The Rational Reminder Podcast

When it comes to the question of whether the economy affects the stock market, it's not about whether the former is in a good or bad state, but how that relates to what the market was expecting. In today's episode we get into predictions about labour economics during COVID-19, the relationship between the market and the economy, and how to make decisions that suit your risk tolerance. We kick things off by reviewing insights Edward Lazear and Gerard O'Reilly gave in a recent webinar. They spoke about how the current crisis relates to past events from the perspective of labour economics, and what empirical data is saying about stock returns and the economy. A talking point here is the idea that recessions are defined by committees, and always long after they have either begun or ended. This leads to the topic of whether there is a relationship between economic data and stock market performance. We find many examples of cases in the short and long term where no correlation can be found between the two, and cases where the market starts to recover before the economy. We discuss how this speaks of a fundamental difference in the analytical methods of economists versus investors, not a rigged market. The first group assesses past information while the second invests based on where they think things will go. We talk about what happens when GDP is good but not as high as expectations were, and how per-share earnings growth can only keep up with GDP if no new shares were issued. We then switch to the concept of risk aversion and discuss the differences between system one and system two thinking, before moving into a comparison between two methods of analyzing risk. Tune in for your weekly reality check! Key Points From This Episode: Having a baby and getting a drone license; updates from Ben and Cameron. [0:00:18.2] Great new Netflix shows and books Cameron has been getting into. [0:03:44.6] Predictions about labour economics during COVID in Lazear's webinar. [0:06:28.3] Implications around recessions being defined by committees after the fact. [0:10:35.2] Predicting future growth based on great performance in financial markets recently. [0:13:45.8] Pent up demand post-crisis; why the government should keep businesses afloat. [0:16:25.0] Gerard O'Reilly's observations about financial markets in recessions. [0:21:51.2] Lazear's stabilization predictions, and why inflation isn't a threat in slack markets. [0:26:09.1] State Street's ETF rebalance and failed hedge fund rebalancing bets. [0:28:40.6] Is the market rigged? Forward-thinking markets vs backward thinking economies. [0:33:30.7] Market expectations and the effect economic news has on future stock prices. [0:38:21.8] Lead vs lag in when recessions get defined compared to when they begin. [0:38:46.2] How component-based vs automatically rebalanced portfolios are faring. [0:43:44.1] Why yield curve inversions forecast economic activity but not equity premiums. [0:44:25.7] Research that compares GDP growth and stock returns long term. [0:48:01.9] Slippage: per-share earnings growth can only keep up with GDP if no new shares get re-issued [0:54:00.0] How efficient the market is in pricing new information, not the other way round. [1:01:50.3] Determining risk tolerance; unintended consequences to risk avoidance. [1:02:41.2] Why using a GMO point is more effective than psychometric risk profiling. [1:06:18.5] The dollar terms and percentage terms shown on the Riskalyze risk slider. [1:09:15.7] Five methods of appraising one's risk tolerance. [1:13:02.2] Bad advice of the week! Rebalancing your portfolios. [1:15:36.2]

No one credible ever said that investing was a simple endeavour. It might have some simple guidelines, that if followed are more likely to yield positive results, but the ins and outs of the markets, decisions and their impacts, movements and crashes are never straightforward one-dimensional cases. Our guest today, Cliff Asness, really brings this point to bear, showing the nuance and multiplicity of all the topics we discuss. As the experienced owner of AQR and a wealth of knowledge and insight, Cliff shares a host of ideas and thoughts on as many topics as we have time for. We start off the chat talking about market efficiency before moving into the murky waters of value. We hold value investing to be sound, as does Cliff, yet the last few years have stretched even our commitment to this philosophy a little. The perspective that Cliff is able to share, drawing from his formative years in the investing world in the '90s is invaluable and a lot of what we talk about gets contrasted to the tech bubble of that period. The conversation also covers the size of stocks and portfolio allocation. Although Cliff has strong opinions on most of these issues he does a great job of showing the lack of definitive answers to any one of them, allowing space for new knowledge and outlying evidence to make its mark. We also get into finding the right kind of investor for your own style and goals, the role of good communication in finance and the influential article that Cliff wrote about 'pulling the goalie'. In it, Cliff lays out what the data tells us about certain late-stage situations in which it is statistically wise to make more risky choices. For all of this and a fabulously entertaining conversation, listen in with us today! Key Points From This Episode: Cliff's perspective on market efficiency and the impact on his portfolios. [0:03:48.5] Value investing in today's climate where value has taken such a knock. [0:08:30.8] Stories and behavioural effects on value; how we understand ups and downs. [0:13:36.2] Conversations Cliff has had with clients in the tougher times. [0:21:04.5] Comparing the companies driving growth now with those in the '90s. [0:23:46.2] The size effect and why Cliff does not subscribe to this philosophy. [0:25:17.1] 60/40 portfolios; are they still alive? Why Cliff thinks you can do better! [0:33:07.7] Cliff's experiences with institutions and advisors and contrasting the two. [0:36:31.5] Informed decisions on who to invest with; thoughts on finding the right advisor. [0:38:28.7] Pulling the goalie and why risky behaviour can work in certain circumstances. [0:40:42.5] The value of communication skills in the game of financial advising. [0:47:29.7] How Cliff defines success for his own life! [0:50:07.9]

In today's episode, we take a less analytical position on the current situation to focus more on the behavioral side of things. Joining us are two returning guests, Dr. Moira Somers and Dave Goetsch, who share their unique perspectives in a very real and at times refreshingly comical conversation about how people could most beneficially respond to this moment in time. Dave speaks of his personal experience going from panicky investor to getting a feel for the broad concept of index investing, and the idea that learning not to worry about the market on a day to day basis can be applied to life more generally. Dr. Somers provides some psychological background to these different strategies for tolerating stress. She shares her insights about a typical response to crises called amygdala hijack and how two main personality types called 'the monitor' and 'the blunter' deal with stress. We speak about some more healthy strategies for coping, with banding together and communicating featuring as strong solutions that allow us to clear our heads and problem solve more creatively. The conversation also covers the idea that this moment can be taken as a time to reflect, and even to double down on skills that aren't necessarily investment-related but which can help ensure financial stability in the future. Toward the end of the episode, we look at how financial advisors could be the most useful to their clients right now and hear a strong argument for a strategy that combines experience-based advice with a more important trait: a high EQ. Tune into today's episode to find out how you can gain more of a bird's eye view of your version of the current situation. Key Points From This Episode: Amygdala hijack: Moira's thoughts on psychological responses to COVID-19. [0:03:33.8] Dave's thoughts on mitigating valid worry using his understanding of markets. [0:05:54.4] Learning not to be emotionally connected to the minutiae of the crisis. [0:13:25.0] Non-investment related skills that can strengthen our financial lives. [0:14:56.1] Adjusting models and using them to gain insights rather than predict the future. [0:17:04.9] Tools Dave has acquired to deal with market fluctuation since 2008. [0:20:40.2] Beating myopic loss aversion by planning your response to situations ahead. [0:24:00.3] Ways of toggling between contrasting feelings about the present and future. [0:29:30.5] Being reflective about one's current experience rather than reactive. [0:33:07.1] The best predictor of getting through stress: social support. [0:33:59.2] A four-step process to effective decision-making defined by the Heath brothers. [0:37:07.2] Banding together and speaking about our difficulties to find creative solutions. [0:41:04.2] Buffering emotions through shopping and how shoppers are coping now. [0:43:30.2] Changes in workplace customs and industry trajectories sped up by the crisis. [0:44:32.2] The contours of a healthy response to inner and outer turbulence. [0:48:24.2] What financial advisors can do to help their clients right now: listen to them. [0:53:45.2] High EQs and which Big Bang Theory character would be good to talk to now. [0:58:33.2] Where folks who have no financial advisor might turn for help. [1:02:45.2] How spouses in charge of finances could communicate with their partner. [1:04:10.2] Financial advisors as punching bags or mediators between couples. [1:07:09.2] How to deal with communicating realites to kids as a single parent. [1:08:40.2]

The Smith Maneuver was developed by Fraser Smith as a smart way for Canadians to convert a traditional, non-deductible mortgage into a deductible mortgage by systematically re-borrowing to invest. Today we are joined by Fraser's son, Robinson, to talk about the maneuver, his father's legacy and explain how you can use it to your financial advantage. In his book, The Smith Maneuver, Fraser laid out a plan for working the mortgage and debt system to your advantage, by deducting the interest on a mortgage, while still being able to claim exemptions on the sale of a house. Robinson does a great job of explaining the procedure for implementing the strategy and all the possible ways to use it. He talks about risk, different kinds of debt and investor diligence, giving everything you need on the subject! Robinson believes in his father's vision of bringing the practices of the wealthy to the average Canadian and allowing wealth creation through leveraging possibilities instead of the inertia and fear that most people choose. For the last part of our conversation, Robinson gives us some examples from the Smithman Calculator, illustrating just how effective the system can be! Join us on the Rational Reminder Podcast today, to get it all! Key Points From This Episode: An explanation of the Smith Maneuver and its usefulness to Canadians. [0:03:40.6] A step by step walk-through of the implementation of the Smith Maneuver. [0:07:15.1] The possibility of refinancing a credit line for lower mortgage rates. [0:10:18.0] How to think about maintaining more leverage with mortgage payments. [0:13:04.9] The risks of debt, minimizing withdrawal amounts and reversing the maneuver. [0:16:48.6] Robinson and his father's investor experiences around the 2008 market crash. [0:18:35.3] Why leveraging smart debt is so much better than gambling on a startup! [0:20:24.2] The regulatory risk that is present when performing a Smith Maneuver. [0:22:04.1] Risks that accompany not applying these strategies that Robinson is espousing. [0:24:47.6] The influence of your tax rate on the efficacy of the Smith Maneuver. [0:27:23.2] The diligence that is needed in the implementation of the Smith Maneuver. [0:29:15.0] How the Smith Maneuver can address poverty issues that plague Canada. [0:33:39.8] Running through the input process and rewards on the Smithman Calculator! [0:34:51.8] Net-worth improvements and cash-flow dams from re-borrowing. [0:38:41.7] How Robinson defines success in his mission to help Canadians. [0:41:26.3]

In our second special release episode during the 2020 COVID-19 bear market we discussed a broad history of US bear markets from 1900 to 2020, the recent volatility in the bond market, bond ETF NAV spreads, a nuance in the legislation on tax-loss harvesting, and some of the tax-related changes that Canada has rolled out in light of the current situation.

How we are handling the situation as a firm, investing through a crisis, historical comparisons, and more.

It's not unreasonable to assume that a desirable retirement equates to having the financial freedom to meet one's lifestyle and personal goals. The more efficient a person is with their assets, the higher the likelihood of this, which is why sensible retirement income planning is so necessary. Today's guest is Wade Pfau and he is arguably one of the main thinkers in the retirement income space at present – a more readable Moshe Milevsky if you will. This podcast is usually devoted to high-level discussions about portfolio investment so it was an honour to have Wade join us and have a similar kind of conversation but rather about retirement income planning. Retirees face some unique risks when it comes to strategies for asset management, insurance, and investments, which means they require tailored strategies, and today Wade weighs in on some of the different approaches we see out there. The topic of probability versus safety-first approaches, and the potential wisdom in amalgamating the two as a means of preparing for retirement, crops up a lot in this discussion. Wade talks about the four L's of the safety-first strategy, how it recommends building up a base of savings that act as an income to reach higher legacy in the long term. He suggests that people need to account for longevity risk more and argues for the efficiency of assuming that you will live until the average oldest age. That way you don't end up throttling your lifestyle by saving unnecessarily during retirement. In our discussion, Wade also shares valuable insight into low interest rates versus expected returns, the ineffectiveness of the 4% rule, annuities and deferred annuities concerning mortality credits, and different types of buffer assets. Tune in for all this and much more on the topic of retirement planning from one of the greats in the field today! Key Points From This Episode: Notes on Wade Pfau, a leader in retirement income planning research. [0:00:43.0] Unique risks faced by retirees: longevity risk, sequence of returns risk, etc. [0:04:03.0] Retirement now vs 20 years ago: low interest rates and retirement length growth. [0:05:16] Safety-first retirement: build a floor and then spend more over the years. [0:06:31] Contractual protections (annuities) and probability vs safety-first approaches. [0:08:25] The four Ls of the safety-first method: longevity, lifestyle, legacy goals, liquidity. [0:12:18.0] Why to go for stocks/equities rather than stocks/bonds. [0:12:18.0] What the low interest rate environment means for expected returns. [0:16:57.0] The ineffectiveness of the 4% rule when applied internationally. [0:18:47] How people don't properly account for longevity risk in retirement planning. [0:23:27] A way of covering basic needs so that higher legacy can be gained later on. [0:25:05.0] Strategies for buying annuities and deferred annuities at retirement. [0:28:57] How mortality credits from an annuity allow you to spend more in early retirement. [0:30:43] Mortality credits in relation to immediate and deferred annuities. [0:33:25] Better net incomes at the end of retirement through reverse mortgages. [0:34:36] Buffer assets such as reverse mortgages and permanent life insurance. [0:37:12] Safe savings rates in relation to historical data, bull markets, and mean reversion. [0:44:39] Asset accumulation conceptualised separately from the retirement plan. [0:44:39] Wade's idea of a successful retirement: meeting safety-first goals. [0:48:39] And much more!

Welcome back to the Rational Reminder Podcast everybody. Today we are using the opportunity to have a bit of a philosophical discussion about a bunch of things related to your retirement and the financial planning that goes into it. We touch on the all too obvious topics of the coronavirus and last week's market fluctuations before we scan the last ten years for any notable data points on fluctuations and the years with the biggest dips. We look at life expectancy and how this affects a retirement planning strategy. In British Columbia, drug use among younger generations has brought down life expectancy estimates, while improved health care has extended them in some regards. This leads to a few comments on biological age and how knowledge of yours should play a big role in your personal strategy for the end of your life. The last part of the episode is spent considering the current state of the discourse around the FIRE movement and what has grown out of it. We can see that it is not uncommon for large portions of the aging population to be happy to carry on working, and that the idea of getting out of the workforce as soon as possible may only be attractive to certain kinds of professions. For all this and a whole more from Cameron and Ben, be sure to tune in! Key Points From This Episode: The amazing new documentary on Herbalife called Betting on Zero. [0:02:54.5] Market drops last week and the story that accompanied the volatility. [0:06:14.9] Biggest and average drawdowns in recent calendar years. [0:10:03.3] Coronavirus impacts and questions about buying stocks now when they are low. [0:14:20.2] Conversations about the market drop and aggressive response strategies. [0:20:06.8] Data findings for historic cases of market timing from the last century. [0:25:12.3] Historic relations between the market and health pandemics. [0:30:22.1] Life expectancy's huge role in long term financial plans and retirement. [0:32:31.8] Changes in average life expectancies in British Columbia due to drug use. [0:37:40.7] The importance of biological age when making sound financial decisions! [0:41:02.5] Working longer into old age as a means to make retirement easier. [0:44:31.5] The five-factor model for happiness and what it means for your retirement. [0:49:50.5] Bad advice of the week! The last time we will talk about deferred sales charges! [0:54:57.5]

You can't get anything good out of life without taking a risk, and this holds true in the world of investing too. Depending on the situation, people are willing to either pay more for high-risk or risk-free, and matters become more complex because the term 'risk-free' means a different thing to everybody. Today's guest is economist Allison Schrager, Senior Fellow at the Manhattan Institute, author of An Economist Walks into a Brothel, and long time collaborator with Nobel laureate, Bob Merton. Allison is an expert on risk and she joins us in this episode to speak about this topic in relation to retirement and retirement finance. We talk about the idea that while risk has been given conventionally bad associations, it can be more accurately understood as a probability distribution between the future occurrence of both potentially good and potentially bad things. Allison shares her opinions about how both young and old people should approach risk, and stresses the importance of having clearly defined goals and a good financial advisor. She shares her thoughts on managing systemic vs idiosyncratic risk, why the retirement crisis is not all doom and gloom, and the laddered bond portfolio she developed with Bob Merton. Joining this episode, you'll also hear Allison speak about how misinformation causes people to be hesitant about annuities, the connection between risk management in surfing and investing, and why investing in education is smarter than investing in a house. Allison covers a whole lot more risk-related topics in this episode too, so don't miss out on it. Key Points From This Episode: Allison's definition of risk: as a probability distribution. [0:02:54.0] The idea that the word risk pertains to both good and bad things. [0:03:57.2] Relativity of the term 'risk-free' and its fundamental connection to price. [0:04:20.0] Probability of, and skill in, taking risks depending on how they are presented. [0:05:11.0] The value of having a clear goal in mind as far as managing risk. [0:07:19.0] Strategies for managing systematic vs idiosyncratic risk. [0:09:20.0] Value adds advisors can give for managing systematic risk. [0:10:01.0] Retirement goals in the current crisis and Allison's work with Bob Merton. [0:11:51.0] The retirement problem as a problem of income, not wealth. [0:12:17.0] A duration matching laddered bond portfolio as a risk-free retirement plan. [0:13:18.0] Why 401(k)s are wealth focused compared to defined benefit plans. [0:14:43.0] Statistics around retirement age casting the retirement crisis in less of a bad light. [0:15:19.0] Why people are scared of putting their retirements into annuities. [0:17:08.0] Misinformation that people are given that make them bad at retirement planning. [0:17:53.0] Similarities between risk and mitigation in surfing and market investing. [0:19:39.0] Idiosyncratic and systemic risks faced upon purchasing a house. [0:21:26.0] An argument for investing in education over homeownership. [0:22:24.0] Why time diversification is a fallacy in Allison's opinion. [0:24:00.0] Pros and cons of investing in mostly bonds or mostly equities. [0:24:52.0] The ultimate riskiness of 60/40 portfolios and other products too. [0:27:04.0] Thoughts on the new trend of adding private equity to portfolios. [0:28:40.0] How the global shortage of safe assets could have an economic impact. [0:30:31.0] Advice for pre-retirees: have goals, have a good financial advisor, and plan. [0:32:12.0]

Let's say you make a choice that had you chosen differently, things would ostensibly have turned out more favourably. Later on, a similar situation comes up and you make the choice you think you should have made previously in the hope that the result you wanted before will come true this time around. This is called counterfactual thinking and it forms the main topic of our discussion in today's episode. First publicized in a fascinating paper called The Psychology of Preferences, Daniel Kahneman and Amos Tversky explore the abundance of instances where humans employ irrational 'what if' thinking in their processing of recently made decisions that resulted in an undesirable outcome. People tend to think back and wish that they had made a different choice, irrationally thinking that if they had, things would have worked out better. This idea, of course, has applications to investing in stocks with particular implications due to the utter randomness of the market. This is a mind-blowing discussion about human irrationality with links to many leading papers that research this principle in relation to different situations. Outside of our main discussion, we also touch on why you should think twice before buying a condo, the utter absurdity of the Robo-Advisor business model, monthly posted DVD accounts and the surprising birth of Netflix, and finally, the ambiguity of Vanguard's partnering with HarbourVest. Key Points From This Episode: The story of Netflix's origin starting by renting DVDs out by post. [0:02:30.0] Life expectancy, annuities, and Wade Pfau's ideas on Safety-First retirement planning. [0:04:56] Investor/insurer reluctance and why you shouldn't buy a condo. [0:07:23] The Robo-Advisor financing crisis and eventual merge of software and humans. [0:11:28] Counterfactual thinking and how it affects investment patterns. [0:17:40] The central role closeness of a related incident plays in 'what if' thinking. [0:21:21] Contrast effects: winning $50 feels good unless you could have won $100. [0:24:42] Causal inference effects: rectifying a past problem by acting its solution in the future. [0:27:37] Investor preferences reflecting counterfactual thinking and attachment to stocks. [0:31:27] The effect the end of WW1 had on people to blind them to the coming depression. [0:36:00] How there is no proof that if we acted differently a desired set of realities would result. [0:40:22] The randomness of the stock market and how mastering it is thus impossible. [0:41:34] Tools for beating counterfactual thinking: document your original rationale, etc. [0:43:19] Jason Zweig's tips: lightning rarely strikes twice, and only gamble 10% of your money. [0:44:17] Bad or good advice? Vanguard's partnering with HarbourVest. [0:47:32] How private equity valuations used to be low, resulting in high expected returns. [0:50:09] And much more!

The financial advice industry has always been a place of change, and yet certain old practices hang around for decades. Our guest today, Dennis Moseley-Williams, is all about moving things forward for the good of the client and the advisor. The basis of his understanding is the characterization of the economy as one fundamentally built around experiences. Applying this lens to the financial sector means that advisors need to think about how to provide more than just a service to their clients, they need to stage an experience and a process of curated growth and learning. In our conversation, Dennis unpacks the evolution up to this point, showing how each step requires adjustments and progress from providers and the space that opens up due to technological advances must be filled with something of value. We discuss communication, fulfillment and happiness and Dennis makes a strong argument for the role of the financial advisor reaching beyond the bank; he believes it should include all important areas of life. The last part of the episode is spent thinking about ways that willing advisors can offer the most to their clients and how to pitch and scale these businesses in the smartest ways. For this fascinating chat with a truly innovative thinker and gifted speaker, be sure to join us! Key Points From This Episode: Dennis' explanation of the experience economy and trends in the financial services industry. [0:04:04.4] How Dennis found himself in the world of finance and investments. [0:07:07.7] The evolution of the skillset needed for good financial advice. [0:09:38.2] The five stages of experience and the lasting impact of a meaningful experience. [0:14:40.7] What the experience economy means in terms of finding good financial advice. [0:18:52.9] The space created by new tech advances and what will fill it. [0:23:35.6] Better communication in today's economy; physical and virtual experiences. [0:31:41.5] Differences between big and small business; pitching your offer for those who care. [0:33:29.3] Red flags and green lights for investors in the search for the right advisor. [0:38:12.2] The place of technical financial know-how and its decreasing value. [0:42:31.7] How an advisor can fill the space left by the church. [0:48:31.3] Happiness and fulfillment; putting funded contentment at the top of the list. [0:54:47.8] Dennis' hopes and predictions for the future of financial advice. [0:59:00.2] A highly differentiated and relevant offer — the recipe for success. [1:01:35.5] Connecting clients and allowing relationships to grow out of advice. [1:04:02.6] The question of scale; the care and caution that goes into growth. [1:08:39.9] Dennis' own definition of success in his life! [1:10:54.6]

On today's episode of The Rational Reminder, we once again cover a host of topics. We begin with Cameron sharing his thoughts on a book he recently finished, The Ride of a Lifetime, and some of the lessons he took away from it. We then tackle three listener questions, where we cover Mawer and index funds hypothetically driving prices. Then, in the portfolio portion of the show, we turn our attention to value premiums. Fama and French recently released a paper on the topic, and Ben is naturally very excited to share his assessment on it. We unpack how value has performed in the US, unexpected big value findings, and other takeaways from the paper. After that, we explore the total cost of ownership in our planning section. These are expenses that you incur when you begin investing. We shed light on some of them and the effect they have on your investments. Finally, we end the show with Tim Nash's take on our assessment of sustainable investing in episode 82. His insights offer an interesting perspective on the topic. While we can't say we're fully on board with his active position, it's certainly a fascinating viewpoint. Don't miss out on today's jam-packed show! Key Points From This Episode: Takeaways from the audience's reception to episode 83 on cryptocurrency. [0:00:52.0] Insights and lessons from The Ride of a Lifetime, which Cameron recently finished. [0:04:13.0] More about Mawer: Data about and insights on how the company has fared. [0:08:48.0] What would happen if index funds could hypothetically drive prices? [0:22:34.0] What's interesting about the timing of Fama and French's new paper, The Value Premium. [0:25:46.0] The thesis of Fama and French's paper and what they found over measured periods. [0:26:49.0] Why Fama and French used how value did relative to the market. [0:29:17.0] How value performed between 1992-2019 and a surprising finding about big value. [0:31:04.0] Ben's takeaways from the Fama and French study. [0:33:18.0] Conclusions from Fama and French's 2019 paper, Volatility Lessons. [0:36:37.0] How other countries performed on market-wide value versus the market. [0:38:30.0] Clarifying the confusion around the management expense ratio and some empirical data. [0:40:00.0] The conflict of interest inherent in commission-based products. [0:42:39.0] What the trading expense ratio is and how it works. [0:43:47.0] Things similar to fees: Cash drags, large cap against distribution, and withholding tax. [0:47:50.0] 'Bad advice of the week': Globe and Mail [0:48:48.0] An overview of Tim Nash's services and his take on Ben's ESG presentation. [0:54:00.0] Tim's critique of the assumption of lower returns when it comes to equity. [0:57:07.0] Why externalities are so important with ESG even though they are glossed over. [0:58:12.0] There is so much that we don't know about ESG because it's all so new. [1:01:45.0] Why Tim believes we should invest in the green companies even with the current market structure. [1:06:08.0] Ben and Cameron's take on Tim's insights. [1:09:32.0]

The last ten years have seen so much said and done in the cryptocurrency space, and yet the future of bitcoin is still somewhat unclear. For Michael Sonnenshein however, bitcoin and the crypto market still offer the freedom and possibilities that have long been espoused as their greatest values. He joins us today to talk about his role at Grayscale Investments, how Grayscale fits into the larger Digital Currency Group family and how he envisions the wide-open future possibilities for bitcoin. We discuss some basics for the bitcoin conversation and Michael does a sterling job of setting out the lay of the land at present. From there, we turn to the role of Grayscale in dealing with bitcoin which can also be bought directly. Michael then takes the opportunity to compare bitcoin and gold; showing how they overlap and then bitcoin improves on the benefits that gold investments have historically provided. The last part of the conversation is spent addressing the safety of bitcoin and how time is showing its resistance to shocks and is earning bitcoin its place among other highly trusted assets. For all this and more fascinating insights into a big part of the future, join us on the Rational Reminder today! Key Points From This Episode: Michael's description of Digital Currency Group. [0:03:28.4] A basic explanation of bitcoin and what defines a digital currency. [0:08:09.2] What will happen when the maximum amount of bitcoin has been mined? [0:11:29.0] Affecting the value of bitcoin through the altering of its decimal places. [0:14:04.2] The usefulness of Grayscale when it is possible to buy bitcoin directly. [0:15:21.4] How bitcoin differs from and improves on gold investments. [0:19:11.7] How digital currency fits in portfolio management and who it really suits. [0:21:30.0] Thinking about the expected returns question in regards to digital currencies. [0:23:30.3] The high amount of institutional investments through Grayscale and deciding on allocation. [0:29:00.5] Bitcoin's response to shocks and its rising reputation as a place of safety. [0:33:36.7] Why Michael is worried by impatience in regards to digital currencies. [0:34:42.5] How bitcoin can impact under-resourced populations through it non-reliance on infrastructure. [0:36:49.3] How Michael defines success for Grayscale and himself moving forward. [0:39:07.0] And much more!

Welcome to this week's episode of the Rational Reminder! Today, we get stuck into a commonly asked about investment topic – socially responsible or sustainable investing. The show kicks off with Cameron sharing some fantastic insights he gained from a book he recently finished, The Undoing Project. We then delve into the CalPERS story that was in the spotlight at the end of 2019. After that, we move the planning portion of our show, where we tackle the topic of sustainable investing. Many prominent Canadian pension funds have said that sustainability will be a core part of their investing going forward. We explore why sustainable investing has to mean lower returns, how this kind of investing effects social change, and what the amount you need to give up to feel good about your investments is. We also look at the subjectivity of ESG ratings and how this relates to your values. Ultimately, sustainable investing is about balancing the continuum of views and values, how closely they can be matched, and how you can do that in a diversified way. The sustainable label may not meet your expectations of sustainability which is why finding the balance can prove to be challenging. We round off the show by sharing our thoughts on how to restructure your portfolio when it comes time to live off of it. You don't want to miss out on this interesting show, so tune in today! Key Points From This Episode: A book Cameron recently finished and how he applies these lessons to his work. [0:01:08.0] More about the CalPERS story that broke in December 2019. [0:05:50.0] Insights into active managers and actively managed funds. [0:07:40.0] Vanguard is the first asset manager to surpass the six trillion-dollar mark and other stats. [0:10:30.0] Portfolio topic: The growth of socially responsible investing in North America. [0:12:10.0] The main considerations to account for when looking at socially responsible investing. [0:14:09.0] Two main sustainable investing strategies: negative screening and ESG integration. [0:15:01.0] The relationship between ESG and expected returns when controlling for common risk factors. [0:17:13.0] The importance of ESG risk factor – where does the negative premium come from? [0:19:45.0] Differences between exclusion and investor tastes and their influence on expected returns. [0:21:40.0] Why the dispersion of preferences in the ESG industry is so important. [0:25:14.0] Does sustainable investing lead to positive social returns? [0:27:05.0] Two ways the lack of diversification of ESG investing hurts investors. [0:30:25.0] Understanding the trade-off between values: do all companies use the same ESG filters? [0:31:42.0] The two major problems of not having consistent ESG rating metrics. [0:33:54.0] Two things to consider when the time comes to live off of your portfolio. [0:36:47.0] Deciding how to change your asset allocation and figuring your safe spending rate. [0:39:05.0] Why selling shares rather than receiving dividends does not make you worse off. [0:42:23.0] Final thoughts on spending income and dividends. [0:45:06.0] 'Bad advice of the week'. [0:46:03.0]

On today's show, we are joined by Kim Melanson who is a local lawyer in Ottawa. The bulk of the conversation is spent on the particulars of drafting a will and the considerations that have to go into this process. Kim also reminds just how important it is to have an up to date will, something many of us have heard but many of us do not act on! She talks about good times to update your documents and the ins and outs of naming guardians and executors before discussing inheritances, donations, and probate. We then turn to a few different types of wills, namely mutual will, mirror wills, and dual wills. Kim weighs in on the topic of 'will kits' and services that make the writing of a will appear a little easier. We also talk about some common errors that are made in the realm of estate planning before turning our attention to family law. Kim answers our questions common-law relationships, domestic contracts, divisions of assets and more, so for all of this from a true expert on Ontario legal matters, be sure to listen in with us today on the Rational Reminder Podcast! Key Points From This Episode: An important legal disclaimer about today's show. [0:02:21.9] What happens if you die in Ontario without a will? [0:03:13.6] Reasons that every adult needs to have a will. [0:05:34.7] How often to update a will throughout the course a lifetime. [0:07:32.7] Best practices for the naming guardians and executors. [0:08:34.6] Kim's recommendations for allocation of inheritances, donations, and probate. [0:14:14.4] Understanding dual wills, how they work and when they make sense. [0:19:14.3] Considering the use of 'will kits' and where these services might fall short. [0:21:39.6] Mutual and mirror wills; managing and policing of these documents. [0:23:19.1] Common and important errors made in estate planning. [0:25:19.4] The definition of a common-law relationship in Ontario. [0:26:50.6] Approaching the conversation and weighing the utility of domestic contracts. [0:30:48.6] The Family Law Act ruling on the division of assets; exclusions and subtractions. [0:34:54.4] Kim's own definition of success and her hopes for a positive impact. [0:36:36.2]

For our very first episode of 2020, we kick things off with some quick updates before sharing Cameron's ten best financial planning strategies for the new year. After laying out some statistics about the great asset class returns that 2019 saw, we get into the wonderful listener questions we have been receiving over the break. Our first topic is about buying versus leasing cars, and Ben shares his thoughts on some of the reasons he recently converted to leasing. Our second question is about using credit to invest in a TFSA and acts as a great segue into our main topic for today's show: implementing leverage in an investment portfolio. We discover some fascinating outputs given by a Monte Carlo simulation that compares the reliability of expected returns between diversified and concentrated investment portfolios. Surprisingly, the concentrated portfolio, while unpredictable, actually produces higher returns, even in its worst iterations. We start to think of concentrated portfolios as just another form of leveraging after comparing IUSV to VLUE ETFs, and then move on to the idea of time diversification as it relates to implementing leveraging in Lifecycle investing. As always, we end off with our bad advice of the week, with the 60/40 stocks and bonds model taking centre stage, so hop on and join us for the ride! Key Points From This Episode: Different corporate cultures and the value of instilling one in your workplace. [0:05:55.0] A top ten list of strategies for financial planning in 2020. [0:08:48.0] Asset class returns from 2019 which were very high across the board. [0:15:34.0] Market unpredictability and why to buy a second-hand car but lease a new one. [0:19:18.0] When to use your unsecured line of credit to invest in a tax-free savings account. [0:22:49.0] Three things that structure a belief: values, biases, and models. [0:24:51.0] Ben's model and expected returns of diversified vs concentrated portfolios. [0:27:49.0] When concentrated portfolios work well: if high performing stocks are chosen. [0:34:01.0] Ways to achieve higher factor exposure with IUSV vs VLUE ETFs. [0:35:47.0] How unexplained portions of returns are the costs of leveraging via concentration. [0:40:40.0] Why investing using leverage creates 'time diversification' and higher yields. [0:42:47.0] Ways for young people to leverage their savings: concentration, derivatives, etc. [0:42:47.0] Time decay on leveraged ETFs and other reasons for leveraging not being a joke. [0:50:52.0] Why ditching a 60/40 portfolio denies market efficiency by increasing risk. [0:55:36.0] And much more!

Today on the show we welcome the Head of Investment Solutions at Dimensional Fund Advisors, Marlena Lee. Marlena has a Ph.D. from the University of Chicago where she served as the TA to Eugene F. Fama. She has been at Dimensional for 11 years where a big part of her role is communicating what their research team is doing for the advisors and clients who are using their products. In this fascinating episode, we discuss and define models, factors, and the importance of understanding the risks involved with any investment decision. We talk about the many different reasons why stocks have different returns, and what the research says about underperformance and our expectation of positive premiums. Marlena has some interesting perspectives on whether risk or behavior drives higher returns, and shares some of her biggest lessons gained from working with Eugene Fama, and Dimensional Fund Advisors. Key Points from This Episode: The uses and limitations of models when making investment decisions. [0:02:30.0] Understanding the concept of 'factors' and why the word is evolving. [0:04:35.0] Why Dimensional doesn't combine Price-to-Book with price sales and cashflows. [0:13:10.0] Marlena's thoughts on whether risk or behavior drives higher returns. [0:15:15.0] The theoretical rationale for why we expect the value premium to be positive. [0:21:00.0] The role of company size in identifying differences in expected returns. [0:25:10.0] The split between dividend income and capital gains: What is the trade-off? [0:27:40.0] How to choose which Factor Model to use for your investing decisions. [0:31:15.0] The good arguments for owning bonds in your portfolio as a young investor. [0:35:00.0] Risk factors and equities when it comes to fixed-income and bonds versus stocks. [0:38:00.0] Questions investors should be asking about fees, risk, and portfolio worth. [0:41:48.0] Evidence that investors can use Yield Curve Inversions to time the market. [0:43:33.0] Marlena shares her most fascinating research topics and economic debates. [0:43:33.0] Marlena shares her biggest lessons gained from working with Eugene Fama. [0:48:13.0]

As we see 2019 out and enter a new decade, we thought it only fitting to do a round-up of some of our shows this year. While we had 26 guests throughout the year, we chose 14 that best captured the sensible investing and education-focused spirit of our show. Some of the guests we have included on this special episode include Rob Carrick, from The Global Mail and leading authority on Canadian personal finance, Alexandra McQueen, a teacher at York University, who offers an explanation on the difference between financial economics and financial planning and Jonathan Clements, who explains why the hardest part of investing is keeping it simple. We also share clips about nipping overconfidence in the bud with Daniel Crosby and the next grand challenge of investing with Dave Nadig. This is just a snapshot of some of the incredibly generous people who have joined us this year. We hope that this show has contributed in some way to educating and helping investors make informed decisions and we are excited for what's on the horizon. Happy New Year from all of us here at The Rational Reminder! Key Points From This Episode: Rob Carrick's insights into whether Canadians have a good relationship with money. [0:04:02.0] Moira Somers' tips on lifestyle changes to decrease financial stress. [0:07:51.3] Why 'debunking the nonsense' of financial advice is so important to Barry Ritholz. [0:10:23.0] The difference between financial economics and financial planning. [0:13:10.0] Discover the importance of having a clear belief system when it comes to investing. [0:16:51.0] Criteria other than performance to use to choose a quant fund according to Wes Gray. [0:19:47.0] Why the most difficult part of investing is trusting in simplicity. [0:23:14.0] Learn what has surprised David Butler the most about working with academics. [0:28:56.0] Ben explaining discount rates and factors to his mom. [0:31:58.0] All factors will underperform at some stage so embracing volatility is key. [0:40:14.0] What Jill Schlesinger has found the most common investment blind spots to be. [0:42:54.0] A look at what adverse selection means and how it applies to DIY investors. [0:44:40.0] Find out why Daniel Crosby calls overconfidence the 'granddaddy' of investment biases.[0:46:17.0] Even though investing is 'solved,' that does not mean people are good investors. [0:44:40.0]

On today's episode, we are joined by Mark Goodfield of The Blunt Bean Counter blog to talk about estate planning and wills. Mark is a partner at BDO Canada, a national accounting firm and has created a wealth of content on investing, tax and the relationship between the two. He provides full-service wealth management, but does not advise on nor manage investments. Estate planning is a difficult task because you are confronted with your mortality, but it is hugely important because without a clear-cut plan, those left behind will have to deal with many complications in the midst of grieving. Mark has seen these complications with some of his own clients and the negative effects it has had on them. Along with conventional estate planning, such as drawing up a will, Mark also strongly advises transparency about your finances both with your partner and your children. This will not only ensure that there are no surprises, but also allow them to gain a level of financial literacy to deal with money, if they currently do not have that responsibility. He believes that people are not open enough when talking about money, which has implications long after they are gone. While estate planning is largely to do with finances and assets, Mark does not believe that money automatically correlates with success. This is why it is equally important to consider the legacy you leave behind in other ways, such as strong relationships and giving time to good causes. For this and much more, join us today! Key Points From This Episode: What it entails being the executor of an estate. [0:02:47.0] The implications of dying intestate. [0:04:32.0] Why it is important to disclose assets liable to probate tax. [0:07:27.0] Ensure that both spouses are relatively financially literate. [0:08:40.0] Why you should involve your adult children in financial conversations. [0:11:07.0] The two ways of consolidating your investment holdings [0:12:23.0] The tax, legal and personal implications of giving up ownership. [0:17:03.0] The distinction between known and presumed inheritance. [0:20:11.0] How to deal with potential uneven distribution in an estate. [0:23:23.0] When it makes sense to hire a corporate executor [0:25:49.0] The five ways that success is not always linked to money [0:27:06.0] How Mark has defined his own personal success [0:29:55.0] And much more! https://rationalreminder.ca/podcast/77

Welcome to another episode of the Rational Reminder Podcast. We kick off the show today with some great listener feedback before diving into the content of a new podcast by Dr. Laurie Santos called The Happiness Lab. In a recent episode of her show, she gets into the idea of human adaptability to fortuitous or catastrophic events. Our capacity to regulate back to a default state has big implications for dreams of greater happiness through wealth acquisition. Next, we move on to three great listener questions, which by the way will be replacing the investment topic segment of the show from now on. We answer questions about the merit of Ray Dalio's all-weather portfolio, fall back rules for prospective rental property owners, and whether the Smith Manoeuvre is a good move for high-income earners. Next up you'll hear some fascinating statistics about residential property value in relation to homeownership and income in Canada. Rob Carrick's article about how tax-free savings accounts are the greatest Canadian financial success story of the century comes under our scrutiny after that. Finally, we end off with our bad advice for the week, in which we discuss the recent protest by investor advocates to speed up the banning process for early withdrawal fee-charging mutual funds. Tune in for your weekly reality check on sensible investing and financial decision-making for Canadians! Key Points From This Episode: Three great reviews from our listeners on iTunes. [0:00:15.0] Human adaptability and how bad we are at predicting our future emotions. [0:03:45.0] Expected returns concerning risk parity and factor investing approaches. [0:06:32.0] Cap rates, leverage, and asset-specific risk regarding investing in real estate. [0:14:02.0] The benefits of the Smith Manoeuvre for those willing to be leveraged investors. [0:20:10.0] Lifecycle investing and why young people should invest in stocks with leverage. [0:23:59.0] Homeownership, income, and residential property value statistics in Canada. [0:25:30.0] Different house prices for middle-income earners across Canada. [0:29:25.0] Statistics about TSFAs such as who has one versus who has an RRB. [0:30:53.0] How to use TSFAs in connection with other investments. [0:32:18.0] Rules and cautions about TSFAs such as why not to pick stocks in one. [0:32:38.0] Good reasons to use TSFAs such as when one has a low income and is young. [0:32:38.0] Why not to buy mutual funds that charge investors early withdrawal fees. [0:38:33.0] And much more! https://rationalreminder.ca/podcast/76

On today's episode, we have Dr. Daniel Crosby joining us for an insightful discussion about the psychology behind investing behaviour. Dr. Crosby is a behavioural finance expert and asset manager who applies his study of market psychology to help people better understand the financial decisions they make and to shed some new light on our ability to be rational. We talk about the inevitability of our emotions and how they impact our actions, but also how they might be leveraged for positive outcomes. As far as behavioural biases are concerned, overconfidence is by far the biggest threat to our investment success, but on the flip side, Dr. Cosby shares why, outside of investing, this trait can serve us really well. We enquire about his thoughts on how wealth changes people's behaviour, on whether the FIRE Movement has some credibility to it, and he explains why having a strong theoretical underpinning is necessary when making decisions based on empirical data. Join us for some more science-based investment advice! Key Points From This Episode: The rationality of people and the possibility of leveraging emotion in finance. [0:02:26.0] Research that shows why you should work with a financial professional. [0:06:46.0] Behavioural biases and overconfidence as the most dangerous one. [0:11:05.0] Avoiding overconfidence by understanding that investment rules are different. [0:13:47.0] The extent to which people's behaviour is affected by those around them. [0:17:58.0] How significant changes in net worth changes a person's investment traits. [0:25:36.0] Thoughts on the FIRE Movement and how investors should look at risk. [0:28:06.0] Behavioural and risk-based factors and the necessity of a theoretical underpinning. [0:37:06.0] And much more!

Thanks for joining us for another episode of the Rational Reminder Podcast. We are proud to say that last week's show received our highest amount of downloads yet, with 10 000 in its first week, so a big thank you to our listeners for that. We begin our discussion this week with some takeaways from the Playing With FIRE documentary about doing affordable things that feel good as a way of cutting costs. Next, we dive into some caller questions, discussing whether putting a downpayment on a rental property as a way of parking cash until you have enough to scale up to a bigger property would be a good idea. We also discuss whether it would make sense to invest in an individual Canadian bank stock based purely on the track record of our banks, which brings up some interesting points about how stocks work. We then dive into our main topic by beginning with some pointers on choosing the best belief system to evaluate investment strategies from, comparing our 5-Factor model with the Quality model and Jim Simons's too. This leads into a deep dive we take into the legitimacy of the definition of quality given by a variety of American and Canadian funds. We share our main takeaways from this discussion with you which should prove very useful. Our planning advice for the week is around getting insurance for income replacement in retirement. Finally, we make a lot of good out of some bad bank advice by drawing from our recent research into reverse mortgages and annuities, so don't miss out on this one! Key Points From This Episode: Lessons for cutting spending in the Playing with FIRE [0:05:30.0] Whether a rental property is a good hedge against rising real estate prices. [0:12:15.0] The effect that leverage would have on equity through market fluctuation. [0:13:50.0] How stock returns work and why not to invest in individual Canadian banks. [0:15:47.0] The challenge of choosing a belief system to evaluate investment strategies. [0:18:43.0] An explanation of the Market Efficiency model. [0:23:12.0] Using Occam's Razor to compare the 5-Factor model to the Quality model. [0:23:27.0] Assess products using US-listed funds, quantitative implementation, and more. [0:26:19.0] Evaluating different funds' definitions of quality. [0:28:03.0] The clause about defensive positions which ruins VFVA and VVL products. [0:29:25.0] Why VLUE and QUAL funds have unreliable outcomes due to low holdings. [0:30:15.0] Fidelity FQAL is a waste of basis points due to insignificant factors loaded. [0:33:45.0] Why Fidelity FDVV shouldn't use investment as a filter. [0:34:49.0] The main takeaways from Ben's reading of the funds: read beyond the title. [0:36:33.0] Many value factor funds are actually actively managed. [0:37:14.0] What to do as far as getting insurance for income replacement in retirement. [0:38:09.0] Retirement variables such as a mortgage payment or spouse declining to work. [0:41:20.0] Why one should discount aggressive investments when choosing insurance. [0:47:08.0] How reverse mortgages and annuities can stretch out a portfolio. [0:48:01.0] And much more!

In today's episode, we are joined by an exciting guest, The Loonie Doctor, of The Loonie Doctor blog to talk about his work not only on physician finance but also on holistic wealth. A physician by training, The Loonie Doctor has scaled back his practice to put more work into the blog and financial education. He masterfully balances precise technical advice on topics like tax alongside 'softer' aspects of money, such as how it affects relationships and other aspects of human capital. These insights are useful for many, but particularly for physicians who often to do not talk about money because of the nature of the work they do. The Loonie Doctor believes that in not talking about finance, it adversely affects physicians' ability to perform at their peak. Finance, however, is not the only marker of wealth and The Loonie Doctor offers a holistic wealth framework in which wealth can be measured in a variety of ways. He also provides a host of other insights, such as advice for DIY investors, how to avoid social pressure around spending and much more. For all this, join us today! Key Points From This Episode: Some of The Loonie Doctor's background and what lead him to starting the blog. [0:02:20.0] The two big reasons that it is important for physicians to talk to one another about money. [0:03:47.0] Wealth must be looked at holistically as it includes financial, human, economic and social capital. [0:06:15.0] How individual spending decisions compound and have a larger economic effect. [0:08:10.0] What can be done to build a healthy career that inspires and adds value to your life. [0:11:16.0] Which factors to account for when making long-term insurance decisions. [0:13:13.0] Reasons why whole-life insurance should not be a catch-all financial plan. [0:17:06.0] How to avoid social pressure and spending large amounts of money. [0:19:51.0] Financial decisions should be understood in relation to non-monetary value they add. [0:22:48.0] How The Loonie Doctor uses evidence effectively in investment decisions. [0:26:30.0] How to make the decision between DIY investing or using a financial planner. [00:29:16] Some of the lessons that The Loonie Doctor has learned having seen so much death. [00:34:28] Insights into The Loonie Doctor's framework about asset location. [00:38:36]

Today on The Rational Reminder Podcast, we talk about the relationship between asset allocation and outcome, the ins and outs of reverse mortgages, and finally, life insurance (or lack thereof) in Canada. However, we begin by sharing some interesting points covered in a recent Barry Ritholtz interview with Eugene Fama and David Booth for his Masters in Business show. We talk about how Booth started the first index fund and discovered the value factor, and quote some of Fama's classic perspectives on behavioural finance and market bubbles. On the topic of asset location, Ben shares some of the findings of his recent research. He weighs in on his surprising discoveries about how to go about investing stocks and bonds in RRSP and taxable accounts to get the maximum yields. One of his main takeaways is the concept of putting bonds in your RRSP to intentionally trick yourself into a more aggressive portfolio. Regarding reverse mortgages, we begin with some definitions and explanations of why they might be beneficial, and then cover the question of whether or not they are the symptom of a 'debt-addicted' society. Finally, we end off by discussing a recent study by Policy Advisor which found some shocking facts about how Canadians are drastically underinsured. For all this and more, join us today! Key Points From This Episode: The difficulty of predicting stock returns based on rate changes. [0:02:27.0] Discussing the Barry Ritholtz interview with Eugene Fama and David Booth. [0:05:44.0] Booth started the first index fund and discovered of the value factor. [0:07:43.0] The fact of bubbles only being such in hindsight according to Fama. [0:08:51.0] Efficient markets aren't necessarily rational. [0:09:18.0] The reason for risk-based and behavioural explanations for asset prices. [0:09:34.0] The value premium does not fluctuate in cycles according to Fama. [0:09:47.0] Considering the role of expected return in making investment decisions. [0:10:21.0] Ben's video on market efficiency in relation to Fama's perspectives on the matter. [0:10:36.0] Jim Simons and the mystery of the success of Renaissance Technologies. [0:11:35.0] How lead generation and aggressive sales shut Planswell down. [0:14:25.0] Vanguard is restructuring its fees and lowering its VXC. [0:17:02.0] Why pre-tax asset allocation doesn't affect expected outcomes. [0:18:11.0] Bonds in an RRSP give a better expected outcome than in a taxable account. [0:20:56.0] Ben's model endorses investing 75/25 in both the taxable and RRSP accounts. [0:21:20.0] Why putting stocks in an RRSP gives a great expected outcome. [0:23:40.0] What the highest yielding asset classes currently are. [0:23:54.0] Why a more aggressive portfolio as far as asset location is good. [0:28:29.0] How after-tax wealth remains the same through three different location strategies. [0:29:03.0] The pretax drawdown difference between all bonds and all stocks in an RRSP. [0:29:25.0] Future outcomes can still be detrimental to an initially optimal asset location. [0:30:29.0] It is important for people to think of their asset allocation in after-tax terms. [0:31:17.0] Drawing on reverse mortgages to fund retirement spending. [0:32:39.0] 'Reverse mortgage' refers to extracting money from a paid-for house. [0:33:22.0] The benefits of reverse mortgages vs regular mortgages. [0:33:42.0] When you take income from a reverse mortgage, it's not taxable. [0:35:13.0] You can borrow more money out of your reverse mortgage as you age. [0:35:45.0] Are reverse mortgages the symptom of a debt-addicted society? [0:37:13.0] A Policy Advisor study finds that Canadians are drastically uninsured. [0:39:15.0] Shocking statistics on the underinsurance of Canadians. [0:40:15.0] And much more!

Today we welcome Dave Nadig onto the show, who joins us off the back of a brilliant presentation he gave at the Wealth Stack conference last month in Scottsdale. Dave is the founder of etf.com and has had key positions at FactSet, Barclays Global Investors, and Cerulli previously. Today Dave sits down to talk about the difference between ETFs and mutual funds, EFT product saturation, the coming of Direct Indexing and well as non-transparent active funds, and risk probabilities in different asset security options such as gold and stocks. He also debunks the myth that ETFs lead to a pricing bubble, highlighting 401(k)s as part of what might be creating this illusion of top-heaviness. He also has a brilliant perspective on trusting the junk bond through a seeming disconnect, which is really one of timing that actually creates opportunities for price discovery. Dave also spends some time on the subject of his belief that the science of investing is largely figured out. He believes therefore that human behavior and decision making through a lifetime investment path is far more mysterious, and highlights the need for good financial advisors in this respect. Join us to take a deep dive into the world of ETFs with Dave today! Key Points From This Episode: Dave's perspectives on content and education in improving investor outcomes. [0:01:58.2] ETFs as a vehicle for trading multiple stocks, or wrappers for holding securities. [0:03:36.9] Authorized participants are what makes ETFs different from mutual funds. [0:04:46.1] Why the timing disconnect in junk bonds creates a vector for price discovery. [0:09:33.0] Why 401(k)s have caused the belief that ETFs are causing a price bubble. [0:25:50.0] How we have figured out investing but not financial advising. [0:14:40.8] Different ETFs benefit the market by suiting different investor classes. [0:17:49.6] The relationship between ETF indexes and material yields. [0:19:38.6] ETF value systems and the benefit of sticking to one index provider. [0:22:49.4] A slowing in ETF spreads and the coming of non-transparent active funds. [0:26:02.2] The evolution towards, and benefits of, direct indexing. [0:29:21.3] ETF as the most robust security short of stashing physical gold. [0:34:16.6] The value of financial advisors to investors who are more trustworthy nowadays. [0:38:10.2] Hourly financial advice rates work for those who don't need advice long term. [0:41:07.2] The benefits of the AUM model as long as it is made transparent. [0:43:45.9] Charging for advice fees separately stops clients from asking for advice. [0:45:09.3]

On today's episode, we cover a variety of topics, such as some tips for DIY investors, highlights from a conference Cameron recently attended, home country investment bias and whether it's possible to have too much money in your RRSP. We begin first by talking about what DIY investors can do to ensure that they are investing to the best of their abilities. As people who work in investment daily, we often forget how tricky a terrain it can be to navigate if you are not armed with all of the knowledge, so we hope to pass some of it on to you. After that, we move onto the lessons Cameron learned from the Dimensional Advisors conference. We unpack ideas such as why he believes the world is 'running towards factors,' how Dimensional is leveraging academic research to inform their work along with some other highlights. Following on from that and picking up on what was spoken about at the conference, we delve into the pros and cons of home country investment bias. In some instances, this bias makes perfect sense, both from a returns and tax perspective and in other instances less so. We take you through some of these scenarios and what they mean for an investor looking to diversify. And finally, in the planning portion of our show, we tackle RRSPs, whether it is possible to overinvest in them, how they compare to other investments and much more. To learn more, join us today! Key Points From This Episode: Our team is growing and we are looking to add some extra positions at PWL. [0:01:32.0] There are many challenges that DIY investors face not having access to professional advice. [0:05:00.0] How to overcome asymmetries of financial knowledge between spouses and within families. [0:07:30.0] Some of the fee-only planners available in Canada that we recommend. [0:08:49.0] Robb Engen's services and his discount for Rational Reminder listeners. [0:09:42.0] What factors are and why the world is 'running towards' using them. [0:12:38.0] Dimensional provides a framework for investing but does not guarantee answers. [0:14:09.0] Has the value-add factor become obsolete? [0:14:55.0] Highlights from Robert Novy-Marx's presentation at the conference. [0:16:18.0] Insights into and trends in the fixed income market. [0:20:31.0] What peer to peer bond trading is and why it has seen such huge growth? [0:21:17.0] All countries in the world, except for one, have a home country investment bias. [0:22:36.0] Factors to consider when deciding how much to allocate to home country investments. [0:23:58.0] Buying and trading costs and taxes are drivers to own more home-country stocks. [0:26:19.0] The difference between tax payable on international versus Canadian stocks. [0:27:50.0] An explanation of unrecoverable foreign withholding tax related to non-taxable accounts. [0:31:50.0] Some of the ways to get around the foreign withholding tax. [0:33:08.0] How the S&P 500 has been performing in Canada over the last ten years. [0:35:29.0] Why we are comfortable having a third of investments in Canada. [0:37:00.0] Is it possible to have too much in an RRSP? [0:39:40.0] Understanding the differences between an RRSP and a taxable account. [0:41:57.0] Which tax conditions make it better to use an RRSP. [0:44:00.0] The conditions under which your OAS will be clawed back. [0:48:07.0] The one exception where you may not want to contribute to your RRSP at all. [0:51:40] This week's piece of 'bad advice.' [0:53:12]

Today we are joined by Wesley Gray who is the CEO of Alpha Architect, a firm in the US that specializes in concentrated factor strategies. Having completed his MBA and PhD at the University of Chicago – the Harvard of the finance world – Wes is an authoritative voice when it comes to quantitative research and factor investing. Incredibly, he took a 4-year break during his PhD, joined the marines and went to Iraq, and has also written several books. He went from value investor and stock-picker to having a strong quant focus and realized that it was possible to eliminate the human biases while still capturing the factor premiums. Our talk with Wes illuminates the nuanced nature of factor investing, behaviour versus risk-based factor premiums and active management versus passive and indexing. He discusses the process of collecting data for his PhD, the rules according to which they structure portfolios, how their boutique firm differs from larger advisor companies and who their ideal client is. Wes also shares his views on selecting the best quant model, hedge funds, value premiums and market-cap indexing. Join us for another insightful episode! Key Points From This Episode: Wesley's experience as a stock picker and riding the wave of small-cap value. [0:03:31.0] The Value Investors Club as a data source to test stock-picking skills for his PhD. [0:06:43.0] From stock picker to a quant and realizing the need to eliminate biases. [0:09:38.0] The rules that govern how they build portfolios in his firm Alpha Architect. [0:14:26.0] Comparing Alpha Architect to Dimensional Fund Advisors and AQR. [0:17:13.0] Understanding reliability in the context of relativity and defining their ideal client. [0:22:28.0] Advice for retail investors about quant shops and choosing the best quant model. [0:26:55.0] Wesley's view on hedge funds and their strategies. [0:32:57.0] Why education rather than assets should determine the active risk that is included in a portfolio. [0:36:24.0] Thinking about persistence in the context of a behavioural component. [0:38:03.0] Why value premiums are not dead and how it relates to behavioural theory. [0:43:22.0] The global explosion of market cap indexing and guidelines for investing. [0:47:28.0] And much more!

Welcome back to the podcast everybody, we have another great round-up episode for you where we field questions that you sent in and cover a bunch of things we think you need to hear! We discuss how you should weight your stocks and bonds ratio and times that you could think about changing it, we also talk about index funds, Michael Burry and why his reputation is a bit overstated. Then we get into the different types of risk! We cover volatility, uncompensated risk, skewness, and inflation and help you think about each and the impact that they may have on your portfolio. The conversation then turns to planning, longevity, and sustainability and we talk about how to prepare for your last years cleverly and realistically. Goals are so important when laying out a sustainable strategy and we give you a bunch of questions to ask yourself to make the task a bit easier. We finish off with another edition of last wee's worst advice and this time around we are talking about some questionable actions and remarks from TD Ameritrade. For all this and more, join us on the Rational Reminder, today! Key Points From This Episode: Considering a bond to stock ratio and when you might adjust it. [0:01:22.7] Questions when switching to index investing and what to hold on to. [0:06:04.3] The Michael Burry question and how much index funds affect prices. [0:11:46.0] Risk 101; going through all the different types of risk. [0:18:07.6] Identifying which risk you are actually averse to and the results of this. [0:31:04.2] Planning and annuities; longevity risks and age-related questions to ask yourself. [0:32:48.1] Increasing the sustainability of your investments and the importance of goals. [0:36:46.9] Last week's worst advice! TD Ameritrade's confusing decisions around fees. [0:42:01.8] Links From Today's Episode: Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on Twitter — https://twitter.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on Twitter — https://twitter.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Larry Swedroe — https://www.etf.com/contributors/larry-swedroe Vanguard — https://investor.vanguard.com/corporate-portal/ Michael Burry — https://www.cnbc.com/2019/09/04/the-big-shorts-michael-burry-says-he-has-found-the-next-market-bubble.html Barry Ritholtz — https://ritholtz.com The Economist — https://www.economist.com AlphaZero — https://deepmind.com/blog/article/alphazero-shedding-new-light-grand-games-chess-shogi-and-go Stockfish — https://stockfishchess.org/ Ray Dalio — https://www.bridgewater.com/leadership/ray-dalio/ Bryan Kelly — https://som.yale.edu/faculty/bryan-t-kelly Philippe Jabre — https://www.ft.com/content/3d07e70c-fefc-11e8-ac00-57a2a826423e Jabre Capital — https://www.jabcap.com/ Bernie Madoff — https://www.investopedia.com/terms/b/bernard-madoff.asp Fama French Five-Factor Model — https://blog.quantinsti.com/fama-french-five-factor-asset-pricing-model/ Alexandra McQueen — https://www.pensionacuity.com/ Alexandra McQueen Episode — https://rationalreminder.ca/podcast/2019/8/15/episode-59-financial-economics-and-annuities-rational-planning-for-retirement Prof Moshe Milevsky — https://moshemilevsky.com Schulich School of Business — https://schulich.yorku.ca Schwab — https://www.schwab.com TD Ameritrade — https://www.tdameritrade.com Jason Zweig — https://jasonzweig.com Wall Street Journal — https://www.wsj.com Costco — https://www.costco.com Raymond James — https://www.raymondjames.com/ Morningstar — https://www.morningstar.com

From a trader on Wall Street to a financial advisor with her own firm, our guest today, Jill Schlesinger, has accumulated a lifetime of knowledge in the investing and financial world. Today she is a household name and well-known media personality, appearing on a variety of CBS shows and hosting her own podcast called Jill on Money. But she is far more than an investment expert: she also has a ton of insight into people's emotional and psychological responses to money, sharing with listeners those areas that people tend to struggle with most when it comes to their financial lives. Jill also weighs in on the current talk about the inverted yield curve and the coming recession and gives her educated opinion about money in marriage, DIY investing, robo-advisors, buying versus renting and the FIRE movement. Be sure to join in our conversation! Key Points From This Episode: Common blind spots that cause smart people to make poor financial decisions. [0:03:33.1] Starting off as a trader and learning how different trading and investing are. [0:05:09.1] A balanced perspective on the inverted yield curve and the predicted recession. [0:08:11.1] Understanding that investing is half science, half art. [0:12:10.1] Couples who think differently about money and teaching the younger generation. [0:17:06:1] Weighing up DIY investing and acquiring the services of a financial advisor. [0:21:11.1] Robo-advisors and the mass democratization of financial management. [0:25:46.1] Thoughts on whether to buy or rent a home and the FIRE Movement. [0:28:26.1] Interviewing Julie Andrews and a perspective on what it means to be successful. [0:35:50.1] And much more!

Welcome back to Rational Reminder Podcast! We kick off today's episode with a discussion about the gap between investor performance and fund performance, the potential reasons why asset allocation funds produced a positive gap and the role that timing and volatility play in a negative behaviour gap. IPOs have been in the media a great deal lately – and not for particularly positive reasons and we tackle the topic with reference to specific companies. We also talk about Dimensional's paper on the issues with IPOs since the early nineties and then we introduce you to The Fama Portfolio, a valuable resource that we will likely quote quite a bit from in the future! As we have mentioned before, the use of empirical findings is incredibly limited without a theoretical framework and we talk about why the conversation around the efficient market hypothesis needs to change and why general statements about markets are not to be paid too much attention to. We discuss the bad advice for the week and the importance of goal setting in retirement. Key Points From This Episode: The news item for the week: the gap between investor and fund performance. [0:01:33.0] Possible reasons why asset allocation funds produced a positive gap. [0:03:09.0] How timing and volatility play into the negative behaviour gap. [0:06:22.0] All the private equity venture capital IPOs that's been covered in the media lately. [0:06:51.0] Companies who took large haircuts from their last private valuations before IPO. [0:08:05.0] How 1.3% of stocks delivered all the excess return between 1990 and 2018. [0:11:52.0] Dimensional's findings regarding IPO issues in the States since 1992. [0:13:01.0] The pyramid that should be used in making investment decisions. [0:16:06.0] The complex yet high-value insight to be gained from The Fama Portfolio [0:18:05:0] Why it is vital for empirical findings to be back up by a theoretical framework. [0:20:32.0] The paradox of the efficient market hypothesis and what markets are really like. [0:21:58.0] Goal setting in retirement, keeping focused and realizing that risk is always there. [0:25:51.0] Bad advice for the week about the deferred sales charge. [0:29:31.0] And much more!

Our guest today on the Rational Reminder Podcast is Dr. Wendall Mascarenhas. Wendall is a listener, DIY investor a medical professional. He actually reached out to us on Twitter and suggested this episode, a listener-centric discussion as well as one comparing the different approaches to evidence from the medical and the financial communities. We thought this was a great idea and the perspective that Wendall offers is very illuminating and thought-provoking. We discuss some of Wendall's own experience and background in both investing and medicine and from there go onto a more theoretical discussion of evidence and literature, asking the question why the financial industry is not more concerned with data. Wendall lays out the evidence pyramid and explains a few of its layers, we discuss a few tips and think about the extent to which DIY investors should involve themselves in their money with things like factor investing. Wendall also offers some of his thoughts on financial advice and the emergence of new information. For this fresh and insightful chat, be sure to join us! Key Points From This Episode: Why Wendall chose to reach out to us over Twitter. [0:03:01.8] Wendall's medical background and the perspective he brings to investing. [0:04:00.1] Index funds and diversified portfolios instead of active management. [0:06:41.7] The role of evidence and literature in medical prescriptions and treatment. [0:08:17.0] Trying to account for the differences in approach to medicine and investing. [0:10:58.2] A description of the different levels of the evidence pyramid. [0:12:23.5] Five tips for do-it-yourself investing from our guest! [0:19:20.5] Should you worry about factors as a DIY investor? [0:24:24.0] Wendall's thoughts on the value of good financial advice. [0:26:17.7] How new information is circulated in the medical community. [0:30:11.0] Why expert opinion is the least valuable type of evidence. [0:31:49.7] Wendall's definition of success in his life. [0:35:07.9] And much more!

Michael Burry says we should get out of indexing. Jim Cramer says it's time to jump in. These are interesting times in the world of investing! On today's episode, we discuss Burry's recent claims about passive investing and advise on a plan of action should he turn out to be right. Benjamin recently posted a new video on dividends, and we have a conversation about the responses the video triggered and give some good reasons for our stance about the irrelevance of dividends. We also talk about negative interest rates, how they affect that market and explain why it's not a good idea to do day trading for a living. In the second part of the episode, we are thrilled to be joined by Benjamin's mom to whom we will attempt to explain the ABCs of factors. Following many requests from listeners to discuss factors in layman's terms, we hope that our explanation today will shed some light on the topic! Key Points From This Episode: The irrelevance of dividends and the debate our video provoked. [0:01:54.0] How much a portfolio should be tilted towards each factor and the overlaps. [0:05:57.0] A balanced perspective on Michael Burry's assertions about index funds. [0:09:43.0] What you should do if Michael Burry is right and why you should do it anyway. [0:15:25.0] How negative interest rates affect a global fixed income allocation. [0:17:57.0] Some interesting facts about day trading for a living and why to stay away. [0:22:05.0] Unpacking the terms "discounted cash flow" and "discount rate". [0:26:58.0] How the risk of a stock is determined and what the market mechanism does. [0:30:37.0] Where the factors come from and the different types of risk. [0:33:26.0] Using factors to explain the differences in returns between two portfolios. [0:40:03.0] The crux of why you want a diversities portfolio. [0:41:20.0] And much more!

We have a really special episode in store today as we welcome Tim Nash, the Sustainable Economist! Tim shares a vast amount of knowledge and ideas with us on how investors wishing to put their money where their heart is can go about investing more ethically and sustainably. We hear about Tim's journey into investing and economics and how he wound up doing the work he currently does, helping investors clarify where their money is going and how to put it portfolios that are more aligned with their beliefs. He unpacks how these ideas and actions can have an impact and what it would take for some kind of systemic shift towards more sustainable industry and companies. We discuss the use of other modes of change as well as the personal practice of investors versus the placement of their money. Tim does such a great job of explaining how he goes about assessing different companies and portfolios and filtering which meet the criteria that he would suggest to his audience. The last part of the episode contains a really impressive argument from Tim around how investing this way can also be beneficial for strictly economic reasons and that it would suit all people to consider the factors he is espousing. For an inspirational chat with a truly great guest, listen in today! Key Points From This Episode: Tim's education and how he became The Sustainable Economist. [0:01:49.6] The actual service that Time provides for his clients and audience. [0:04:18.1] How does this type of sustainable investing have an impact? [0:05:41.9] Considering the efficacy of other means to bring about change. [0:11:06.4] Squaring personal practices and investing principles of an individual. [0:14:37.3] The criteria that Tim uses to assess items in a portfolio. [0:21:17.1] Tim unpacks his experiences of anarchist portfolios! [0:28:54.8] Allowing ethical investors to feel good about their portfolios. [0:31:50.6] The usefulness of so-called ESG screening for finding robust companies. [0:33:41.3] The twofold imperative to ethical and sustainable investing. [0:38:11.2] The product landscape for investors building sustainable portfolios. [0:40:57.8] How Tim helps people through his fee for service planning. [0:45:48.2] Tim's own definition of success! [0:47:44.6] And much more!

Welcome back to another episode of the Rational Reminder! We are doing another variety show for all of you and this week we cover some news, current affairs, questions and of course our staple bad advice of the week! We start the show looking at the restructuring of swap-based ETF's from Horizons before looking at Michal Burry's latest commentary and predictions. From there we move onto John Rekenthaler's recent article on Morningstar about Canadian financial advice and what it is lacking. We discuss gold and why it is still not a good investment choice for almost all situations and even draw on some inspiring words from Warren Buffett on the subject! The conversation then turns to tax-loss selling; we unpack how it is possible to use this tactic to your advantage and look at some of the specifics that it entails. Lastly. we cover a particularly bad piece of advice that had the Twitter community up in arms recently! So for all of this and a bit more, listen in with us today! Key Points From This Episode: Horizons' restructuring of swap-based ETF's and what this means. [0:01:48.5] Michael Burry says that index funds are creating a bubble in large stocks. [0:05:2] 'Canadian Financial Advice, Good Intentions but Bad Results'. [0:07:51.4] Warren Buffet's classic gold explanation from a while back. [0:11:17.7] The example of Brazil; hyperinflation and the price of gold. [0:14:38.2] Tax loss selling and knowing the ins and outs of how much you are paying. [0:21:37.5] Looking at some examples of tax loss selling and how they play out. [0:26:32.6] The best hypothetical times to do a tax loss sale. [0:31:19.8] This week's bad advice! [0:33:50.8] And much more!

We have another phenomenal guest joining us on the podcast today. You might know Ted Seides from his famous bet with Warren Buffett or, more recently, from his widely successful Capital Allocators Podcast. Ted is what we would call a classically impressive guy, having studied at both Ivy League frontrunners Yale and Harvard and having founded Protégé Partners, an asset management and advisory firm that specializes in hedge funds. In addition, he has trained under the legendary David Swensen, and together with his experience and training, has become a big name in the investing world. On this episode, he discusses the wealth of knowledge he has gained from David, the criteria for selecting a fund manager and how to approach evaluating the performance of that manager over time. Contrary to the assumptions about his views on index funds, he explains what he believes about them and whether he thinks the market is likely to become saturated. We then get into a conversation about the investment habits of the wealthy, why relationships are so important in this business and why he would not make the same bet again. Don't miss out on this exciting conversation with Ted Seides! Key Points from This Episode: What Ted learned from David Swensen and his core beliefs about investing. [0:03:06.0] The foremost criteria when selecting a manager and establishing your beliefs. [0:05:04.0] Why endowment institutions and strategies are only beneficial for a select few. [0:10:59.0] Formulating a hypothesis to measure the outcomes of your manager. [0:13:31.0] Whether retail investors saving for retirement should consider hedge funds. [0:15:46.0] Ted's bet with Warren Buffett and his actual take on index funds. [0:19:02.0] Fee compression in hedge funds and whether the market can become index saturated. [0:20:12.0] Why there is still a significant investment in actively managed mutual funds. [0:24:33.0] Observations about how people invest their money as their wealth increases. [0:26:52.0] The importance of relationships in the world of investing. [0:29:40.0] How the famous bet affected Ted and why he wouldn't do it again. [0:31:12.0] More about his Capital Allocators Podcast and how it has surprised him. [0:36:39.0] And much more!

Welcome back to the Rational Reminder everybody! We are taking this episode to round up all the recent goings-on and tackle a few residual issues that we believe need some attention. We start off by contemplating how much we have both been learning with the wealth of guests that come through our doors. We would never be confronted with this many ideas and inspiration if it were not for this great platform on which we find ourselves! From there we go on to discuss all the recent talk of a recession and the many assumptions that seem to be being made. Here at the Ration Reminder Podcast, we want to try and dissuade you from thinking you can easily predict the movement of the markets or believe those that say they can. It is just not that straightforward. Most often, a recession is only noticeable during or even after it has occurred. Rather stick to a good, diversified strategy without trying to guess and gamble on questionable information. The conversation also covers the portfolio changes from Wealthsimple before Benjamin does what he does best and explains valuation theory for all of us! So for all this and a few more goodies, be sure to listen in! Key Points from This Episode: Effects of hosting this podcast on our own money minds. [0:00:25.4] The impending recession that everyone is talking about. [0:03:24.5] Wealthsimple portfolio changes this week and the paper they published. [0:08:29.4] Risk, return, low volatility, and balancing these in your favour. [0:17:32.2] The theoretical underpinning of factor investing and valuation. [0:18:39.8] Fama and French's Five Factor Model. [0:26:02.5] Retiring early; spending rules for the FIRE movement. [0:28:18.2] More viable alternatives for saving and preparing for retirement smartly. [0:33:21.6] This week's bad advice! [0:35:28.2] And much more!

Welcome to another episode of the Rational Reminder Podcast! We have a fantastic guest joining us today to talk about annuities, or in more general terms, pensionization. Alexandra Macqueen is certified financial planner, who is also a financial author, editor, York University educator, consultant, and speaker. Alexandra co-wrote a book with Dr. Moshe Milevsky called Pensionize Your Nest Egg: How to Use Product Allocation to Create a Guaranteed Income for Life, an incredible resource on our topic today. In this episode, Alexandra talks about the important distinction between financial economics and financial planning, the former being much more rational and quantitative than the latter, which is largely based on folklores and rules of thumb. We discuss the concepts of retirement sustainability quotient (RSQ) and financial legacy value (FLV) and the impact they have on each other, before diving into explaining what annuities are and how they are meant to function. She also advises on the use of the GIC ladder, copycat annuities, and considerations for deferring your CPP. Don't miss out on this insightful conversation! Key Points from This Episode: The distinction between financial economics and financial planning. [0:02:38.8] Product allocation and how it relates to pensionization. [0:04:15.8] The retirement sustainability quotient (RSQ) and what it measures. [0:06:46.3] How the RSQ affects your financial legacy value (FLV). [0:07:45.7] The idea of eliminating the probability of ruin from your portfolio. [0:09:39.6] What exactly is an annuity and how does it work? [0:10:15.3] The type of person and age group that annuities appeal to. [0:13:53.2] Why allocating to an annuity can allow you to spend more on your overall capital. [0:16:20.0] The problem with the folklore rules around appropriate withdrawal rates. [0:19:47.8] Suggestions for annuities for wealthy people under 50. [0:23:08.3] Why a GIC ladder is not a guaranteed stream of income. [0:26:04.9] Defining copycat annuities and their accompanying issues. [0:30:57.6] CPP and the impact of deferring it at retirement. [0:33:52.4] And much more!

On today's episode, Benjamin and Cameron are talking real estate, specifically mortgage rates and REITs. For the first time since the early 90s, fixed mortgage rates are lower than variable ones, which have always been the popular choice. However, due to the fact that Canada's yield curve is inverted, short term rates higher than their long-term counterparts. This is not usually the case, which makes it a great time to consider a fixed term mortgage, bearing in mind that it requires some lifestyle considerations. Benjamin and Cameron also provide some insights into the rental property market changes since 2015, with some astonishing figures. They then discuss REITs, which many think should be considered their own asset class. While it is often recommended to have REITs in your portfolio, research is starting to show that you are taking a great deal of risk you are not being compensated for. This means you may be better off investing in other options such as high exposure bonds which bear much less risk. For all this and much more, join us today! Key Points From This Episode: Why fixed-rate mortgages are now lower than variable-rate ones. [0:03:58.0] Interest rates went up, but the shape of the yield curve changed as well. [0:06:25.0] Property prices have almost doubled relative to rent since 2015. [0:07:12.0] What a rental wage is. [0:12:48.0] What a REIT is and the benefits of investing one in your portfolio is. [0:17:05.0] Why the risk of a REIT may not be justifiable. [0:21:01.0] Variable annuity investors routinely outperform mutual fund investors [0:26:23.0] And much more!

On today's episode we are so happy to be joined by none other than Barry Ritholtz! As the founder and CIO of Ritholtz Wealth Management, host of the Masters in Business Podcast and regular financial blogger for more than 15 years, Barry is someone we have been dying to speak to on the show and who we have taken loads of inspiration from over the years. We talk to Barry about his own podcast which has been going strong for years now and is just about to reach its 250th episode! He also explains the beginnings of his firm and how his role has evolved in it since it started. From there, the conversation turns to the different parts of an investing philosophy we and Barry pretty much share and we ruminate on the state of the financial industry in US and Canada currently. We all feel that it is surprising that brokerage firms still find business in this day and age, when it has been shown so many times, for an extended period of time to be a far inferior business model for clients. Barry offers some pretty sensible advice on how to pursue financial growth in the long term and shares how RWM approaches client acquisition. For all of this and so much more, be sure not to miss this great episode! Key Points From This Episode: Why Barry feels he has the easiest gig in podcasting. [0:03:17.6] The inspiration behind starting the firm and Barry's day to day work. [0:05:53.9] The RIA model versus the brokerage model in investment firms. [0:12:45.4] How Barry and the firm have chosen to run their business model. [0:16:03] Specific portfolios at Ritholtz and the philosophy behind them . [0:21:18.8] It's no good breaking a record if you crash straight after! [0:28:13.1] How Barry and the firm find customers and the client conversations they have. [0:34:04.2] Behavioral counseling as RWMC's biggest value proposition. [0:42:34.8] Barry's opinions on robo-advisors and the factors to consider. [0:47:06.2] Why are there still commission based advisors in 2019? [0:50:38.9] Things Barry has changed his mind about since starting the firm in 2013. [0:55:09.9] Small cap tilts, lower rates and the longer term vision that is necessary. [1:01:11.1] How Barry defines success in his life. [1:07:01.5] And much more!

On the show today we are going back to basics, just Cameron and Benjamin going through some useful topics for your financial benefit! We start talking about GIC's and the article on MoneySense that led to this conversation. GIC's have a somewhat mix and match reputation, one which we believe has been often misunderstood and misrepresented. We try to show in which ways people have been misled into thinking that GIC's are the best option when, we believe, they are not. From there we turn to more general portfolio ideas, comparing the performance of the S&P 500 over time and drawing on a very useful study that illuminates the index's limitations. Our last topic for today is around saving for college and RESP's or registered education saving plans. We talk about asset allocation, how to think about starting and best practices when drawing on these funds. We finish off the show with some bad advice regarding dividend investing that actually referenced a video we made! So for all and a bunch more great stuff, be sure to tune in today! Key Points From This Episode: Our recent summer travels and getting away from it all! [0:03:02.4] The article by Jonathan Chevreau that sparked part of today's discussion. [0:05:46] GIC's, long term returns and the financial implications of your choices now. [0:07:15.2] Reasons why returns on GIC's can be misleading in the short term. [0:11:02.7] The S&P 500's performance against other portfolio options. [0:13:56.3] Market drops and risk appetites during panic periods. [0:19:15.2] Saving and drawing on college funds and education plans. [0:22:40.2] Asset allocation and the best way to think about covering costs. [0:27:41.1] Withdrawing funds and making the most of unused college savings. [0:31:21.3] This week's bad advice! An argument about dividend investing. [0:33:30.8] And much more!

Joining us on the podcast today is Jonathan Clements, former Wall Street Journal columnist, founder of HumbleDollar and author of From Here to Financial Happiness, How to Think About Money and several other books. Jonathan is a well-known name in the world of personal finance as he has been giving financial advice for more than 20 years. Today he talks about the role of stories in shaping people's understanding of and relationship with money by sharing an anecdote from his own childhood. He discusses how his investment philosophy has changed in favor of index funds, why investing is much simpler than people tend to believe and then he gives us a glimpse into his own investment portfolio and the financial decisions he is making in his personal life. Jonathan also offers a balanced perspective on home ownership from an investment point of view, advises on the things worth spending money on and then we debate the age-old question of whether money can in fact make you happy. Key Points from This Episode: Working as a financial journalist on Wall Street for more than 20 years. [0:02:01.0] How old family stories taught Jonathan to be thrifty and careful with money. [0:02:28.0] How his philosophy and the investment world has changed over the years. [0:06:09.0] The hardest part of investing is accepting how simple it is! [0:07:39.0] Why Jonathan tilts towards value in his own investment portfolio. [0:11:12.0] Considering the many sides to home ownership as an investment. [0:13:57.0.] How his partial retirement has affected how he thinks about his portfolio. [0:17:43.0] What HumbleDollar is about and dealing with the human side of money. [0:19:58.0] Three things to do to get more happiness from your money. [0:24:17.0] What people should be talking more about in finance. [0:30:46.0] And much more!

Today on the Rational Reminder Podcast we have joining us Dr. David Blitzer who is the Managing Director and Chairman of the S&P Dow Jones index committee. He has been there from the time when indexes were barely even being traded and the first time S&P Futures began trading, and since then, indexing has turned into the massive phenomenon we all know today. Indeed, S&P indexes were (and still is) at the center of this explosion. Today Dr. Blitzer talks to us about the early days of indexing and shares some of his ideas about why indexing became so popular. We also discuss the possible reasons why some people still choose actively managed funds and the effect that the abundance of research has had on their dwindling appeal. Ever wondered where the rapid growth in indexing will end up? What happens after indexing? Can indexing become too big? Be sure to join us for this masterclass on indexing! Key Points From This Episode: When Dr. Blitzer joined S&P and how index investing has changed over time. [0:03:33.0] The relationship between an S&P and a product manufactured like Vanguard. [0:06:03.0] Considering the reasons why indexing became so popular and the role of ETFs. [0:10:11.0] How research has impacted people's perception about active management. [0:12:54.0] Some theories on why it is so difficult to beat the S&P 500. [0:18:13.0] How the change to indexing has affected smaller markets such as Canada. [0:25:39.0] Dr. Blitzer's thoughts on factor weighting. [0:30:28.0] The line where we cross over from passive to active investing. [0:32:18.0] Can indexing become too big, and what's next? [0:41:00.0] What Dr. Blitzer ascribes his success to. [0:45:26.0] And much more!

Live in the studio with us today is Preet Banerjee, renowned speaker, personal finance expert, consultant and author of Stop Overthinking Your Money. He is also the founder of MoneyGaps, a hybrid-advisor platform designed to help financial advisors make financial planning accessible to more Canadians. Having done a reality TV show and with a popular YouTube channel, Preet is on the forefront of the finance world, and he is here to talk to us about the findings that his DBA research has produced. He discusses his endeavour of seeking empirical evidence for the actual contribution that advisors are making to the financial lives of people, and we talk about the crucial difference between robo and human advisors and how people's diverse needs demand diverse solutions. This is a really insightful conversation with someone who knows what he's talking about, so be sure to listen in on this one! Key Points from This Episode: What is the value of financial advice? Preet shares about his DBA research. [0:02:33.0] Preet's history in finance and how he gained a more objective perspective. [0:05:13.0] Speculating around the findings and more about his research design. [0:06:41.0] The relationship between wealth and financial advice: correlation or causation? [0:11:11.0] Measuring the performance of someone who uses no advisor. [0:14:17.0] How the financial security of the home you grew up in affects your finances. [0:16:26.0] Building the model to score financial wellbeing and the challenges that surfaced. [0:20:20.0] Paying more attention to aspects outside of portfolio management. [0:25:09.0] MoneyGaps as a platform for affordable financial planning. [0:29:04.0] How the value of human advisors depends on each individual consumer. [0:33:34.0] The core benefits of human advisors. [0:34:44.0] And much more!

Welcome to this week's Rational Reminded Podcast! Today we're diving into the recent CPPIB report that portrays actively managed funds in the most optimistic light. But before you trade in your index funds, we look at the methodologies and calculations employed by the report and show why there are a number of issues with their findings. Benjamin shares his proposal for an alternative analysis that employs a more risk appropriate benchmark, and we discuss why the report can be seriously misguiding. We also talk about the transitional issues that have result from MD Financial being taken over by Scotiabank and why some MD Financial clients have not been too pleased with it all. We tackle the issue of value versus growth stocks and look at a number of research papers that could explain the developments that have taken place in this regard. Nearing retirement and unsure when to take your CPP? Be sure to join us to find the answer to this complex question! Key Points From This Episode: The positive report about the active management strategy of the CPPIB. [0:01:19.0] Why there is a red flag about the calculations done for this report. [0:03:19.0] Benjamin's alternative analysis and how he built up a more risk appropriate benchmark. [0:05:43.0] The problem of CPP comparing a relatively safe portfolio with a much higher risk one. [0:09:02.0] CPPIB's argument for why they are investing in illiquid asset classes. [0:11:31.0] A few repercussions of MD Financial being taken over by Scotiabank. [0:16:16.0] Does value still make sense? Looking at the data of value relative to growth. [0:19:45.0] An overview of three research papers on on the overreaction hypothesis. [0:25:10.0] The complex question of when to take your CPP and when it's better to wait. [0:33:27.0] And much more!

On the Rational Reminder today we are joined by Ellen Roseman from The Toronto Star, who has been writing and working in the realm of Canadian personal finance and consumer rights for many years. We have a great chat about her work history, what has driven her career and what motivates her to continue to pursue her path of creating financial awareness for more people. We discuss the position of advocacy for consumer rights and how that translates into her everyday work, her most important and recent areas of action, the classes she is involved in teaching and her most recent book, titled Fight Back. Ellen weighs in on the topics of financial advice and how to seek out the best of it, actively managed funds and how she is involved FAIR Canada. We finish off with a fun bit about how Ellen found herself blocked on Twitter by Suze Orman and Dave Ramsey! For all this and more, listen in today! Key Points From This Episode: What it means to Ellens to be an advocate for consumer rights. [0:02:43.1] The most recent cause that Ellen has been championing through her work. [0:05:4] Three tips from Ellen's most recent book, Fight Back. [0:07:59.0] The class Ellen teaches at UFT, Investing for Beginners. [0:14:18.9] Ellen's attitude towards seeking advice and when it is necessary. [0:16:19.6] Bad investment advice and the cases that crop up the most for Ellen. [0:18:18.5] Some of the results of Ellen's course and how it is laid out. [0:21:05.4] Are actively managed mutual funds still holding the majority of Canadian assets? [0:26:03.2] A little about FAIR Canada and Ellen's work there. [0:27:55.4] Ellen's recent Twitter activity which led to get her getting blocked by Suze Orman. [0:32:14.5] A definition of success from our wonderful guest! [0:38:14.0] And much more!

Welcome back to the Rational Reminder Podcast! We're nearing our one-year anniversary, and we are still getting more listeners every episode and we have some incredible guests lined up for you! Today we are tackling more technical issues and some interesting topics overall. We explore the tax implications of VGRO or any of the asset allocation ETFs of Vanguard and iShares and discuss the scenarios in which it might be more advisable to configure the asset allocation that you want using a different form of fixed income and equities. We compare the tax rates on various funds and then dive into some literature on currency hedged global fixed income and what key role players have to say about diversification and dispersion. The spotlight is then diverted to disability insurance and we talk over whether it really is a necessity, what statistics show, and we advise you on the specific points to consider when looking for the right cover plan. For all of this and more, be sure to join us for this episode! Key Points From This Episode: The listener question about the tax efficiency of VGRO that keeps popping up. [0:01:58.0] The tax issues with premium bonds and how interest rates impact their value. [0:02:41.0] The benefits of the different ETFs that VGRO gets its bond market exposure from. [0:05:34.0] Buying VEQT or other equity ETFs as an alternative to buying VGRO. [0:07:49.0] Comparing the tax rates on funds and why tax efficiency is a vital consideration. [0:09:31.0] Some interesting research findings on currency hedged global fixed income. [0:12:21.0] Understanding the tax, liquidity and risk implications of GICs. [0:14:16.0] Is it possible to over-diversify? And important points on dispersion. [0:16:31.0] Considering disability insurance, what data shows and what do look for. [0:22:47.1] And much more! Read more on GICs replacing bonds here: https://www.pwlcapital.com/should-gics-replace-bonds-in-a-portfolio/

On today's episode, we are joined by Jaime Purvis, Executive Vice President at Horizons ETFs. Having been the company's third ever employee, he has worked at the company for nearly 24 years and provides an in-depth inside look into how Horizons has come to have the reputation of being ahead of the curve in the Canadian ETF market. He takes us through some of Horizons history, how they got into ETFs, as well as giving some insights into how these products were chosen. Given the instability of the market today, it is important not only to innovate, but also to leverage experience when creating ETFs, which is what Horizons seeks to do. With such high levels of unpredictability, they aim to provide their clients with as much knowledge as they can to make informed decisions, especially given the Canadian national budget proposal, which will likely affect ETFs across the board greatly. Along with this, Horizons has also created a variety of ETFs, based on products they anticipate will soon play a huge role in daily lives, such as robotics and AI. Despite casting this wide net, these decisions are still made with careful consideration, drawing on the company's extensive knowledge pool. This ability to continually innovate has put them at the forefront of the Canadian ETF market. To gain more insight into the world of ETFs and Horizons, join us today! Key Points From This Episode: How Horizons has swap structure works and why these swaps should not be feared. [0:06:55.0] What the rationale behind the Canadian government swap-based ETF targeting is. [0:11:45.0] What the redeemer's methodology is and the effect that is has. [0:16:08.0] What some of the risks associated with the swap-based ETF structure are. [0:23:56.0] The situations where it does not make sense to have a swap-based ETF. [0:28:43.0] How Horizons chooses their thematic ETFs. [0:30:35.0] What the deciding factors in closing a stock down are. [0:36:29.0] Why it is becoming increasingly difficult for starter ETFs to launch. [0:39:20.0] And much more!

Welcome back to your weekly reality check on sensible investing and financial decision making for Canadians. On today's episode we kick it off with a combo of a current topics, answering listener questions, and discussing the bad advice of the week. We then dive into the huge shift in the industry in the US in terms of fund flows into index funds out of active mutual funds. When you look at the overall US market cap, 13% of it is in index funds. This means that price discovery is being done by 87%. Inside this episode we unpack what that means for investments overall and how it differs in the Canadian market. We then take to a deeper discussion on our portfolio management topic of the week, which is looking at the relationship between price and future returns. We know that when prices are high, future returns tend to be low, so we dive into how that affects the context of pricing. We also take a look at the AQR study, Vanguard's dollar cost averaging versus lump sump study, and of course our planning topic for the week; renting versus buying a home and understanding the unrecoverable costs. Join us today and be sure not to miss out on today's incredible episode! Key Points From This Episode: Answering a listener question: using dividend stocks to pay down your mortgage. [0:03:41.0] Busting the beliefs and concepts of this week's worst investment advice. [0:06:33.0] The shift in the US market place: index funds versus active mutual funds. [0:11:27.0] Understanding the Grossman-Stiglitz Paradox: market efficiency. [0:15:40.0] Portfolio management topic of the week: relationship between price and future returns. [0:18:19.0] Discussing the Vanguard study: Lump sum versus dollar cost averaging. [0:24:18.0] A viral topic: understanding the debate of whether to rent or to buy a house. [0:28:28.0] And much more!

Today we're talking about a slightly different topic from the usual – used cars. We have Brad Boehme joining us and he is the Dealer Principal/General Manager at MyCar, a successful used cars dealership that has three different locations around the country. Brad shares with us how he got into the industry, how the 2008 financial crisis helped them to start the business, where they source their inventory from and why the profits are in the buying more than in the selling. Client experience is a high priority for them, and he tells us how they approach negotiations with clients and what he advises listeners to consider before leasing or buying a car. Tune in today to learn more about the business of used cars! Key Points From This Episode: An overview of Brad's education and how he got into the car business. [0:1:46.0] The different roles that taught Brad about remarketing and the ins and out of the trade. [0:02:54.0] Why the financial crisis of 2008 was an opportunity to start a used car business. [0:4:10.0] What volume of inventory they typically have between the three locations. [0:05:41.0] Where they source their cars from and why the buying process is so important. [0:07:23.0] The digital platforms they use to buy and sell and what the process involves. [0:08:55.0] How car dealerships make profits, where the margins are and understanding lot packs. [0:12:12.0] How they approach negotiations with clients and prioritize customer experience. [0:14:57.0] Buying and leasing new cars and how residuals work. [0:16:42.0] Factors to consider when you want to buy out a leased vehicle. [0:20:27.0] Weighing up whether it is best to lease or to buy used. [0:21:35.0] Advice for buying used cars and what protection there is for consumers. [0:24:58.0] The cars that are investments and that have a good growth rate on them. [0:29:42.0] The aspects of the business that are most rewarding to Brad and how he defines success. [0:31:25.0] And much more!

Welcome back to the podcast everybody! Today we are running through our weekly topics as usual, giving you the best, worst and everything in between on investing in Canada. We are talking a bit about the really interesting and important SOHN Investment Conference and what goes on there. We also go into why random stock picks, chosen by a thrown dart, beat Wall Street's elite and what we can learn from the SPIVA Report. From there we go pretty deep into the topic of low volatility and how its different permutations and readings can impact our investments. In our planning section of the program we talk about returns and how Canadian investing fits into the global landscape. Lastly, we finish off with our segment on the worst advice of the week, where we evaluate a claim that new kinds of ETFs with a new kind of value are what is needed in the market currently. For all this and more, be sure to join us today! Key Points From This Episode: A little about the SOHN Investment Conference. [0:01:51.3] Why the 'best' investment advisors cannot beat a dart. [0:04:42.4] Active funds versus index funds and the SPIVA report. [0:06:59.7] Low volatility stocks, a definition and understanding them better. [0:13:18.2] The most important metrics in the low volatility equation. [0:19:01.1] Average returns on mutual funds over time. [0:24:42.6] The worst advice of the week! [0:31:56.3] And much more!