The Rational Reminder Podcast Benjamin Felix & Cameron Passmore

How does the connection we have with our future self impact the decisions we make today? And what active steps can we take to improve our connection with our future selves? Today on the show we welcome back Hal Hershfield, whose new book Your Future Self: How to Make Tomorrow Better Today delves into the science of our relationship with our future selves and what we can do to change it for the better. In our conversation with Hal, we discuss the concept of the self, how we change over time, and why so many of us feel disconnected from our future selves. He describes the research surrounding these subjects and their findings, including how the brain scans they performed demonstrate that we mostly see our future selves as strangers, and why this is caused, at least in part, by the fact that our future selves don’t technically exist yet. We also discuss the interventions that have been shown to improve our relationship with our future selves, like viewing age-progressed images or exchanging letters with our future selves, and why everyone responds to these interventions differently. Having a strong connection with your future self has many benefits. It means you’re more likely to make decisions that will serve you later in life, like saving for retirement, eating healthily, and exercising regularly. But Hal also warns that we risk losing sight of the present and what truly matters when we focus solely on the future. To hear all of Hal’s knowledgeable insights on this topic and what he wants to explore next, be sure to tune in today!
Key Points From This Episode:
Defining the self and how our identity shifts depending on age, context, and the people we surround ourselves with. (0:04:08)
An overview of Hal’s research and what it reveals about how most people connect (or don’t connect) to their future selves. (0:08:29)
How empathy can influence our connection to our future selves. (0:11:36)
Insights into why we tend to think of our future self the same way we think about strangers or
acquaintances. (0:14:19)
Our level of connection to our future self and how it affects wealth accumulation and financial
well-being. (0:17:53)
The definition of ‘present bias’ and ‘hyperbolic discounting’ and the role they play in decisions
about the future. (0:19:28)
The end-of-history illusion and the impact it has on our decisions. (0:23:02)
How viewing age-progressed images of yourself can help you build a connection with your
future self. (0:26:35)
The research Hal is conducting with MIT Media Lab using an AI chatbot called Future You.
(0:29:35)


© 2023 Rational Reminder Podcast 1




RRP 256 Show Notes


Dan Pink’s work on the power of regret and how it overlaps with Hal’s research and findings. (0:31:59)
The findings on being presented with age-progressed images of ourselves and how they impact our decision-making and relationship with our future selves. (0:35:20)
How writing to your future self can improve your decisions. (0:40:16)
The problems that arise when we become too focused on improving life for our future self and
how to find harmony between the present and future. (0:44:03)
The COVID-19 pandemic and its impact on our collective relationship with the future.
(0:48:10)
Learn about the live episode we’ll be recording at the upcoming Future Proof conference with Hal as our guest. (0:51:24)
 
Links From Today’s Episode:
Hal Hershfield — https://www.halhershfield.com/
Hal Hershfield on Twitter — https://twitter.com/HalHershfield
Hal Hershfield on LinkedIn — https://www.linkedin.com/in/hal-hershfield-a2b91510/
Your Future Self: How to Make Tomorrow Better Today — https://www.halhershfield.com/ yourfutureself
Episode 141: Hal Hershfield: The Psychology of Long-term Decision Making — https:// rationalreminder.ca/podcast/141
The Power of Regret: How Looking Backward Moves Us Forward — https://www.amazon.com/ Powe

Structured products can offer unique investment opportunities and customization but also come with risks and complexities. It is vital to thoroughly understand the product's structure, risks, and potential returns before investing. In this episode, we delve into the value of structured products and recap a past episode about the philosophy of money before continuing our focus on reading and finance by diving into the book, Just Keep Buying by Nick Maggiulli. Nick is a highly regarded author known for his insightful and engaging works on finance and investing. With a passion for demystifying complex financial concepts, Nick has earned a reputation for his ability to present information in a clear and accessible manner. His ability to blend storytelling with data-driven insights made his articles immensely popular among readers of all backgrounds. We discuss the pros and cons of financial products, why investors prefer them, the dark side of structured products, and what investors need to avoid. We recap a past episode with Barry Ritholtz about the philosophy of money and the main takeaways from our conversation with him. Then, we delve into Just Keep Buying and the invaluable lessons and uncover hidden gems it offers readers before speaking to Nick about savings and investing. We discuss the best strategies for investing, how to spend your money comfortably, why you should never wait for the markets to dip, and much more. To learn everything about structured products and valuable insights about saving and investing, tune in now. 
 
Key Points From This Episode:
 
•    Learn about structured products and what they offer investors. (0:03:12)
•    Why structured products can be a problem for investors. (0:07:00)
•    We discuss whether the pricing of structured financial products is fair. (0:12:05)
•    How financial institutions use complexity to exploit uninformed investors. (0:14:51)
•    Outline of key findings from research conducted on structured financial products. (0:17:47)
•    The behavioural aspect of structured products and why investors prefer them. (0:22:20)
•    A recap of the main takeaways from our interview with Barry Ritholtz. (0:26:10)
•    This week’s book review of Just Keep Buying. (0:28:54)
•    Nick explains the difference between saving and investing. (0:32:54)
•    A comparison of just keep buying and dollar cost averaging strategies. (0:35:21)
•    Whether people should wait for a dip in the market before investing. (0:37:23)
•    Why you do not need as much savings as you think you need. (0:39:04)
•    What the biggest lie is regarding personal finance. (0:42:29)
•    Find out how to spend your money guilt-free. (0:44:13)
•    He unpacks what comes after the just keep buying strategy, and how to be comfortable spending more in retirement. (0:46:48)
•    Financial advice that Nick has for listeners. (0:51:03)
•    The aftershow: upcoming guests, feedback about the show, and more. (0:53:59) 
 
Links From Today’s Episode:
Nick Maggiulli — https://ofdollarsanddata.com/
Nick Maggiulli on LinkedIn — https://www.linkedin.com/in/nicholasmaggiulli/
Nick Maggiulli on Twitter — https://twitter.com/dollarsanddata
Just Keep Buying — https://www.amazon.com/Just-Keep-Buying-Proven-wealth/
Episode 57: Barry Ritholtz — https://rationalreminder.ca/podcast/57
Episode 248: Professor William Goetzmann — https://rationalreminder.ca/podcast/248 Episode 253: Professor Paul Calluzzo — https://rationalreminder.ca/podcast/253
Episode 126: Dr. Brian Portnoy and Josh Brown — https://rationalreminder.ca/podcast/126 ‘The dark side of financial innovation’ — https://www.sciencedirect.com/science/article/abs/pii/ ‘Catering to Investors Through Security Design’ — https://academic.oup.com/qje/article- abstract/132/3/1469/3057435
‘Engineering lemons

There are many different objective functions you can use when building optimal portfolios. The majority of these approaches define risk from the perspective of variability or bad outcomes, but positive returns could be viewed as “risky” for those that don’t experience them, which is another way of saying that people experience regret (or FOMO, for our trendier listeners). Today, we are joined by David Blanchett, a return guest and the Managing Director and Head of Retirement Research for PGIM DC Solutions, the global investment management arm of Prudential Financial. He is also an Adjunct Professor of Wealth Management at The American College of Financial Services and a Research Fellow for the Alliance for Lifetime Income. David returns to the podcast for an articulate discussion about regret in portfolio construction, what drives it, and how financial advisors can cater to it. We then delve into how David is redefining optimal retirement income strategies, looking at retirement tools, retirement planning, compensation models in the industry, risk exposures, and portfolios. We also get a high-level overview of some of the fascinating work that David has done on home-country bias, plus so much more. For highly technical content presented in an accessible and practical way by one of the brightest minds in retirement planning, be sure to tune in today!
Key Points From This Episode:
• Differences between risk aversion and regret aversion. (0:03:57)
• The distinctly human element that drives “investment FOMO.” (0:06:34)
• Insight into how David models regret in his research. (0:09:06)
• The asset pricing implications of approaching portfolio optimization this way. (0:12:11)
• Tips for deciding on what the regret benchmark should be. (0:13:19)
• How a portfolio optimization routine based on regret affects asset allocation. (0:14:08)
• Ways that the effect of optimizing over regret changes depending on risk aversion. (0:16:55) • Other asset characteristics that might drive optimal allocation to regret assets. (0:18:04)
• Why moving away from self-direction is the best thing to happen to 401(k) plans. (0:20:53)
• How financial advisors should cater to investors interested in speculative assets. (0:24:00)
• Unpacking some of the social and story-driven sources of regret. (0:29:03)
• Downsides to modelling retirement liability as a static inflation-adjusted amount. (0:32:00)
• Why it’s important to understand the composition of retiree spending and saving. (0:33:57)
• David’s research into dynamic spending rules for retirement planning. (0:42:06)
• Some of the key pitfalls of existing financial planning tools and solutions. (0:44:38)
• Ways that safe withdrawal rates change when you incorporate dynamic spending. (0:51:10) • How advisor channel affects passive fund choice and how clients should respond. (0:57:56) • Insight into David’s research on foreign revenue and home-country bias. (1:02:27)


 



 
Links From Today’s Episode:
David Blanchett — https://www.davidmblanchett.com/
David Blanchett on Twitter — https://twitter.com/davidmblanchett
David Blanchett on LinkedIn — https://www.linkedin.com/in/david-blanchett-b0b0aa2/


© 2023 Rational Reminder Podcast 2




RRP 254 Show Notes


PGIM — https://www.pgim.com/
E137: David Blanchett: Researching Retirement — https://rationalreminder.ca/podcast/137 ‘Regret and Optimal Portfolio Allocations’ — https://www.pm-research.com/content/iijpormgmt/ early/2023/02/01/jpm20231464
‘Keep Keeping Your Distance: An Updated Look at 401(k) Participant Behaviors During the COVID-19 Crisis’ — https://www.morningstar.com/articles/1032011/keep-keeping-your- distance-an-updated-look-at-401k-participant-behaviors-during-the-covid-19-crisis
‘Save more with less: The impact of employer defaults and match rates on retirement saving’ — https://onlinelibrary.wiley.

We have two guests joining us for this episode of the Rational Reminder podcast. First up, we have Paul Calluzzo, who is the Assistant Professor of Finance and Toller Family Fellow of Finance in the Smith School of Business at Queen's University in Kingston. Paul joins us today to discuss the findings in his paper, ‘Complex Instruments Have Increased Risk and Reduced Performance at Mutual Funds’. He explains the motivation for the paper, the research it expands upon, and the types of complex instrument allowances it investigates. We discuss reverse causality and find out how complex instrument allowance is related to fund performance and risk, respectively, before hearing Paul’s investment advice. For the second half of the show, we are joined by the author of Losing the Signal: The Spectacular Rise and Fall of BlackBerry, Sean Silcoff to discuss the BlackBerry revolution and its subsequent decline, and the film adaptation of the book. Tune in for our guests’ insights into best practices for investors and business leaders alike.
 
Key Points From This Episode:
 
•    Housekeeping: check out our CE courses and reach out for financial advice. (0:02:25)
•    An introduction to Paul Calluzzo and our conversation with him about the impact of complex financial instruments on mutual funds. (0:05:20)
•    The motivation for the paper, ‘Complex Instruments Have Increased Risk and Reduced Performance at Mutual Funds’, the research it expands upon, and the types of complex instrument allowances it investigates. (0:07:50)
•    Reverse causality relating to complex instruments and mutual funds, and the mechanisms that could potentially harm investors in funds using complex instruments. (0:12:37)
•    How the performance of funds was evaluated in the paper and how the usage of complex instruments evolved throughout the sample. (0:18:12)
•    How complex instrument allowance is related to fund performance and risk. (0:23:06)
•    The asymmetry of return patterns in up and down markets. (0:26:11)
•    Paul’s investment advice, in the context of the paper’s findings. (0:33:05)
•    Why complex products are growing despite their poor performance and how research can reach the market. (0:37:05)
•    A quick recap of episode 39 with Rob Carrick. (0:40:48)
•    Our brief review of Losing the Signal: The Spectacular Rise and Fall of BlackBerry by Sean Silcoff and Jacquie McNish. (0:41:49)
•    Sean Silcoff breaks down the BlackBerry revolution and its subsequent demise. (0:44:53)
•    Insight into the film adaptation of the book and what makes it such a compelling story. (1:04:51)
•    What business leaders and investors can take away from the BlackBerry story. (1:08:09)
•    Our after-show roundup! (1:15:12)
 
 
Participate in our Community Discussion about this Episode:
https://community.rationalreminder.ca/t/episode-253-complex-financial-instruments-with-prof-paul-calluzzo-plus-sean-silcoff-on-losing-the-signal-discussion-thread/23482
 
Book From Today’s Episode:
Losing The Signal: The Spectacular Rise and Fall of BlackBerry Kindle Edition — https://amzn.to/3OaA5Wa
 
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/
Follow us on Twitter — https://twitter.com/RationalRemind
Follow us on Instagram — @rationalreminder
Benjamin on Twitter — https://twitter.com/benjaminwfelix
Cameron on Twitter — https://twitter.com/CameronPassmore
Paul Calluzzo — https://smith.queensu.ca/faculty_and_research/faculty_list/calluzzo-paul.php
Sean Silcoff on LinkedIn — https://www.linkedin.com/in/sean-silcoff-777b0912
Sean Silcoff on Twitter — https://twitt

Understanding market efficiency is an important part of investment decision-making. It can help investors to identify the most appropriate investment strategies and develop realistic expectations for their returns. In this episode of the Rational Reminder Podcast, we sit down with Professor Burton Malkiel, the renowned economist, and author of the classic investing book A Random Walk Down Wall Street. Professor Malkiel is a distinguished figure in the world of economics and academia. He holds the prestigious title of Chemical Bank Chairman's Professor of Economics Emeritus and Senior Economist at Princeton, where he has made significant contributions to the field over the years. In our conversation, we discuss Professor Malkiel’s views on the stock market, the efficient market hypothesis, how behavioural finance relates to investing, and why index funds should be at the core of every portfolio. Throughout the episode, Professor Malkiel shares his insights on a wide range of topics related to personal finance and investing, including the benefits of index funds, the dangers of active stock picking, the impact of fees and taxes on investment returns, factor investing, and expensive asset classes. He also discusses research on socially responsible investing and how investors can incorporate ethical considerations into their portfolios without sacrificing performance. In this episode, listeners will gain a better understanding of the vital principles of investing and how to apply them to achieve their financial goals. Whether you're a novice investor or an experienced pro, this episode offers valuable insights and advice from one of the most respected economists in the field, Professor Malkiel.
Key Points From This Episode:
Professor Malkiel explains the efficient market hypothesis and what the term “efficient market” means. (0:03:42)
What the media tends to get wrong about the concept of market efficiency and the mathematical theory behind a random walk market. (0:07:04)
We discuss investing in index funds rather than actively managed strategies. (0:09:44)
How his book, Random Walk, was received by professionals and academics in the industry
(0:13:08)
Hear about the inspiration behind the concept covered in his book, and how his investment advice has changed over the last 50 years. (0:19:18)
Why index funds have become widely accepted, and the difference between investing and speculating. (0:23:38)
He unpacks why past market bubbles are vital for managers to understand and shares some wise words for those who want to participate in market speculation investing. (0:28:21)
How the existence and persistence of bubbles throughout history relate to markets being efficient. (0:32:10)


 



 
Find out how the multiple, non-diversifiable risks in today’s financial markets impact the advice in his book, and learn about factor investing. (0:35:42)
He shares advice and insights for people looking to invest in cheaper funds and his perspective on trending investment strategies. (0:37:55)
Learn how the general findings from behavioural finance influence his advice on investing in index funds. (0:41:33)
We explore the value of risk parity strategies and the problem with backtests, and he shares his view on expensive asset classes. (0:44:09)
What impact super-low bond yields had on the return of bonds, and whether you should focus on the value or yield. (0:54:16)
The importance of saving as opposed to an optimal investment strategy to investor outcomes.
(0:57:56)
Insights into investing according to your desired outcomes and whether Professor Malkiel thinks it is better to rent or own a home. (1:03:55)
We discuss inflation and possible future trends and the role of financial planners and investment advisors. (1:10:29)
Hear his concerns regarding the growth of index fund assets. (1:14:52)
Details about his book writing journey and his definition of success.

We all have different levels of risk tolerance. But how is that risk measured for complex investment strategies like covered calls? And how can you be sure it's an accurate reflection of reality? For the first portion of today’s episode, we provide a detailed breakdown of everything you need to know about covered calls and why there is no perfect model for assessing risk-adjusted returns. We examine how incorrect measures of risk can make covered calls seem more attractive, what investors need to know about covered calls, and the fees, costs, and taxes you should be considering with these types of strategies. Next, we are joined by lifelong friends and colleagues Jonathan Hollow and Robin Powell to discuss their new book How to Fund the Life You Want: What everyone needs to know about savings, pensions and investments. They describe how their shared passion for financial education motivated them to write their book, before explaining how readers can best use the accompanying workbook to identify and reach their financial goals. Robin and Jonathan then go on to share their advice on day-to-day money management, finding a trustworthy advisor, and why it’s never too early to teach your child about money. Tune in for a detailed breakdown of covered calls and how to make informed decisions about your investments and finances!
 
Key Points From This Episode:
An introduction to the concept of covered calls. (0:02:41) The definition of covered calls, how risk can be measured incorrectly to make covered call strategies look more attractive, and why risk can never be destroyed. (0:04:22) A breakdown of the assets involved in covered calls and why their yields can be misleading. (0:07:00) Why there is no perfect model for assessing risk-adjusted returns and what can be learned from looking at investors through a behavioural lens. (0:16:19) An overview of why fees, costs, and taxes are major considerations for these types of strategies. (0:20:15) Introducing Robin Powell, Jonathan Hollow and their new book How to Fund the Life You Want. (0:25:08) Jonathan and Robin’s long friendship, their shared interest in financial education, why they saw a need for their book, and how readers can get the most out of their workbook. (0:30:45) Insight into the six rules that Robin and Jonathan outline in their book and the eight keywords that they set up for managing money day to day. (0:35:07) Advice on how to keep up with finance news, including what you should pay attention to and what you can ignore. (0:40:37)  The importance of a day-to-day savings habit and suggestions on what kids should be taught about money. (0:43:20) Advice on how to find a first-rate advisor based on your needs and what questions you need to be asking of them. (0:49:54) How your financial advisor should act as your financial bodyguard and complement your weaknesses. (0:56:02) Ben and Cameron share news about their next podcast appearances, Rational Reminder education courses for financial advisors, and upcoming meetups. (0:57:43) Learn about the webinars that Ben and Cameron have been hosting and how you can sign up. (01:03:00)  
 
Links From Today’s Episode:
 
Robin Powell on LinkedIn — https://www.linkedin.com/in/robinpowell/
Jonathan Hollow on LinkedIn — https://www.linkedin.com/in/jonathanhollow/
How to Fund the Life You Want: What everyone needs to know about savings, pensions and investments — https://www.amazon.co.uk/dp/1399404601/
Covered Calls — https://www.investopedia.com/terms/c/coveredcall.asp
Episode 27: Robin Powell: Evidence Based Investing: Changing the Minds of Advisors and Investors — https://rationalreminder.ca/podcast/27
Patrick Boyle on YouTube — https://www.youtube.com/c/PatrickBoyleOnFinance
Sharpe Ratio — https://www.investopedia.com/terms/s/sharperatio.asp
Sortino Ratio — https://www.investopedia.com/terms/s/sortinoratio.asp
S&P 500 — https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overvie