The Rational Reminder Podcast

Latest Episodes:

Harold Geller: "I Sue Financial Advisors" (EP.236) Jan 19, 2023

Show notes

Our guest today, Harold Gellar, is a lawyer who helps clients dealing with fraud and negligence perpetrated by financial advisors, and is a passionate advocate for investors and their rights. Tuning in you'll hear details of some of the most common issues Harold has come across in his work, along with his practical advice for financial advisors and investors. We discuss the importance of clear communication between advisors and their clients, the concept of KYC (Know Your Client), and simple steps investors can take to ensure that their advice is properly understood by their clients. Harold goes on to provide an outline of factors that could make individuals vulnerable to negligent financial advice (such as marital problems or a sudden health crisis) and how to gain perspective in extreme situations. We also discuss the key differences between salespeople and financial advisors, the type of credentials investors should be looking for, and how regulation needs to be modernized in Canada for investors to be properly protected. Harold has been in this industry for a long time and is immensely knowledgeable on the subject of fraud and negligent investment advice.

Key Points From This Episode:

An overview of Harold's practice and how he helps clients get their money back. (0:03:22)
The difference between salespeople and financial advisors and the vulnerability of investors. (0:05:40)
Practical advice for investors to ensure their financial advisor is doing due diligence and the concept of KYP (Know Your Product). (0:10:46)
The concept of KYC (Know Your Client) and how to be sure your financial advisor understands you as a client. (0:15:32)
The type of individuals who are particularly vulnerable to negligent financial advice, and why we can all be vulnerable in certain situations. (0:18:33)
The role of the trusted contact person in Canada specifically, and how to know when to take the advice of your financial advisor. (0:25:13)
Harold's thoughts on what is causing Canada's slow adoption of low-cost index funds. (0:32:27)
How financial advisors earn money and why we need an updated regulatory system. (0:34:21)
Harold's approach to crypto and why he classifies it as a speculative asset. (0:41:50)
Examples of negligence when the investment made was too conservative and why clear communication between client and advisor is crucial. (0:44:20)
The worst insurance products that Harold has come across. (0:46:10)
What financial advisors should be doing to make sure that their advice is properly understood by their clients. (0:49:23)
What investors can do to make sure that they understand what the advisor is saying to them. (0:51:16)
Ontario's recent implementation of title regulation for financial planners and advisors and some of its key flaws. (0:52:16)
The credentials that investors should expect from their financial advisors. (0:55:34)
The value of good advice when it comes to financial planning and investment, and what motivates Harold to be such a strong investor advocate. (0:56:56)

Participate in our 23 in 23 Reading Challenge:

23 in 23 Reading Challenge — https://rationalreminder.ca/23in23

23 in 23 Reading Challenge on Beanstalk — https://pwlcapital.beanstack.org/

Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-236-harold-geller-i-sue-financial-advisors-discussion-thread/21500 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/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Harold on Linkedin — https://www.linkedin.com/in/harold-geller-25094033/

Geller Law — http://gellerlaw.ca

'The Misguided Beliefs of Financial Advisors' — https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12995

'Retail Financial Advice: Does One Size Fit All?' — https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12514

Top Learnings from 2022 (plus 23 in 23 Special Guest Shaun Tomson) (EP.235) Jan 12, 2023

Show notes

As we kick off the new year, we wanted to look back at our biggest areas of learning from last year. So this episode serves as a great companion piece to our year-end recap from a couple of weeks ago, but the focus here is on the personal impact that specific guests, ideas, and topics had on each of our lives. We cover ICAPM thinking, the nature of money, financial literacy, setting financial goals, the history of index funds, and more. For the second half of the show, we are joined by the amazing Shaun Tomson, former world surfing champion, author, and renowned speaker. Shaun is here to talk a bit about his latest book, co-authored with Noah benShea, entitled The Surfer and the Sage. We get to hear about Shaun's belief in the power of words, the specific conditions that can enforce this power, the lessons he has taken from a life in the ocean, and how the tragedy of losing his son influenced his life's trajectory. Join us to catch it all.

Key Points From This Episode:

Differentiating between the CAPM and ICAPM theories. (0:08:02)
Long-run risks in stocks and bonds; demystifying safety claims. (0:14:46)
Further illumination on the concept of money and how to think about it. (0:24:27)
Learnings around the empirical side of financial literacy. (0:31:00)
Improved setting of financial goals and common mistakes that many of us make. (0:32:24)
Filling in the gaps in an understanding of the history of index funds. (0:35:57)
A one-minute recap of our episode with Allison Schrager from last year. (0:37:47)
A quick review of Shaun Tomson's book, The Surfer and the Sage. (0:39:38)
Shaun explains the significance of the wave as a metaphor. (0:43:28)
The tragic passing of Shaun's son in 2006 and how this redirected his life's purpose. (0:45:10)
Shaun explains his CODE method for transformation. (0:49:35)
The significance of the structure of the book and the motivation behind it. (0:56:38)
Unpacking the importance of purpose when making financial decisions. (0:59:40)
Shaun's tactical recommendations; resilience, hope, optimism, and discipline. (1:05:44)
Upcoming book recommendations for our 23 in 23 Reading Challenge. (1:19:22)

Participate in our 23 in 23 Reading Challenge:

23 in 23 Reading Challenge — https://rationalreminder.ca/23in23

23 in 23 Reading Challenge on Beanstalk — https://pwlcapital.beanstack.org/

Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-235-top-learnings-from-2022-plus-23-in-23-special-guest-shaun-tomson-discussion-thread/21332 Books From Today's Episode:

The Surfer and the Sage: A Guide to Survive and Ride Life's Waves — https://amzn.to/3GytVJV

The Code: The of Power of "I Will" — https://amzn.to/3ZEMUvg

Surfer's Code: 12 Simple Lessons for Riding Through Life — https://amzn.to/3VZIcFb

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/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Shaun Tomson on Twitter — https://twitter.com/shauntomson

Shaun Tomson on Instagram — https://www.instagram.com/shauntomson/

Shaun Tomson on Linkedin — https://www.linkedin.com/in/shaun-tomson-42a57213/

Shaun Tomson — https://shauntomson.com/

Shaun Tomson's I Will Form — https://buzzy.buzz/kiosk/3676e3c13ae389a80dd5774d

'The Code Method for Families' — https://shauntomson.com/wp-content/uploads/2020/04/CODE-METHOD-FOR-FAMILIES.pdf

'The Surfer and the Sage: Trailer' — https://www.dropbox.com/s/wn0q3r0gf006tl6/TrailerUSETHISONE.mp4?dl=0

'Generating Objectives: Can Decision Makers Articulate What They Want?' — https://pubsonline.informs.org/doi/abs/10.1287/mnsc.1070.0754?journalCode=mnsc

'Eyes on the Prize: The Preference to Invest Resources in Goals Over Means' — https://www.anderson.ucla.edu/documents/areas/fac/marketing/Shaddy/investing_goals.pdf

'Counteracting obstacles with optimistic predictions' — https://pubmed.ncbi.nlm.nih.gov/20121310/

'Immediate Rewards Predict Adherence to Long-Term Goals' — https://journals.sagepub.com/doi/full/10.1177/0146167216676480

'Stocks for the Long Run? Sometimes Yes. Sometimes No.' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3805927

Prof. Robert C. Merton: ICAPM, Retirement, and Models in Finance (EP.234) Jan 05, 2023

Show notes

Few people have impacted the way the world works, and today, we have the privilege of speaking to one of them. Professor Robert C. Merton is the Distinguished Professor of Finance at The Massachusetts Institute of Technology (MIT) Sloan School of Management and Professor Emeritus at Harvard University. He has a Ph.D. in Economics from MIT and is currently the Resident Scientist at Dimensional Fund Advisors. Professor Merton was awarded the Alfred Nobel Memorial Prize in Economic Sciences in 1997 for his work establishing a new method to determine the value of derivatives. He also created the Intertemporal Capital Asset Pricing Model (ICAPM), a popular tool to help advisors make informed financial decisions and understand market trends. In our incredible conversation, we cover portfolio theory, moving from Capital Asset Pricing Model (CAPM) to the Intertemporal Capital Asset Pricing Model (ICAPM), and how financial models work. We also discuss the difference between the value of your capital and the value of the cash flow that can come from that capital, why size can't be a factor, what aspects to consider when calculating the worth of an account, and the definition of market efficiency. We also delve into retirement, how to safely invest for it, what pitfalls to avoid, and how retirement funds may change over time. He also shares his opinion about some popular financial advise and what the roles of financial advisors should be. For all this and more, tune in to hear from the man behind the model and Nobel laureate, Professor Robert C. Merton!

Key Points From This Episode:

We start with Professor Merton describing the concept of market efficiency. (0:04:28)
He explains the basics of his ICAPM asset pricing model. (0:09:10)
How portfolio theory changes when moving from single-period to multi-period. (0:10:46)
Hear a practical example of expected returns changing over time. (0:14:15)
Why ICAPM is dependent on the sensitivities to risk of an individual investor. (0:22:52)
Find out how to determine if the correct proxy has been identified for a risk. (0:25:34)
Learn how home country bias fits into portfolio choice from an ICAPM hedging perspective. (0:31:54)
The definition of a risk-free asset and how it changes with time. (0:33:24)
What influence the time horizon should have on the mix between stocks and bonds in an investor's portfolio. (0:35:33)
His opinion about young investors using leverage to make investments. (0:41:50)
What people should be doing to get more accessibility to leverage. (0:47:39)
Professor Merton tells us who should focus on value stocks and growth stocks. (0:51:34)
Discover what makes retirement income a difficult problem to solve and tips to ensure your retirement. (0:56:47)
We discuss using Monte Carlo simulations to estimate how much people can spend in retirement. (1:09:04)
He provides insight into how to get more from your retirement investment. (1:13:04)
Whether nominal annuities are considered low-risk assets for retirees. (1:16:48)
An overview of the impact mathematical models have had on the finance sector. (1:20:12)
Areas of finance practice that are lagging behind the financial models. (1:27:35)
Hear what popular financial advice Professor Merton thinks is misguided. (1:33:22)
Ways his work on option pricing has impacted society. (1:41:26)
The role he sees for financial advisors. (1:45:42)
Why he decided to join Dimensional Fund Advisors. (1:48:54)
Professor Merton unpacks the definition of product design. (1:52:14)
Stay listening for the extended discussion. (1:57:24)

Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-234-prof-robert-c-merton-icapm-retirement-and-models-in-finance-discussion-thread/20748 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/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Prof. Robert C. Merton — https://robertcmerton.com/

2022: A Year in Review (EP.233) Dec 29, 2022

Show notes

It has been an amazing year for the podcast. We have had some incredible guests during 2022 who have provided us and listeners with insights and thought-provoking ideas about the world of finance. We covered a lot of ground and to wrap up the year we decided to recap some of our favourite moments for listeners. In this episode, we highlight the many themes covered during this year, such as the basics of investing, stocks and bonds, how to make wise investment decisions, gender inequality, asset management, index funds, market trends, and portfolio management. We also highlight some of the indirectly topics indirectly related to finance such as the value of happiness, enjoying the pursuit of happiness, the importance of goal setting, and much more. Join us as we reflect on some of our best moments from the year and provide an overview of the many vital lessons we have learned in this final episode of the year for the Rational Reminder podcast.

Key Points From This Episode:

Mac McQuown explains how the data revolution changed the game of investing. (0:09:05)
Robin Wigglesworth and tracking the performance of portfolios in the 60s. (0:12:56)
Professor Fama shares what it is like to see the impact of his academic work on the practice of asset management. (0:16:02)
Gus Sauter tells us about the role the University of Chicago played in the index fund revolution. (0:18:41)
Professor Fama unpacks what it means for a market to be efficient. (0:20:52)
Gerard O'Reilly and the differences in the types of market strategies available. (0:24:27)
Professor Betermier shares his research from multiple papers concerning tendencies towards growth and value stocks. (0:28:50)
Eduardo Repetto tells us whether having a portfolio consisting of 100% small-cap value stocks makes sense. (0:36:06)
Professor Koijen explains whether index funds distort market prices and make markets less efficient. (0:40:30)
Professors Berk and van Binsbergen discuss if it is possible to find skilled fund managers before they are absorbed by their fund. (0:43:44)
Professor Cederburg explains how data sets can be upwardly biased and why you need to be aware of it when looking at data. (0:48:15)
Bill Janeway describes the three-player game regarding investments. (0:50:51)
Professor Phalippou compares the performance of private equity relative to public equities. (0:53:42)
Antti Ilmanen tells us how investors can stick with an investment strategy during times of low performance. (0:59:10)
Professor List tells us how often people should check their investment portfolios. (1:01:56)
Leonard Mlodinow explains how the rational mind and the emotional mind are intertwined. (1:04:56)
Professor Edmans's Grow the Pie and making the world a better place. (1:07:27)
Rebecca Walker outlines the effect learning about money has on people. (1:11:15)
Colleen Ammerman describes the current state of women in the workplace. (1:13:21)
Find out why the pursuit of a goal should be enjoyable with Professor Fishbach. (1:15:40)
Andrew Hallam talks about life satisfaction after middle age and how to get there sooner. (1:20:28)
Jay van Bavel details the effect of group identity on goal setting. (1:23:08)
Professor Frank unpacks the relationship between the consumption of luxury goods and happiness. (1:26:55)
Professor Bohns provides insight into why people are under-confident in their social lives. (1:31:01)
Professor Fama reveals how many hours a day the brain can handle deep work. (1:34:24)
Cassie Holmes and why happiness is a good thing from a scientific perspective. (1:35:30)
Colonel Chris Hadfield shares the lesson he learned as an astronaut that he applies to his everyday life. (1:38:52)

Participate in our Community Discussion about this Episode:

https://community.rationalreminder.ca/t/episode-233-a-year-in-review-discussion-thread/20856

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/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Episode 182: John 'Mac' McQuown — https://rationalreminder.ca/podcast/182

Episode 184: Robin Wigglesworth — https://rationalreminder.ca/podcast/184

Episode 186: Andrew Hallam — https://rationalreminder.ca/podcast/186

Episode 188: Professor Fishbach — https://rationalreminder.ca/podcast/188

Episode 192: Professor Edmans — https://rationalreminder.ca/podcast/192

Episode 194: Bill Janeway — https://rationalreminder.ca/podcast/194

Episode 196: Professor Betermier — https://rationalreminder.ca/podcast/196

Episode 198: Gerard O'Reilly — https://rationalreminder.ca/podcast/198

Episode 200: Professor Eugene Fama — https://rationalreminder.ca/podcast/200

Episode 202: Antti Ilmanen — https://rationalreminder.ca/podcast/202

Episode 204: Professor List — https://rationalreminder.ca/podcast/204

Episode 206: Professor Bohns — https://rationalreminder.ca/podcast/206

Episode 208: Rebecca Walker — https://rationalreminder.ca/podcast/208

Episode 210: Professor Phalippou — https://rationalreminder.ca/podcast/210

Episode 212: Professor Koijen — https://rationalreminder.ca/podcast/212

Episode 214: Jay Van Bavel — https://rationalreminder.ca/podcast/214

Episode 216: Gus Sauter — https://rationalreminder.ca/podcast/216

Episode 218: Colleen Ammerman — https://rationalreminder.ca/podcast/218

Episode 220: Professors Berk and van Binsbergen — https://rationalreminder.ca/podcast/220

Episode 222: Cassie Holmes — https://rationalreminder.ca/podcast/222

Episode 224: Professor Cederburg — https://rationalreminder.ca/podcast/224

Episode 226: Colonel Chris Hadfield — https://rationalreminder.ca/podcast/226

Episode 228: Eduardo Repetto — https://rationalreminder.ca/podcast/228

Episode 230: Professor Frank — https://rationalreminder.ca/podcast/230

Dr. Annamaria Lusardi: The Economic Importance of Financial Literacy (EP.232) Dec 22, 2022

Show notes

Gaining financial literacy is critical if you want to thrive in today's society. And yet, only about a third of the global population can be described as being financially literate. Joining us today to unpack the concept of financial literacy and its impact is Dr. Annamaria Lusardi, Professor of Economics and Accountancy at George Washington University. Dr. Lusardi has taught Economics for over 20 years, and her passion for financial literacy is reflected in everything she does. Her career has been instrumental in furthering the cause of increased global financial literacy, from being the Founder and Academic Director of the Global Financial Literacy Excellence Center, to serving as the co-chair of the G53 Financial Literacy and Personal Finance Research Network. In our conversation, Dr. Lusardi breaks down the definition of financial literacy, how it's measured by leading experts across the world, along with some of the key differences we see between people in richer and poorer countries. She explains why financial advice isn't a replacement for financial literacy and provides guidance on what we should be doing to educate various population groups. We also discuss how global trends have created an increased need for financial literacy as an essential skill, especially for young people, and why greater global financial literacy is beneficial to everyone, including governments and wealthier individuals. Tune in as we delve into the many facets of financial literacy and the important role it plays in our collective health, happiness, and success!

Key Points From This Episode:

Lusardi defines the concept of financial literacy and the importance of being able to apply it as a skill. (0:04:30)
How experts measure financial literacy and some of the key challenges involved. (0:07:55)
The global survey that was conducted on financial literacy in 2014 and its dismal findings. (0:11:44)
The areas of financial literacy that people struggle with most and why the need for financial literacy has increased over time. (0:15:26)
The costs and benefits of gaining financial literacy and the concept of optimal financial knowledge. (0:22:42)
An overview of the type of person who should be investing in financial literacy and why. (0:27:46)
How the strength of your government's social safety net affects financial literacy rates. (0:30:15)
The extent to which financial literacy affects stock market participation and wealth accumulation. (0:31:18)
Some of the common mistakes that those with low levels of financial literacy tend to make. (0:35:10)
Why financial literacy's end goal should be geared towards happiness and living a good life. (0:39:24)
The impact that financial advice and financial advisors have on economic outcomes. (0:43:18)
How financial literacy varies across demographic groups and some of the factors that account for disparities in financial literacy. (0:45:42)
How financial education programs can yield positive results and where this education should take place for it to be optimal. (0:52:13)
What listeners can do to increase financial literacy for those around them and why there is no alternative to good financial knowledge. (0:58:55)

Participate in our Community Discussion about this Episode: 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/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Dr. Annamaria Lusardi — https://www.annamarialusardi.com/

'Financial literacy and financial resilience: Evidence from around the world' — https://onlinelibrary.wiley.com/doi/abs/10.1111/fima.12283

'The Economic Importance of Financial Literacy: Theory and Evidence' — https://gflec.org/wp-content/uploads/2014/12/economic-importance-financial-literacy-theory-evidence.pdf

'Optimal Financial Knowledge and Wealth Inequality' — https://www.journals.uchicago.edu/doi/10.1086/690950

'Financial literacy and stock market participation' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X11000717

'Employee Financial Literacy and Retirement Plan Behavior: A Case Study' — https://onlinelibrary.wiley.com/doi/abs/10.1111/ecin.12389

'Skating on thin ice: New evidence on financial fragility' — https://www.dnb.nl/media/uxldldkl/working-paper-no-670_tcm47.pdf

'Stereotypes in financial literacy: Evidence from PISA' — https://www.sciencedirect.com/science/article/abs/pii/S0929119920302753?via%3Dihub

'Fearless Woman: Financial Literacy and Stock Market Participation' — https://gflec.org/wp-content/uploads/2021/03/Fearless-Woman-Research-Final.pdf?x53868

'How Financially Literate Are Women? An Overview and New Insights' — https://onlinelibrary.wiley.com/doi/abs/10.1111/joca.12121

'Factors Contributing to Financial Well-Being among Black and Hispanic Women' — https://jor.pm-research.com/content/9/1/71

'Financial Education Affects Financial Knowledge and Downstream Behaviors' — https://gflec.org/wp-content/uploads/2020/04/Working-Paper-Financial-education-affects-financial-knowledge-and-downstream-behaviors-April_2020.pdf

RR 231: Investing Basics and Common Questions (plus Reading Habits w/ Amer Kaissi) (EP.231) Dec 15, 2022

Show notes

Today is our final episode featuring just the two of us before our annual wrap-up show, and we thought we would use this opportunity to cover some important foundational aspects of rational investing. Ben goes over some of the most fundamental concepts about market prices, risk, and actual returns before answering five common questions that relate to this level of information. From investing in an employer's stock to predicting the future and real estate comparisons, these five touch-points are always worth returning to, and should even interest the more experienced of our listeners. For the second half of the show, we offer a quick book review of The Culture Playbook by Daniel Coyle, and have a brief and illuminating conversation with Professor Amer Kaissi about his book, Humbitious, and some of his thoughts on the part that reading plays in rich and progressive life. Press play to catch all this and more on the Rational Reminder Podcast.

Key Points From This Episode:

Picking up a thread from our discussion on the 2% Rule. (0:06:05)
Getting to grips with investing basics. (0:10:45)
How market prices work in response to traders' actions and risk. (0:17:59)
The main determinants of actual returns and starting points for your portfolio. (0:23:15)
Unknowable futures and the eternal doom and gloom predictions. (0:35:43)
Assessing the value of owning an employer's stock. (0:38:21)
Holding stock picks in Tax-Free Savings Accounts. (0:42:07)
How to prepare a portfolio when a recession is predicted. (0:43:49)
Comparing investments in real estate with the stock market. (0:45:14)
Weighing the value of building and emergency fund. (0:47:11)
A thirty-second recap of our episode with Cliff Asness. (0:50:06)
Today's book review focussing on the lesson from The Culture Playbook by Daniel Coyle. (0:51:48)
Professor Kaissi shares a quick summary of his book, Humbitious. (0:58:40)
The potential to develop characteristics and the role that reading plays. (0:59:38)
Professor Kaissi talks about his reading habits. (1:02:12)
Application of ideas from books and how Professor Kaissi captures and organizes information in his own reading. (1:05:15)
A few of Professor Kaissi's favourite book recommendations and how to increase your reading habit. (1:08:52)

Participate in our Community Discussion about this Episode:

https://community.rationalreminder.ca/t/episode-231-investing-basics-and-common-questions-plus-reading-habits-w-amer-kaissi-discussion-thread/20716

Books From Today's Episode:

Humbitious: The Power of Low-Ego, High-Drive Leadership — https://amzn.to/3WjHjry

Mindset — https://amzn.to/3Wzl7Kr

Quiet — https://amzn.to/3htlN4X

The Five Dysfunctions of a Team — https://amzn.to/3YmKqRv

The SPEED of Trust — https://amzn.to/3UWCljq

Top Five Regrets of the Dying — https://amzn.to/3uQcUWf

The Assertiveness Workbook — https://amzn.to/3VVDVUf

How to Raise Your Self Esteem — https://amzn.to/3BDM33p

Ego Is the Enemy — https://amzn.to/3BAyCkZ

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/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Amer Kaissi on Twitter — https://twitter.com/amerkaissi10

Amer Kaissi on LinkedIn — https://www.linkedin.com/in/amer-kaissi-ph-d-38258919/

Amer Kaissi — http://www.amerkaissi.com

'The Value of Goals-Based Financial Planning' — https://www.financialplanningassociation.org/article/journal/JUN15-value-goals-based-financial-planning

'Excessive Extrapolation and the Allocation of 401(k) Accounts to Company Stock' — http://independent401kadvisors.com/library_articles/ExcessiveExtrapolation.pdf

'The Agony of Ecstasy: The risks and rewards of a concentrated stock position' — https://assets.jpmprivatebank.com/content/dam/jpm-wm-aem/global/pb/en/insights/eye-on-the-market/agony-ecstasy-2021.pdf

'The financial resilience and financial well-being of Canadians during the COVID-19 pandemic' — https://www150.statcan.gc.ca/n1/pub/75f0002m/75f0002m2021008-eng.htm

Prof. Robert Frank: Success, Luck, and Luxury (EP.230) Dec 08, 2022

Show notes

The world is a highly competitive place, and becoming successful requires hard work, dedication, and luck. This is the view of today's guest, Professor Robert Frank, who helps us unravel the nuance of conspicuous consumption trends and the role of luck in gaining financial success. Professor Frank is the emeritus Henrietta Johnson Louis Professor of Management at Cornell University and holds an MA in statistics and a Ph.D. in Economics from UC Berkeley. He is also a prolific author, having written 12 books, financial textbooks, and many peer-reviewed articles in journals such as the American Economic Review, Econometrica, and Journal of Political Economy. He is passionate about how policy can help drive positive consumer behaviour, reduce inequality, and increase individual happiness. His work has also focused on the role of luck in achieving financial success which he covers in his book Success and Luck. In this episode, we unpack how individuals can improve societal collective action, the role of policy in driving those changes, and how luck interplays with success. We discuss economic and financial relativism, the dangers of conspicuous consumption, how expenditure cascades occur, and what influences consumption trends in society. We also dive into the topic of luck, whether wealthy people are happier, what behavioural changes are needed to create a better society, and more.

Key Points From This Episode:

Professor Frank describes the difference between departures from rational choice with regret and without regret. (0:04:34)
Whether he classifies his work as behavioural economics. (0:07:38)
An explanation of economic and financial relativism. (0:10:50)
The role of economic and financial relativism in consumption trends. (0:12:44)
Find out what constitutes a positional good. (0:16:56)
How the consumption of positional goods affects psychological well-being. (0:19:32)
Why people choose to engage in consumption arms races. (0:21:52)
The relationship between the consumption of luxury goods and happiness. (0:24:45)
What people can do to recognize and avoid negative consumption behaviours. (0:26:31)
How the spending of the super-rich impacts the spending habits of the typical consumer. (0:27:38)
Ways in which social media influencers have affected consumption. (0:30:32)
We learn about the link between consumption and inequality. (0:32:40)
How well differences in human capital explain differences in income. (0:35:04)
Professor Frank explains how likely it is that the most skilled person gets the best outcome in a competitive market. (0:38:13)
Professor Frank shares how they measure luck. (0:41:20)
The influence luck has on achieving a successful outcome. (0:42:09)
Find out if luck influences consumption trends and inequality. (0:44:03)
A thought experiment concerning the wealthy and higher taxes. (0:46:56)
We discuss whether winner-take-all markets are a good thing for society. (0:50:22)
How people should behave differently to help drive positive change. (0:53:06)
Advice for people to stay motivated and work hard. (0:57:19)
What Professor Frank thinks about working a job you hate for more money. (0:58:59)
He provides insight for people who work jobs they hate. (0:59:59)
His approach on the subject of luck and meritocracy with young kids. (1:00:47)
We discuss the idolization of financially successful people. (1:03:36)
How successful individuals should behave differently in an economy where luck plays such an important role. (1:05:38)
The response of successful people to Success and Luck. (1:08:15)
Steps people can take to positively affect those around them. (1:09:29)
Discover what Professor Frank's position is on policy. (1:14:20)
We hear how Professor Frank defines success in his life. (1:18:33)

Links From Today's Episode:

Professsor Robert Frank on Twitter — https://twitter.com/econnaturalist

Cornell University — https://www.cornell.edu/

Success and Luck — https://www.amazon.com/Success-Luck-Good-Fortune/

Luxury Fever — https://www.amazon.com/Luxury-Fever/

Principles of Economics — https://www.amazon.com/Principles-Economics/

The Winner-Take-All Society — https://www.amazon.com/Winner-Take-All-Society/

American Economic Review — https://www.aeaweb.org/journals/aer

Econometrica — https://onlinelibrary.wiley.com/journal/14680262

Journal of Political Economy — https://www.jstor.org/journal/jpoliecon

Project Sunroof — https://sunroof.withgoogle.com/

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/

Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/?hl=en

Rational Reminder on YouTube — https://www.youtube.com/channel/ 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/

The 2% (!?) Rule for Retirement Spending (EP.229) Dec 01, 2022

Show notes

Traditionally, people saving for retirement and financial advisors relied on the 4% rule when calculating how much to save for retirement and the associated income those savings would provide after retirement. What if you found out it does not work? Is there another option? Today, we offer you an alternative approach, which is the 2% rule for retirement spending. Before we delve into today's main topic, we update listeners on the recent London meet-up, what to expect on upcoming shows, and who our special guest is to kick off the first episode of 2023. Then, we discuss today's main topic and learn what the 2% rule is, how it compares to the 4% rule, and whether the safe percentage for retirement is actually higher. We unpack retirement spending through the lens of several empirical papers, historical data, and market comparisons. We also find out why the US market has always been able to bounce back from uncertainty and whether there is empirical data to support the 4% rule. We also talk about the many financial challenges and opportunities that young people face, the biggest mistake people make regarding retirement, the value of financial literacy, book reviews, and more!

Key Points From This Episode:

An update on the 22 in 22 Reading Challenge. (0:05:21)
Outline of today's content and the main topic: the 2% rule for retirement spending. (0:06:27)
An overview of the "2% rule", the motivation behind it, and how it was formulated. (0:08:17)
We discuss if the safe withdrawal rate for retirement savings is higher than 4%. (0:13:31)
The inspiration for the higher average realized rate of return on investment theory. (0:19:59)
Whether the past returns on US stocks will repeat in the future. (0:21:54)
Why the US stock market has been historically exceptional and resilient, and how other markets compare. (0:23:44)
The biggest limitation of the seminal work which helped established the 4% rule. (0:28:38)
How data gaps were dealt with in the paper by Scott Rieckens and results are discussed. (0:33:16)
Other aspects to consider regarding the research on retirement funds. (0:38:35)
The challenges and opportunities that young people face today. (0:42:24)
How financial literacy impacts investment opportunities, returns, and overall happiness. (0:46:59)
What are the potential solutions and reasons to be optimistic regarding the current financial market. (0:47:48)
Our usual episode review under a minute: episode 30 with Larry Swedroe. (0:52:31)
This week's book review and choice architecture. (0:54:35)
We discuss the reviews and feedback received on a previous episode. (1:02:32)
Hear an update about our idea regarding CE credits and reviews about the show. (1:06:01)

Participate in our Community Discussion about this Episode:

https://community.rationalreminder.ca/t/episode-229-the-2-rule-for-retirement-spending-discussion-thread/20473

Book From Today's Episode:

The Elements of Choice: Why the Way We Decide Matters — https://amzn.to/3VvxZR8

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/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

'Determining Withdrawal Rates Using Historical Data' — https://retailinvestor.org/pdf/Bengen1.pdf

'Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable' — https://www.researchgate.net/profile/Carl-Hubbard/publication/265279441/

'Global stock markets in the twentieth century' — https://onlinelibrary.wiley.com/doi/abs/10.1111/

'Is The United States A Lucky Survivor: A Hierarchical Bayesian Approach' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3689958

'The Safe Withdrawal Rate' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4227132

'The equity premium: A puzzle' — https://www.sciencedirect.com/science/article/abs/pii/0304393285900613

'Long-Horizon Losses in Stocks, Bonds, and Bills' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3964908

'Financial System Review 2022' — https://www.bankofcanada.ca/2022/06/financial-system-review-2022/#:~:text=The%20tightening%20of%20monetary%20policy,remain%20two%20key%20interconnected%20vulnerabilities.

'The financial resilience and financial well-being of Canadians during the COVID-19 pandemic' — https://www150.statcan.gc.ca/n1/pub/75f0002m/75f0002m2021008-eng.htm

'Hopefulness is declining across Canada' — https://www150.statcan.gc.ca/n1/daily-quotidien/220517/dq220517d-eng.htm

'Global Investor Experience Study: Fees and Expenses' — https://assets.contentstack.io/v3/assets/blt4eb669caa7dc65b2/blt60e320775385837a/62431900eed9f60f2de8ad55/GIE_2022.pdf

'Financial Literacy Around the World' — https://gflec.org/wp-content/uploads/2015/11/3313-Finlit_Report_FINAL-5.11.16.pdf

'Ontario Securities Commission Investor Knowledge Study' — https://www.osc.ca/sites/default/files/2022-09/inv_research_20220907_investor-knowledge-study_EN.pdf

'Measuring the Financial Sophistication of Household' — https://www.nber.org/system/files/working_papers/w14699/w14699.pdf

'Investment Literacy, Overconfidence and Cryptocurrency Investment' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3953242

'Financial Literacy and Attitudes to Cryptocurrencies' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3482083

'Bitcoin Awareness, Ownership and Use: 2016–20'— https://www.bankofcanada.ca/wp-content/uploads/2022/04/sdp2022-10.pdf

'Optimal Financial Knowledge and Wealth Inequality' — https://repository.upenn.edu/cgi/viewcontent.cgi?article=1093&context=bepp_papers

'Financial Literacy and Retirement Planning in the United States' — https://www.nber.org/system/files/working_papers/w17108/w17108.pdf

'Financial Well-Being of the Millennial Generation' — https://gflec.org/wp-content/uploads/2019/12/Financial-Well-Being-of-the-Millennial-Generation-Paper-20191122.pdf

Eduardo Repetto: Deep Dive with Avantis Investors' CIO (EP.228) Nov 24, 2022

Show notes

In this episode, we are joined by the CIO of Avantis Investors, Eduardo Repetto, to have an in-depth conversation about his philosophy and approach to many of the central concepts that are important to our listeners. Eduardo weighs in on asset pricing factor investing, premiums, and also shares some of his perspectives on what makes Avantis different from its competitors. Eduardo's wealth of experience and technical know-how make this very practical exploration, complete with some inventive and demonstrative analogies. Despite the high-level concepts discussed, our guest's ability to communicate these in an accessible manner also helped maintain a level of approachability throughout. Toward the end of the episode, we get to hear a little about Eduardo's Ph.D. in aeronautics and some of the surprising overlaps he sees between his two fields of interest.

Key Points From This Episode:

Eduardo's approach to communicating what Avantis can offer their clients. (0:02:57)
Advantages of the ETF structure for managing portfolios. (0:05:07)
Advice for investors for quantitatively assessing the expected return advantage of a factor-tilted portfolio. (0:10:26)
Practical approaches for individual investors when assessing a factor tilt in portfolios. (0:13:54)
Eduardo unpacks the idea of trust in relation to the premium. (0:20:45)
When does a completely small-cap value portfolio make sense? (0:27:23)
Avantis' method for targeting value and profitability. (0:31:03)
The weighting of different metrics that Avantis uses when building portfolios. (0:34:43)
Eduardo unpacks cash profitability versus operating profitability. (0:36:53)
The approach at Avantis to sector weights. (0:39:56)
Understanding adjusted book value when pricing a company. (0:43:53)
Eduardo describes the premium for the Goodwill adjustment. (0:50:02)
How Avantis views pursuing credit premium in fixed income investments. (0:51:32)
Determining the size of factors tilts on particular products. (0:57:05)
Reasons that there are no emerging market small cap value strategies. (0:59:48)
Comparing the research behind inflation-focused equity strategy to a more general value profitability premium. (1:06:03)
Avantis' strategy for staying on the cutting edge of the latest research. (1:10:34)
Conversations between Avantis and American Century Investments about different investment philosophies. (1:18:22)
Eduardo shares his opinion about Avantis' competitive advantage. (1:19:56)
Where Avantis and Eduardo are aiming their energy in the near future, and the succession plan for the company. (1:23:11)
Some surprising similarities between aeronautics and asset management. (1:27:21)
Eduardo talks about his personal definition of success. (1:31:31)

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/

Eduardo Repetto — https://www.avantisinvestors.com/content/avantis/en/about-us/our-team/eduardo-repetto.html

Avantis Investors — https://www.avantisinvestors.com/

Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/?hl=en

Rational Reminder on YouTube — https://www.youtube.com/channel/ 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/

Who Should Invest in (Cap Weighted) Index Funds? (EP.227) Nov 17, 2022

Show notes

In today's episode, we pull relevant quotes from past guests (namely John Cochrane, Gene Fama, and Jonathan Berk) to extricate who should own market cap funds. We look at the variable risks of value stocks and factor investing and hear counter-views on owning the market. We also delve into the hot topic of tax loss selling, with an overview of a recent Financial Analyst Journal paper on loss harvesting outcomes, sorted by investor profiles. This episode will get you up to date on the biggest finance news of the week, from crypto collapses to Amazon's catapulting gains and losses. Tune in to hear all of this and more, including a recap of our conversation with Dave Goetsch and our Financial Literacy Month book reviews.

Key Points From This Episode:

A neat way to keep track of the value of your purchases over time. (0:00:33)
The results of the Rational Reminder financial literacy survey. (0:02:44)
An overview of this episode's topics. (0:05:45)
Who should invest in market cap-weighted index funds. (0:07:28)
How to determine whether you're different from the average investor. (0:16:13)
Gene Fama's take on the possibility of identifying state factors. (0:22:13)
The variable risks of value stocks. (0:23:25)
What drives people to increase their value tilts over time. (0:25:11)
The risks of factor investing, and trading in general. (0:28:26)
Jonathan Berk's take on owning the market. (0:31:53)
A summary of who should invest in total market index funds. (0:33:20)
The big crypto news of the week! (0:38:21)
Other significant market news. (0:42:17)
An overview of a recent Financial Analyst Journal paper on loss harvesting outcomes, sorted by investor profiles. (0:44:59)
Our book reviews for Financial Literacy Month. (0:55:15)
A recap of our conversation with Dave Goetsch. (1:01:47)
A few of our listeners' reviews. (1:02:50)

Participate in our RR CE Credits Survey:

https://forms.office.com/Pages/ResponsePage.aspx?id=xVA-B3TS3UeuUte5Yx-hRi0Vpj3fzvhNpOTm6eRMYJ5UN0tOM1A5MFdPQzJFT1hZOTJLN1pHRVFYSS4u

Participate in our Community Discussion about this Episode:

https://community.rationalreminder.ca/t/episode-227-who-should-invest-in-cap-weighted-index-funds-discussion-thread/20230

Books From Today's Episode:

The Geometry of Wealth: How to shape a life of money and meaning — https://amzn.to/3Od9J3N

Retirement Income for Life: Getting More without Saving More — https://amzn.to/3GpkHRN

We're Talking Millions!: 12 Simple Ways to Supercharge Your Retirement — https://amzn.to/3UI3uaE

Common Sense on Mutual Funds — https://amzn.to/3AjUsIM

The Investment Answer: Learn to Manage Your Money and Protect Your Financial Future — https://amzn.to/3UWeSPM

Money Like You Mean It: Personal Finance Tactics for the Real World — https://amzn.to/3g9bT7Q

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/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

'An Intertemporal Capital Asset Pricing Model' — https://www.jstor.org/stable/1913811

'Risk and Return of Value Stocks' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=112553

'The Value Premium' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=351060

'A Consumption-Based Explanation of Expected Stock Returns' — https://repository.upenn.edu/cgi/viewcontent.cgi?article=1146&context=fnce_papers

'Who Are the Value and Growth Investors?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2426823

'Is There a Replication Crisis in Finance?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3774514

'Amazon Becomes World's First Public Company to Lose $1 Trillion in Market Value' — https://www.bloomberg.com/news/articles/2022-11-09/amazon-hits-unwelcome-milestone-with-1-trillion-in-value-lost?leadSource=uverify%20wall

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