return losses to the effects of day trading. [0:30:39] Comparing the performance of the best and worst day traders. [0:33:52] Why it might be impossible for you to earn a living as a day trader. [0:36:58] Applying Michael Mauboussin's 'Paradox of Skill' to day trading. [0:39:50] Three reasons why people still day trade, despite evidence that they make for bad investments. [0:42:38] Which stocks day traders trade and how they pick their stocks. [0:45:42] Why overconfidence can turn you into your worst enemy. [0:50:25] Trends in which investors develop an inflated sense of how much they know. [0:56:02] Hear this week's bad advice of the week; ignore the data and only invest in excellent companies. [01:01:24]

Good decision-making is a fundamental part of achieving our goals, so getting better at it would be in anybody's best interest. Here to talk about making better decisions is Annie Duke, expert poker player and author of How to Decide: Simple Tools for Making Better Decisions, and Thinking in Bets. Annie starts by defining what a good decision should look like and some of the steps involved. From there, we explore the idea of how to accommodate the fact that our preferences change and we sometimes do not even know what they are in our decision-making processes. Uncertainty is a big part of what makes future choices difficult, and Annie talks about how it is caused by either luck or ignorance, the latter of which we can control, thereby reducing uncertainty as much as possible. Another big theme today how to know which decisions to spend time on and which not to. We waste a lot of time on choices that do not affect our happiness much, and on the other end of the scale, big choices often are hard because the different outcomes they present look quite similar. Annie gives us a few tools to deal with both scenarios. Toward the end, Annie dives deeper into what a good decision involves, talking about the need to step outside our beliefs by building an evidentiary record of the process which involves outside input. Tune in for a fascinating conversation that will help you get better at choosing. Key Points From This Episode: Introducing today's guest, Annie Duke, and her work on decision-making. [0:00:16.3] The definition of a good decision and the steps involved in making one. [0:02:51.3] Examining probabilities of potential choices and the beliefs informing the examination. [0:05:00.3] Factoring in the possibility of preferences changing while making decisions. [0:08:56.3] Beliefs as formed by actions, and how to not see a change in course as failure. [0:13:30.3] When our preferences are clear and when they are not. [0:15:00.3] Dealing two kinds of uncertainty, one based on luck and the other on ignorance. [0:16:39.3] How to know how much time to spend on making decisions, and the need to record the process. [0:20:49.3] Using the 'happiness test' to judge decisions and free up time for the important ones.[0:27:46.3] Choosing 'quittable' things to gather information for more binding decisions. [0:30:03.3] Doing things in parallel so you don't have to make one choice. [0:31:57.3] Understanding that choices become hard when they present similar outcomes, thus that it is not sensible to deliberate too long. [0:32:32.3] How to speed up the harder decisions; the 'only option test'. [0:35:47.3] Involving others while producing an evidentiary record of a decision-making process. [0:37:11.3] How often we should aim to update our beliefs, making them less subjective. [0:37:11.3]

Thank you for tuning in to this episode of the Rational Reminder. We start this show with some great news about the comment section and our migration to Discourse. Having an open dialogue has always been crucial for us—it has even led to our latest hire—so we felt it was time to add more structure to it. We then talk about mortgage rates and why so many people do not know that it is possible to negotiate them down even further. There is often a big gap between what is publicly advertised and what you can actually get, so it's worth shopping around. Following this, we touch on IPOs, SPACs, and why some are saying it is similar to 1999. In the heart of this discussion, we unpack the relationship between the US election and stock market returns. If you are like Ben, perhaps you thought there is not much material difference, and while over the short-term there is not, the election cycle data is truly astonishing. We find out the fascinating explanation of why there are higher excess returns under Democratic leadership, and it is probably not what you think! Moving on, we chat with our newest advisor Jordan Tarasoff where he sheds light on his previous employment at a sales and product-centric advisory firm. We talk about how this affects both the customer and the advisor, and Jordan ends with talking about his positive time at PWL so far. To hear more, be sure to tune in today! Key Points From This Episode: Some great news about migrating the comment section to Discourse. [0:00:09.3] The new PWL team member we are welcoming and our shop opening. [0:01:27.3] Why Cameron recommends everyone watch The Social Dilemma. [0:04:19.3] Recommended books: Open and Succession Planning for Financial Advisors. [0:08:27.3] Results from a survey around people's knowledge of mortgage rates. [0:11:43.3] Some of the reasons that mortgages can be tricky. [0:14:20.3] What is happening with IPOs and why it is being likened to 1999. [0:15:26.3] Insights from Hendrick Bessembinder about how investors should use his findings to structure their portfolios. [0:19:16.3] A follow up about safe withdrawal rates we touched on a while back. [0:21:44.3] Today's investment topic: The US election and stock market relationship and Ben's assumptions prior to research. [0:24:13.3] Are returns affected by US elections? Hear Ben's findings. [0:27:26.3] The relationship between beliefs and optimism in the market. [0:30:31.3] Unpacking the link between volatility and the election. [0:32:09.3] Looking long-term at the stock market through election cycles. [0:33:14.3] How the timing of a Democratic president being elected results in positive excess returns. [0:39:26.3] The short-term effects of the election are minimal compared to changes over an entire election cycle. [0:44:39.3] Get to know Jordan Tarasoff, PWL's newest advisor, and his previous experience. [0:47:01.3] Some of the conflicts and tension Jordan experienced in his former advisory role. [0:49:33.3] What to keep in mind about adding segregated funds to your portfolio. [0:54:47.3] Why you should not put a great deal of money into life insurance. [1:01:11.3] The flawed hiring model that Jordan experienced at his former workplace. [1:02:49.3] Jordan's advice for anyone with a product-centric financial advisor. [1:05:49.3] What PWL does better, according to Jordan. [1:07:55.3] Bad advice of the week! [1:08:57.3]

What are the psychological conditions that allow investors to make rational decisions, and how do these processes of decision-making occur? These are the questions that our guest, Victor Ricciardi, is dedicated to answering and what he is here on the show today to talk about! Victor is the Visiting Assistant Professor of Finance at Washington and Lee University as well as the Coordinator of Behavioral and Experimental Research at the Social Science Research Network. He has an MBA in finance and an advanced professional certificate in economics from St. John's University and holds graduate certificates in personal financial planning and financial therapy from Kansas State University. Victor is the co-author of Investor Behavior: The Psychology of Financial Planning and Investing, in which he and H. Kent Baker explore and unpack the exact topics we look at in this episode. In our conversation, we talk about the steps that investors can take in order to make better decisions, and for Victor, this means maintaining a balanced portfolio and recording the circumstances and conditions in which decisions are made. Victor's starting point for better investing is self-knowledge and understanding one's own psychology and risk tolerance. He also underlines becoming familiar with the environments that allow you to make the best decisions and refining this wisdom over time. We also dig into the topics of the subconscious, checking biases, and financial therapy, so make sure to join us to hear it all. Key Points From This Episode: The history of academic studies on investor behaviour. [0:02:11.2] Victor's thoughts on the rational decisions investors should aim for. [0:04:50.5] The idea of 'bounded rationality'; sufficing and the factors that influence decisions. [0:06:38.9] Benefits and dangers of group investments — more or less rationality. [0:09:43.2] Weighing the usefulness of heuristics in the investment process. [0:11:54.1] The role of the subconscious in human decision-making. [0:13:33.8] Victor's thoughts on sustained commitment to active investing, despite the evidence. [0:15:45.6] The framing of information and the impact this has on investor behaviour. [0:19:09.5] A five-factor model for personality; extroversion, agreeableness, conscientiousness, neuroticism, and openness to intellect. [0:22:33.4] Unpacking the emerging profession of financial therapy and Victor's thoughts on its benefits. [0:28:36.3] The relationship between money and happiness; the importance of options. [0:31:42.7] Methods for checking our biases; education, simplicity, rebalancing, and more! [0:33:44.3] Prioritizing trust and ways to ensure that received advice is dependable. [0:35:38.2] The effect of access to free information and weighing the helpfulness of the internet. [0:37:47.2] The application of behavioural bias models to the real estate market. [0:39:38.6] Victor's personal definition of success: Impacting students. [0:41:49.4]

For the first part of today's discussion, we are joined by Don Coletti from The Central Bank of Canada. He is here to talk about their upcoming recommendation for a monetary policy framework for the next five years which is incorporating public feedback into its development through the survey, Lets Talk Inflation. From there, we touch on some favourite books, Starbucks's stored value card liabilities, the benefits of keeping inheritance in a separate account, new standards for financial planners and advisors proposed by the FSRA, and why SoftBank did not pile into call options and cause the rally in tech as the previous headlines suggested. Heading into the meat of the episode next, Ben shares some findings from a model he built inspired by a program written by one of this show's listeners that tests historical safe withdrawal rates for factor loaded portfolios. Ben gets into a series of papers that speak to the diversification benefit of adding factors in this section too. He wraps up the discussion with a spanner in the works though, which looks at this question through the lens of time-series momentum rather than cross-sectional momentum. Here, he considers trend following as another type of diversification that has shown favourable impacts on portfolio returns in the data that exists. As usual, we wrap up with our bad advice of the week, hearing Cameron relate the bizarre 'findings' of a Forbes article claiming that active management beats passive investing in the face of piles of data to the contrary! Key Points From This Episode: Updates: An upcoming guest, great reviews of this show, and the brilliant discussions thread. [0:00:23.0] Introducing Don Coletti to talk about The Bank of Canada's outreach programme. [0:04:52.0] Alternative approaches to monetary policy the Bank of Canada is considering. [0:07:19.0] Thoughts on the US Federal Reserve's change to average inflation targeting. [0:11:43.0] How open the Bank of Canada is to making a change. [0:13:14.0] Why the Bank of Canada is placing more emphasis on engaging with the public as part of their renewal. [0:14:35.0] Why questions about large scale asset purchases and forward guidance were included in the survey. [0:17:00.0] The response rate so far to the Bank of Canada's Let's Talk Inflation survey. [0:18:59.0] Favourite books and series, and Starbucks's stored value card liabilities. [0:21:50.0] The benefits of keeping inheritance in a separate account. [0:26:24.0] Standards for financial planners and advisors the FSRA is proposing. [0:28:20.0] Why SoftBank was not piling into call options and responsible for the rally in tech. [0:31:43.0] Ben's remodelling of a listener's code that tests historical safe withdrawal rates for factor loaded portfolios. [0:34:40.0] Safe withdrawal rates for different stock indexes according to Ben's model. [0:37:15.0] A paper looking at the interaction between factors historically and the results this produced. [0:47:52.0] Findings of a paper looking at the five factors through business cycles. [0:56:57.0] Papers exploring whether a factor can be cheap and therefore have a higher extended premium. [1:00:41.0] The shadow time-series momentum casts on this; the impact of trend following on safe withdrawal rates. [1:02:46.0] Bad advice of the week: Active management beats the stock market. [1:15:51.0]

Joining us on the Rational Reminder today is one of the pioneers in the space of evidence-based investing, and someone who has been a massive inspiration to us, Mark Hebner! His website, Index Fund Advisors, was one of the first to start explaining the ideas of an evidence-based approach and the power of indexing, way back in the 1990s. We get to hear from Mark about his transition from misled active investor to his discovery of indexing and how this led to him founding Index Fund Advisors. One of Mark's mantras is to replace speculation with education, an idea he has held dear since his first forays into passive strategies and a message he delivers to his new clients repeatedly. Mark also tells us about the niche he filled with his business, visually presenting the evidence that was being ignored, in a way that was both easy to understanding and also convincing for investors. Our conversation covers the troubled waters of DIY investing, why Mark believes that an advisor is a necessary part of a good approach, as well as the parts of wealth management that are not actual investing. Mark unpacks his definition of risk and how best to think about it before we get into the topic of taxation. So for all this valuable information from a true authority, be sure to listen in with us and hear what Mark has to say! Key Points From This Episode: The events that led up to Mark founding Index Fund Advisors. [0:03:18.7] Mark's 12 step process for getting out of active investing and the importance of the first one. [0:11:41.3] Advice for avoiding the allure of active management — the idea of the Ulysses Pact. [0:16:12.2] Thoughts on large-cap growth stocks and the lessons we learn from history. [0:18:34.6] You cannot cheat risk; rules that have remained the same since 1720. [0:22:37.3] The folly of market timing and Mark's approach for explaining this. [0:27:55.1] Understanding tax and how it should impact and propel passive strategies. [0:33:10.1] The best way to think about risk — the uncertainty of your expected returns. [0:36:16.6] Important lessons that Mark has learned while educating clients over the years. [0:39:02.4] Aspects of wealth management apart from investing; saving, withdrawal rates, spending, and more. [0:43:28.2] The indispensability of an advisor — why DIY investing is not the way to go. [0:47:08.7] Mark's personal definition of success: Freedom of choice and the opportunity to help. [0:51:04.4] The public company that Mark had and exited before he got into investing. [0:54:23.8]

Our focus for this episode of the Rational Reminder is split into two sections; first, we cycle through our regular features, looking at a number of studies and articles of interest, the market during the pandemic, and our bad advice segment, and then Benjamin is joined by Tim Nash to talk about ethical investing and comment on Wealthsimple's new sustainable portfolio. We start off our weekly round-up talking about the idea of broadening a knowledge-base and how reading widely and diversely on all manner of subjects can influence and benefit your investing. From there, we turn to the topic of quantitive easing before exploring Tim Wu's thesis about information empires and how they cyclically influence economics. We then dive into the Ontario Securities Commission Investor Experience Study and Lubos Pastor's paper, 'Mutual Fund Performance and Flows During the COVID-19 Crisis'. Both of these shed light on investor behaviour and market performance during 2020 and also offer some interesting findings on the strength of some active management. Daniel Crosby has laid out what he calls '22 Behavioral Nudges to Optimize Client Outcomes', which we then run through, touching on each of his ideas and commenting where necessary. Our bad advice of the week comes from TikTok, and we listen in on two, worryingly misleading clips from TikTok personalities — the social platform may not be the best place to find sound financial advice! For the last part of the show we hear from Tim Nash; he shares his thoughts on Ken French's appearance on the show recently and what the pandemic has proven about sustainable funds going forward. So for all of this and a whole more, in a jam-packed episode, be sure to listen in with us! Key Points From This Episode: The importance of a wide range of reading material and looking at Peter Thiel's Zero to One. [0:03:35.2] Quantitative easing and the important work that Frances Coppola has done on the subject. [0:09:22.8] Tim's Wu's economic theory around the cycle of information empires. [00:11:49] Takeaways from the Ontario Securities Commission Investor Experience Study. [00:13:53] Narratives about actively managed funds during the COVID-19 crisis. [0:20:04.1] The performance and flows of mutual funds; looking at Lubos Pastor's paper. [0:28:35.7] Sustainable funds during the crisis — the past research that this now underlines. [0:38:03.3] Looking at the 22 behavioural nudges identified by Daniel Crosby for optimizing client outcomes. [0:43:23.7] Bad advice of the week: A couple of concerning clips of financial of content on TikTok. [0:58:46.2] An introduction to Wealthsimple's new sustainable model portfolio. [1:03:45.5] Tim weighs in on what this progressive portfolio really means. [1:08:32.7] A response to the conversation we had with Ken French about ESG. [1:11:44.1] The increasing prioritization of sustainable companies during the pandemic. [1:16:47.8]

When it comes to your financial life, you can have endless conversations about asset allocation but we often neglect the impact of communication and asking difficult questions. Today we speak with Chief Financial Commentator and awarded media personality, Pattie Lovett-Reid. We start the discussion by COVID silver-linings and the financial lessons that people have been learning due to the pandemic. Pattie explores how people's views of risk have shifted, along with the realization that our portfolios may not be as watertight as we had thought. We dive into financial control and Pattie emphasizes how better family dialogue and managing your emotions are key elements. After talking about how the COVID crisis is different from previous crises, Pattie talks about how stress impacts people's financial decision-making. We ask Pattie for advice on teaching children about finances, and she uses examples from her own life to show how you can instill financial responsibility in your kids. From kids to partnerships, Pattie highlights why you should be on the same financial page as your partner before explaining the concept of financial abuse. We touch on what job-seekers should consider as they apply for jobs, tips for retirees facing the challenge of low-income rates, offering financial advice through Instagram, and how the work-from-home trend is affecting real estate. Our conversation this episode filled with practical advice, and Pattie's approach focuses on the importance of asking difficult questions and communication, be that with your family, partner, or financial advisor. Tune in to hear more about why asking difficult questions is critical to controlling your finances. Key Points From This Episode: Introducing this episode's guest, Pattie Lovett-Reid. [0:00:15] Key financial lessons that people have learned from the COVID-19 pandemic. [0:04:01] How the way that people view their portfolios has changed due to the pandemic. [0:05:08] Pattie's insights into what people can control regarding their finances. [0:06:15] Why Pattie has bought dividend-paying stocks in sectors that have been performing poorly. [0:07:26] Why controlling your emotions is important in making sensible financial decisions. [0:09:06] Pattie's media perspective on the current market, compared to previous crises [0:09:44] How stress has impacted people's financial decisions for the worse. [0:12:07] What people can be doing to make sure that they don't make poor decisions. [0:14:06] Hear how you can begin discussing personal finances with your children. [0:15:29] Planning for future upsets, the importance of balance, and being frugal, not cheap. [0:19:04.4] Being on the same financial page as your partner; it allows you to achieve financial goals. [0:21:40] The idea of financial abuse and the need for transparent conversations. [0:25:15] Thoughts on what job-hunters should do once the market opens up. [0:30:07] Pattie shares her 'big-picture' opinions on COVID market shifts. [0:31:48] Hear Pattie's advice to retirees facing the challenge of low-interest rates. [0:33:27] How Pattie uses Instagram and the types of questions that she's often asked. [0:36:04] The state of the average Canadian's access to financial advice [0:39:22] Tough questions that you need to ask your financial advisor. [0:41:19] Reflecting on her life Pattie gives listeners some final advice on following your passion. [0:42:23]

The hype to invest in high-cap tech companies is deafening. In this episode, we share what you need to know before buying FANG company stocks. Although FANG is the popular term, our analysis includes Facebook, Apple, Amazon, Alphabet, Tesla, and Microsoft — so it's closer to the less slick-sounding FAAATM. Before we dive into that, we talk about the show's books of the week and how ETFs and mutual funds have been performing compared to July of 2019. We then set the scene for how FANG businesses fit into the market-place and how we measure their success by their size and relative price. As these are the companies that are changing the fabric of society, we discuss how it is fitting that companies like Apple represent a whopping 6% of the US market. To put this in historical context, we explore AT&T's past and how market-share tends to reflect the level of innovation introduced by businesses. The upshot of this is that the huge market-share that FANG companies have carved out is not as new of a phenomenon as it may seem. We then unpack how stock prices are valued and the impact that expectation has on stock valuation and returns. After talking about why we might be overpaying for growth stocks, we commiserate over the pain of being a value-titled index investor at times when large-cap growth stocks dominate both the discussion and the marketplace. We round this section by touching on the US stocks' performance compared to US treasury bills, whether you should be looking for the next Amazon, and why you need to quantitatively look at a company's business quality. From FANG we jump into our planning topic of the week — a review of the withdrawal rules for the Registered Education Savings Plan (RESP). Near the end of the episode, we share some bad financial advice for the week courtesy of TMZ and the idea that you should start your portfolio with 100% gold. Tune in to hear more from the world of rational investing. Key Points From This Episode: From Blackstone to Bloomberg, hear about the books of the week. [0:01:23] Why success is often driven by luck and not by 'being the best.' [0:06:19] Listener feedback on Assuris — the insurance industry's insurer. [0:07:32] Comparing Canadian ETF and mutual fund performance from July 2019. [0:08:52] Introducing our investment topic; should you add FANG mega-caps to your portfolio? [0:12:37] Measuring the unreal success of the top FANG companies. [0:14:28] Contextualizing Apple's market-share within US history. [0:16:44] Exploring AT&T's history to unpacking flaws behind the 'this time, it's different' line of thinking. [0:18:07] How developing life-changing technology can earn you high market share — until it doesn't. [0:22:19] Understanding mega-cap stock prices and factors to consider before buying. [0:25:25] How high market expectations are linked to low stock returns. [0:27:59] The connection between paying low prices for higher stock returns. [0:31:04] Rational versus irrational views on high-growth stock prices. [0:32:13] The pain of being a value-tilted investor at times when large-cap growth stocks outperform. [0:35:36] How most US stocks trail underperform compared to US treasury bills whether you should be looking for the next Amazon. [0:37:43] Business quality and how the relative expensiveness of growth stocks is bigger than ever. [0:41:01] We dive into your planning topic on the Registered Education Savings Plan withdrawal rules. [0:45:12] What to consider before coming up with an RESP withdrawal strategy. [0:47:57] Our bad advice for the week; become the Wolf of Wall Street by reading TMZ and starting your portfolio with 100% gold. [0:51:01]

Michael Kitces is one of the world's leading experts in financial services but is also a trusted authority in retirement planning research, and today he joins us for a brilliant conversation that covers both topics. Michael is the Head of Planning Strategy at Buckingham Wealth Partners, Co-Founder of XY Planning Network, AdvicePay, and fpPathfinder, and also hosts the much-admired Financial Advisor Success podcast. In the first section of the show, we shoot our questions about retirement planning Michael's way, exploring sequence of returns risk and the implications it presents for spending and portfolio management through retirement. Michael weighs in on three approaches to variable spending, why people can do what they love and still retire well, and his research on the 'rising equity glidepath'. He also speaks about why it's normal to start saving after you hit forty, and why withdrawal policy statements can help you have a better idea of when your portfolio is in the red. This leads us into the financial services segment of the show and we start out hearing Michael compare the assets under management model to the fee for service one, and how XY Planning helps those who can't afford the first by implementing the second. From there, we dive deeper into the limits of more affordable AUM models, Michael's thoughts on which draw on theories of human nature and also function as an advisor underwriting how-to for investors. Toward the end of the show, Michael does an amazing job of contextualizing the merge of the brokerage and advisory sides of the financial system and what this means for investors. For all this and a closing exchange about the incredible work Michael is doing to lift standards for the industry through his podcast and more, be sure to tune in! Key Points From This Episode: Introducing Michael Kitces, a leader in financial services and retirement planning. [0:00:15.7] Market fluctuation and how early retirement affects sequence of returns risk. [0:03:25.1] Different approaches to variable spending to deal with market fluctuation. [0:06:37.6] Lifestyle and banking habits: Why retirement spending rarely increases. [0:17:55.3] The rising equity glidepath: Inverting the conventional retirement portfolio. [0:20:57.2] How withdrawal policy statements help you know when your portfolio is in the red. [0:27:35.1] Why people don't have to endure unhappy jobs for the sake of a good retirement. [0:34.42.7] Beating 'learned helplessness': Start saving in your 40s, you haven't missed the boat. [0:43:41.6] Assets under management versus fee for service financial advisor models. [0:48:43.3] Why cheaper AUM financial advisor models can't meet investor needs. [0:55:57.4] Limits to human sociability and how to vet a financial advisor by asking how many clients they have. [0:59:43.4] How tech has merged the brokerage and financial advice sides of financial systems and the effects of this. [1:04:30.6] Michael's definition of success and his gratitude for the impact his work has. [1:12:02.2]

With the gold price reaching record highs, we revisit the contentious issue of whether you should add gold to your portfolio. Before mining that topic, we talk about Super Pumped: The Battle for Uber and Am I Being Too Subtle? — our book recommendations of the week. We then touch on key news stories including how the recent Apple stock split has affected its position in the Dow index. After fielding a listener question about why central banks care about deflation, we share the reasons for and against investing in gold. We discuss where gold derives its value along with the concept of the 'golden constant' which states that the value of gold will keep pace with inflation in the extreme long-term. Host Benjamin Felix brings in research to show why gold is a bad inflation hedge due to its short-term price volatility. He also brings in data to look at how gold performs under hyper-inflation and then speculates on how supply shock from finding new sources of gold would impact its market value. Often used as a reason to invest in gold, we provide our take on John Bogle's statement that you should invest 5% of your portfolio in gold. Despite seeming to be a middling investment, we then talk about why so many central banks own gold. Near the end of the episode, we briefly explore the life insurance organization Assuris and which account you should draw from when buying a home. Lastly, we draw insights from this episode's bad advice of the week. Tune in to hear more rational reminders from the investment world. Key Points From This Episode: Media recommendations ranging from Too Much and Never Enough to Ray Donovan. [0:01:39] Updates on the model portfolios being written by Ben. [0:02:58] This week's book recommendations: Super Pumped and Am I Being Too Subtle? [0:04:40] Dives into key stories of the week; Apple's share split and Vanguard Investor's trading practices. [0:09:13] Answering a listener question about why central banks care about deflation. [0:11:13] Introducing this episode's portfolio topic; should you invest in gold? [0:13:52] An overview of the arguments for and against investing in gold. [0:15:05] How gold's value derives from its scarcity, malleability, and symbolism. [0:15:46] Gold's value as an industrial and collectible commodity and pricing in the 'emotional dividend'. [0:17:18] Where the demand for gold comes from — it increases with its price. [0:20:00] The concept of the golden constant and how gold maintains its value in real terms. [0:21:23] Drawing conclusions about the value and portfolio benefits of gold from the 2013 paper, 'The Golden Dilemma'. [0:22:31] How gold has performed in periods of hyperinflation. [0:28:19] Further unpacking the idea of a golden constant and the expectation of receiving zero return. [0:32:00] Summarising why investors are attracted to gold; it's tangible and scarce. [0:34:50] Speculation around asteroid and ocean mining in the far future and how this might impact gold prices. [0:36:01] How central banks off-loading their gold reserves will affect the gold price. [0:38:30] Why gold returns look so good at the moment and why this can't be trusted. [0:40:03] The paper, 'The Long-term Returns to Durable Assets', conclusions about the gold's pricing. [0:41:00] Why John C. Bogle invested 5% of his portfolio in gold and why it's not necessarily a good idea. [0:42:01] Answering why central banks hold gold in the first place. [0:43:23] Exploring Assuris — an organization protecting Canadians when their life insurance policies fail. [0:47:40] Which account to draw from when buying a home when you have equal amounts in your TFSA and RSP accounts. [0:52:30] Bad financial advice for the week; PWL Capital versus funds chosen by a big bank. [0:55:02] The importance of understanding the decision-making behind developing your portfolio. [1:04:35]

Often called a 'once in one hundred years event', the COVID-19 pandemic is having a profound impact on the economy. Today's guest is Craig Alexander, Deloitte's Chief Economist, who brings his 29 years of experience analyzing the economy to answer our questions about the marketplace. We start the conversation by exploring how the pandemic is affecting small businesses, with Craig adding insights into what the government should be doing to help. Craig discusses how the pandemic has revealed inadequacies with Canada's employment insurance and why Canada needs to improve both its income support and its skills frameworks. A key theme in the episode, Chris presents the idea that businesses "Shouldn't let a crisis go to waste." As such, Chris thinks that this crisis is a chance for businesses to reassess their models, especially as certain pre-pandemic trends will continue to disrupt business. Chris also highlights the importance of high-quality childcare services to ensure both long and short-term economic recovery. From childcare, we leap to real estate before Chris provides his perspective on the interplay between the stock market and the economy. After the hosts question the value of economic forecasts, Chris makes a strong case for them, showing how they help organizations to develop plans based on several best and worst-case scenarios. Next, we ask Chris about investing in these times of economic uncertainty and if there is a risk of increased inflation in the future. Near the end of the episode, Chris talks about which industries will most likely grow in the future. Tune in to learn more from Chris's incredible economic perspective. Key Points From This Episode: Presenting Craig Alexander's bona fides and the insights gained from this episode. [0:00:39] How the pandemic has impacted the economy, especially small businesses. [0:03:10] Craig talks about inadequacies in the current employment insurance system. [0:05:06] The challenge of repurposing the job market to fit the recovery landscape. [0:06:37] Reassessing business models as a way for businesses to exit the recession stronger than before. [0:07:44] Trends disrupting business that have been accelerated by the pandemic [0:08:55] Why high-quality childcare services are so important to the economy. [0:11:16] How the real estate market is faring and why Ottawa is not a good benchmark. [0:14:31] How bank policies and mortgage deferrals have impacted real estate. [0:18:40] Making a distinction between COVID-19 and post-vaccine trends [0:22:22] Why consumer debt is increasing but that the debt-to-income ratio is a poor metric [0:24:42] How the interaction between the economy and the stock market has played out. [0:28:37] What government and banks did that stabilized the stock market. [0:29:45] How economic recovery hinges on managing health risks. [0:32:04] The case for economic forecasts and their role in simulation analysis. [0:34:23] Craig highlights the level of uncertainty regarding economic futures. [00:39:15] Why uncertainty shouldn't prevent you from making investments. [0:41:19] How the government response is geared towards preventing deflation. [00:42:52] Hear why the government's strategy won't decrease the appetite for Canadian bonds. [0:48:03] How the pandemic is affecting some industries and which markets will see growth. [0:51:12] Chris explains why macroeconomic theories evolve based on circumstance. [0:58:06] Chris shares how he defines success and what brings him [1:03:43]

Quantitative easing is a monetary policy whereby a central bank buys government bonds or other financial assets in order to inject money into the economy to expand economic activity. But what exactly does that mean? In today's episode, Benjamin and Cameron are going to address this topic, avoiding highly politicized aspects, like whether or not central banks should be involved in the economy in the first place, and focusing purely on the operational perspective of quantitative easing – what is it, how it works, and what the intended transmission mechanisms are. Benjamin explains what he has learned through his extensive research, from what money printing and the stock market have to do with one another, where the money for loans comes from, how central banks can influence lending rates, and the difference between regular open market operations and quantitative easing. We also cover how quantitative easing works, the relationship between bank reserves and money in the economy, and what causes inflation, as well as the effect of quantitative easing has on stock prices (if any). We also catch up on recent news stories, and Cameron takes us through five key personal finance lessons we can learn from this crisis. If you're looking to understand quantitative easing, this episode will hopefully become a useful resource! Tune in today. Key Points From This Episode: This week's book of the week is Mindf*ck: Cambridge Analytica and the Plot to Break America by Canadian, Christopher Wylie [0:04:38] A chart showing the ratio of the Nasdaq 100 index divided by the Russell 2000 [0:08:22] University endowment sued for active investing by 94-year-old Clarence Herbst. [0:10:02] This was not the first time Clarence Herbst had an issue with his alma mater. [0:13:05] Multimillion-dollar mismanagement of public pension funds in Maryland, 2014. [0:13:22] Benjamin introduces the main topic, quantitative easing (QE), a central bank action. [0:14:42] What do money printing and the stock market have to do with one another? [0:17:37] You can summarize money as a social construct that facilitates economic activity. [0:20:06] As long as there are credit-worthy borrowers, banks will print money out of thin air. [0:22:28] The distinction between central banks and private banks, which interact with customers and have to monitor their net flow of money. [0:25:27] Open market operations allow a central bank to influence overnight lending rates. [0:28:30] The difference between regular open market operations and QE. [0:33:14] A couple of theories about how QE might work, like the portfolio balance theory. [0:37:42] There is no relationship between reserves and money in the economy. [0:41:11] What causes inflation? It's not reserves! Demand for loans drives demand for loans. [0:43:07] What about the effect of QE on stock prices? We would expect a positive impact. [0:45:14] Money is this medium that facilitates economic activity and that's all it does. [0:47:40] Five key personal finance lessons we can learn from this crisis: Stocks are volatile [0:50:35] Debt is dangerous and emergency funds have a very important purpose. [0:50:35] Don't stop spending, always prepare for the worst – disability insurance is crucial! [0:54:51] Cameron still wants to understand how fee-free trading platforms make money – nothing is for free! [0:50:35]

In keeping with our recent tide of incredible guests, today's one is no exception. Dr. William Bernstein, a financial theorist, advisor, and neurologist, joins us to share some of his incredible insights. As the author of several seminal books such as The Intelligent Asset Allocator and The Four Pillars of Investing, Dr. Bernstein has made his mark applying his medical evidence-based approach to investing. These works have had a particularly strong influence on Cameron when he made the transition from active mutual funds earlier in his career, so it was an incredible honour to have him on the show. In this episode, we dive into a range of topics. We kick off with the importance of understanding investment theories and market history along with why Dr. Bernstein believes young investors should cross their fingers and hope for a bear market. We then take a look at how overconfidence and ill-discipline affect investment decisions and how investors can test their risk appetite in real-time. From there, we turn our attention to small-cap and value stocks and Dr. Bernstein's take on them and the role they should play in your portfolio. We round the show off by discussing the real economic issue that Dr. Bernstein thinks the pandemic is bringing to the fore in the US, the parallels he has seen between his medical and his financial advisory career, and some of his frustrations in communicating financial advice. Be sure to tune into this phenomenal episode. Key Points From This Episode: Learn more about today's guest, Dr. William Bernstein, and his background. [0:01:06.0] An overview of value averaging and how it's different from dollar-cost averaging. [0:02:37.0] Why Dr. Bernstein believes it's so important for investors to understand investing theory. [0:05:14.0] What it means to understand the several facets of market history. [0:06:28.0] Insights into return sequence and why young investors should hope for bear markets. [0:08:11.0] Why generational underperformance is arguably a bigger risk than volatility. [0:09:39.0] Why people are so bad at evaluating their risk tolerance and how they should assess it. [0:11:54.0] Bernstein's take on whether young investors should be using leverage. [0:15:15.0] Insights on premiums for small-cap and value stocks and the reason to not build an entire portfolio of them. [0:15:49.0] Dollar-cost averaging vs value cost averaging: Dr. Bernstein's position. [0:19:37.0] Factors that influence the shift from an equity biased portfolio to a fixed-income one. [0:21:08.0] How to reconcile the idea that stocks can be less risky than bonds over time. [0:23:58.0] When Dr. Bernstein would make the rare recommendation of an annuity. [0:25:33.0] The difference between financial systems and airfoils and electric circuits. [0:27:29.0] Why Dr. Bernstein calls mean-variance optimizer an error maximizer. [0:29:28.0] Bernstein's opinions on gold and some of the problems he sees with it. [0:30:34.0] What Dr. Bernstein is really worried about with the securities market in the COVID crisis. [0:31:49.0] The similarities between neurology and financial advisory and what motivated Dr. Bernstein's transition. [0:35:04.0] The impact that the current crisis is likely to have on global trade. [0:38:01.0] Find out what Dr. Bernstein thinks about the US Central Bank's crisis response. [0:39:24.0] The lessons that Dr. Bernstein has learned about communicating financial topics. [0:40:46.0]

As the expression goes, another day, another dollar. Today's episode is a roundup of news and analysis with deeper dives into behavioural and risk-based market explanations, active management, and endowment investing models. We open with a book review of Essentialism: The Disciplined Pursuit of Less by Greg McKeown, a book that's getting a lot of attention at the moment. Another topic that's getting a lot of attention, we discuss how Tesla's huge market cap growth makes it feel like it's 1999. We also offer our opinions on why Tesla has been so highly valued despite increasing competition in the electric car market. Answering a listener question, we explore how Robinhood makes money through 'payment for order flow' and the debate about if this is in the retail client's best interest. Following another listener question, we answer if the podcast suffers from confirmation bias and how you can never know the 'why' behind stock returns. We talk about risk versus behaviour market explanations and use sound clips from previous episodes to present views on this subject. We then discuss Yale and David Swensen's endowment investment model, focusing on his strategy of finding uncorrelated asset classes and then hiring active managers to meet target allocations. We look at the model's benefits and its similarities to Canada's CCP before examining how Norway invests based on oppositional ideas of the marketplace. Near the end of the episode, we continue our conversation on spousal loans by listing more family income splitting strategies. Tune in to hear more from the financial world. Key Points From This Episode: A quick book review of Essentialism: The Disciplined Pursuit of Less by Greg McKeown. [0:03:25] Key ideas of this book; being busy isn't always a positive, and if you don't prioritize your life then someone else will. [0:06:02] Why Tesla surpassing General Motors' market cap makes it feel like it's 1999. [0:07:32] Opinions on why Tesla has experienced such incredible growth. [0:09:06] How Robinhood makes money if they don't charge any trade fees. [0:12:15] Discussion on whether Robinhood's service benefits the end-user. [0:13:19] Dave Nadig's take on Robinhood and why it's a "tempest in a teapot." [0:15:46] Answering the question; "does the podcast suffer from confirmation bias?" [0:17:30] How the podcast's stance on behavioural versus risk-based explanations have softened. [0:18:38] Sound clips from previous episodes on the reasons for different stock returns. [0:21:00] Examining a paper arguing that active management can create value for investors. [0:23:10] Deep dive into our portfolio topic; Yale and the endowment investment model. [0:27:30] Why it's so difficult to replicate David Swensen's endowment investment success. [0:32:00] The correlation between endowment size and allocation to alternative asset classes. [0:34:30] How many endowment investment portfolios have performed poorly. [0:36:35] Differences between the Yale and Canadian endowment investment models. [0:40:15] How Norway operates the biggest wealth fund in the world. [0:45:40] How Norway's model is completely at odds with the Yale endowment model. [0:48:20] Family income splitting opportunities in Canada that attract less tax. [0:52:00] [0:52:00] Why you should seek legal counsel when setting up family trusts and using family income splitting strategies. [1:00:05] Hear the crazy, bad financial advice of the week; Ponzi schemes are still selling. [1:06:15]

Today's guest is Dr. Jim Stanford, Economist and Director of the Centre for Future Work and author of Economics for Everyone. We kick things off with Jim hearing his perspectives on what makes this recession unprecedented before he argues that a traditional approach to macroeconomic policy won't be enough to augment more than a crippled and unstable recovery. This situation might hold a silver lining though and Jim sketches out the opportunity it provides for rethinking employment ethics. After weighing in on why the deficits caused by a much-needed post-war style economic reconstruction might not such a bad thing, Jim does an amazing job of explaining the connections and differences between quantitative easing and government deficit. On this topic, he talks about why fears around credit creation are centered on an outdated concept of banking, and the potential quantitative easing has for facilitating investment and economic activity in this recession rather than buying corporate assets in the secondary market. From there, we talk about wealth distribution, the inevitability of an economic system that supersedes capitalism, and the concept of the political economy. Jim gets into how issues about history, norms, culture, and power – things that don't show up in your usual supply and demand graphs – are actually crucial inputs for understanding the economy and understanding economics. Don't miss this incredible conversation about ethics and capitalism with today's guest. Key Points From This Episode: Introducing Jim Stanford and his work on economics and quantitative easing. [0:00:05.3] What makes this recession unprecedented; the 'Loch Ness Monster' recovery. [0:03:16.2] How many of the most vulnerable groups are experiencing more job losses. 0:06:27.3] Challenges of remote work and implications that only 25-30% of jobs can be done remotely. [0:09:32.3] Impacts of social distancing on the economy, a socially constructed phenomenon. [0:12:07.7] Avoiding the Loch Ness recovery by implementing a post-war style recovery plan. [0:14:53.3] The silver lining of this crisis: putting an end to inhumane work arrangements. [0:18:38.4] Why large deficits that could come with a reconstruction might not be a problem. [0:21:02.0] Connections and differences between quantitative easing and government deficit. [0:24:30.3] Dispelling fears of credit creation inflation; how banking actually works. [0:28:14.7] The dangers of quantitative easing and how it can be better used in the recovery. [0:32:44.3] Why GDP might not be the best measure of how well an economy is doing. [0:35:49.1] Metrics that make skew wealth distribution seem less harsh than it is. [0:38:58.2] The precariousness of the bank and mining-based Canadian economy. [0:41:49.9] How Capitalism is not perpetual and examples of seeds of change. [0:46:17.3] Why the capitalist economy is political and gross inequality contradicts it. [0:50:21.8] Jim's education, early activistic goals, and definition of success. [0:53:28.5]

With private equity investments increasing in popularity, you may feel the pressure to expand your portfolio. Today's episode, we look at the data behind private equity returns to see if these investments add something to your portfolio that you couldn't get elsewhere. But first, we discuss some big news — that slow-moving Dimensional Fund Advisors are entering the ETF marketplace. After looking at the implications of this move, we use a Harvard paper as our springboard into the topic of private equity. By exploring the shift in demand for private equity, the paper establishes the context for why investors, especially institutions, are seeking higher returns. Looking at research from AQR, we talk about their finding that private equity returns are overvalued, despite them being historically good investments. You'll hear how the risks underlying private equity are obscured by a 'return smoothing effect' and why people are willing to overpay to get smooth returns. We examine how the gap between private and public equity returns has narrowed along with AQR's argument that market changes have caused private equity investments to perform poorly. After AQR, we move onto a paper by Erik Stafford which shows that small-cap investing yields similar returns to private equity — with the advantage that you don't have to pay high private equity fees. We round off the episode with a discussion on the benefits of spousal loans before talking about this week's bad financial advice. This is a valuable episode for those wondering about adding private equity to their portfolios. Listen to find out why that might not be in your best interest. Key Points From This Episode: Updates on our brilliant future guests — Jim Stanford and William Bernstein. [0:01:50] That Jim Stanford's book provides an excellent view of money and banking in capitalism. [0:02:49] The big news; Dimensional Fund Advisors are entering the ETF marketplace. [0:04:50] The similarity between Avantis Investments and Dimensional Fund's offerings. [0:06:05] Speculation on why Dimensional Fund Advisors are moving into the ETF space. [0:09:06] The benefit of ETFs — if you want out, then you have to pick up the spread [0:13:12] How ETFs might affect investor discipline and what ETF demand might look like. [0:14:06] Other Dimension news; 16 Canadian funds will get a management fee reduction. [0:15:39] Corrections to a chart on Twitter showing investors selling their equity holdings. [0:16:16] Hear about Capital and Ideology, Benjamin's book of the week. [0:17:38] How private equity is becoming increasingly popular. [0:19:26] Why, generally, you shouldn't include U.S ETFs in your portfolio. [0:21:20] The massive shift towards private equity investment from numerous entities. [0:24:08] How the timing has caused large institutions to look for higher returns. [0:25:33] Why expected returns from private equity were historically good and why this is no longer the case. [0:27:50] How private equity trading results in an artificial 'return smoothing effect'. [0:29:10] That the valuation gap between private and public equity has narrowed. [0:31:40] What other mechanisms lead to an overvaluation of private equity. [0:32:28] Why IRRs, as opposed to PMEs, can be easily gamed, rendering them unreliable. [0:37:00] The historical conditions that led to high returns from private equity. [0:40:50] Comparing the expected return for public and private equity. [0:43:25] How Erik Stafford's paper agrees that public equity risk is under-stated. [0:47:06] The difference in dispersion between private and public mutual equity funds. [0:49:30] Why private equity past performance isn't a predictor of future returns. [0:50:55] How spousal loans allow your partner to make investments with your money. [0:54:24] The potential tax savings that result from spousal loans. [01:01:20] Why you should probably include spousal loan debt forgiveness in your will. [01:03:45] Hear the show's bad advice of the week; the return of 90s investment ideas. [01:06:16]

Today, we get into a masterclass on retirement planning with a true expert in the field whose perspectives are distinctly evidence-based, Fred Vettese. Fred is a Partner and former Actuary at Morneau Shepell and author of three retirement books including Retirement Income For Life. We hear Fred's thoughts on what people should be spending in retirement, why there is not a retirement crisis in Canada, and how Canadians can live on far less than they have been told. Fred talks about how to prepare for a bad investment outcome, as well as the problem of underspending early on and ending up with too many assets. He is a big proponent of people deferring their CPP until after 70 and buying an annuity with a portion of their money in most cases. Our guest weighs in on annuities, talking about how to buy them, which types to buy, and why ALDAs exacerbate the problem of early underspending. We query Fred about when people should start their CPP and OAS government benefits, and then move to hear his thoughts about different bear markets, how to invest during them, and what the current massive government interventions mean for the future of taxpayers. Fred gets into the risk of getting a retirement age date wrong, why he doesn't endorse the 4% spending rule, and how retirement planning is affected by owning versus renting a home next. He also makes a case for when reverse mortgages are a good option, why long-term care insurance makes no sense, and why interest rates are so low right now. Wrapping up, we hear Fred's thoughts on what this all means for early retirees, people still in the workforce, and those just entering it. Tune in for Fred's brilliant perspectives on all this and a lot more in what should be an evergreen resource for any Canadian looking for solid retirement instructions. Key Points From This Episode: Introducing Fred Vettese and his evidence-based work on retirement planning. [0:00:16.3] How Fred and Bill Morneau dispelled notions of a Canadian financial crisis. [0:02:45.3] Rethinking the rule that Canadians spend 70% of their income in retirement. [0:04:55.3] Fred's conclusion about how spending tracks inflation during retirement. [0:09:27.3] Strategies for how retirees can take on less risk but still have enough money. [0:12:00.3] Avoiding underspending and ending up with too many assets later. [0:15:08.3] The benefits of annuities and why they might not be that safe anymore. [0:16:55.3] The pitfalls of annuities indexed to inflation over combining all income sources. [0:20:00.3] Why ALDAs exacerbate Canadians underspending at younger ages. [0:22:47.3] When to start CPP and OAS government benefits, and tips for exceptional cases. [0:25:59.3] Whether this bear market is vanilla or not and how it affects investment decisions. [0:30:25.3] The effects that massive government stimulus could have on taxpayers. [0:32:28.3] Drawbacks of saving for an over and underestimated retirement age. [0:35:12.3] Thoughts on the 4% spending rule now that bond returns are 0%. [0:37:20.3] How people owning versus renting a home affects retirement planning. [0:39:09.3] When it's a good idea to take out a reverse mortgage. [0:41:36.3] Why long-term care insurance makes no sense; poor coverage for the price. [0:44:10.3] The link between aging populations and low interest rates/inflation. [0:47:40.3] The impacts of this low interest rate environment on early retirees. [0:52:10.3] Whether Monte Carlo simulation is a useful tool and what success rates to aim for. [0:53:49.3] Why early retirees can withstand a lower Monte Carlo success rate. [0:56:11.3] The reason people who are not retired yet should be saving 20% of their income. [0:56:59.3] Fred's advice for people entering the workforce to live within their means. [0:58:52.3] How Fred defines success: having a minimal amount of regrets when it's all over. [0:59:55.3]

Welcome to another episode of the Rational Reminder Podcast! Today's main topic is how to pick an actively managed fund to invest in despite funds of this type producing lower returns than passive ones! Before getting into that, we hear a few updates on Ben's research into dollar-cost averaging versus lump-sum investing, discuss the factors that influence choice making found in an amazing new book by Sheena Iyengar, and touch on an OSC report on QuadrigaCX being a big Ponzi scheme! We get into our main topic next, introduced by the point that while Peter Lynch managed the Magellan Fund so well, none of its investors made any money out of it. We talk about the decrease in popularity of actively managed funds and Ben attempts to find out if it would be possible to sketch out a framework for picking one despite this. He does this by firstly defining active and passive investing and then tracing the evolution of the definition of Alpha (excess risk-adjusted returns) found in different key papers, where at each new contribution to the definition, the window for actually achieving Alpha gets smaller. Finally, we end with a framework but you'll find out how it falls short of being able to narrow the definition of a sensible actively managed fund to invest in down beyond a certain point. From there, we get into some amazing OAS clawback retirement hacks that could earn you a lot of extra income and wrap up with a glance at the bizarre upsurge in Robinhood investors in now-bankrupt Hertz since the pandemic! Key Points From This Episode: Updates about Ben's work, fans of RRP, and brilliant upcoming guests! [0:00:40.1] Discussing The Art of Choosing and its meditations on factors that impact choice. [0:05:11.3] Findings of an OSC report about QuadrigaCX being a Ponzi scheme. [0:11:00.6] An article on Peter Lynch and why Active Fund Management doesn't work. [0:14:53.4] A framework for picking an active fund; defining active/passive investing and Alpha. [0:20:40.9] An evolving definition of Alpha showing active fund management doesn't often produce it. [0:24:11.3] Findings of a 2017 Vanguard paper that help identify Alpha in actively managed funds. [0:36:20.3] When an active fund is less bad: it is low fee, low turnover, and invested in small-cap value stocks. [0:43:43.3] Adding a criterion to active funds to invest in: those that aren't that big. [0:44:46.3] The last piece to consider when finding an active fund: active share concerning your belief in the manager. [0:46:29.3] How Ben's point about active share ties back to investors not doing well under Peter Lynch despite him being a great active fund manager. [0:48:57.3] This week's planning topic: OAS secrets for the high net worth. [0:52:11.3] Bad advice of the week: the Robinhood investors buying bankrupt Hertz shares. [0:58:08.3]

Even though we learn that money is merely a means of exchange, a store of value, or a unit of account, it's so much more than this. Money captures so much of what we grapple with like hope, joy, fear, regret, and envy, yet it's widely surveyed as being the least spoken-about issue when compared to religion, mortality, and marriage. Dr. Brian Portnoy, the author of The Geometry of Wealth, joins us today to share his view on wealth, which moves past the conventional understanding of accumulation. We kick off the show by discussing some of Brian's research findings around the way people avoid talking about money. From there, we move onto his idea of funded contentment, which he hopes will get people to think about the different facets that go into a contented, joyful, and meaningful life. While this is a purposely loaded concept, Brian conveys the message in a simple, clear way to show that building wealth requires an assessment of many aspects of life. Then, we move onto how Brian believes financial crises affect people's financial wellness. Although there are certainly immediate devastating effects of these crises, Brian takes it a step further, sharing a conceptual view of how these shifts intersect with people's financial plans. After this, we turn our attention to adaptive simplicity and how it relates to goal-setting. We round the show off by discussing how the financial management industry is changing, and what Brian hopes the role of the advisor will increasingly become. Be sure to tune in today! Key Points From This Episode: Learn more about Brian's rationale for comparing money to Lord Voldemort. [0:03:31.0] Why money — contrary to what we've learned — is a qualitative, not quantitative. [0:05:58.0] What Brian hopes to get people to think about with his 'funded contentment' idea. [0:06:44.0] How the shapes Brian uses in Geometry of Wealth relate to the journey of achieving wealth. [0:08:36.0] The three-step process to achieve funded contentment. [0:09:22.0] Unpacking priorities and decisions and how they intersect with building wealth. [0:10:54.0] The importance of calibrating planning with purpose and where people fall short. [0:13:50.0] Where people in America are in their financial wellness journey. [0:15:43.0] The four corners of the square: Exploring investment expectations and how people view this. [0:17:37.0] Brian's practical and conceptual takes on how financial crises' impact on financial wellness.[0:21:12.0] Why Brian disagrees that volatility is not a great measure of risk for a long-term investor. [0:29:13.0] 'Adaptive simplicity:' What this is and why it's key in financial planning. [0:32:15.0] How to set financial goals, which are static, when being flexible is key. [0:35:17.0] Why Brian believes — despite his hedge fund experience — that investors can't plan for mark-beating returns. [0:38:47.0] The role that hedge funds could play in investors' retirement strategies. [0:42:47.0] What investors can do to understand if they can manage their own retirement. [0:45:34.0] How reframing the financial advisor relationship to a coaching one helps. [0:49:15.0] What the future of holistic financial advice should look like, according to Brian. [0:54:53.0] Insights into Brian's firm, Shaping Wealth, and the work that they do. [0:55:37.0] Brian's definition of success in his own life. [0:58:02.0]

We kick off today's episode of the Rational Reminder by discussing when Ben will be publishing his new model portfolios and a quick look at some of our upcoming guests and resources you might want to take a look at. We have been on a roll with our guests lately, and we are certainly not slowing down anytime soon. From there, we look at some of the headlines, such as CDIC developments and the myths around inflation. Next, we move onto to listener rapid-fire questions. Some of the topics include the difference between leveraged ETFs and traditional ones as well as a small-cap investment strategy for an investor with a 30-year plus investment timeline. We then turn our attention to the core topic of the show, dollar-cost averaging versus lump-sum investing. Ben presents an overview of dollar-cost averaging along with some of the perceived benefits. We dive into his analysis of dollar-cost averaging versus lump sum investing in equity portfolios over select 10-year periods across various countries. We discuss the results based on a range of factors and variables. The crux of the argument is that dollar-cost averaging is not as compelling as it's often sold to be. While there are psychological benefits, the empirical evidence shows that there are not real ones. We wrap the show up with a look at how the pandemic is likely to shape the annuities industry and retirement planning. Tune in today! Key Points From This Episode: Find out when the new model portfolios will be up. [03:10] Some books to look at ahead of upcoming guests. [05:04] Ben and Cameron's takeaways from Tobi Lutke's appearance on Invest Like the Best. [05:43] Current affairs, including CDIC changes, Michael Kitces recent publication, and inflation. [09:07] Rapid fire questions: Leveraged ETFs versus traditional ETFs and size as a risk factor. [13:47] How a small cap value investment strategy could work for an investor with a long horizon. [23:07] Why Ben and Cameron don't talk about implementing the profitability factor with a dedicated ETF. [25:05] A brief explanation of dollar-cost averaging and the rationale behind it. [29:54] Find out more about Ben's dollar-cost averaging versus lump sum investing analysis. [31:49] The results of Ben's analysis and some key takeaways. [36:44] The worst 10% of lump sum outcomes versus dollar-cost averaging – the results. [41:26] Two things people look at to try to predict positive outcomes and its influence on lump sum investing.[50:36] How high stock prices influence lump sum versus dollar-cost averaging outcomes. [53:36] Japan vs the US: How Ben determined if the Japanese market is expensive. [56:37] Three key outcomes of the pandemic on retirement planning. [1:00:03] How the annuity industry can encourage its products with decreasing life expectancy. [1:02:05] Bad advice of the week. [1:06:16]

Who better to have on the Rational Reminder Podcast than Professor Ken French? Ken has been a massive inspiration to us and has remained a guiding light for sensible, evidence-based investors over the last few decades! His work with Eugene Fama stands as the seminal work on the subject of passive investment portfolios and we are so delighted to have him on the show today as we talk through some of his thoughts on a variety of subjects. This conversation was recorded near the beginning of the coronavirus outbreak on this side of the world and although Ken does mention the crisis, the situation has developed considerably since then. We start with the basics, with Ken giving us some helpful definitions and perspectives on asset pricing models and active management before we dive into the current market volatility and familiar topics such as risk tolerance and equity premiums. We also get the chance to hear Ken's reflections on a number of his papers, home-country bias, and the value of a good advisor. Some listeners may be surprised to learn that Ken still relies heavily on a financial advisor of his own and he explains exactly what functions this person performs for him and why he values their help so highly! We also discuss better strategies for long-term portfolio allocation, sustainable investing options and more, so be sure to join us for this very special episode, it is not to be missed! Key Points From This Episode: Ken's description of asset pricing models and their importance to investments. [0:02:37.2] Reasons why most people should ignore and avoid actively managed options. [0:04:50.7] Why the same rules that apply to mutual funds apply to hedge funds too. [0:08:36.3] Reasonable approaches to the market volatility we are currently experiencing. [0:11:01.7] The potential impacts of the move away from active into passive investments. [0:18:22.2] Realistic expectations for collecting a positive equity premium. [0:21:12.8] The probability of negative premiums and the most helpful time horizons. [0:25:25.5] Findings from the Fama and French paper, Value Premium. [0:28:47.4] Better and worse ways of measuring value and Ken's personal preference. [0:34:06.7] Factoring in the 'momentum effect' and keeping it in perspective. [0:37:36.1] Defining and evaluating home-country bias. [0:41:06.5] Ken's view of buybacks and the possible penalization of companies administering them. [0:43:50.4] Environmental and sustainable investing and how this can play into a strategy. [0:46:02.7] Who should business management work for? Shareholders or corporate stakeholders? [0:49:25.5] Ken's valuable relationship with his own financial advisor! [0:52:41.8] The most important factor that Ken considers in his investments: the unexpected. [0:54:27.2]

We often talk about better planning, reduced spending and a consistent long-term strategy on the show and today we have a guest who not only gives that advice himself but clearly lives it too! Andrew Hallam is the author of the new book Millionaire Expat in which he details some strategies for what has been called geographic arbitrage, or moving to another part of the world in order to maximize your financial independence! His earlier book, Millionaire Teacher took a similar approach to education abroad and he has built out his philosophy from there. We hear from Andrew about his definition of wealth and why so many people who earn a relatively large amount of money can never be called wealthy. Andrew lays out the researched correlations between happiness and money and more clearly between debt and misery. He also shares how he has approached spending, saving and budgeting in his own life and relationships before we get into some more technical investing topics such as the benefits of index funds and why many advisors try to persuade clients away from them. Andrew weighs in on finding the right advisor for your needs and when to seek out help with your portfolio. The last part of the show is spent on the topics of education and expatriation. Andrew is a strong believer in leading by example for your children to learn about money matters and he explains his reasons for moving abroad and the gains he has accrued. For all this from a wonderful guest, tune in today! Key Points From This Episode: How Andrew defines the term 'wealthy' and why it does not depend on income. [03:43] Links between spending and happiness, and debt and misery. [06:51] How Andrew and his wife have managed their own values around spending. [11:55] Benefits and costs of borrowing; could you handle it if interest rates doubled? [13:32] Andrew's thoughts on index investing and why it is a good idea. [19:06] Common tactics that financial advisors use to steer clients away from index funds. [22:40] Advice for staying steady for the long term, through market volatility. [25:45] Considering the place of investing in gold and the 60/40 portfolio model. [27:46] Ignoring all the false information that gets broadcasted and sticking to the data. [35:05] Why to only consider certified financial planners and how much this cuts the options down. [39:53] Going it alone versus using professional advice; average reactions to volatility. [41:22] Education for the younger generation and Andrew's advice for parents. [45:18] Who could benefit from moving abroad and the idea of geographical arbitrage? [49:56] How Andrew defines success in his own life! The importance of relationships. [54:01]

We spend the bulk of today's episode considering whether Wealthsimple's use of long bonds and low volatility stocks is really protecting their clients' downside, and summing up recent arguments by Cliff Asness and AQR leveled against critiques on value investing. Before that, we kick things off with thoughts on why Elon Musk aims to have no possessions, before looking at the links between empathy and the theory of relativity as well as some productivity secrets in recent books by Charles Duhigg and Shane Parrish. Next up, we briefly address a bunch of listener questions on factor tilting, and ETFs concerning COVID-19, the Smith Maneuver, and more! A final listener question about Wealthsimple's claim mentioned above leads our hosts to wonder whether volatility and drawdown are good measures of risk. Ben made a few models to help answer this question which tested consumption models as another possible measure and brings up an interesting point about the significance of considering long bonds from an expected return or a risk parity perspective. From there, we move to the investment topic of the week – the historic state of value investing. This is a contentious topic with recent papers by Cliff Asness and AQR both weighing in and you'll hear Ben and Cameron distill the main points from both. We hear about medium-term odds being on the side of value, and some great arguments showing common critiques leveled at value investing to be premature. Finally, Cameron takes us through the psychometric profiling side of measuring risk tolerance before telling listeners why they shouldn't make investment decisions based on reckless critiques. Tune in to get it all! Key Points From This Episode: A reminder to comment on the new comments section on the RRP website. [0:00:44.2] Why Elon Musk ways he intends throw away his possessions. [0:04:36.1] New books about productivity and the links between science and empathy. [0:07:08.2] Factor tilting: being aggressive versus non-aggressive. [0:12:43.6] Is there a benefit in capturing size premium using a combination of ETFs? [0:16:54.2] How to adjust RESP asset allocation as kids get closer to school age. [0:18:46.2] What ETFs are best to use while implementing the Smith Maneuver. [0:22:36.2] Has the role of bonds ETFs changed in light of COVID-19? [0:24:12.2] Thoughts on Wealthsimple's claim to have protected their clients in this downturn. [0:28:34.2] Critiquing long term bonds: is volatility/drawdown a good measure of risk? [0:33:28.2] Ben's model testing consumption objectives as a measure of risk. [0:36:28.2] Portfolio topic of the week: the historic state of value investing. [0:42:22.2] Considering Cliff Asness's paper about whether value investing is dead. [0:46:05.2] Considering AQR's paper addressing critiques levelled at value investing. [0:54:04.2] Planning topic: the psychometric approach to measuring risk tolerance. [1:05:50.2] Bad advice of the week: don't make investment decisions based on predictions! [1:10:14.2]

Today on the Rational Reminder Podcast we interview a seasoned journalist from The Wall Street Journal, Greg Zuckerman. With 23 years of experience with the media outlet, Greg has written extensively about the most prominent figures in the world of investing, including Jim Simons, John Paulson and Carl Icahn, generally focusing his attention on significant trades, traders and fund managers. In this episode, Greg shares how covering the stories of renowned investors and fund managers have influenced his investment philosophy. Specifically, we get into his book about John Paulson, The Greatest Trade Ever, and why Greg reckons Paulson never managed to achieve the same level of success following this famous trade. His work on the founder of Renaissance Technologies, Jim Simons, also produces fascinating points of discussion, including why their Medallion Fund became so successful and how capping the size of the fund contributed to its outstanding performance. Greg also talks about the idiosyncratic character of Simons, the role of luck, why taking an algorithmic approach to investing is likely to produce good outcomes in the long run, and why people should not always pay attention to the advice of "smart money" sources like hedge funds. Key Points From This Episode: How covering the stories of prominent fund managers has affected Greg's investment philosophy. [0:03:27.1] Thoughts on the likelihood of fund managers outperforming the market. [0:05:54.1] Hear about John Paulson's big trade and why he has failed to outperform since. [0:07:24.1] Find out what made Renaissance Technologies' Medallion Fund so successful. [0:11:25.1] The role that capping the size of their fund has played in their ongoing success. [0:13:30.1] More about Jim Simons: the mathematician with outstanding people skills. [0:14:46.1] The influence that Simons personally had on the outcome of the Medallion Fund. [0:17:02.1] The unpredictability of luck and intuition Simon's relied upon in his early days of trading. [0:22:22.5] George's biggest surprise in writing the story and his general thoughts on market efficiency. [0:24:27.1] Advice about investors making decisions based on the opinions of people like Buffett and Dalio. [0:28:06:7] Algorithmic thinking and other lessons from working with Renaissance Technologies. [0:31:26.1] Why the so-called "smart money" sources like hedge funds are not so smart. [0:34:28.6] Learn how Greg became interested in Wall Street characters and how he gets access to their stories. [0:36:36.6]

The economic effects of the coronavirus pandemic have been unprecedented and the seismic shifts have caused numerous unforeseen challenges. While no-one could have predicted the enormity and speed of the current crash before it happened, several signs indicated that an economic contraction was on the horizon. Today's guest, Ben Rabidoux, President of North Cove Advisors, a boutique research firm, is here to share some macroeconomic trends and what they tell us about the state of the Canadian economy. His research expertise includes Canadian housing, macroeconomic trends, and household credit. We kick off the episode with some listener feedback as well as a listener question, where we discuss how to incorporate unvested stock options into your personal financial planning. There are several ways to go about this and numerous factors to consider, so it's important account for them all. Ben then dives straight in, giving us an overview of the economic landscape before the sudden upheaval. He sheds some light on population growth and its relationship to economic growth. As a great deal of the economic gains was coming from non-resident growth, the crisis is likely to change this. We also talk about personal debt and HELOC loans. Coming into the recession, the household debt service ratio was incredibly high, with interest rates at an all-time low. Ben walks us through how these vulnerabilities might pan out and what could happen with HELOC debt. Along with this, we also discuss the relationship between housing and economic growth, with some truly astonishing data from Canada, the changes that are likely to happen with rental supply, and Ben's take on some personal finance topics. This show was an incredible overview of some of the larger forces at play, and it went a long way to paint a clearer overall picture. Be sure to tune in today! Key Points From This Episode: Useful listener feedback and personal updates from Cameron and Benjamin. [0:01:50.0] Data points about the increase in value of the top five S&P 500 stocks. [0:03:46.0] A listener question about factoring company stock options into financial planning. [0:06:04.0] Learn more about Ben, the work he does, his research focus, and his clients. [0:10:22.0] Find out Ben's take on active management vs index investing. [0:11:20.0] The state of the Canadian economy prior to the COVID-19 pandemic. [0:12:05.0] Canada's recent explosive population growth and where that's headed. [0:14:09.0] Consumer and corporate debt-level, the source, and important takeaways. [0:16:13.0] Why it's difficult to draw parallels between the situation today and Japan in 1990. [0:03:43.2] How different Canadian regions' employment has responded to the crisis. [0:22:59.0] Housing trends and the state of housing in Canada before coronavirus. [0:24:20] The direct and indirect way that housing affects economic growth. [0:27:48.0] Housing supply, construction activity, and rental market changes in Canada. [0:31:06.0] What the data is saying about real estate prices across all market segments. [0:36:57.0] Some of the economic shocks are temporary and will snap back quickly. [0:39:34.0] The economic conditions in Canada's previous housing downturns. [0:41:16.0] Ben's take on the Bank of Canada's QE programme and how he thinks it'll work. [0:44:07.0] Renting vs buying: Why Ben thinks there's no generic answer. [0:47:53.0] Why landlords are often willing to charge rent that makes them a loss. [0:51:29.0] Ben's advice for building resilience to economic shocks. [0:52:47.0]

The recent film, Playing with FIRE details the particulars of the FIRE Movement in a way that is accessible, informative, and impactful. Both Cameron and Ben were hugely impressed with the film and the argument it makes for the framework of FIRE. Today we are joined by the producer and star of the film, Scott Rieckens, to discuss the movie and his own journey to reach financial independence. In much the same way that the film does, Scott makes a compelling and inspiring argument for the central philosophy of the movement, emphasizing what many of us will agree are the most important part of our lives and the way we can think about these to maximize our health and happiness. We discuss values and decision making, and how the FIRE perspective accounts for psychological and emotional changes to what is meaningful in your life. Scott explains the reframing that occurs with the system and the important aspects of it, especially those that matter in an introductory setting. We talk about communication and upkeep, the 4% rule, and the individual nature of your own financial strategy. Ultimately the ideas of FIRE are just ways to think about what is really important to you and your family and they provide a way to focus and enhance these. For this truly inspiring and potentially life-changing discussion, be sure to listen in with on the Rational Reminder! Key Points From This Episode: Scott's own understanding of FIRE and what it comes to mean in his life. [0:04:25.4] The initial connection that Scott had with the FIRE movement before making the film. [0:05:23.2] Shared values and finding common financial ground in a life-partnership. [0:08:50.8] Mental changes that Scott and his wife, Taylor, made in response to the ideas of FIRE. [0:11:57.5] Reframing your decisions and the necessary information to do this. [0:18:01.9] Social changes and the impacts of the philosophical alterations Scott made. [0:22:48.1] How Scott has communicated these ideas to his daughter as she has grown older. [0:29:51.4] Scott's complete gratefulness for his new relationship with money. [0:33:23.8] First steps to take in the process toward financial independence. [0:37:27.4] Getting a grip on the '4% Rule and how it can guide your decisions. [0:41:39.6] Increasing income versus decreasing spending and adjusting accordingly. [0:46:41.2] Applying these ideas to something beyond our selfish needs. [0:51:05.4] The multitude of things we can all do with more time in retirement! [0:56:05.4] Comparing the changing definition of success for Scott. [0:58:11.4] The information that is now available for a framework for happiness. [1:01:55.4]