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What shapes investor beliefs and behaviours? Steve Utkus, a leading expert in investor behaviour and former Global Head of Investor and Retirement Research at Vanguard, brings decades of groundbreaking insights to this episode. Drawing on exclusive access to Vanguard’s anonymized client data and investor surveys, Steve uncovers the intricate links between what people believe and how they invest. In the first half, he reveals surprising findings from his research into investor beliefs and portfolio decisions. The second half dives into the impact of financial advisors, both human and robotic, on improving investor outcomes. Steve’s reflections, enriched by years of collaboration with academic leaders and personal conversations with Vanguard founder Jack Bogle, offer a rare window into the world of data-driven financial research. Join us today for this fascinating conversation as we unpack fresh perspectives on investor behaviour and the evolving role of financial advice!
Key Points From This Episode:
(0:00:20) The importance of understanding investor belief, Steve’s unique approach to studying it, and the benefits of using survey data.
(0:08:37) Understanding the effects of individual beliefs on portfolio equity shares.
(0:13:40) How equity sensitivity varies with things like trading frequency and how observed sensitivity compares with predictions of an asset pricing model.
(0:17:27) The variation of beliefs across different groups and the strong effect of being a pessimist, optimist, or having a middle-of-the-road perspective.
(0:21:29) Investor cash flow expectations, how it affects stock return expectations, and how it aligns with models of equilibrium.
(0:24:35) The impact of stock market disaster expectations on future stock returns and the effect of COVID-19 on investor expectations.
(0:33:37) ESG investing motives, portfolio impact, and the role of financial returns.
(0:38:35) Unpacking the impact of robo-advisors on previously DIY investors and who benefits.
(0:45:21) Pros and cons of human financial advisors: the needs they satisfy over robo-advisors.
(0:53:12) How unadvised investors' needs differ from those who get financial advice.
(0:54:04) What determines how much value investors place on financial advice and how they think about the trade-offs between fees and the value of advice.
(01:00:00) Reasons traditionally-advised people give for not switching to robo-advising.
(01:03:15) Having a relationship with a good advisor: how it impacts investor behaviour through poor market performance periods, and the importance of frequent quality communication.
(01:13:07) The key attributes of a high-retention advisor and what they should be focusing on.
(01:19:02) Success, retirement, timing, and knowing when to leave, according to Steve.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPSteve Utkus on LinkedIn — https://www.linkedin.com/in/steveutkus/
Episode 278: Juhani Linnainmaa — https://rationalreminder.ca/podcast/278
Books From Today’s Episode:
Bogle on Mutual Funds — https://www.amazon.com/Bogle-Mutual-Funds-Perspectives-Intelligent/dp/111908833XPapers From Today’s Episode:
‘Political Cycles and Stock Returns’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2920401
Scott Cederburg Paper —
‘The Diversification and Welfare Effects of Robo-advising’ — https://www.sciencedirect.com/science/article/abs/pii/S0304405X24000928‘Who Benefits from Robo-advising? Evidence from Machine Learning’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3552671
‘Human Financial Advice in the Age of Automation’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4301514
‘The Misguided Beliefs of Financial Advisors’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3101426
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What makes Warren Buffett’s investment legacy so iconic, and how has his advice shaped the world of investing? In this episode, we delve into Warren Buffet's investment philosophy and the lessons he offers everyday investors. In our conversation, we unpack the impact of his investment strategies on the financial world, debunk common misconceptions, and discuss how his strategies have changed over time. We also examine the structural barriers to replicating his success, the complexities of scale and changing market dynamics, and the parallels between his approach and modern asset pricing models. Discover Warren Buffett’s astonishing historical returns, his perspectives on diminishing returns for active managers, and the misunderstood nuances of his advice regarding index funds. Gain insight into academic research on Warren Buffett’s success, his pragmatic view on cash holdings, and his opinion on the value of dividends for investors. Tune in to learn about the world's greatest investor and how you can apply his wisdom to your own portfolio!
Key Points From This Episode:
(0:04:55) Warren Buffett’s legacy and Berkshire Hathaway's performance history.
(0:13:04) The problem of diminishing returns to scale and finding skilled active managers.
(0:18:37) Reasons Buffett repeatedly advises most investors to choose low-cost index funds.
(0:23:14) Why identifying skilled managers before they outperform the market is impossible.
(0:30:15) Research explaining Buffett's success using multi-factor asset pricing models.
(0:35:30) Insight into why Berkshire Hathaway holds large cash reserves as part of its strategy.
(0:44:02) Buffett’s views on dividends and why his focus remains on reinvestment.
(0:48:16) Why diversification concentration is a bad strategy and Buffett's investing superpower.
(0:57:07) Aftershow: Ben’s experience of being on The Wealthy Barber podcast.
(0:58:07) Reviews and feedback from the episode with Randolph Cohen and Michael Green.
(1:04:58) Changes to our year-end episode format and what listeners can expect.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPDan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/
CPP by the Fire — https://pages.pwlcapital.com/webinar_cpp_by_the_fire
Braden Warwick on LinkedIn — https://linkedin.com/in/braden-warwick-a40b48a3/
PWL Capital CPP Tool — https://research-tools.pwlcapital.com/research/cpp
Berkshire Hathaway — https://berkshirehathaway.com/
Berkshire Hathaway Shareholder Letters — https://berkshirehathaway.com/letters/letters.html
Richard Ennis — https://richardmennis.com/author/richard-m-ennis
Home Trust — https://hometrust.ca/
Ben on The Wealthy Barber Podcast — https://thewealthybarber.com/podcast/ben-felix-a-deep-dive-into-the-world-of-investing-twb-podcast-5/
Episode 61: Ted Seides — https://rationalreminder.ca/podcast/61
Episode 220: Jonathan Berk and Jules van Binsbergen — https://rationalreminder.ca/podcast/220
Episode 332 - Randolph Cohen & Michael Green — https://rationalreminder.ca/podcast/332
Books From Today’s Episode:
The Intelligent Investor — https://amazon.com/dp/B0CBQ18KDB/
Papers From Today’s Episode:
'Buffett’s Alpha' — https://doi.org/10.2469/faj.v74.n4.3
'Mutual Fund Flows and Performance in Rational Markets'— https://journals.uchicago.edu/doi/abs/10.1086/424739
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Fehlende Folgen?
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How do you balance family values, evidence-based investing, and building long-term wealth? In this episode, we are joined by Magnus Reitan, CEO of Reitan Kapital, to discuss his evidence-based approach to wealth management. Reitan Kapital is a leading investment firm specializing in index fund strategies and innovative portfolio optimization techniques. Under his leadership, the firm has become a key player in the investment industry, known for its analytical approach and commitment to sustainable and effective financial solutions. In our conversation, we delve into the disciplined, evidence-based philosophy driving Reitan Kapital’s investment strategy, the importance of simplicity in managing wealth, and the lessons he’s learned as an investor and a leader. We also explore the nuances around managing family wealth, unpack the importance of aligning investment strategies with family and business goals, and uncover the influence of Norway’s Sovereign Wealth Fund on Reitan Kapital’s approach. Join us as we explore the intersection of finance, legacy, and innovation and learn why a low-cost, evidence-based investment strategy works with Magnus Reitan. Tune in now!
Key Points From This Episode:
(0:03:27) The Reitan family’s journey from a single grocery store to a multinational group.
(0:04:20) How Reitan Kapital fits into the broader Reitan Group and how it started.
(0:06:35) Discover how Reitan Kapital defines risk and the role of access liquidity.
(0:08:06) Magnus shares how he developed his personal investment philosophy.
(0:09:33) Hear how his personal interest in finance led to founding Reitan Kapital.
(0:11:24) Explore the differences between managing a business and a family portfolio.
(0:12:26) Why the company chose to hire a CIO who was not part of the Reitan family.
(0:13:59) Reitan Kapital’s values: long-term perspective, diversification, liquidity, and low costs.
(0:17:37) Hear how the family decided on and agreed to the company's investment approach.
(0:18:58) Asset allocation at Reitan Kapital and the reasons behind its approach.
(0:21:50) Avoiding portfolio complexity and the benefits of evidence-based investing.
(0:24:30) The influence of Norway’s Sovereign Wealth Fund on Reitan Kapital’s philosophy.
(0:26:07) Sources of information for learning about portfolio management and financial markets.
(0:27:00) Lessons and key takeaways from the recent Reitan Kapital investor conference.
(0:29:38) He shares his definition of success and why passion is important.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Magnus Reitan on LinkedIn — https://linkedin.com/in/magnus-reitan-3a6b90225/
Reitan Kapital — https://reitan.no/no/selskap/170/reitan-kapital
Reitan Retail — https://reitanretail.no/en
Reitan Eiendom — https://reitan.no/no/selskap/171/reitan-eiendom
Episode 321: Evidence in Practice with Håkon Kavli — https://rationalreminder.ca/podcast/321
Håkon Kavli on LinkedIn — https://linkedin.com/in/haakonkavli/
Sindre Drevland on LinkedIn — https://linkedin.com/in/sindredrevland/
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What does Trump’s re-election mean for the markets? In this episode, Ben and Mark explore The Presidential Puzzle, a phenomenon revealing that equity risk premiums have historically been higher under Democratic presidencies than Republican ones. With Trump returning to office as the 47th U.S. president, they examine how voter risk aversion shapes political outcomes and market expectations, offering surprising insights into this intriguing connection between politics and investing. They also delve into market timing pitfalls, the importance of diversification, and how financial advisors can help investors navigate emotionally charged decisions. To wrap up, Ben and Mark reflect on listener perspectives and explore the intriguing future of Bitcoin in finance. Tune in to learn what Trump’s win means for expected stock returns and more!
Key Points From This Episode:(0:00:18) Mark and Ben’s experiences at the Physician Financial Independence Conference.
(0:06:53) Republicans vs. Democrats: What the election results mean for the stock market.
(0:09:09) The Presidential Puzzle and how belief informs asset choices among voters.
(0:15:12) How risk aversion and the economy impact election outcomes and expected returns.
(0:20:08) What investors should and should not do with this information.
(0:24:38) The dangers of making financial decisions based on emotional predictions.
(0:30:02) Unpacking the relationship between global risk aversion and U.S. presidencies.
(0:31:20) Our aftershow segment: digging into recent reviews, the podcast topic puzzle, Ben’s recent trip to Boston, and Bitcoin.
Links From Today’s Episode:
Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPEpisode 217: The Expected Returns of Financial Literacy — https://rationalreminder.ca/podcast/217
Episode 313: When Should You Hire a Financial Advisor? — https://rationalreminder.ca/podcast/313
Episode 124: Ľuboš Pástor — https://rationalreminder.ca/podcast/124
Papers From Today’s Episode:‘Belief Disagreement and Portfolio Choice’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3934061
‘Political Cycles and Stock Returns’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2920401
‘The Presidential Puzzle: Political Cycles and the Stock Market’ — https://www.jstor.org/stable/3648176
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Are index funds a silent disruptor? Or are the concerns overblown? In this grab-your-popcorn episode, Michael Green returns to the show after his previous appearance elicited a wave of compelling feedback from listeners. These included very smart individuals in academia and practice who were interested in hearing a counter perspective. Joining Michael today for a lively debate is Randolph Cohen, Senior Lecturer of Entrepreneurial Management in the Finance Unit at Harvard Business School. In our conversation, Michael shares his deep concerns about how index funds and target-date funds might be distorting financial markets, honing in on the tension between market efficiency and price elasticity. Randolph counters with an academically grounded perspective, drawing on his PhD and years of research and teaching at one of the world’s leading business schools. With Ben and Cameron moderating, the discussion explores both sides without reaching a definitive conclusion. Tune in to witness this spirited, nuanced exchange and decide where you stand!
Key Points From This Episode:
(0:00:14) Introducing Michael Green, Randolph Cohen, and today’s topics of debate.
(0:06:00) Defining passive investing, distinguishing between the two different meanings of “the rise of passive investing”, and how much of the market is currently held by passive investors.
(0:12:53) Michael’s concerns with the high levels of passive investing and Randy’s response.
(0:20:55) Addressing the proliferation of target-date funds and their use in different scenarios.
(0:28:48) Debating risk in the market, raised valuations, and retirement savings diversification.
(0:42:22) A breakdown of the biggest thing Michael and Randy disagree on: how passive investing is impacting stock market valuations.
(0:57:06) Answering the question: does inelasticity rise with passive, and how does it shape the impact of active managers?
(01:06:14) Unpacking whether the rise of passive has made the markets more efficient; an accompanying refresher on the two types of passive.
(01:09:27) Reasons to doubt whether there really is a rise in both types of passive and the effect of the rise in mega firms.
(01:19:16) The state of fundamental analysis in the current market and Michael’s response to a recent paper by Goldman Sachs attempting to isolate the component of passive.
(01:23:30) Unpacking the cross-sectional impact on stock valuations from index investing and insights on the work of Valentine Haddad.
(01:31:28) The implications of today’s subject matter for investors and what they should be doing with this information.
(01:44:22) Reflection on why more experts don’t share Michael’s level of concern.
(01:47:42) Randy’s takeaways from today’s conversation, why he still does not share Michael’s level of concern, and what he might be worried about.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Michael Green on Substack — https://substack.com/@michaelwgreen
Michael Green on LinkedIn — https://www.linkedin.com/in/michael-green-9a15142/
Michael Green on X — https://twitter.com/profplum99
‘Yes, I give a fig… Thoughts on markets from Michael Green’ — https://www.yesigiveafig.com/ Randolph Cohen — https://www.hbs.edu/faculty/Pages/profile.aspx?facId=6597Randolph Cohen on LinkedIn — https://www.linkedin.com/in/randy-cohen/
Dangerous Visions Podcast — https://podcasts.apple.com/us/podcast/dangerous-vision-with-randy-cohen/id1477519445
Episode 302: Michael Green — https://rationalreminder.ca/podcast/302
Episode 322: Marco Sammon — https://rationalreminder.ca/podcast/322
Episode 310: Antoinette Schoar — https://rationalreminder.ca/podcast/310
Episode 212: Ralph Koijen — https://rationalreminder.ca/podcast/212
Episode 314: Valentine Haddad — https://rationalreminder.ca/podcast/314
Episode 224: Scott Cederburg — https://rationalreminder.ca/podcast/224
Episode 284: Scott Cederburg — https://rationalreminder.ca/podcast/284
The Grossman - Stiglitz Paradox (feat. The Plain Bagel) — https://www.youtube.com/watch?v=zoXMZxe8crIBooks From Today’s Episode:
Irrational Exuberance — https://www.amazon.com/Irrational-Exuberance-3rd-Robert-Shiller/dp/0691166269
Papers From Today’s Episode:
‘The Disappearing Index Effect’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4294297
‘Passive Investing and the Rise of Mega-Firms’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4851266
‘Retail Financial Innovation and Stock Market Dynamics: The Case of Target Date Funds’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3723265
Valentine Haddad on Google Scholar — https://scholar.google.com/citations?user=PlPjP48AAAAJ
‘How Competitive is the Stock Market? Theory, Evidence from Portfolios, and Implications for the Rise of Passive Investing’ — https://papers.ssrn.com/sol3/Papers.cfm?abstract_id=3821263
‘Household Portfolios and Retirement Saving Over the Life Cycle’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4068063
‘The equity premium: A puzzle’ — https://www.sciencedirect.com/science/article/abs/pii/0304393285900613
‘In Search of the Origins of Financial Fluctuations: The Inelastic Markets Hypothesis’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3686935 -
In today's episode, Cameron sits down with Mark McGrath to talk about his trip to Trondheim, Norway, the event he attended there, and his presentation in which he shared top lessons from prestigious Rational Reminder Podcast guests. Tuning in, you'll hear Cameron's top takeaways from conversations with Nobel laureate Eugene Fama and his collaborator Kenneth French, as well as Robert Merton, Antti Ilmanen, Professor Ludovic Phalippou, and more. We also delve into the changing industry trends regarding index investing and the many benefits that come with embracing it, including how it helps financial advisors better serve their clients. Stay tuned for our after-show section, where we discuss advice for new advisors, from developing a robust investment philosophy to building a network, along with insights to help consumers navigate the industry and much more. To learn all about Cameron’s trip to Norway, top guest takeaways, and industry trends around index investing, be sure to tune in!
Key Points From This Episode:
(0:01:13) An overview of today’s episode and a discussion on industry trends.
(0:03:56) Our conversation with Håkon Kavli on managing Reitan Kapital.
(0:04:38) What it was like for Cameron to meet Håkon Kavli and Magnus Reitan in Norway.
(0:05:42) The excellent event in Trondheim, Norway, and their impressive lineup of speakers.
(0:08:56) Unpacking industry trends in index investing and why more people are embracing it.
(0:09:42) The light bulb moment for Mark and Cameron regarding index investing.
(0:19:07) Highlights from our interviews with Eugene Fama, Ken French, and Robert Merton.
(0:25:28) Dr. Annamaria Lusardi's insights and takeaways from our John Cochrane interview.
(0:29:05) Top lessons from our conversation with Antti Ilmanen on low-expected returns.
(0:30:58) Insights from talking with Professor Ludovic Phalippou about private equity.
(0:32:22) Closing thoughts on Cameron’s presentation in Norway and index investing trends.
(0:39:44) Our aftershow segment: advice for new advisors, ways the industry has changed, tips for consumers, technology insights, personal updates, and more.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPEpisode 321: Evidence in Practice with Håkon Kavli – https://rationalreminder.ca/podcast/321
Professor Marcos López de Prado — https://www.orie.cornell.edu/faculty-directory/marcos-lopez-de-prado
Erik Hilde — https://www.linkedin.com/in/erik-hilde-9570a785/?originalSubdomain=no
Dan Bortolotti — https://www.canadianmoneysaver.ca/authors/dan-bortolotti
Canadian Couch Potato Blog — https://canadiancouchpotato.com/
Canadian Couch Potato Podcast — https://canadiancouchpotato.com/podcast/
Justin Bender — https://www.linkedin.com/in/justin-bender-cfa-cfp%C2%AE-tep-195b8b27/?originalSubdomain=ca
Episode 200: Prof. Eugene Fama — https://rationalreminder.ca/podcast/200
Tune Out the Noise — https://www.dimensional.com/film
Episode 100: Prof. Kenneth French — https://rationalreminder.ca/podcast/100
Episode 234: Prof. Robert C. Merton — https://rationalreminder.ca/podcast/234Episode 232: Dr. Annamaria Lusardi — https://rationalreminder.ca/podcast/232
Episode 169: Prof. John Cochrane — https://rationalreminder.ca/podcast/169Episode 202: Antti Ilmanen – https://rationalreminder.ca/podcast/202
Episode 210: Prof. Ludovic Phalippou — https://rationalreminder.ca/podcast/210
Fama and French Three Factor Model — https://www.investopedia.com/terms/f/famaandfrenchthreefactormodel.asp
Books From Today’s Episode:
Investing Amid Low Expected Returns — http://www.aqr.com/serenity
The Empowered Investor — https://www.amazon.ca/Empowered-Investor-Canadian-Investment-Experience/dp/0991978307
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What happens when index investing dominates the market? In this episode, we’re joined by Davidson Heath, Assistant Professor of Finance at the University of Utah David Eccles School of Business, to explore this question and its surprising answers. Davidson’s research dives into the unintended impacts of passive investing, examining how it influences price stability, corporate governance, and even the way we define shareholder responsibility. He unpacks how index funds, while supporting price efficiency, may be weakening governance structures by reducing shareholder oversight, a shift that could have lasting effects on corporate accountability. We also discuss the promise and limitations of socially responsible investing (SRI), as Davidson introduces the term “impact washing” to describe how some SRI funds fail to achieve real change despite their green branding. In a forward-looking segment, Davidson shares insights on the collaboration between AI and human intelligence in finance, giving a reassuring perspective on the future of machine and human co-existence in complex decision-making. This episode is a must-listen for anyone curious about the hidden dynamics of passive investing and the evolving role of technology in finance!
Key Points From This Episode:
(0:02:22) Davidson’s paper On Index Investing; Why active managers are important to indexing.
(0:08:42) Conclusions on how index investing is affecting price efficiency.
(0:11:10) The role of shareholders in corporate governance.
(0:13:06) How the incentives of index funds to monitor portfolio firms differ from active funds.
(0:15:10) Measuring how well index or active funds are monitoring the companies they own.
(0:16:54) How the expense ratios of index funds affect their quality of monitoring.
(0:18:08) What shareholders can do to monitor and make themselves heard.
(0:20:31) How index fund ownership affects other firm-level governance issues.(0:21:30) Recap and takeaways on index funds and the market.
(0:25:39) The impact of socially responsible investing (SRI) and how successful they are at selecting firms with better environmental, social, and governance (ESG) characteristics.
(0:28:08) Unpacking “impact washing” in SRI funds and its consequences.
(0:33:04) Insights on how ETFs are replicating index funds.
(0:37:03) The implications of Davidson’s findings for index ETF investors and the markets.
(0:38:57) Details on Davidson’s Cyborg Trading project and how it’s using AI to complement human intelligence.
(0:42:42) How Davidson defines success: being a part of a worthwhile endeavour.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPDavidson Heath — https://davidsontheath.github.io/
Davidson Heath on LinkedIn — https://www.linkedin.com/in/davidson-heath-5a28999a/
Davidson Heath on Google Scholar — https://scholar.google.com/citations?user=Fr-HyLEAAAAJ&hl=enCyborg — https://www.imdb.com/title/tt0097138/
Papers From Today’s Episode:
‘On Index Investing’ — https://dx.doi.org/10.2139/ssrn.3055324
‘Do Index Funds Monitor?’ — https://doi.org/10.1093/rfs/hhab023
‘Does Socially Responsible Investing Change Firm Behavior?’ — https://doi.org/10.1093/rof/rfad002‘The Rise of Passive Investing and Active Mutual Fund Skill’ — https://dx.doi.org/10.2139/ssrn.4190266
‘Counterproductive Sustainable Investing: The Impact Elasticity of Brown and Green Firms’ — https://dx.doi.org/10.2139/ssrn.4359282
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Unlocking the power of education savings is often a complex task, but with the right strategies, a Registered Education Savings Plan (RESP) can be a game-changer for Canadian families planning their children's future. In this episode, Ben Felix, Dan Bortolotti, and Mark McGrath take a deep dive into the mechanics of the RESP, covering everything from optimal contributions and grant maximization to tax-efficient withdrawals and asset allocation. They discuss critical factors like the Canada Learning Bond (CLB) for low-income families and the intricacies of group RESPs, noting how pooled plans, though easy to join, can financially penalize those who don’t stay the course. With the RESP’s unique 35-year lifespan and its flexible range of education options, this in-depth conversation brings clarity to a valuable tool often overshadowed by its complexity. Tune in to discover practical strategies that could transform how you fund education, optimize your investments, and make the most of Canada’s RESP benefits.
Key Points From This Episode:
(0:02:43) Purpose and structure of the RESP as a tool to fund post-secondary education.
(0:06:25) Insight and tips for how contribution limits and government matching grants work.
(0:07:13) How the CLB supports low-income families with up to $2,000 without contributions.
(0:10:13) Family RESPs, which allow multiple beneficiaries to share contributions and earnings.
(0:11:54) Distinguishing between Education Assistance Payments (EAP), Post-Secondary Education Payments (PSE), and their tax implications for beneficiaries.
(0:14:27) Front-loading versus annual contributions: optimal contribution strategies to maximize grants and investment growth.
(0:23:22) Tips for tax-efficient RESP withdrawals, especially if beneficiaries have other income.
(0:35:28) Education outside of Canada, over-contribution penalties, and other considerations.
(0:37:28) RESPs and estate planning, including naming a successor subscriber in your will.
(0:42:54) Asset allocation advice: prioritize growth early and stabilize as educational costs near.
(0:48:00) Constructive criticism of RESP policies to increase access for low-income families.
(1:02:02) Summing up the benefits and challenges of RESPs and encouraging families to use them wisely as part of their education savings plan.
(1:07:39) The aftershow: reviews, praise for Dan, and a community debate on expected returns.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPDan Bortolotti — https://benderbenderbortolotti.com/about/our-team/
Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/
Registered Education Savings Plan (RESP) — https://www.canada.ca/en/services/benefits/education/education-savings/plan.html
Canada Learning Bond — https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-education-savings-plans-resps/canada-education-savings-programs-cesp/canada-learning-bond.html
Aaron Hector: ‘Optimal RESP funding strategies if you have $50,000 to invest’ — https://x.com/AaronHectorCFP/status/1787188396248731967
Aaron Hector: ‘How to draw down a $200k RESP over a 4 year university program’ — https://x.com/AaronHectorCFP/status/1788196751821738360
Employment and Social Development Canada (ESDC) — https://www.canada.ca/en/employment-social-development.html
'How to Invest Your RESP’ — https://benderbenderbortolotti.com/how-to-invest-your-resp/
‘The Regulation of Group Plan RESPs and the Experiences of Low-Income Subscribers’ — https://seedwinnipeg.ca/wp-content/uploads/2024/09/The_Regulation_of_Group_Plan_RESPs_and_the_Experiences_of_Low-income_Subscribers.pdf
Episode 326: Dr. Sunil Wahal: Exploring the Nuances of Financial Science — https://rationalreminder.ca/podcast/326
Papers From Today’s Episode:
‘The Anatomy of Value and Growth Stock Returns’ — https://dx.doi.org/10.2139/ssrn.806664
‘Migration’ — https://dx.doi.org/10.2139/ssrn.926556
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Have you ever wondered how the world's top financial thinkers shaped the way we invest today? In this episode, Ben and Cameron sit down with Professor Stephen Foerster from the Ivey Business School to explore the evolution of modern investing. As a distinguished financial expert and co-author of In Pursuit of the Perfect Portfolio, Professor Foerster dives into the groundbreaking work of financial pioneers like Harry Markowitz, Bill Sharpe, Gene Fama, and others, unpacking their remarkable contributions to portfolio management, risk assessment, and market efficiency as we know it today. Tuning in, you'll gain a deeper understanding of Markowitz's revolutionary diversification theory, Sharpe's introduction of beta as a risk measure, and Fama’s Efficient Market Hypothesis, as well as each of their perspectives on the “perfect portfolio,” tying together the history, theory, and practical application of modern investment strategies. Whether you're looking to sharpen your strategy or build your investment knowledge from the ground up, this conversation with Professor Foerster is packed with actionable takeaways and fascinating stories that could change the way you approach your financial future. Don’t miss this opportunity to learn from the thought leaders who shaped the market!
Key Points From This Episode:
(0:03:29) Contrasting the historical art of investing with the modern science of investing.
(0:04:44) Markowitz’s diversification theory and the importance of balancing risk and return.
(0:09:39) Sharpe’s capital asset pricing model (CAPM) and his contribution to measuring risk.
(0:16:13) Insight into Fama’s Efficient Markets Hypothesis and the joint hypothesis problem.
(0:19:13) The rise of factor investing and the significance of Fama-French’s three-factor model.
(0:23:26) Unpacking Shiller and Fama's main point of disagreement on bubbles.
(0:26:50) Bogle’s perfect portfolio and persistence about the index fund, despite resistance.
(0:29:37) How the Black-Scholes-Merton (BSM) option pricing formula changed the world.
(0:34:37) Ways that Merton contributed to portfolio theory and his take on TIPS.
(0:36:20) Key takeaways from talks with Martin Leibowitz, Charlie Ellis, and Jeremy Siegel.
(0:37:35) An interesting analogy for Professor Foerster’s take on the “perfect portfolio.”
(0:40:53) Correlation vs. causation in stock pricing and how it applies to factor investing.
(0:46:38) Examples of masterly inactivity and investor lessons from Madoff's Ponzi scheme.
(0:52:07) The dangers of FOMO, a SPACs cautionary tale, and lessons from value investors.
(1:00:43) Winning at tennis vs. investing and risks of over-reliance on automated decisions.
(1:06:02) Long-term lessons from pioneers in finance to improve investment strategies today.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — https://www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Professor Stephen Foerster — https://stephenrfoerster.com/
Ivey Business School — https://www.ivey.uwo.ca/
Stephen Foerster on LinkedIn – https://www.linkedin.com/in/stephen-foerster-26b85319/
Stephen Foerster on X – https://x.com/profsfoerster
Stephen Foerster Books — https://www.amazon.com/stores/author/B001KDO1L0
‘Cristiano Ronaldo snubbed Coca-Cola. The company’s market value fell $4 billion.’ — https://www.washingtonpost.com/sports/2021/06/16/cristiano-ronaldo-coca-cola/
Books From Today’s Episode:
In Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest — https://www.amazon.com/dp/0691229880
Trailblazers, Heroes, and Crooks: Stories to Make You a Smarter Investor — https://www.amazon.com/dp/B0DHLVYK1Q
In Pursuit of the Unknown: 17 Equations That Changed the World — https://www.amazon.com/dp/0465085989
A History of Interest Rates — https://www.amazon.com/dp/0471732834
Winning the Loser's Game: Timeless Strategies for Successful Investing — https://www.amazon.com/dp/0071813659
Stocks for the Long Run — https://www.amazon.com/dp/1264269803/
Extraordinary Tennis For The Ordinary Player — https://www.amazon.com/dp/0517511991
Papers From Today’s Episode:
‘Efficient Capital Markets: A Review of Theory and Empirical Work’ — https://doi.org/10.2307/2325486
‘The Loser’s Game’ — https://doi.org/10.2469/faj.v31.n4.19
'The Pricing of Options and Corporate Liabilities’ — https://doi.org/10.1142/9789814759588_0001
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What does it take to manage a $60 billion wealth management firm while keeping investment strategies grounded in scientific thinking? In this episode, we’re joined by Don Calcagni, Chief Investment Officer at Mercer Advisors. Don chairs the firm’s investment committee and provides guidance on mergers and acquisitions, investment integration, and long-term strategic planning. His expertise spans fiduciary oversight, portfolio management, private equity, and financial mathematics. In our conversation, we discuss how his firm constructs client portfolios, engages with academic and industry experts, and leverages a factor-based investment approach. He also explains the importance of having an investment philosophy rooted in fiduciary principles and delves into how Mercer Advisors manages fiduciary oversight for billions of dollars in assets across thousands of families. Explore the details of portfolio governance and the role of the firms’s alternative investment platform space. Gain insights on value metrics, factor investing, and how Mercer works to provide a family-office experience for everyday clients. Tune in for a deep dive into portfolio construction and the evolving landscape of wealth management with Don Calcagni!
Key Points From This Episode:
(0:05:22) Learn about Mercer Advisors and the range of services it has on offer.
(0:07:10) Unpack Mercer Advisors’ approach and philosophy to portfolio construction.
(0:11:55) The Building Better Portfolio Summit and the purpose of the event.
(0:17:08) How the meetings are structured and the main takeaways from the last event.
(0:24:45) What topics cause extreme points of agreement and disagreement at the meetings.
(0:29:21) Find out how takeaways from the events are implemented into client portfolios.
(0:31:19) Mercer Advisors’ recently launched alternative investment platform space.
(0:40:23) Don shares valuable recommendations and advice for the average investor.
(0:42:23) Aftershow: the controversy surrounding the RBC options trading incident.
(0:49:57) Listener feedback, reviews, updates, and upcoming events.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPDan Bortolotti on LinkedIn — https://linkedin.com/in/dan-bortolotti-8a482310/
Canadian Couch Potato — https://canadiancouchpotato.com/blog/
Don Calcagni on LinkedIn — https://linkedin.com/in/donald-calcagni-8104b546/
Mercer Advisors — https://merceradvisors.com/
‘Building Better Portfolios | 2023 Summit’ — https://youtu.be/TWYukQogQPA
Dimensional Fund Advisors — https://dimensional.com/
BlackRock — https://blackrock.com/
Avantis — https://www.avantisinvestors.com/
AQR — https://aqr.com
Carlyle — https://carlyle.com/
Royal Bank of Canada (RBC) — https://www.rbcroyalbank.com
Future Proof Festival — https://futureproofhq.com/festival/
Episode 316: Andrew Chen — https://rationalreminder.ca/podcast/316
Episode 323: Renting Versus Buying a Home in Canada 2005-2024 — https://rationalreminder.ca/podcast/323
Episode 325: Addressing 200+ Comments on Renting vs. Owning a Home — https://rationalreminder.ca/podcast/325
Papers From Today’s Episode:
‘Portfolio Selection’ — https://doi.org/10.1111/j.1540-6261.1952.tb01525.x
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What are the critical factors driving investment success? How can investors balance profitability and risk? In this episode, we sit down with Dr. Sunil Wahal, the Jack D. Furst Professor of Finance and Director of the Center for Responsible Investing at the W.P Carey School of Business at Arizona State University, to delve into the intricacies of financial science. With over 25 years of academic and practical experience, Dr. Wahal shares his unique perspective on factor investing, profitability premiums, and how to approach value investing in today’s complex financial environment. He talks about the joint distribution of value and profitability, explains how profitability premiums work, and discusses the challenges faced when integrating academic research into practical investing strategies. Dr. Wahal also touches on common misconceptions in financial theory, the long-term benefits of maintaining a diversified investor base, and why understanding the nuances of financial risk is key to avoiding costly mistakes. Gain insights into building a successful investment portfolio grounded in the principles of financial science and how to avoid common pitfalls in factor investing. Join us to hear actionable strategies for balancing risk, understanding factors, and applying academic research to real-world scenarios with Dr. Sunil Wahal!
Key Points From This Episode:
(0:04:15) Dr. Wahal’s work on profitability, data sourcing challenges, and its significance.
(0:08:01) The impact of controlling the value of the profitability premium.
(0:10:08) Correlations between value and profitability and the benefits of “tilted” portfolios.
(0:14:48) Steps for unleveraged long-term investors to build profitable portfolios.
(0:17:27) How the joint distribution of value and profitability differs from a profitability screen.
(0:20:43) Approaches of large financial firms to implementing value and profitability in portfolios.
(0:24:41) Time horizons for tiled portfolios and their expected returns after cost.
(0:30:53) Insight into how institutions decide on which investment managers to hire and fire.
(0:38:00) Exploring how the hiring and firing of managers affects institutional performance.
(0:40:16) Ways the relationships with institutions influence hiring decisions and performance.
(0:44:35) Uncover how institutions select which private market firms to invest in.
(0:48:58) Key takeaway lessons from Dr. Wahal’s research for institutional investors.
(0:50:52) Why frequently hiring and terminating managers may not be the best approach.
(0:52:32) Advice for retail investors and the importance of cost in managing portfolios.
(0:59:22) Reasons that institutions avoid indexing and the competitiveness of mutual funds.
(1:02:29) How diversification among mutual fund investors affects performance.
(1:09:19) Performance overview of actively managed global equity mutual funds.
(1:12:35) The role of practitioner interaction and his concept of success.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Sunil Wahal on LinkedIn — https://www.linkedin.com/in/sunil-wahal/
W. P. Carey School of Business — https://wpcarey.asu.edu/
Avantis Investors — https://www.avantisinvestors.com/
Dimensional Fund Advisors — https://www.dimensional.com/
UpWork — https://www.upwork.com
NVIDIA — https://www.nvidia.com
Episode 316: Andrew Chen — https://rationalreminder.ca/podcast/316
Books From Today’s Episode:
The Interpretation of Financial Statements — https://www.amazon.com/dp/0887309135
Papers From Today’s Episode:
‘Long-Term Shareholder Returns: Evidence from 64,000 Global Stocks’ — https://doi.org/10.1080/0015198X.2023.2188870
‘Long-Run Stock Market Returns: Probabilities of Big Gains and Post-Event Returns’ — https://dx.doi.org/10.2139/ssrn.3873010
‘Prudential Uncertainty Causes Time-Varying Risk Premiums’ — https://dx.doi.org/10.2139/ssrn.2176896
‘A Five-Factor Asset Pricing Model’ — https://dx.doi.org/10.2139/ssrn.2287202
‘Do Institutional Investors Exacerbate Managerial Myopia?’ — https://doi.org/10.1016/S0929-1199(00)00005-5
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There are many different considerations behind housing when you are in the position to choose between renting or buying. During this episode, hosted by Ben Felix and Dan Bortolotti, we address user questions and comments on homeownership, rentals, and the factors that may lead to choosing one over the other. We discuss what makes homeownership more attractive as your financial situation evolves, consider whether or not landlords are making money on their properties in 2024, and explore the explanations behind whether or not renters are less wealthy than owners. This conversation also touches on one of the most common misconceptions about housing, why it is untrue, and how to make this key decision of renting or buying based on both lifestyle and financial considerations and the difference in mindset between renters and buyers. Join us today to hear all this and more.
Key Points From This Episode:
(0:02:06) Homeownership versus renting with renovations and rental evictions in mind.
(0:08:40) Understanding the risks and rewards associated with securitive tenure.
(0:10:09) Factors that may influence changing needs that may influence whether you rent or buy.
(0:15:58) Three factors that one user would include in an argument of renting versus buying.
(0:18:25) Addressing the idea that it is equally expensive for a family or landlord to own a home.
(0:21:00) How the cost of homeownership evolves with time and other factors.
(0:24:50) Why owning a home is not above and beyond better than renting or owning with a mortgage.
(0:27:50) Understanding factors beyond financial considerations when it comes to renting versus owning.
(0:34:10) The difference in mindset between homeowners and renters and the benefits of both.
(0:38:10) Why it is so beneficial to be open-minded and add to conversations rather than rejecting other people’s ideas.
(0:40:25) Ben tells the story from the start of his career and Dan shares his experience of feedback on the Canadian Couch Potato blog.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://pwlcapital.com/our-team/?team-search=benjamin+felixBenjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/
Canadian Couch Potato — https://canadiancouchpotato.com/blog/
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Have you ever wondered how financial markets performed centuries ago or how world events impacted stock prices? Today, we sit down with Dr. Bryan Taylor, President and Chief Economist at Global Financial Data, to unpack the world’s fascinating financial history. Dr. Taylor is known for his extensive work in collecting and analyzing historical financial data that spans several centuries and his valuable knowledge of stock, bond, and commodity market trends, which led to the creation of Global Financial Data. In our conversation, Dr. Taylor shares insights from his extensive research, covering stock and bond returns from as far back as the 1600s. From the impact of the French Revolution on financial markets to the performance of commodities, Dr. Taylor provides a rare view of the long-term trends shaping today’s financial decisions. Learn about the value of historical financial data, its importance for investment decision-making, and how long-term trends can provide insights into future market behaviour. We discuss the creation of Global Financial Data's extensive historical financial database, the challenges of gathering centuries-old data, and the long-term performance of stocks versus bonds. Explore the impact of major geopolitical events on financial markets, the importance of studying historical market trends for modern investment decisions, and how his data-driven research has been utilized. Join us as we delve into the world’s financial history and its relevance to today’s investment landscape with Dr. Bryan Taylor. Tune in now!
Key Points From This Episode:
(0:03:41) Background about Global Financial Data, their data sources, and the challenges of collecting historical data.
(0:09:27) What he finds fascinating about historical data, who uses the database, and the role of historical data in financial decision-making.
(0:14:49) How stocks have performed relative to bonds throughout the financial records.
(0:17:34) Uncover the main historical factors that limit returns and increase risk for investors and the five financial eras.
(0:23:18) Explore the trends in stocks and bonds during the five financial eras and the impact of government debt and inflation on returns.
(0:29:04) Common characteristics of countries that have had bad long-term market outcomes and the effect of world events on markets.
(0:35:11) Learn about the best and worst-performing markets and what makes the US market so resilient.
(0:38:36) His outlook for stocks and bonds and how the recent bear market compared to past market upheavals.
(0:41:36) Compare past and current interest rates and the return on commodities versus stocks and bonds.
(0:46:20) Overcoming the lack of historical data for emerging market returns and what defines an emerging market.
(0:52:29) Find out how emerging markets have performed throughout history and how often they make the transition to developed.
(0:59:04) Unpack the historical market concentration in the US and his thoughts on the expected returns of the US stock market.
(1:03:42) Final takeaways and Dr. Bryan Taylor shares his definition of success.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPDr. Bryan Taylor — https://www.linkedin.com/in/bryan-taylor-46a92032/
Global Financial Data — https://globalfinancialdata.com/
Dr. Bryan Taylor on SSRN — https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=4320002
Papers From Today’s Episode:
‘France and the Four Horsemen of the Market’ — https://globalfinancialdata.com/france-and-the-four-horsemen-of-the-market
‘The Financial History of Emerging Markets: New Indices’ — https://dx.doi.org/10.2139/ssrn.4193062
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Is renting just “throwing money away,” or could it be the smarter financial choice? In this episode, we dive deep into one of the most debated topics in personal finance: renting versus owning a home. In our conversation, we discuss the nuances of renting versus owning, the hidden costs of buying a home, and the importance of saving discipline. Tuning in, you’ll discover how emotional biases may inflate real estate prices and how societal pressures influence housing decisions. Then, we shift our focus to a listener's question about interest rates and bonds. Dan explains how bond prices and yields work inversely and delves into the concept of bond duration. He also breaks down how long and short-term bonds react to interest rate changes and why the Bank of Canada’s influence on bond markets may not always be straightforward. Join us as we investigate the pros and cons of renting versus buying and how to leverage bonds effectively in a dynamic interest rate environment!
Key Points From This Episode:
(0:03:54) Exploring the common belief that owning a home is universally better.
(0:09:13) How buying and renting in Canada compares to other countries.
(0:10:58) Some of the inherent risks of renting versus buying in Canada.
(0:17:01) Methods to test how housing performed as an asset with examples.
(0:21:04) The importance of analyzing real data, and Ben presents his findings.
(0:31:03) How housing costs influence the financial outcome of renting versus owning.
(0:35:51) Ways that mortgages, housing costs, and forced savings affect wealth accumulation.
(0:47:34) Unpacking how maintenance costs serve as a proportion of the building value.
(0:52:45) Renting versus buying takeaways and the associated psychological factors.
(1:00:37) Dan’s take on whether long-term bonds can take advantage of falling interest rates.
(1:10:55) Insight into how various market-driven factors influence the long-term return on bonds.
(1:13:30) Aftershow: final takeaways, catch-up, news, and more.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPDan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310
Canadian Couch Potato — https://canadiancouchpotato.com/
Future Proof Conference — https://futureproofhq.com/
CMHC (Canada Mortgage and Housing Corporation) Rental Market Survey Data — https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-data/data-tables/rental-market/rental-market-report-data-tables
Episode 196: Sebastien Betermier — https://rationalreminder.ca/podcast/196
Episode 308: Dan Bortolotti — https://rationalreminder.ca/podcast/308
Statistics Canada — https://www.statcan.gc.ca/
Bank of Canada — https://www.bankofcanada.ca/
National Council of Real Estate Investment Fiduciaries (NCREIF) — https://www.ncreif.org/
REALTOR.ca — https://www.realtor.ca/
Kevin Prins — https://www.bmoetfs.ca/specialists/kevin-prins
BMO Canadian ETF — https://www.bmoetfs.ca/
Financial Planning Association of Canada — https://www.fpassociation.ca/
Papers From Today’s Episode:
‘Assessing High House Prices: Bubbles, Fundamentals and Misperceptions’ — https://www.aeaweb.org/articles?id=10.1257/089533005775196769&ref=josephnoelwalker.com
‘Lessons from Over 30 Years of Buy versus Rent Decisions: Is the American Dream Always Wise?’ — https://doi.org/10.1111/j.1540-6229.2011.00321.x
‘Perception of House Price Risk and Homeownership’ — https://www.nber.org/papers/w25090
‘Owner-Occupied Housing as a Hedge Against Rent Risk’ — https://doi.org/10.1093/qje/120.2.763
‘To Rent or Buy? A 30-Year Perspective’ — https://www.financialplanningassociation.org/article/journal/MAY18-rent-or-buy-30-year-perspective
‘Are Renters Being Left Behind?: Homeownership and Wealth Accumulation in Canadian Cities’ — http://hdl.handle.net/2429/50413
‘The Life-Cycle Effects of House Price Changes’ — https://www.philadelphiafed.org/-/media/frbp/assets/working-papers/2005/wp05-7.pdf
‘Depreciation of Housing Capital, Maintenance, and House Price Inflation: Estimates From a Repeat Sales Model’ — https://doi.org/10.1016/j.jue.2006.07.007
‘Characteristics of Depreciation in Commercial and Multifamily Property: An Investment Perspective’ — https://doi.org/10.1111/1540-6229.12156
‘Homeownership and Psychological Resources Among Older Adults: Do Gender and Mortgage Status Moderate Homeownership Effects?’ — https://doi.org/10.1177/08982643211029174
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Can we really understand the impact of passive ownership on the US market? Marco Sammon is an Assistant Professor in the Finance Unit at Harvard Business School. During this episode, he joins us to share deep insights into the complex and counter-intuitive nature of the index fund revolution. To kick off our conversation, we discuss some of the challenges associated with getting a true understanding of the scope of passive ownership across the US. Distinguishing between different approaches to investment, we begin to unpack Marco’s paper with Alex Chinco, titled ‘The Passive-Ownership Share Is Double What You Think It Is’. We touch on the relevance of Grossman Stiglitz in 2024, pricing and reconstitution, and the ins and outs of employee stock and compensation. Using the case studies of huge global firms, we consider how to best accommodate passive demand. Lastly, as an index investor who does not own index funds, Marco shares his opinion on whether index funds have had a net positive or negative impact on financial markets. Tune in today to get a more dynamic view of the complex world of index funding and investment.
Key Points From This Episode:
(0:00:45) Index funds, index and passive investments, and why Professor Marco Sammon is perfectly positioned to unpack these concepts.
(0:03:36) The challenges of understanding just how big passive ownership is in the US market.
(0:08:16) Distinguishing between partial investment, direct investment and passive funds.
(0:10:14) Important concepts on the closing auction and which indexes Marco focuses on.
(0:15:50) Defining the Grossman-Stiglitz framework and its validity in 2024.
(0:20:36) Evolving ideas around pricing and reconstitution over time.
(0:23:05) Why indexing is a fixed-point problem and how to measure market efficiency.
(0:32:19) Nuances of security demands around indexing and how it differs from other investors.
(0:38:02) Employee compensation and reverse causality as illustrated by Marco’s friend.
(0:42:10) Why it is important to distinguish between equal-weighted and value-weighted.
(0:44:13) How huge firms like Facebook and Tesla accommodate passive demand.
(0:48:19) Conditions that affect the responsiveness of firms in accommodating passive demand.
(0:51:13) The ‘Dead Reckoning’ metaphor to describe how we can know who is clearing the market.
(01:02:22) Marco’s thoughts on whether index funds have had a net positive or negative impact.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Marco Sammon — https://marcosammon.com/
Marco Sammon on X — https://x.com/mcsammon19
Episode 302: Michael Green — https://rationalreminder.ca/podcast/302
Papers From Today’s Episode:
‘The Passive-Ownership Share Is Double What You Think It Is’ — https://www.hbs.edu/ris/Publication%20Files/double-what-you-think-it-is%20may%2023_3c1ae213-5aec-407d-b656-13e3822f0b8b.pdf
‘On the Impossibility of Informationally Efficient Markets’ — http://www.dklevine.com/archive/refs41908.pdf‘Capital Asset Prices With and Without Negative Holding’ — https://ideas.repec.org/p/ris/nobelp/1990_003.html
Do Demand Curves for Stock Slope Down? — https://www.jstor.org/stable/2328486/
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How can the Rational Reminder Podcast get even better? By bringing back one of its most beloved voices, Dan Bortolotti, also known as "The Spud." In this exciting episode, hosts Ben Felix, Cameron Passmore, and Mark McGrath announce that Dan, the mind behind the Canadian Couch Potato Podcast, will now be a regular guest, contributing segments like "Bad Investment Advice" or "Ask the Spud.” Before Dan joins the conversation, we have an insightful discussion with Håkon Kavli, CIO of Reitan Kapital. Håkon shares how his team manages the wealth of one of Norway’s most prominent families, comparable to Canada’s Weston family. We discuss Reitan Kapital’s evidence-based investing approach, their robust methods for overcoming portfolio optimization challenges, and much more. Håkon also sheds light on their upcoming investing conference in Norway, featuring speakers like our very own, Cameron Passmore, and Marcos López de Prado. Following this, Dan kicks off his return by dissecting an article that advocates going all-in on the QQQ ETF in an RRSP, exposing the dangers of such a concentrated and risky strategy. He contrasts this approach with the wisdom of diversifying across global markets, using examples like Vanguard’s VEQT ETF, which offers exposure to over 13,000 stocks worldwide. Additionally, if you’re a financial advisor interested in joining a planning-focused, fiduciary firm like PWL Capital, we encourage you to reach out. Our team is growing, and we’re looking for like-minded individuals to join our mission. Tune in for a rich mix of expert advice, thoughtful discussions, and exciting announcements!
Key Points From This Episode:(0:00:28) Announcements: a new regular guest, PWL’s call for like-minded advisors, and more.
(0:04:15) Introducing Håkon Kavli, the Reitan family, and the origins of Reitan Kapital.
(0:08:06) Reitan Kapital’s investment philosophy and asset allocation strategy.
(0:10:29) The biggest differences between a Reitan Kapital portfolio and a market portfolio.
(0:13:19) Capital market assumptions; how they influence Reitan Kapital's investment process.
(0:20:38) Portfolio optimization challenges and Reitan’s robust methods for addressing these.
(0:35:06) The role of private equity in a diversified portfolio and how it differs from public equity.
(0:38:40) Fee structure significance in private equity investments and their impact on returns.
(0:40:38) Risks associated with private equity and how they compare to public markets.
(0:43:36) Reitan Kapital’s view on how private equity fits into a diversified portfolio.
(0:49:08) Challenges of investing in private equity for retail investors.
(0:50:26) Why so many institutions and firms have substantial allocations to private markets.
(0:53:58) An overview of the research Håkon is most excited about.
(0:56:20) Details for the upcoming conference in Norway, featuring Cameron Passmore.
(0:59:16) Dan’s Bad Investment Advice segment; going all-in on the QQQ ETF in an RRSP.
(01:13:12) Our aftershow segment: listener feedback, our next meetup in Ottawa, a shoutout to Jason Pereira, and more.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPDan Bortolotti — https://www.canadianmoneysaver.ca/authors/dan-bortolotti
Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/
Canadian Couch Potato Blog — https://canadiancouchpotato.com/
Canadian Couch Potato Podcast — https://canadiancouchpotato.com/podcast/
Episode 308: Dan Bortolotti — https://rationalreminder.ca/podcast/308
Håkon Kavli on LinkedIn — https://www.linkedin.com/in/haakonkavli/
Reitan — https://reitan.no/noReitan Kapital — http://www.reitankapital.no/
Weston — https://www.weston.ca/en/Home.aspx
Marcos Lopez de Prado — https://www.orie.cornell.edu/faculty-directory/marcos-lopez-de-prado
Antti Ilmanen — https://www.aqr.com/About-Us/OurFirm/Antti-Ilmanen
Episode 224: Prof. Scott Cederburg — https://rationalreminder.ca/podcast/224
Sharpe ratio — https://www.investopedia.com/terms/s/sharperatio.aspEpisode 210: Prof. Ludovic Phalippou — https://rationalreminder.ca/podcast/210
Reitan Kapital Conference —
‘An interesting RRSP idea – all in on QQQ?’ — https://www.tawcan.com/all-in-on-qqq/VEQT Vanguard All-Equity ETF Portfolio — https://www.vanguard.ca/en/investor/products/products-group/etfs/VEQT
Mark Mid Graph on X —
Jason Pereira — https://jasonpereira.ca/
Papers From Today’s Episode:
‘Estimating Private Equity Returns from Limited Partner Cash Flows’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2356553
‘Mutual Fund Flows and Performance in Rational Markets’ — https://www.nber.org/papers/w9275
‘What are Stock Investors' Actual Historical Returns? Evidence from Dollar-Weighted Returns’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=544142 -
Have you ever wondered how vibes can shape the economy? Or how the economy differs from financial markets? Or even how meme stocks operate? In this episode, we dive into the intersection of economic theory, social media, and public sentiment with Kyla Scanlon, an insightful economic commentator known for her relatable approach to explaining complex economic concepts. Kyla is a prolific content creator and founder of the financial education company, Bread. She produces a weekly newsletter, informative YouTube videos, the Let’s Appreciate Podcast, and (almost) daily short-form videos that break down complex economic concepts into engaging, bite-sized content. She’s also the author of In This Economy?: How Money & Markets Really Work, an indispensable guide to the “mad math and terrible terminology” of economics. Join us as we explore her unique vibecession concept, discuss the impact of social media-driven market movements, examine the housing crisis through the lens of generational wealth transfer and zoning laws, and much more. As Kyla explains it, economics isn't just about numbers. It’s about the stories we tell and how they influence the world around us. For a fun, fascinating, and highly accessible look at the state of the economy today, don’t miss this conversation with one of the internet’s favorite financial educators!
Key Points From This Episode:
(0:03:19) Kyla’s definition of economics, who the main players are, and how it's understood.
(0:05:04) How "vibes" influence the economy and intersect with economic theory and reality.
(0:07:07) Money, its impact on the economy, and whether GDP reflects economic health.
(0:09:45) Ways that expectations about inflation affect vibes in the economy.
(0:10:50) Kyla’s take on housing, what people get wrong about it, and renting versus owning.
(0:15:16) Surprisingly simple reasons for the housing crisis in the US and beyond.
(0:17:48) Key distinctions between financial markets, the economy, and the stock market.
(0:20:53) The difference between investing, speculating, and gambling.
(0:22:08) GameStop, meme stocks, and the power of social media.
(0:24:43) Reasons that “new era” thinking is dangerous and where crypto went wrong.
(0:29:49) How to know when we’re in a recession and what a “vibecession” is.
(0:33:52) Why US national debt isn’t always bad and why the Federal Reserve exists.
(0:39:43) Problems that can arise from strictly adhering to economic beliefs.
(0:42:53) Ways that the economy is connected to the mental health of individuals.
(0:45:10) The impact of social media and media business models on vibes.
(0:48:45) Kyla’s biggest learnings from her work and how she defines success.
Links From Today’s Episode:
Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPKyla Scanlon — https://kylascanlon.com/
In This Economy?: How Money & Markets Really Work — https://www.penguinrandomhouse.com/books/737854/in-this-economy-by-kyla-scanlon/
Let’s Appreciate Podcast — https://open.spotify.com/show/6ziXCBAojpLDKtexx8bxds
TLDR Podcast — https://wealthsimple-tldr-podcast.simplecast.com/
Kyla Scanlon Newsletter — https://kyla.substack.com/
Kyla Scanlon on LinkedIn — https://www.linkedin.com/in/kylascanlon/
Kyla Scanlon on YouTube — https://www.youtube.com/@KylaScanlon/
Kyla Scanlon on Instagram — https://www.instagram.com/kylascan/
Kyla Scanlon on TikTok — https://www.tiktok.com/@kylascan
Kyla Scanlon on X — https://x.com/kylascan
‘The Vibecession: The Self-Fulfilling Prophecy’ — https://kyla.substack.com/p/the-vibecession-the-self-fulfilling
Federal Reserve DFA (Distributional Financial Accounts) Chart — https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/
Federal Reserve SLOOS Report — https://www.federalreserve.gov/data/sloos.htm
Michael Mauboussin — https://www.michaelmauboussin.com/
FedNow — https://www.frbservices.org/financial-services/fednow
National Bureau of Economic Research — https://www.nber.org/
Justin Wolfers on X — https://x.com/JustinWolfers
‘Why Gen Z is Rewriting the Rules of Work’ — https://www.fastcompany.com/90911399/kyla-scanlon-on-why-gen-z-is-redefining-the-concept-of-job-satisfaction
‘Loneliness as a "market opportunity”’ — https://youtu.be/UL9QiHYtajw
Journal of Economic Teaching Symposium on Economics Teaching (JETSET) — https://journalofeconomicsteaching.org/symposium/
Kyla’s Tweet about #JETSET24 — https://x.com/kylascan/status/1820242645672738938
Books From Today’s Episode:
The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing — https://www.amazon.com/dp/1422184234
Papers From Today’s Episode:
‘Why Do We Think That Inflation Expectations Matter for Inflation? (And Should We?)’ — https://www.federalreserve.gov/econres/feds/why-do-we-think-that-inflation-expectations-matter-for-Inflation-and-should-we.htm
‘Negativity drives online news consumption’ — https://www.researchgate.net/publication/369301406_Negativity_drives_online_news_consumption
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Which account should you choose, a registered retirement savings plan (RRSP) or a Tax-free savings account (TFSA)? This is one of the most common decisions that Canadians must make when it comes to investing, but it will also elicit some of the most passionate responses. RRSPs especially get a lot of undue skepticism, with some even labelling it as a scam. Today we take a deep dive into both of these savings accounts, exploring the downsides and benefits of each, and how to decide which account is right for you based on your savings goals. With the help of Conquest Planning, a specialized, in-depth modelling tool, we look at a range of scenarios incorporating different variables, like income and family size, and break down our analysis regarding the RRSP vs. TFSA decision for each scenario. We discuss key factors to consider, including the basic personal amount tax credit, which allows RRSPs to act as a tax flow-through, and the guaranteed income supplement (GIS), which can impact retirement planning. Our conversation also examines how to approach family size and longevity, as RRSPs become more advantageous with longer lifespans. Join us today to learn about the benefits and flexibility of each of these accounts, the surprising ways RRSPs often outperform TFSAs, and find out which one is right for you!
Key Points From This Episode:
(0:00:20) An introduction to the RRSP vs. TFSA debate.
(0:08:11) How we used the Conquest Planning tool and the scenarios we analyzed.
(0:10:34) Taxation and contribution considerations and strategies for RRSPs and TFSAs.
(0:20:11) An analysis of scenario one; $60,000 income and no children.
(0:22:38) Basic personal amount tax credit; how it allows RRSPs to act as a tax flow-through.(0:27:20) The Guaranteed Income Supplement (GIS) and its impact on RRSP vs. TFSA analysis in different scenarios.
(0:36:16) How GIS is tied to Old Age Security (OAS) payments.
(0:41:12) An analysis of scenario two; a couple with two children, and the impact of the Canada Child Benefit on RRSP vs. TFSA contributions.
(0:45:21) The impact of mortality and longevity on RRSP and TFSA in various scenarios.
(0:47:01) Main takeaways from today’s scenarios and the advice our hosts would give to different clients regarding TFSAs and RRSPs.
(0:50:50) Why RRSPs are of greater benefit if you live longer compared to TFSAs.
(0:52:13) Our aftershow section: listener feedback, what Ben is working on regarding renting versus buying, the zombie apocalypse, and more.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPBrady Plunkett on LinkedIn — https://www.linkedin.com/in/brady-plunkett-712489105/
Lukas Fleck on LinkedIn — https://www.linkedin.com/in/lukasfleck/
Flossing for your Finances, Personal Financial Strategies for Dentists — https://us06web.zoom.us/webinar/register/9017236574029/WN_7O_JdvejRhmh-_LleBNRmQ#/registration
Episode 317: Kevin Milligan — https://rationalreminder.ca/podcast/317Papers From Today’s Episode:
‘Tax Uncertainty and Retirement Savings Diversification’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2799288 -
If you’re in the Canada Pension Plan (CPP), then you won’t want to miss today’s conversation with Canada's Chief Actuary, Assia Billig. Assia’s knowledge of the CPP is extensive, having joined the Office of the Chief Actuary (OCA) in 2008, where she was involved in the preparation of statutory actuarial reports on the Canada Pension Plan and Old Age Security Program. She has served as Chief Actuary of the Government of Canada since 2019, and, before joining the OCA, she worked in private pension consulting. She is also a Fellow of the Society of Actuaries and the Canadian Institute of Actuaries. Assia joins us today for a deep dive into the most common questions about the Canada Pension Plan, from the inner workings of its financial components to the quality of governance that drives it. Discover the world-leading topics she and her team investigate, the immense power and research behind their analysis, and why the CPP is set to be sustainable for the next 75 years. We also discuss the concerns some people have about the CPP’s longevity, before examining how the actuarial report on the sustainability of the CPP, conducted every three years, reliably addresses this. If today’s conversation with Canada’s chief actuary does not instill confidence and pride in Canada’s investment in our collective retirement, then we don’t know what will! Tune in, to hear all of Assia’s keen insights and discover why she is unequivocally the best person to talk about the sustainability of the CPP.
Key Points From This Episode:
(0:00:18) Introducing today’s guest, Assia Billig and the Canada Pension Plan (CPP).
(0:04:53) What the main function of the Office of the Chief Actuary is.
(0:06:28) The independence of Assia’s office and the work that they do.
(0:07:09) Unpacking the main purpose of the actuarial report on the Canada Pension Plan.
(0:09:22) Changes that the report triggers to contribution or benefit rates.
(0:13:04) Main revenue sources for the CPP and how base CPP benefit payments are funded.
(0:14:56) Base CPP’s funded status and how funding differs for additional CPP.
(0:20:32) The sustainability of base and additional CPP and how sustainability is measured.
(0:23:22) Primary assumptions that go into sustainability analysis at the high level.
(0:27:31) Estimating expected returns for assets managed by CPP investments.
(0:30:37) The plan’s level of sensitivity to lower realized returns and other variables.
(0:35:22) How lower overall economic growth and inequality affect the plan’s sustainability.
(0:37:15) Measuring the impact of variables like climate change and other catastrophic events.
(0:43:01) When the minimum contribution rate exceeds the current legislated contribution rate.
(0:44:12) Assia’s response to people who are skeptical of the CPP's future sustainability.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3pRational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminderRational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPAssia Billig — https://www.osfi-bsif.gc.ca/en/oca
Assia Billig on LinkedIn — https://www.linkedin.com/in/assia-billig-9b861587/?originalSubdomain=ca
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Today, we sit down with Professor Kevin Milligan to unpack the recent capital gain changes and the complexities of the Canadian tax system. Kevin Milligan is a Professor of Economics at the Vancouver School of Economics, University of British Columbia. He holds positions as a Scholar-in-Residence at the C.D. Howe Institute and a Research Associate at the National Bureau of Economic Research. A two-time recipient of the Purvis Prize, Professor Milligan’s work is recognized for its significant contributions to Canadian economic policy. His research focuses on public and labour economics, particularly concerning the economics of children and the elderly, along with tax and labour market policy issues. In our conversation, we dive deep into capital gains tax, the progressivity of the tax system, and the distribution of tax burdens among different income groups. We explore the intricate details of who bears the burden of corporate taxes, the impact of recent capital gains changes, and the intriguing relationship between income and longevity in Canada. Professor Milligan also shares insights from his research on longevity and the implications of tax policies on economic behaviour. Join us and uncover the truths about Canada's tax system, capital gains changes, and their profound impacts on Canadians. Tune in now!
Key Points From This Episode:
(0:07:20) Background about Professor Milligan and an outline of today’s topic.
(0:10:10) Complexities behind tax policy and recent capital gains changes in Canada.
(0:14:22) Distribution of tax rates in Canada and how progressive the tax system is.
(0:20:12) Analysis of how the Canadian tax system is applied to the top 1% of earners.
(0:22:28) The theory behind capital income and how it relates to personal income tax.
(0:26:40) Explanation of tax integration and how income tax accounts for corporate taxes.
(0:29:53) Impact of the capital gains tax changes and Canada’s overall tax progressivity.
(0:40:55) How the new capital gains inclusion rate affects integration for incorporated business.
(0:46:32) The interplay between corporate investment, capital taxation, and productivity.
(0:54:11) Historical changes in tax rates and the shift of average tax rates over time.
(0:57:14) His perspective on the increase of the capital gains inclusion rate in Canada.
(0:58:35) Explore the correlation between income levels and longevity in Canada.
(1:03:30) Geographic longevity differences and policy implications for longevity.
(1:07:55) Implications of longevity trends on personal financial planning.
(1:13:24) Takeaways from a past episode, an update on Mark’s book, and more.
Links From Today’s Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on X — https://x.com/RationalRemind
Rational Reminder on TikTok — www.tiktok.com/@rationalreminder
Rational Reminder on YouTube — https://www.youtube.com/channel/
Rational Reminder Email — [email protected]
Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/
Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFPProfessor Kevin Milligan — https://sites.google.com/view/kevin-milligan/home
Professor Kevin Milligan on X — https://x.com/kevinmilligan
The Vancouver School of Economics — https://economics.ubc.ca/
C.D. Howe Institute — https://www.cdhowe.org/
National Bureau of Economic Research — https://www.nber.org/
Canadian Tax Journal — https://www.ctf.ca/EN/EN/Publications/CTJ.aspx
Episode 316: Andrew Chen — https://rationalreminder.ca/podcast/316
Papers From Today’s Episode:
‘How Progressive is the Canadian Personal Income Tax? A Buffett Curve Analysis’ — https://utpjournals.press/doi/10.3138/cpp.2021-087
‘The Evolution of Longevity: Evidence from Canada’ — https://onlinelibrary.wiley.com/doi/10.1111/caje.12497
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