The Rational Reminder Podcast

Benjamin Felix, Cameron Passmore, Mark McGrath, and Dan Bortolotti
The Rational Reminder Podcast

A weekly reality check on sensible investing and financial decision-making, from three Canadians. Hosted by Benjamin Felix, Cameron Passmore, and Dan Bortolotti, Portfolio Managers at PWL Capital, and Mark McGrath, Associate Portfolio Manager at PWL Capital.

  1. HACE 3 DÍAS

    The Case for Index Funds

    Are index funds the best investment strategy for most investors? In this episode of Rational Reminder, Benjamin Felix, Dan Bortolotti, and Mark McGrath explore why low-cost index funds should be the primary investment strategy for most people. They explain how index funds evolved from a niche concept to a widely accepted strategy and outline their six key benefits. Learn about the fees associated with index funds, why index funds outperform most actively managed funds, and how to avoid the risks of picking individual stocks. They also explore academic research on long-term mutual fund performance, the persistence (or lack thereof) in active management, and the dangers of alternative indexing schemes. Discover how behaviour impacts investment decisions and why a globally diversified portfolio is crucial. Finally, in the aftershow, Ben shares an update regarding his health and listener feedback from the Rational Reminder community. Join the conversation and uncover why index funds are the best investment strategy and how to leverage them effectively to maximize your portfolio for long-term gains. Tune in now!   Key Points From This Episode:   (0:01:58) Outline of today's topic and why index funds should be everyone's main investment strategy. (0:05:10) Index fund fundamentals, market cap weighting, and why not all ETFs are index funds.  (0:10:03) Learn about the transition of index funds into mainstream finance and their low-fee advantages. (0:13:30) Linking fees to index performance and why lower fees gives them an advantage over managed funds. (0:19:50) The general awareness about index funds and what impact the lack of diversification has on actively managed funds. (0:26:35) Explore critical research comparing the returns on investment between index funds and actively managed funds. (0:33:32) Unpack why the size of the active management industry matters and common misconceptions surrounding the long-term returns of mutual funds. (0:42:26) Discover why some fund managers do well and how sector-specific performance influences stock returns. (0:48:28) Unpack why average returns are better than beating the market and what makes index funds tax efficient.  (0:51:08) Find out what makes index funds easy to use and how this results in higher returns in the long term.  (0:55:25) How index funds are consistent with foundational finance theory and why thematic ETFs and sector-specific index funds should be avoided. (1:05:40) The aftershow: Ben shares a personal health update, Rational Reminder news, and a request for listener AMA questions.   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 — info@rationalreminder.ca 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/MarkMcGrathCFP Dan Bortolotti — https://pwlcapital.com/our-team/ 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 54: Dr. David Blitzer — https://rationalreminder.ca/podcast/54 Episode 124: Prof. Lubos Pastor — https://rationalreminder.ca/podcast/124 Episode 133: Adriana Robertson — https://rationalreminder.ca/podcast/133 Episode 220: Jonathan Berk and Jules van Binsbergen — https://rationalreminder.ca/podcast/220 Episode 244: Charles D. Ellis — https://rationalreminder.ca/podcast/244 Episode 268: Itzhak Ben-David — https://rationalreminder.ca/podcast/268 Episode 302: Michael Green — https://rationalreminder.ca/podcast/302 Episode 346: Hendrik Bessembinder — https://rationalreminder.ca/podcast/346 Coffeezilla — https://www.youtube.com/@Coffeezilla Coffeezilla: Investing for Idiots — https://www.youtube.com/watch?v=hoGm61I52YQ YCharts — https://ycharts.com/   Papers From Today’s Episode:    'The Arithmetic of Active Management' — https://www.tandfonline.com/doi/pdf/10.2469/faj.v47.n1.7 'Sharpening Sharpe’s Arithmetic' — https://www.tandfonline.com/doi/full/10.2469/faj.v74.n1.4 'Mutual Fund Flows and Performance in Rational Markets' — https://www.journals.uchicago.edu/doi/abs/10.1086/424739 'Why Indexing Works' — https://onlinelibrary.wiley.com/doi/abs/10.1002/asmb.2271 'Long-Term Shareholder Returns: Evidence from 64,000 Global Stocks' — https://www.tandfonline.com/doi/abs/10.1080/0015198X.2023.2188870 'The Performance of Mutual Funds in the Period 1945-1964' — https://www.jstor.org/stable/2325404 'On Persistence in Mutual Fund Performance' — https://doi.org/10.1111/j.1540-6261.1997.tb03808.x 'Capital Asset Prices: A Theory of Market Equilibrium Under Conditions of Risk' — https://onlinelibrary.wiley.com/doi/full/10.1111/j.1540-6261.1964.tb02865.x 'Passive in name only: Delegated management and index investing' — https://heinonline.org/HOL/LandingPage?handle=hein.journals/yjor36&div=20&id=&page=

    1 h y 16 min
  2. 27 FEB

    Hendrik Bessembinder: Why It's So Hard to Beat the Market

    Did you know that just a handful of stocks drive nearly all of the stock market’s long-term gains? In this episode, we sit down with Hendrik Bessembinder to discuss his groundbreaking research on why most stocks fail to outperform Treasury bills and how a small fraction of stocks generate the most long-term market returns. Hendrik is a Professor in the Department of Finance at Arizona State University whose research focuses on market design, trading, and long-term investment performance across stock, foreign exchange, fixed income, futures, and energy markets. In addition to his academic contributions, Professor Bessembinder has over 25 years of consulting experience, advising major firms, financial markets, and government agencies. In our conversation, we delve into the findings of his research and find out how a small fraction of stocks generate the majority of long-term returns. We explore why traditional investment strategies often overlook the impact of skewness, the impacts of broad diversification and passive investing, and why active fund managers struggle to beat the market. Discover why chasing past returns can lead to costly mistakes, his latest research on 'sustainable returns', what type of industries have the highest stock returns, common investing mistakes, and more. Join us to uncover the surprising realities of stock market returns and how you can build a portfolio that stands the test of time with Professor Hendrik Bessembinder. Key Points From This Episode:   (0:03:54) Explore Hendrik’s research on long-term stock returns and how most returns come from a small group of stocks. (0:08:30) Learn how company size interacts with the skewness in stock returns and what it means for individual investors. (0:11:39) Considering fundamentals in stock returns and the implications of skewness for measuring portfolio performance. (0:15:42) Unpack how he used bootstrap simulations in his paper and the performance of stock returns versus Treasury bills. (0:19:01) Find out the proportion of US firms responsible for dollar wealth creation and why diversification is essential for long-term stock returns. (0:25:23) Navigating volatility in the market and why it is difficult to identify skilled managers in time to leverage the market. (0:28:00) Compare the performance of US stocks versus global stocks and what is driving their performance. (0:32:04) What the findings of his research means for financial planners and individual investors.  (0:35:35) Uncover which US firms generated the highest returns and what type of industries these companies are in. (0:42:07) Hear about the long-term performance of US mutual funds and how investor behaviour contributes to it. (0:49:54) How passive investing and index funds have reduced the contributions of actively managed mutual funds and the lessons for investors. (0:55:48) Discover Professor Bessembinder's broader research interests and his definition of 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/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.ca 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/MarkMcGrathCFP Professor Hendrik Bessembinder — https://search.asu.edu/profile/2717225 Arizona State University — https://www.asu.edu/ KRIS — https://www.kris-online.com/ Professor Hendrik Bessembinder papers on SSRN — https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=667 SPIVA — https://www.spglobal.com/spdji/en/research-insights/spiva/ Episode 322: Professor Marco Sammon — https://rationalreminder.ca/podcast/322 Episode 124: Professor Lubos Pastor — https://rationalreminder.ca/podcast/124   Papers From Today’s Episode:    'Do Stocks Outperform Treasury Bills?' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X18301521 'Extending Portfolio Theory to Compound Returns' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3875870 'Luck versus Skill in the Cross-Section of Mutual Fund Returns' — https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.2010.01598.x 'Measuring Skill in the Mutual Fund Industry' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X15000628 'Long-Term Shareholder Returns: Evidence from 64,000 Global Stocks' — https://www.tandfonline.com/doi/abs/10.1080/0015198X.2023.2188870 'Which U.S. Stocks Generated the Highest Long-Term Returns?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4897069 'How Should Investors’ Long-Term Returns Be Measured?' — https://www.tandfonline.com/doi/abs/10.1080/0015198X.2024.2401765

    1 h y 3 min
  3. 20 FEB

    Episode 345 - AMA #3

    As we continue to answer your questions from our most recent AMA, Ben, Mark, and Dan begin today’s episode with Bitcoin and how its value as an investment has changed over the years. Then, after briefly explaining how to find short clips of this podcast online, we discuss why many companies choose not to list directly on the TXS, how to implement factor investing without factor EFTS, the best way to invest if you could only make one EFT investment in your lifetime, and, and understanding buffered EFTs and market-linked GICs. We also cover expected returns in a corrupt market, return stacking for individuals, academia versus real-world applications, and why stock valuations will never be the same as they were in the past. To end, we look at lump sum investing versus dollar-cost averaging, what to remember regarding asset allocation, how we rebalance portfolios here at PWL Capital, and we wish Ben well as he awaits his diagnosis. Key Points From This Episode: (0:03:30) Unpacking the value of Bitcoin as an investment; past, present, and future.  (0:09:58) Why we don’t use YouTube Shorts anymore and how to find our bite-sized clips.  (0:10:29) Understanding why many companies refrain from directly listing on the TXS.  (0:11:29) An interlude on how we take care of our bodies.  (0:14:22) Implementing factor investing without factor ETFs, and Manulife’s multifactor ETFs. (0:19:21) What we would do if we could only invest in one ETF until retirement. (0:22:23) Buffered EFTs and market-linked GICs.   (0:26:15) Market efficiency and expected returns in a low transparency/high corruption market.   (0:29:50) Whether return stacking is a good idea for individuals, and unpacking leverage.  (0:40:44) Balancing proven business philosophies with academic thinking.  (0:47:39) The Shiller PE Ratio; why stock valuations are permanently higher than in the past.   (0:54:58) Lump sum investing versus dollar-cost averaging.  (1:00:09) Asset allocation and how to know which assets to sell first.  (1:04:57) How PWL Capital rebalances client portfolios – an operational perspective.  (1:10:42) The after show: Testicular cancer and heartwarming reviews.    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 — info@rationalreminder.ca 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/MarkMcGrathCFP  Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/   ‘Episode 80: A Planning Checklist, Portfolio Concentration, and Leverage’ — https://rationalreminder.ca/podcast/80  ‘Episode 343: How to Choose an Asset Allocation’ — https://rationalreminder.ca/podcast/343 ‘Episode 234: Prof. Robert C. Merton: ICAPM, Retirement, and Models in Finance’ — https://rationalreminder.ca/podcast/234   ‘Episode 335: What About Warren Buffett?’ — https://rationalreminder.ca/podcast/335  ‘Episode 202: Antti Ilmanen: The Building Blocks of Long-Run Returns’ — https://rationalreminder.ca/podcast/202   ‘Episode 262: Prof. Francisco Gomes: Consumption and Portfolio Choice over the Life Cycle’ — https://rationalreminder.ca/podcast/262   ‘Dan Bortolotti: Index Investing, ETFs and Financial Planning’ — https://thewealthybarber.com/podcast/dan-bortolotti-index-investing-etfs-and-financial-planning-twb-podcast-9/   Manulife Investment Management — https://www.manulifeim.com/retail/ca/en  Dimensional Fund Advisors — https://www.dimensional.com/hk-en/financial-professionals  Scott Cederburg on LinkedIn — https://www.linkedin.com/in/scott-cederburg-0917b0121/  Corey Hoffstein on LinkedIn — https://www.linkedin.com/in/coreyhoffstein/   We Study Billionaires — https://www.theinvestorspodcast.com/we-study-billionaires/   Hendrik Bessembinder | ASU Search — https://search.asu.edu/profile/2717225  Shiller PE Ratio — https://www.multpl.com/shiller-pe  ‘What if You Only Invested at Market Peaks?’ — https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/   Books From Today’s Episode:  The Only Guide You'll Ever Need for the Right Financial Plan — https://www.amazon.com/Only-Guide-Youll-Right-Financial/dp/1576603660    Papers From Today’s Episode:  ‘Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4590406  ‘Why Not 100% Equities’ — https://ibs-masters.narod.ru/olderfiles/1/asness_100equities.pdf   ‘A Conversation with Benjamin Graham’ — https://www.jstor.org/stable/4477960  ‘Forecasting Stock Returns: What signals matter, and what do they say now?’ — https://fairwaywealth.com/wp-content/uploads/Vanguard-Research-11-30-2014.pdf  ‘Dollar Cost Averaging vs. Lump Sum Investing’ — https://pwlcapital.com/wp-content/uploads/2024/08/Dollar-Cost-Averaging-vs-Lump-Sum-Investing.pdf

    1 h y 14 min
  4. 13 FEB

    Michael Mauboussin: The One Job of an Equity Investor

    What if the key to successful investing is about understanding how market expectations, intangible assets, and even your own biases shape the outcome? In this episode, Cameron sits down with Michael Mauboussin, a renowned expert in investment strategies and behavioural finance, to explore how the evolving dynamics of investing influence valuation, investor decision-making, and market efficiency. Michael is the head of Consilient Research at Counterpoint Global, part of Morgan Stanley Investment Management, and an adjunct professor at Columbia Business School, where he teaches courses on investing and decision-making. His work focuses on behavioural biases, skill versus luck, complex adaptive systems, and valuation. In our conversation, we discuss the core principles of equity investing, unpack the evolution of intangible assets, and explore how market dynamics are influenced by index funds. You’ll learn about capital allocation strategies, the shifting landscape of private equity, accounting challenges with intangibles, and how traditional investment frameworks are being redefined. Michael also provides insight into the "free dividend" fallacy, the importance of understanding the basic unit of analysis, the paradox of skill in active management, and more. Join us to learn about market and investing fundamentals to improve your strategy with Michael Mauboussin. Tune in now!   Key Points From This Episode:   (0:03:08) What the primary job of an equity investor is and the origin of stock returns. (0:05:37) Why dividends are less critical to total shareholder return unless fully reinvested. (0:08:43) Dissect the behaviour of investors in dividend stocks and the "free dividend fallacy." (0:10:01) Value versus growth classifications and how intangible assets impact valuations. (0:16:39) Learn about the potential advantages for companies investing in intangible assets. (0:20:20) How to determine a company's position in the competitive advantage life cycle. (0:24:42) The phase that offers the highest returns and what to consider about newer industries. (0:26:18) Explore the tradeoffs of intangible-intensive companies and the impact on base rates. (0:29:22) Pitfalls of valuation multiples and the implications for systematic value investors. (0:32:25) Relevance of market metrics and how index funds have affected alpha opportunities. (0:38:14) Effects of rising indexed assets and what to consider about market concentration. (0:45:01) Discover the historical link between market concentration and future returns.  (0:46:31) How active managers benefit markets and misconceptions about skilled managers.  (0:48:46) The value of active managers and advice for structuring investment portfolios. (0:52:44) Unpack the shift from public to private equities and why it happened.  (0:55:40) Insights into the benefits of private over public equities for investors.  (0:58:00) Ways intangible assets influenced the rise of private equity.  (0:59:27) What the market says about future returns and using public equity for diversification.   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 — info@rationalreminder.ca 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 Mauboussin — https://www.michaelmauboussin.com/ Michael Mauboussin on LinkedIn — https://www.linkedin.com/in/michael-mauboussin-12519b2/ Michael Mauboussin on X — https://x.com/mjmauboussin Columbia Business School — https://business.columbia.edu/ Morgan Stanley | Counterpoint Global — https://www.morganstanley.com/im/en-us/individual-investor/about-us/investment-teams/active-fundamental-equity/counterpoint-global-team.html The Heilbrunn Center for Graham and Dodd Investing — https://business.columbia.edu/heilbrunn Episode 332: Randolph Cohen and Michael Green — https://rationalreminder.ca/podcast/332   Books From Today’s Episode:   The Success Equation — https://www.amazon.com/Success-Equation-Untangling-Business-Investing/dp/1422184234 More Than You Know — https://www.amazon.com/More-Than-You-Know-Unconventional/dp/0231143729 Expectations Investing — https://www.amazon.com/Expectations-Investing-Reading-Prices-Returns/dp/159139127X Think Twice — https://www.amazon.com/Think-Twice-Harnessing-Power-Counterintuition/dp/1422187381 Creating Shareholder Value — https://www.amazon.com/Creating-Shareholder-Value-Managers-Investors/dp/0684844109 Capitalism Without Capital — https://www.amazon.com/Capitalism-without-Capital-Intangible-Economy/dp/0691175039 The New Goliaths — https://www.amazon.com/New-Goliaths-Corporations-Industries-Innovation/dp/0300255047 Security Analysis — https://www.amazon.com/Security-Analysis-Foreword-Buffett-Editions/dp/0071592539 —    Papers From Today’s Episode:    'The Dividend Disconnect' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2876373 'Trading Stages in the Company Life Cycle' — https://www.morganstanley.com/im/en-gb/intermediary-investor/insights/articles/trading-stages-in-the-company-life-cycle.html

    1 h y 5 min
  5. 6 FEB

    How to Choose an Asset Allocation

    Choosing an asset allocation is a crucial investment decision, as it determines expected returns and risk exposure. During this episode, we uncover what this means, exploring topics such as why risk may not always be the best assessment method. We unpack the three factors that John Grable’s risk profiling framework considers: behavioural loss tolerance, the ability to take risk (which assesses the financial capacity to withstand losses without affecting lifestyle), and the need to take risk. Many investors sabotage their returns by selling after losses and buying after gains, and we discuss the reasons behind this. We also explore why stocks tend to become less risky over long horizons, while bonds can be vulnerable to inflation and interest rate changes, before explaining why investors should focus on compensated risks. In the aftershow, we address listener comments on absolute returns, XEQT, why we have made certain sponsorship decisions, and more. To gain a deeper understanding of risk and avoid common pitfalls that can undermine your returns, tune in today!   Key Points From This Episode:   (0:05:10) The critical importance of choosing an asset allocation and understanding risk.  (0:08:35) How behavioural loss tolerance impacts asset allocation.    (0:18:42) Psychological theory on risk tolerance and willingness to engage in financial behavior.  (0:30:48) Assessing your need to take risks.  (0:39:24) Why market volatility is not where the true risks lie. (0:47:42) Private credit, other portfolio alternatives, and GICs.  (0:53:03) The aftershow: demystifying the AMA controversy. (1:00:20) Absolute returns, XEQT, and sponsorship on the Rational Reminder. (1:12:05) An update on Ben’s health and what he has learned from this experience.    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 — info@rationalreminder.ca 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/MarkMcGrathCFP Dan Bortolotti — https://pwlcapital.com/our-team/ 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/   Papers From Today’s Episode:  'The Grable and Lytton risk-tolerance scale: a 15-year retrospective’ — https://static.arnaudsylvain.fr/2017/03/The-Grable-and-Lytton-risk-tolerance-scale-15-year-retrospective.pdf

    1 h y 16 min
  6. 30 ENE

    Matthew Ringgenberg: When Do Anomaly Returns Happen?

    Today we are joined by the Professor of Finance at the University of Utah, Matt Ringgenberg to discuss everything related to anomaly returns. Matt’s research – mainly centred on the actions of short sellers – has been published in all the major journals including the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies. We begin with the definition of an asset pricing anomaly before learning about the anomalies that Matt’s research is primarily focused on. Then, we unpack anomaly returns and how they relate to anomaly signal information, what causes anomalies, the risk versus mispricing debate, and the barriers to accessing financial data that allow anomalies to persist. We also weigh Matt’s research against its anomaly-denying counterparts, assess anomaly behaviour before and after publicly available signal information, explore models that help to predict future anomalies, and learn more about the economic mechanism underlying asset pricing anomalies. To end, we dive into Matt’s paper, ‘The Loan Fee Anomaly’ and explore the relationship between cross-sectional predictors and market returns, and Matt explains why long-term happiness is the only true marker of success.    Key Points From This Episode:   (0:05:07) Matt Ringgenberg defines an asset pricing anomaly and describes the anomalies his research is focused on.  (0:06:27) When anomaly returns appear relative to the release of anomaly signal information. (0:07:57) How the annual forming of portfolios in June affects anomaly returns.  (0:08:50) The cause of anomalies, and the risk versus mispricing debate on anomaly returns.   (0:10:35) Unpacking the barriers to accessing financial data that allow anomalies to persist.   (0:13:41) How Matt’s rebalancing approach could affect anomaly-denying research. (0:14:37) Applying his work to valuation-based anomalies and to investors capturing anomaly returns in live-traded portfolios.   (0:16:04) How anomalies behave before anomaly signal information is publicly available. (0:17:48) Exploring the models that can be used to predict future anomaly signals.  (0:19:05) How anomaly premiums traded on predicted signals compare to trades on actual information release dates. (0:19:37) Understanding the economic mechanism underlying asset pricing anomalies. (0:24:38) Dissecting one of Matt’s short-selling papers, ‘The Loan Fee Anomaly’. (0:32:51) The relationship between cross-sectional predictors and market returns. (0:39:11) What Matt hopes to pass on to his students in his Introduction to Investments course. (0:40:48) How Matthew Ringgenberg 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/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.ca 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/MarkMcGrathCFP Matthew Ringgenberg on Google Scholar — https://scholar.google.com/citations?user=NArgYXUAAAAJ  Matthew Ringgenberg on LinkedIn — https://www.linkedin.com/in/matthewringgenberg/  Matthew Ringgenberg on X — https://x.com/Ringgenberg_M  University of Utah — https://www.utah.edu/  Davidson Heath on LinkedIn — https://www.linkedin.com/in/davidson-heath-5a28999a/   Management Science — https://pubsonline.informs.org/journal/mnsc  Journal of Financial and Quantitative Analysis — https://jfqa.org/  Morningstar Direct — https://www.morningstar.com/business/brands/data-analytics/products/direct  YCharts — https://ycharts.com/  Andre Chen — https://andrewchen.substack.com/  David Booth | Dimensional Fund Advisors — https://www.dimensional.com/hk-en/bios/david-booth    Papers From Today’s Episode:    ‘A Conversation with Benjamin Graham’ — https://www.jstor.org/stable/4477960   ‘The Loan Fee Anomaly: A Short Seller's Best Ideas’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3707166  ‘Do Cross-Sectional Predictors Contain Systematic Information?’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3459229

    42 min
  7. 23 ENE

    PWL’s Next Chapter

    PWL Capital is undergoing an exciting change that will help the company bring a greater positive impact to the Canadian Wealth Management space and serve more clients effectively. In this episode, Ben Felix and Cameron Passmore welcome Mike Sullivan, co-founder of OneDigital, to share the inside story behind PWL Capital's recent decision to join forces with OneDigital. With nearly 25 years of experience in growth through acquisitions, Mike explains how their unique culture and strategic vision led to this exciting collaboration. We discuss Mike’s role in driving OneDigital's expansion and how the company’s values align with PWL's mission to offer low-cost, client-centric, systematic investing. He provides insights into why this partnership represents more than just a business transaction by amplifying a shared vision for Canadian investors. Our conversation also delves into the dynamics of mergers and acquisitions and examines the importance of culture and purpose in making these critical decisions. Today’s episode offers a rare inside look at an M&A transaction with key players that many listeners will already be well-acquainted with. Tune in now to hear it all!   Key Points From This Episode:   (0:00:16) Details on PWL Capital's decision to partner with OneDigital. (0:14:31) An introduction to co-founder Mike Sullivan and OneDigital. (0:16:38) How Mike knows when an acquisition will be a good fit. (0:19:13) The opportunities for building a different kind of wealth management firm in Canada. (0:21:14) What attracted Mike to PWL as a potential OneDigital partner. (0:34:05) Mike’s insights on applying what’s worked to the Canadian marketplace. (0:36:14) How being part of OneDigital will make PWL better. (0:37:59) Mike and his co-founder Adam Bruckman’s objectives for OneDigital. (0:40:20) Why you shouldn’t expect changes to PWL’s service offerings or teams. (0:45:02) How being part of OneDigital will help PWL assist other like-minded advisors. (0:46:36) The typical advisor profile that PWL/OneDigital Canada would like to attract. (0:53:15) Reflections on our hopes and goals: what we are looking forward to at PWL. (0:57:45) Mike’s definition of success, plus Cam and Ben’s answer to the success question!   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 — info@rationalreminder.ca 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/MarkMcGrathCFP Mike Sullivan on LinkedIn — https://www.linkedin.com/in/mikesullivanatdigital/ OneDigital — https://www.onedigital.com/

    1 h y 3 min
  8. 16 ENE

    Ben Mathew: The Lifecycle Model vs. Safe Withdrawal Rates (SWR)

    What drives the best financial planning decisions? In this episode, Ben Felix and Mark McGrath sit down with Ben Mathew, a PhD in economics from the University of Chicago and author of Economics: The Remarkable Story of How the Economy Works. The discussion explores the lifecycle model of economics, a powerful yet underutilized framework for financial planning, and contrasts it with traditional approaches like safe withdrawal rates (SWR). Ben Mathew shares insights into the lifecycle model, its origins, and its practical applications in aligning financial decisions with personal goals over a lifetime. We also dig into Ben’s innovative financial planning tool, TPAW (Total Portfolio Allocation and Withdrawal) Planner, designed to bring the lifecycle model into practice. While the discussion delves into the complexities of financial planning, it’s packed with actionable insights for listeners seeking smarter, evidence-based strategies. Join us for a deep dive into the lifecycle model and discover how it compares to traditional safe withdrawal rates.   Key Points From This Episode:   (0:02:31) Identifying the main problem financial planning aims to solve and the biggest challenges in creating a plan for saving and spending across a lifetime. (0:05:49) Exploring the effectiveness of simple rules of thumb, like the 4% rule, and the economic models available to analyze financial planning problems. (0:09:16) Why the lifecycle model isn’t more widely adopted. (0:12:06) The basic premise of the lifecycle model. (0:16:45) How withdrawals in the lifecycle model relate to amortization and how risk affects amortization-based withdrawals. (0:21:12) Examining how amortization-based variable spending aligns with consumption smoothing and responds to portfolio drops. (0:25:25) How updating expected return assumptions mitigates behavioural worry during market drops. (0:26:37) The variability in spending seen in historical simulations, how variable spending can be tailored to individual preferences, and the recommended frequency for updating financial calculations. (0:38:30) What the lifecycle model advises about asset allocation. (0:42:00) The importance of expected return assumptions in lifecycle asset allocation advice. (0:45:28) Adjusting lifecycle advice for when you have limited information about expected returns and how retirement glide paths compare to the lifecycle model. (0:50:03) How asset allocation in the model changes based on the time horizon of the goal. (0:54:10) The influence of different wealth levels on asset allocation in the lifecycle model. (0:56:43) How the safe withdrawal rate methodology works and key problems with its approach. (01:08:11) Connecting the probability of success metric to the utility function and differentiating variable safe withdrawal rates (SWR) from amortization-based withdrawals. (01:17:02) An overview of Ben’s exciting online tool, TPAW (Total Portfolio Allocation and Withdrawal) Planner, for bringing the lifecycle model into practice.   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 — info@rationalreminder.ca 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/MarkMcGrathCFP Ben Mathew — http://www.benmatheweconomics.com/ Ben Mathew on LinkedIn — https://www.linkedin.com/in/bmathecon/  TPAW Planner — tpawplanner.com Bogleheads — https://www.bogleheads.org/wiki/Main_Page   Books From Today’s Episode:   Economics: The Remarkable Story of How the Economy Works — https://www.amazon.com/Economics-Remarkable-Story-Economy-Works/dp/0988669102 The Missing Billionaires: A Guide to Better Financial Decisions — https://www.amazon.com/Missing-Billionaires-Better-Financial-Decisions/dp/1119747910

    1 h y 23 min
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A weekly reality check on sensible investing and financial decision-making, from three Canadians. Hosted by Benjamin Felix, Cameron Passmore, and Dan Bortolotti, Portfolio Managers at PWL Capital, and Mark McGrath, Associate Portfolio Manager at PWL Capital.

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