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Episode 286: Errol Morris: Tuning out the Noise
4 januari 2024 · 1 uur 1 min
Rational Reminder listeners get exclusive first access to Tune Out the Noise, a documentary directed by Academy Award-winner Errol Morris until January 31. Lees meer
Tune Out The Noise Access URL: film.dimensional.com/podcast
Access Code (available until Jan 31): RATIONAL
In today's episode, Errol Morris, Academy Award-winning film director and author, joins us to talk about his recently released documentary called Tune Out the Noise. The documentary focuses on the revolution that's happened in the financial system, how the markets work, and why the advancements made are so vital. Errol is an acclaimed figure in film and literature, boasting an impressive array of accolades, notably securing an Oscar for his renowned documentary The Fog of War. His work spans various arenas, encompassing short films for prestigious events and many charitable and political organizations. In our conversation, we delve into the significance of storytelling in communicating complex subjects, the power of serendipity, the evolution of finance, and the enigmatic nature of truth. We discuss the necessity of storytelling, the unexpected occurrences that influenced finance, the importance of empirical data in understanding truth, the central story of Tune Out the Noise, and much more. He also provides insights into the amazing economists, many of whom are past guests, who helped shape the financial landscape. Discover how chance, humility, and the pursuit of truth intertwine in this captivating episode, where the intriguing art of storytelling converges with the complexities of the financial world. Tune in now!
Rational Reminder listeners get exclusive first access to Tune Out the Noise, a documentary directed by Academy Award-winner Errol Morris until January 31.
Tune Out The Noise Access URL: film.dimensional.com/podcast
Access Code (available until Jan 31): RATIONAL
Key Points From This Episode:
Introduction and background about our special guest, Errol Morris. (0:00:18)
The central story…
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Episode 285: A Year in Review
28 december 2023 · 2 uur 5 min
It's hard to believe, but today's episode marks our fifth annual year-in-review episode — where we look back at some of our favourite conversations and takeaways from the past year! If there's one overarching theme that stood out amongst our guests in 2023 it would be the power of purposeful decision-making to impact our future selves. Tuning in, you'll hear our guests' remarkable views on the topic, from the power of regret when it comes to long-term decisions to the 'hidden partner' that accompanies us in all our decision-making. Another key theme that emerged is how the role of financial advisors is evolving. Key insights include why your financial advisor should collaborate with other advisors, why trust is essential, and how to prepare your children for wealth. We wrap things up with reflective tips on how to identify what your true goals are with a profound lesson on why setting your own scoreboard is essential. Tune in as we share some of our favourite moments from the past year and look back at the incredible guests we've had on the show in 2023! Lees meer
Key Points From This Episode:
Our year with the Rational Reminder community: 23 in 23 reading challenge, memorable meetups, live recordings, a shoutout to our community moderators, and more. (0:00:19)
Looking back at our conversation with Charles Ellis and Burton Malkiel on why money management is a loser's game and navigating market efficiency. (0:08:42)
Pim Van Vliet's insights on the evidence supporting higher expected returns related to certain stock characteristics. (0:16:19)
Discussing the relevance (and irrelevance) of dividends and why people tend to view dividends as particularly special, with Professor Samuel Hartzmark. (0:19:42)
Our conversation with Will Goetzmann on the value of very long-term data and why historical data is still relevant today. (0:24:58)
Nobel laureate, Robert Merton's insights on putting together a long-term asset mix and taking into account your time horizon. (0:32:35)
High…
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Episode 284: Prof. Scott Cederburg: Challenging the Status Quo on Lifecycle Asset Allocation
21 december 2023 · 1 uur 9 min
In this episode, we welcome back the esteemed Professor Scott Cederburg, Associate Professor of Finance at the University of Arizona. In this highly anticipated episode, Professor Cederburg revisits the show to delve into his groundbreaking paper on life cycle asset allocation. Professor Cederburg's latest research presents findings that disrupt traditional thinking in the field, prompting a deep dive into the implications of these new insights. In our conversation, we unpack the findings from the paper and how they challenge established norms in retirement planning and asset allocation. We discuss what the new paper adds to the discourse, his approach and methodology, the different assessment criteria used, and the main findings from the paper. We also delve into the different asset allocation strategies assessed, which strategy performed best, aspects that would influence the various strategies, and how to invest for the long term safely. We explore the nuances of stock versus bond returns and the hidden benefits of international diversification. Gain profound insights into the significance of social security, inflation-protected bonds, target date funds, and the repercussions of an all-equity strategy. Comparing his latest paper with prior research on withdrawal rates, Professor Cederburg highlights surprising aspects of the results and provides invaluable takeaways for financial advisors from these cutting-edge findings. Discover how this pioneering work challenges conventional wisdom, reshaping the landscape of retirement planning and investment strategies in this illuminating conversation with Professor Scott Cederburg. Lees meer
Key Points From This Episode:
Background about Professor Cederburg and episode overview. (0:00:00)
How his new paper challenges the central tenets in life cycle investing. (0:03:38)
What sets his method apart regarding its ability to challenge the status quo. (0:06:56)
How he characterizes the life cycle of the household modelled in his s…
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Episode 283: When Volatility is Risk, and Introducing The Money Scope Podcast
14 december 2023 · 53 min
Today's episode features a series of in-depth segments, and includes a visit from our two favourite Marks; Mark Soth (aka The Loonie Doctor) and Mark McGrath! To kick things off we break down volatility and investor behaviour by looking back at our conversation with Scott Cederburg and what his research demonstrates about the topic. We then hear from Mark Soth about the project that he and Ben have been working on; the soon-to-be-released Money Scope podcast. Find out what you can expect from their financial curriculum, like the topics they'll be covering and how the structure of their episodes is specifically designed to educate. Next up we have our Mark to Market Segment, with Mark McGrath providing a detailed overview of everything you need to know about physicians incorporating. We then cover a recap of our conversation with Gerard O'Reilly, before sharing our thoughts on why this episode is worth multiple listens. Following that you'll hear Cameron share his review of Brave New Work: Are You Ready to Reinvent Your Organization? by Aaron Dignan, along with his key takeaways from the book. Finally, in our after-show section, we discuss some of the fantastic guests we have coming up, our recommended reading to prepare for those episodes, community updates, plus a few other goodies! Lees meer
Key Points From This Episode:
The biggest takeaways on volatility and investor behaviour from Scott Cederburg's research; unpacking performance chasing, return gaps, fund expense ratios, and more. (0:02:06)
An overview of the project that Mark Soth and Ben have been working on, the Money Scope podcast; why they started it, what it covers, and who it's for. (0:14:13)
Details on Money Scope's format and the supplementary case study episodes. (0:19:12)
Our Mark to Market segment on physicians incorporating; a rundown of the complexities, common misconceptions, and benefits to be aware of. (0:26:32)
How much you should be retaining in a corporation to make it worthwhile. (0:33:30)
A…
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Episode 282: Dr. Jim Grubman: The Psychology of Wealth
7 december 2023 · 1 uur 14 min
In this episode, we delve deep into the world of wealth management and family advisory services and explore the evolving landscape of financial wealth planning. Dr. James Grubman, a renowned expert in family wealth psychology and author of Strangers in Paradise and Wealth 3.0, shares his profound insights and expertise on this critical subject. Dr. Grubman is a distinguished figure in family wealth and well-being and has made a mark with his profound understanding and enduring contributions to the field. In our conversation, we unpack the wealth management landscape through a psychological lens. We discuss the definition of wealth, the complex family dynamics and hurdles faced when adapting to elevated levels of wealth, and the essential role parents play in imparting financial responsibility to their children. We also explore the fundamentals when embracing the cultural norms associated with affluence, the psychological and practical ramifications of avoiding or overcompensating for wealth, the changing landscape of family wealth management, and much more. Listeners will also gain a comprehensive understanding of the evolution of wealth management, from traditional approaches to the transformative Wealth 3.0, along with insights on nurturing strong family relationships in the context of affluence. Dr. Grubman's wealth of knowledge and engaging storytelling make this episode a must-listen for those interested in the future of wealth management. Tune in now! Lees meer
Key Points From This Episode:
Dr. Grubman's definition of wealth and why wealth is relative. (0:04:06)
How common is becoming wealthy compared to being born wealthy. (0:07:12)
Family dynamics and challenges when adapting to higher levels of wealth. (0:11:01)
Why modelling healthy personal financial management is vital for children. (0:16:00)
Discover how the origins of wealth influence the ability to psychologically adapt. (0:20:34)
Essential considerations when adopting the culture of wealth. (0:23:00)
…
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Episode 281: Lifecycle Asset Allocation, and Retiring Successfully with Justin King
30 november 2023 · 1 uur 5 min
Today, we take a closer look at asset allocation through an empirical lens, by drawing on the work and data of Scott Cederburg and his new article 'Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice'. We unpack what the research tells us about how to establish the optimal mix of assets in a portfolio, the challenges of making the right decisions when you have volatile assets, and why it's critical that you understand your level of risk tolerance. Next, in our Mark to Market segment, we unpack different types of insurance — like life, disability, and critical illness — and when you should own them personally versus making them the property of your corporation. We then review Justin King's new book The Retirement Café Handbook: Nine Accelerators for a Successful Retirement before sitting down with the author himself to discuss the content of his latest work and his long-held interest in helping others optimize for retirement. Tuning in you'll hear Justin share his thoughts on the role of choice, vitality, and joy when it comes to having a successful retirement, the nine accelerators he lays out in his book, and how to become the hero of your retirement story. In our final section, we wrap things up with some wonderful reviews from listeners and our book recommendations. To hear all of the captivating takeaways from today's episode, be sure to tune in! Lees meer
Key Points From This Episode:
Breaking down asset allocation through an empirical lens; finding the right mix of assets in a portfolio, common challenges, and measuring risk. (0:02:12)
The role of government pensions when considering asset allocation over one's life. (0:09:10)
Investigating whether volatility is risk; modeling the lifecycle of an investor and determining if (and when) it makes sense to shift into bonds over time. (0:11:27)
Analyzing the data, modelling, and findings from the paper, 'Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice'. (0:14:02)
The…
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Episode 280: Shane Parrish: Clear Thinking in Everyday Life
23 november 2023 · 59 min
In this episode, we delve into the complexity of navigating life's challenges, taking risks, fostering self-confidence, and honing problem-solving skills. Joining us is Shane Parrish, a best-selling author, to help us unpack this nuanced topic through the lens of his new book, Clear Thinking. His latest publication is a roadmap for recognizing pivotal moments for clear thought and exposing how our defaults often drive us. He aims to empower readers to intervene, harness reasoning, and apply cognitive tools for better decision-making. Shane is also the founder of the website blog Farnam Street and the venture capitalist firm Syrus Partners. In our conversation, we explore the steps to becoming a clear thinker and how the mantra can be applied to our daily lives. We discuss how ordinary moments influence our decisions, the definition of true goals, and how to build self-confidence. We also unpack the barriers that hinder clear thinking, the difference between playing on hard and playing on easy, the value of continual growth, and much more. Tune in and discover how to master risk, confidence, and problem-solving with Shane Parrish! Lees meer
Key Points From This Episode:
Background about Shane Parrish and his new best-selling book, Clear Thinking. (0:00:19)
The significance of ordinary moments and the benefits of becoming a clear thinker. (0:03:19)
Examples of how ordinary moments can multiply bigger decisions to zero. (0:06:32)
Defining true goals, and why regularly reassessing them ensures personal growth. (0:08:20)
Clear thinking's role in reaching goals and how it helps evaluate your objectives. (0:11:07)
Discover the defaults that hinder clear thinking and strategies to overcome them. (0:12:19)
Best practices as a decision-making tool and the value of unconventional paths. (0:25:22)
Explore the role of self-confidence in clear thinking and taking the first step. (0:26:51)
Learn about the importance of good habits in developing clear thinking. (0:33:03)
Making y…
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Episode 279: Stock Returns in Recessions, and FSRA's Approach to Regulation
16 november 2023 · 1 uur 35 min
In this episode, we start by learning about the complex relationship between recessions and stock returns before welcoming Huston Loke and Jordan Solway from the Financial Services Regulatory Authority (FSRA) to discuss protecting consumers in the financial investment space. Huston is the Executive Vice President of Market Conduct, and Jordan is the Executive Vice President of Legal and Enforcement at FSRA. The FSRA supervises insurance companies, mortgage brokers, credit unions, pensions and other non-securities areas of the financial services sector. We discuss the objectives of the FSRA, their approach to protecting consumers, enforcement strategies, upcoming regulations, and more. Then, we welcome back Mark McGrath to learn about the Passive Investment Grind (PIG) concept for this week's Mark to Market segment, and we take a look back at a previous episode with Ted Seides of Capital Allocators. Finally, we are joined by author Tim Hale to discuss the new edition of his book Smarter Investing before closing off with our usual after-show roundup. Tune in now! Lees meer
Key Points From This Episode:
(0:03:22) The relationship between recessions and stock returns, the definition of a technical recession, and the role of media in shaping perceptions.
(0:09:33) Why bad economic conditions don't necessarily warrant changes to investment strategies and why attempts to time the market based on recession news should be avoided.
(0:13:42) Introducing Huston Loke and Jordan Solway and background about the Financial Services Regulatory Authority of Ontario (FSRA).
(0:15:34) Objectives of the FSRA and the principle of putting the client's interest first.
(0:18:55) What aspects of financial advisory services FSRA regard as the most important.
(0:20:30) Unpacking the "Take-All-Comers" rule in Ontario and how it protects consumers.
(0:25:32) How successful the title protection rule has been in Ontario and how it differentiates between the title of financial advisor and financial …
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Episode 278: Juhani Linnainmaa: Financial Advisors, and the Cross-Section of Returns
9 november 2023 · 58 min
If you dive deep into financial advisor fixed effects, you'll begin to understand that an advisor's own portfolio has a bigger impact on the portfolios of their clients than the characteristics of the clients themselves. To help us make sense of this and to further explain financial values and the cross-section of returns, we are joined by the influential and notorious Professor of Finance, Juhani Linnainmaa. Our conversation begins with a comprehensive analysis of financial values, including a comparison between the trading patterns of advisors and those of their clients, a disquisition of misguided beliefs, an examination of client characteristics, and the ins and outs of portfolio variation and customizations. Canada recently adopted regulations from the Mutual Fund Dealers Association (MFDA), and we discuss how this has affected the use of financial advice in the country before comparing the benefit of increased equity share to the cost of advice, what hiring a new advisor before a financial crisis may mean for clients, and the role of regulation in the industry. We end with the cross-section of returns by examining accounting-based anomalies pre-1963, how profitability and investment relate to data mining, why a financial firm would switch between growth and value, and finally, Professor Juhani Linnainmaa's definition of success. Lees meer
Key Points From This Episode:
(0:00:42) A very warm welcome to the influential Professor of Finance, Juhani Linnainmaa.
(0:03:52) Comparing the trading patterns of advisors to those of their clients.
(0:08:45) How regulators can go about addressing misguided beliefs.
(0:11:08) Client characteristics that advisors base portfolio customizations on.
(0:13:22) Whether the variation in a client's portfolio can be explained by their characteristics.
(0:14:49) Explaining the remaining variation in portfolios.
(0:19:38) Other reasons for the high cost of advising, aside from portfolio customization.
(0:22:03) How the adoption of the …
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Episode 277: The Cash Wedge w/ Phil Briggs, and and the Four Ds of Tax Planning
2 november 2023 · 49 min
During this episode, Financial Advisor and Associate Portfolio Manager Phil Briggs joins us to discuss the 'cash wedge' financial strategy. He also shares his motivation for joining PWL Capital after kicking off his career in the banking industry. Next, Mark McGrath unpacks the four D's of tax planning and how to implement them in your future planning. We review a much-loved past episode featuring Dr. William Bernstein and unpack the principles taught in Seth Godin's latest book, The Song of Significance. During the aftershow, you'll hear about our recent explorations in the world of infinite banking, Admired Leadership, and more. In closing, we share some of our favourite reviews from guests all over the world and offer a glimpse of what's to come in upcoming conversations. Thanks for listening! Lees meer
Key Points From This Episode:
(0:02:19) Phil's introduction to financial services and his decision to join PWL.
(0:07:06)The role of the podcast in helping Philip to take the plunge and leave his role at the bank.
(0:09:35) What the 'cash wedge' strategy is and how it supports financial planning for retirement.
(0:22:41) Stress-testing financial plans using the Monte Carlo simulation.
(0:25:10) Mark McGrath joins the show for this episode's Mark-to-Market segment.
(0:29:54) Assessing which category RSPs fit into.
(0:32:02) Past episode review: episode 108 with Dr. William Bernstein.
(0:34:22) Reviewing Seth Godin's book, The Song of Significance.
(0:29:11) Seth's principles on the road to significance.
(0:39:53) The aftershow: infinite banking, Admired Leadership, and more.
(0:42:43) Reviews from Canada, Australia, San Francisco, and beyond.
(0:47:44) A teaser for two upcoming episodes.
Books From Today's Episode:
The Song of Significance — https://www.amazon.com/Song-Significance-New-Manifesto-Teams/dp/0593715543
The Four Pillars of Investing — https://www.amazon.com/Four-Pillars-Investing-Second-Portfolio/dp/1264715919/
The Wealthy Barber — https://www.a…
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Episode 276: Darin Soat: The Problem with Finfluencers, and Why it Won't Get Better Anytime Soon
26 oktober 2023 · 54 min
If you're in the world of finance, you'd know today's guest from YouTube — but you've probably never heard his real name. However, today and for the first time, he chooses to associate his actual identity with his YouTube channel! It's an honour to introduce to you, Mr. How Money Works himself, Darin Soat. On his YouTube channel, Darin combines captivating storytelling with high-quality, sensible information that helps you to make better financial decisions. Today, he joins us to explain How Money Works, why he chose to create his channel anonymously, and how he feels after his grand reveal. He describes how his channel informed his career as an investment banker, and gives us his insider breakdown of how influencer businesses work. Then, we dive deep into YouTube as we explore the problems with today's financial influencers (finfluencers), how these problems are carried through to the crypto market, why it's rare to find high-quality financial information on YouTube, and everything you need to know about the gamification of investing, creating passive income, and the ins and outs of investing from the perspective of one of YouTube's top finfluencers, Darin Soat! Lees meer
Key Points From This Episode:
We're thrilled to reveal the real identity behind How Money Works – Darin Soat! (0:00:42)
Darin's professional background. (0:01:41)
A thorough description of How Money Works, straight from the source. (0:04:33)
Exploring Darin's background in investment banking. (0:07:08)
How he chooses content for his YouTube channel. (0:11:05)
Why he created his channel anonymously, and how he feels after his reveal. (0:12:54)
How his channel impacted his work while he was still in investment banking. (0:14:54)
Darin's summation of how influencer businesses work. (0:17:00)
The problems with today's financial influencers on YouTube. (0:21:17)
How the aforementioned problems relate to the crypto market. (0:27:11)
His criteria for selecting sponsors for How Money Works. (0:32:03)
…
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Episode 275: Live from Future Proof 2023: Decoding Financial Decision-Making with Hal Hershfield
19 oktober 2023 · 39 min
In this episode, we welcome back Hal Hershfield, Associate Professor of Marketing and Behavioral Decision Making at UCLA Anderson School of Management. Hal is renowned for his pioneering work in understanding how individuals make financial decisions, and he shares invaluable insights that can help us navigate the complexities of financial planning. In our conversation, live from Future Proof, we explore the intersection of behavioural economics, financial decision-making, and the potential for AI to enhance financial advisory services through the lens of Hal's latest research findings. We explore framing insurance decisions, the impact of generative AI on financial choices, and the often-overlooked realm of end-of-life decisions. Discover why the key to success lies in understanding different consumer segments, how advisors can optimize the frequency of client meetings, and how clients and advisors should be working together. We also unpack the importance of personalized decisions, the value of a decision-making journal, the framework for making the right financial choice, and much more. Tune in to gain valuable insights into behavioural economics, consumer preferences, and the evolving financial planning landscape with Hal Hershfield! Lees meer
Key Points From This Episode:
(0:02:41) Hal shares his motivation for writing the paper and why the topic of financial decision-making is so vital to understand.
(0:04:28) An overview of our current understanding of financial decision-making and interesting findings from the latest work on the subject.
(0:09:00) How to leverage the current knowledge of financial decision-making to your benefit.
(0:10:27) Opportunities for the industry to improve, both in academia and industry.
(0:15:09) Characterizing the framework for conceptualizing financial decisions, from decision-making to the consequences.
(0:18:13) The biggest gaps and opportunities for future research and the value of writing and maintaining a decision journal.
(0:22…
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Episode 274: A Live 5-Year Rational Reminder Retrospective (and Creating Superfans with Brittany Hodak)
12 oktober 2023 · 1 uur 23 min
In this episode, we are trying something different. Recorded live at the CFA Society's Toronto Annual Wealth Conference, we take an exclusive look at the origins and evolution of the Rational Reminder Podcast through an interview with Ben and Cameron. From motivations for starting the podcast to favourite episodes and guests, we delve into the behind-the-scenes of the show. Discover how the podcast has grown, the impact it's had on listeners, and the exciting global reach it's achieved. Get an exclusive look at the challenges, regrets, and valuable lessons learned along the way. Then, we are joined by Mark McGrath to explore common pitfalls of ITF accounts, providing listeners with valuable information to help them make the right decisions for their investments. Finally, we welcome special guest Brittany Hodak, author of Creating Superfans, which unpacks the concept of turning customers into passionate fans of your brand. Brittany shares her insights on the power of storytelling in business and how to create Superfans who will champion your brand. We explore the concept of the experience economy, the right approach to investing in marketing for your business, and much more! Join us for this extraordinary episode that blends wealth management insights, podcasting wisdom, and the secrets to cultivating Superfans. Whether you're a long-time Rational Reminder listener or a business owner seeking to supercharge customer loyalty, this episode has something for everyone. Tune in now! Lees meer
Key Points From This Episode:
(0:04:32) Introduction to Ben and Cameron's interview at the 2023 Annual Wealth Conference.
(0:07:15) Learn about the average listener base for the show, the active Rational Reminder community, and how the podcast has grown over time.
(0:10:08) The global reach of the podcast, how it has benefitted business, and a look back at the first episode of Rational Reminder.
(0:13:19) What Ben and Cameron originally envisioned, how they met, and what motivated them t…
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Episode 273: Professor Samuel Hartzmark: Asset Pricing, Behavioural Finance, and Sustainability Rankings
4 oktober 2023 · 1 uur 22 min
Today's episode is an exhilarating journey into the captivating realms of finance and human behaviour with Professor Samuel Hartzmark, who takes centre stage to explore the complex intersection of asset pricing and behavioural finance. Professor Hartzmark's career and academic journey are nothing short of inspiring. With a double major in mathematics and economics, a prestigious MBA from the University of Chicago Booth School of Business, and a Ph.D. from the University of Southern California's Marshall School of Business, he has paved a remarkable path through the world of academia. Our conversation takes a deep dive into his groundbreaking research, where he dissects complex financial topics with astonishing clarity. We delve into some of his most-cited papers, including those on dividends and sustainable investing, which consistently reveal counterintuitive conclusions that challenge conventional wisdom. We unpack price-only index returns, dividend juicing, price-only data, the value of sustainability rankings, and the power of capital to make the world a better place. And don't miss our exploration of multi-factor asset pricing, where Samuel's unique perspective sheds new light on these models in the context of human behaviour. This episode promises an enlightening and engaging conversation that investors and finance enthusiasts alike won't want to miss! Lees meer
Key Points From This Episode:
(0:03:48) Morningstar's sustainability rating system and its impact on the flow of mutual funds.
(0:07:35) Choosing sustainability ratings over other metrics and how they motivate investors.
(0:16:24) What drives the behaviour of mutual fund investors toward green firms.
(0:18:17) Unpacking the concept of sustainable investing and how impact elasticity is relevant.
(0:23:15) Insights into the impact elasticity differences between brown and green firms.
(0:26:40) The divestment of brown firms and ESG integration.
(0:28:58) Unlocking the power of investor capital to shift tow…
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Episode 272: Rob Carrick: Canadian Personal Finance in 2023
28 september 2023 · 53 min
In this episode, we welcome back one of Canada's most trusted and widely read financial experts to discuss the state of Canadian personal finance. Rob Carrick is a columnist for The Globe and Mail, where he has brought his boots-on-the-ground perspective to readers for more than 20 years. He also co-hosts the Stress Test Podcast, where regular Canadians offer real-life perspectives on the biggest stress tests that their personal finances face in the wake of COVID-19. Tuning in, you'll find out which issues are at the forefront of Rob's readers' lives. Next, he shares his perspective on GICs and ETFs and draws a comparison between affordable housing today and the mutual fund market of 20 to 30 years ago. We talk about the lack of comprehensive advice that Canadians are receiving from their planners, the state of affordable housing in the country, and why so many Canadians say they are giving up on home ownership altogether. We also compare housing returns to the stock market and discuss successfully using a reverse mortgage, the non-financial challenges faced by retirees, and more. For a comprehensive overview of the state of personal finance in Canada (and some practical advice for protecting yourself and prospering in a challenging economy), don't miss today's episode! Lees meer
Key Points From This Episode:
(0:00:19) Introducing today's returning guest, Rob Carrick.
(0:02:38) Issues at the forefront of Rob's readers' lives today.
(0:04:02) His perspective on GICs, ETFs, and simplification.
(0:09:33) Comparing today's EFT Market with the mutual fund market of 20 to 30 years ago.
(0:15:24) The lack of comprehensive advice Canadians are receiving from their planners.
(0:20:03) Rob's perspective on affordable housing, as outlined in his Globe and Mail article.
(0:24:52) Why a growing number of adults continue to live with their parents into adulthood.
(0:28:48) Reasons that many Canadians say they are "giving up on home ownership."
(0:31:44) Housing returns in compar…
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Episode 271: Expected Returns of the AI Revolution (plus People are Lying to you About Money w/ Anthony Walsh)
21 september 2023 · 1 uur 5 min
AI is not new and financial mis-education is rife. These are two ideas that form the foundation of this episode, which features insights from Ben Felix, Mark McGrath, and guest speaker Anthony Walsh. To start our conversation, we explore the history of artificial intelligence and what it might mean for the future and beyond. During this Mark to Market segment, Mark McGrath shares his experience of owning property and becoming a landlord before we look back on Episode 155 with Don Ezra, where he revealed his thoughts on planning for life after work. Anthony Walsh, author of People Are Lying To You About Money joins us to discuss his efforts to remedy the lack of financial literacy among everyday people, how he approaches financial planning as a risk-averse person, and his move from lean FI to Coast Fi. He also shares his thoughts on the relative value of money, the importance of planning according to financial wellness and health, and more. Join us today to hear all this and so much more! Lees meer
Key Points From This Episode:
(0:04:07) The cycles of AI development, excitement, and disappointment in technological history.
(0:15:01) How technology bubbles impact investors and why investing in revolutionary technology is a questionable strategy.
(0:18:50) The paradox of skill and how it applies to investment strategy.
(0:23:40) Mark to Market Segment with Mark McGrath on real estate and rentals.
(0:34:50) Looking back on Episode 155 with Don Ezra on planning for life after work.
(0:37:03) Introducing today's guest: Anthony Walsh, who wrote People Are Lying To You About Money.
(0:40:17) Four types of lies people tell about money and why most people are financially illiterate.
(0:48:46) How Anthony navigates financial planning as a risk-averse person.
(0:53:25) What motivated his move from Lean FI to Coast FI and the relative value of money.
(0:55:10) The importance of planning according to financial wellness and health.
(0:57:19) The after-show; shows and series you…
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Episode 270: Victor Haghani and James White: The Missing Billionaires
14 september 2023 · 1 uur 36 min
If the wealthiest families of the past century spent a reasonable amount of their wealth, invested in the stock market, and paid taxes, there would be thousands of billionaires today. But there aren't. So, what happened? To answer this question, we are joined by authors and finance professionals, Victor Haghani and James White. Their recently released book, The Missing Billionaires: A Guide to Better Financial Decisions, uses the missing billionaires puzzle to explore how and why most investors fail to capture the returns offered by the market. Victor was a founding partner of Long-Term Capital Management (LTCM), the multi-billion-dollar hedge fund that famously collapsed in 1998 and nearly took the global financial markets down with it. His participation in the downfall of LTCM led him to reassess much of the way he thought about investing, and in this episode, he shares some simple but powerful frameworks and personal finance recommendations. We also receive accessible explanations of the Merton model and expected utility theory from James, take a deep dive into dynamic asset allocation, discuss optimal solutions for lifetime spending, and learn more about the certainty equivalent return and Sharpe ratios, plus so much more. Whether you're an entrepreneur invested in your own business or simply focused on building long-term wealth, Victor and James' book (and this conversation about it) will be a valuable resource for better financial decision-making, so be sure to tune in today! Lees meer
Key Points From This Episode:
(0:05:19) The puzzle of the missing billionaires (and why it matters to Victor and James).
(0:09:45) Some common but critical financial decision-making problems most people face.
(0:12:39) Unpacking the coin-flipping experiment in their 'What's Past is Not Prologue' paper.
(0:19:57) What investors should aim to maximize when sizing positions in risky assets.
(0:24:22) An example that illustrates how the Merton model relates to bullish bets.
(0:29:04) …
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Episode 269: Preet Banerjee: A multi-dimensional analysis of the value of financial advice
7 september 2023 · 1 uur 33 min
This week we welcome back return guest Preet Banerjee, a renowned speaker, personal finance expert, consultant, and author of Stop Overthinking Your Money. Listeners may remember Preet from his previous appearance on the show back in 2019 when he was first embarking on his doctoral journey. Several years and one pandemic later, Preet has finally made it through the monumental task of completing his dissertation! We spend today's conversation with Preet getting into the fascinating details of his research which interrogates the value of financial advice within households and explores the pressing question of whether it's worth getting it. Preet provides a comprehensive overview of the current state of financial planning and shares his most intriguing findings before unpacking the policy and regulatory recommendations that emerge from his research. The latter part of the show includes our Mark to Market segment with Mark McGrath, where this week, he delivers key insights on retirement savings plans (RSPs) and why he believes RSPs are actually tax-free. You'll also hear our reflection on our past conversation with Colonel Chris Hadfield, paired with a book review of Kevin Kelly's Excellent Advice for Living: Wisdom I Wish I'd Known Earlier. Join us for an expansive episode on the value of financial advice along with timely insights on what truly matters in life! Lees meer
Key Points From This Episode:
(0:03:34) Background on today's guest, Preet Banerjee, and the focus of his research: the value of financial advice to households and whether it's worth getting it.
(0:06:29) Key problems with past research attempting to demonstrate the value of financial advice (including the portfolio-centric advice model).
(0:10:47) A review of the existing literature on the value of financial advice; the gap in the literature that his research is addressing.
(0:16:27) How Preet measured holistic wealth scores and comprehensive financial confidence in his research and the dataset he based …
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Episode 268: Itzhak Ben-David: ETFs, Investor Behavior, and Hedge Fund Fees
31 augustus 2023 · 1 uur 25 min
For nearly 25 years, Exchange Traded Funds (ETFs) have been a popular passive investment vehicle for both household and professional investors due to their low transaction costs and high liquidity. But what are the pros and cons? How can you diversify your portfolio to avoid volatility? Today, we are joined by Professor Itzhak Ben-David, one of the world's foremost academic experts on ETFs, the Neil Klatskin Chair in Finance and Real Estate at The Ohio State University (OSU) Fisher College of Business, and the Academic Director of the OSU Center for Real Estate. In this episode, we look at the current ETF market and the impact that ETFs have on underlying securities and investor outcomes. We discuss Morningstar ratings, the change that happened in 2002, and some mind-blowing data regarding hedge fund fees. We also dive into the correlation between miscalibrated CFOs and overconfidence; the unnecessary mental accounting people do when it comes to tax refunds, and so much more. This conversation makes for an incredibly diversified overview of a variety of topics that are relevant to financial decision-making at the household level. Finance experts will certainly find value here, too! Regardless of your level of experience, tune in today to learn more. Lees meer
Key Points From This Episode:
(0:03:27) Professor Ben-David's take on the current state of the ETF market.
(0:07:37) Ways that investors are affected by a broader variety of ETF options.
(0:16:46) Advice for investors who have been lured in by a sector or thematic ETF.
(0:17:53) Mutual or hedge funds versus ETFs and their impact on underlying securities.
(0:26:38) Reflections on the behaviour of mutual fund investors (learning versus luck).
(0:33:01) How we can learn what investors care about from mutual fund flows.
(0:37:15) Why investors typically put their money where the Morningstar ratings are.
(0:38:46) Morningstar's rewiring of the "star" system in 2002 and its repercussions.
(0:48:54) The effect of Mor…
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Episode 267: The (Expected) Cost of Pessimism (Plus Matthew Dicks on the Value of Storytelling)
24 augustus 2023 · 1 uur
Today's show is centred on the expected cost of pessimism and how investor expectations of loss negatively affect financial decisions. After concisely exploring the data and literature on the subject, we get into a few solutions to this dynamic and talk about how to find a way around natural human tendencies and myopic loss aversion. We then get into our first Mark's Minutes segment, with our colleague Mark McGrath briefly explaining some interesting ideas about risk and tax-free savings accounts. For today's episode retrospective, we go over Episode 45 and the conversation we had with Moira Somers about effective communication and advice methods. Matthew Dicks, the author of Storyworthy then joins us to offer some insight into the utility of stories in the different areas of life, including financial advice, and more relaxed social settings. Matthew does a great job of describing and demonstrating how stories connect people, and allow ideas to flow in a natural and impactful way, so make sure to tune in. Lees meer
Key Points From This Episode:
Introducing the inverse relationship between subjective return expectations and expected returns. (0:02:55).
Potential solutions to this issue; checking investments less frequently, ignoring financial media, healthy advisor relationships, and more. (0:15:39)
Mark's Minutes: Mark McGrath shares some background on the TFSA and its positive and negative sides. (0:22:59)
A quick recap of our episode with Moira Somers and its lessons on effective financial advice. (0:30:36)
An introduction to Matthew Dicks and some thoughts on storytelling. (0:32:05)
Matthew talks about the power of storytelling to shape the world. (0:36:35)
Strategies for finding, crafting, and telling great stories. (0:41:45)
Matthew weighs in using storytelling in the world of investing and financial advice. (0:48:23)
Finding the value in your own personal data and experience. (0:52:04)
Today's after-show: upcoming events and news from home. (0:54:40)
Partic…
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Episode 266: Prof. Cass Sunstein: Practical Reason in Ordinary Life
17 augustus 2023 · 1 uur 7 min
We make countless decisions throughout our lives that range from the mundane to the monumental. But how do you decide how you decide? That is the fundamental question in our esteemed guest, Cass R. Sunstein's new book Decisions about Decisions: Practical Reason in Ordinary Life. Cass currently serves as the Robert Walmsley University Professor at Harvard University and is the founder and director of the Program on Behavioral Economics and Public Policy at Harvard Law School. He is also a prolific author, with one of his most notable works being the hugely popular and impactful book, Nudge: Improving Decisions about Health, Wealth, and Happiness, which he co-wrote with Richard Thaler in 2008. In today's conversation, we sit down with Cass to discuss the difficulties inherent to understanding why people make the decisions they make and what the latest research teaches us about how we should approach decision-making to maximize our well-being. Cass provides insight into second-order thinking strategies, the difference between picking and choosing, and why delegating a particular decision is sometimes the right call. We also unpack what to consider when making major life choices, the strengths and weaknesses of algorithms when it comes to decision-making, and much more. To hear Cass's many insights on the topic of behaviour, knowledge, and decision-making, be sure to tune in! Lees meer
Key Points From This Episode:
The challenges of understanding why people make the decisions that they make. (0:03:38)
Second-order decisions and why they are sometimes preferable to on-the-spot decisions. (0:04:50)
An overview of various second-order decision strategies. (0:06:45)
Guidelines to help you choose which decisions to delegate and how to determine whether you have a trustworthy delegate. (0:11:28)
What to consider when making a transformative and irrevocable life decision. (0:16:07)
Why people avoid seeking out information that might make them feel bad, even if it could help them…
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Episode 265: 5% HISA... for the Long-run? (Plus Stoicism with Michael Tremblay)
10 augustus 2023 · 1 uur 3 min
In this episode, we tackle the timely topic of higher interest rates and their potential impact on investors' decisions. With rates soaring to unprecedented levels, many are tempted to veer off their investment paths in pursuit of short-term gains. But is this a rational choice? We break it down and offer invaluable insights into why staying the course might be the wiser option. We also welcome new PWL team member Mark McGrath. Mark possesses an innate talent for crafting concise, valuable, and captivating financial planning nuggets on social media. His content has struck a chord with the audience, evident from his rapidly expanding following. Next, we take a nostalgic trip back to one of our favourite past episodes, featuring a remarkable guest, David Booth, co-founder of Dimensional Fund Advisors. With a quick review of the episode, listeners get a refresher on Booth's sage advice and investment philosophies, reminding us all why this episode remains a standout. For the book segment, Michael Tremblay, a passionate listener, and stoicism expert, reached out to suggest an exploration of The Handbook of Epictetus. We welcome Michael to the show for an enlightening discussion on the principles of stoicism and how they can be applied to investing and everyday life. Lees meer
Key Points From This Episode:
Introducing new PWL team member, Mark McGrath. (0:02:22)
Background about Mark and his journey to PWL Capital. (0:03:35)
What Mark appreciates most about working at PWL: its core values. (0:08:45)
Why cash is an extremely risky long-term investment option. (0:11:47)
We explore 'buying the dip' and expected returns versus return expectations. (0:24:31)
Highlights and key takeaways from our conversation with David Booth. (0:29:07)
The Handbook of Epictetus and devoted listener Michael Tremblay's background. (0:31:22)
Stoicism basics, who Epictetus was, and the key idea behind the philosophy. (0:33:30)
How stoicism can benefit everyday investors. (0:36:09)
A breakdown o…
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Episode 264: Pim van Vliet: The Volatility Effect, Revisited
3 augustus 2023 · 59 min
Pim van Vliet is on a mission to put the low volatility factor on the map. In his role as Head of Conservative Equities and Chief Quantitative Strategist at Robeco, he focuses on leveraging the effect of low-risk investing. Pim has also published a book, High Returns From Low Risk: A Remarkable Stock Market Paradox, where he unpacks some of the key aspects that guide his work and underpin his success. During this conversation, Pim shares his insights on volatility, the changing market, and combining low-risk with other traditional factors. He equips listeners with key considerations for evaluating strategies or products when allocating low-risk and offers his perspective on out-of-sample-testing, distinguishing between global-factor and cross-sectional premiums, and more. Listeners will get Pim's perspective on the pros and cons of the Sharpe ratio, and we examine risk-adjusted returns on long and short legs before hearing his Fama-French Five Factor Model analysis. We touch on inflation and gold, and finally, Pim shares his inspiring perspective on success in his financial and personal life. Tune in today to hear more! Lees meer
Key Points From This Episode:
Introducing Pim Van Vliet and his mission to put low volatility on the map as a factor. (0:00:41)
Defining the low-risk effect with reference to volatility and its impact on other asset classes. (0:04:47)
Low-risk portfolio performance in relation to the changing market. (0:12:02)
Combining low-risk with other traditional factors. (0:21:43)
Considerations for evaluating strategies or products when allocating low-risk. (0:24:35)
Out-of-sample testing. (0:31:28)
Distinguishing between global factor premiums and cross-sectional premiums. (0:35:18)
Weighing the pros and cons of the Sharpe ratio as an evaluation tool. (0:40:19)
Examining the risk-adjusted returns of long and short legs. (0:41:20)
Issues with the Fama-French Five Factor Model. (0:44:37)
Why factor premiums vary through inflation regimes. (0:50:41)…
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Episode 263: A Tribute to Harry Markowitz with Alex Potts & 7 Steps to a Better Portfolio with Edward Goodfellow
27 juli 2023 · 1 uur 5 min
With the recent passing of Harry Markowitz, we wanted to take this opportunity to spend some time honoring this giant of financial economics. Joining us on today's episode is our friend Alex Potts, who shares some of his touching memories of Harry, and talks about the unmistakable impact he had on the field. Harry is commonly viewed as the father of modern portfolio theory but also might be considered the grandfather of behavioural finance and a huge proponent of intelligent diversification. Alex graciously shares the nine lessons he learned from Harry, a few 'Harryisms' and some fond and surprising anecdotes from the time he spent with the man. Following this, we welcome Edward Goodfellow to the show to explore his new book, 7 Steps to A Better Portfolio. Edward is a fellow Canadian financial advisor, and we get to hear from him about the motivations for his book, its intended audience, and his insight into a host of central and familiar themes that we deal with on the show, so join us to hear it all. Lees meer
Key Points From This Episode:
Looking back on the irreplaceable contributions of Harry Markowitz. (0:05:24)
Alex talks about reaching out and meeting Harry in 2010. (0:10:00)
Harry's amazing work ethic, unusual approach to problem-solving, and the nine lessons that Alex learned from him. (0:14:23)
Edward shares his motivations for writing 7 Steps to A Better Portfolio, the questions that gave it structure, and its intended audience. (0:25:53)
Understanding math and emotion, the four questions to ask before investing, and dangerous investment personalities and influencers. (0:29:39)
Categorizing the different types of risk we encounter as investors, and the role of predictions and expectations. (0:35:41)
Charting the evolution of a strategy over time, how to reassess and determine risk tolerance, and evaluating performance. (0:38:06)
Edward describes different types of active and passive investing and the seven steps from his book. (0:40:26)
Comparing financ…
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Episode 262: Francisco Gomes: Consumption and Portfolio Choice over the Life Cycle
20 juli 2023 · 58 min
Household finance has grown considerably as a field of study in recent years. And with the decrease in defined benefits pension plans, households are increasingly needing to take more responsibility for their own financial fates (much more so than they needed to in the past). Joining us today to discuss household finance and the growing importance of households in the economy, is Professor Francisco Gomes. Francisco is a Professor of Finance at London Business School and earned his PhD in economics at Harvard with his main areas of expertise being household finance, capital markets, asset allocation, and macroeconomics. In our expansive conversation with Francisco, we discuss the increasingly important role of households in the economy, how this has contributed to household finance becoming a more prominent field of study, and what can be done to make sure that academic findings reach, and positively impact, households. Francisco shares a detailed outline of what he's learned from his research, covering topics like level of education, automation at work, peer effects, and culture, with explanations of how these elements can impact household financial decisions. We also learn about his passion for financial literacy, why he is such a big proponent of ensuring that everyone has access to a quality personal finance education, and the personal finance course he currently teaches at London Business School. To learn more from Francisco about the study of household finance and how to improve outcomes for households, be sure to tune in today! Lees meer
Key Points From This Episode:
What it means to maximize your wealth over your lifetime and the crucial ratio determining optimal asset allocation. (0:02:53)
How optimal asset allocation changes over your life cycle and how our human capital diminishes with age. (0:08:08)
Building a buffer stock of wealth and the evidence that people become more comfortable with risk as they get richer. (0:10:03)
The importance of simplifying life…
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Episode 261: Structured Products with Felix Fattinger and Petra Vokata & Jill Schlesinger
13 juli 2023 · 1 uur 57 min
Our focus for today's episode is the topic of structured products and we welcome two expert guests to weigh in with their research and insight on the subject. Felix Fattinger is an Assistant Professor of Finance at the Vienna Graduate School of Finance whose research focuses on complexity from a number of perspectives. Petra Vokata is an Assistant Professor of Finance at Ohio State University, currently working in areas of household finance, financial innovation, and consumer financial protection. Both Felix and Petra offer some amazing takeaways for retail investors, deftly balancing the data with their ability to read it and implement the lessons we should learn about structured products. We then welcome Jill Schlesinger back to the show to talk about her new book, The Great Money Reset. We hear from her about the process of writing the book, her aims for its publications, and the main questions it can help individuals answer. Lees meer
Felix Fattinger thanks his co-authors Marc Chesney, Jonathan Krakow (both University of Zurich) and Simon Straumann (WHU – Otto Beisheim School of Management).
Key Points From This Episode:
Felix talks about his interest in complexity and how to understand the three different types of structured products. (0:07:23)
The definition of headline rates and their relationship to expected returns. (0:18:23)
Laying out the biggest lessons from Felix's research; price competition regulation, expected returns, and simulating portfolios. (0:32:21)
Petra shares her reasons for researching structured products and what she focuses on. (0:40:36)
The doubts Petra has about YEPs, the evolution of their fee structure, and estimating their expected returns. (0:49:02)
The YEP index and how it can help investors mitigate certain issues. (1:02:42)
Actions by banks that increase headline rates of return and how this relates to expected returns. (1:06:56)
Unpacking the biggest lesson from Petra's research about understanding fees and payoff. (1:10:12)
A…
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Episode 260: Prof. James Choi: Practical Finance
6 juli 2023 · 1 uur 11 min
Today we welcome James Choi, Professor of Finance at the Yale School of Management, to the show to share some of his insight into what he has dubbed practical finance. James has focused his research on behavioural finance, behavioural economics, household finance, capital markets, health economics, and sociology, and is turning this expertise into pragmatic knowledge marketed towards ordinary people. This reframing and reconfiguration of the theory for all people and the decisions they make, could not be more in line with what we are trying to do here at Rational Reminder, and this conversation with James was packed with so many surprising and informative responses to relatable questions. We ask James about index funds, the benefits of advisors, optimal equity, diversification, and much more. We also spend a little bit of time exploring the individual reasons that people have for their decisions, with James expanding on the disconnect between people's philosophy and their actions. Further topics include the role and impact of education, renting versus buying, and the formulation of his concept of practical finance, so make sure to join us and catch it all. Lees meer
Key Points From This Episode:
The failure of economic theory to explain everyday financial decisions. (0:03:03)
A little about James' course on personal finance at Yale. (0:06:29)
Economic theory and popular personal finance advice on optimal savings and consumption. (0:12:06)
Looking at economic theory and popular personal finance's suggestions about optimal equity allocations for households. (0:19:33)
The kinds of personal aversions people have towards their finances. (0:27:07)
The impact that James' survey research has had on his perspectives on equity. (0:29:42)
Practical application of economic theory to household decisions. (0:32:29)
Increased awareness of the benefits of index funds. (0:42:59)
James shares a few famous economists' investment strategies. (0:44:11)
Some thoughts on approaches to a…
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Episode 259: Comprehensive Overview: Estimating Expected Returns
29 juni 2023 · 1 uur 15 min
Join us as we present a compilation of segments on expected returns and the dynamics that shape investment outcomes. We deep dive into the world of financial predictions and gain a comprehensive understanding of how expected returns influence your financial decision-making. We also go back to the episode with Dr. Brian Portnoy where we delved into his book, The Geometry of Wealth. Lastly, joining our conversation is our colleague Matt Gour who discusses The Power of Moments by Chip and Dan Heath. We discuss how extraordinary moments have the power to shape our lives and the pivotal importance of crafting unforgettable experiences. Tune in now! Lees meer
Key Points From This Episode:
What Pressor Fama had to say about expected returns. (0:03:35)
Looking at returns through a historical lens with Professor Goetzmann. (0:08:23)
Professor Cederburg explains the usefulness of historical data. (0:11:38)
Hear Professor Cochrane's perspective on expected returns. (0:15:19)
Professor Cornell shares his contrasting view on historical returns. (0:23:41)
We recap our discussion with Professor French about uncertainty. (0:34:23)
Breaking down the conventional viewpoint of uncertainty with Professor Pastor. (0:38:34)
A brief overview of our approach to estimating expected returns. (0:44:03)
Highlights from our conversation with Dr. Brian Portnoy about his book. (0:47:56)
Matt Gour joins us for our weekly book review of The Power of Moments. (0:51:15)
He shares an impactful moment from his childhood. (0:54:04)
We unpack a main takeaway from the book: the peak-end rule. (0:56:23)
The four elements needed to create a defining moment. (0:57:51)
Learn about the different types of defining moments. (1:01:02)
How to be deliberate about creating powerful moments. (1:01:02)
Main takeaways from the book. (1:04:55)
The aftershow, planned meetups, upcoming projects, and more. (1:07:15)
Participate in our Community Discussion about this Episode:
https://community.rationalreminder.ca…
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Episode 258: Prof. Meir Statman: Financial Decisions for Normal People
22 juni 2023 · 1 uur 12 min
Behavioural finance provides a realistic and comprehensive framework for understanding financial markets and decision-making. Incorporating insights from psychology, it enhances our understanding of investor behaviour, market dynamics, and risk management, leading to more effective investment strategies and improved financial outcomes. In this episode, Professor Meir Statman, a renowned expert in finance and behavioural finance, takes us on a captivating journey through the intriguing world of maximizing well-being through finance. Professor Statman is a distinguished financial expert and a leading authority in the field of behavioural finance. His groundbreaking research has shaped the understanding of investor behaviour and its impact on financial decision-making. Through his academic contributions and practical insights, Professor Statman has become a trusted guide in navigating the complex intersection of finance and human behaviour. In our conversation, he unravels the secrets of maximizing well-being through finance and the intricacies of the field. We explore the captivating world of behavioural finance and its connection to efficient markets, the distinction between normal and rational investors, the allure of lottery-like assets, and the downsides of consuming dividends. We unpack the aversion to realizing losses and the debate between dollar-cost averaging and lump-sum investing. We delve into the rising popularity of alternative investment strategies, the influence of status on rational investor behaviour, the role of financial advisors, and much more. Tune in for this enlightening conversation that will not only reshape your understanding of finance but human behaviour too. Lees meer
Key Points From This Episode:
Defining what behavioural finance is and how it relates to efficient markets. (0:04:37)
How traditional financial economists responded to Professor Statman's early behavioural work and the current state of behavioural finance research. (0:06:12)
The …
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Episode 257: Giorgio Ugazio (Mr. RIP): Life Design, In Progress
15 juni 2023 · 57 min
What are your guiding philosophies on work and life? And how do they influence your daily decisions and the trajectory of your career? If these questions feel somewhat daunting, and you aren't sure how to answer them, then this episode is a great place to start! Joining us today is Giorgio Ugazio, a self-described content creator, startup founder, and father. Giorgio is a software engineer by training, with a Master's degree in Artificial Intelligence and robotics, and spent over seven years working at Google. He is the founder of Retire In Progress, a blog where he shares his thoughts on life, work, achieving financial independence, and retiring early. The platform has amassed a dedicated following thanks to Giorgio's many unique insights on life, design, and living intentionally. In today's conversation, we talk with Giorgio about the underpinnings of his philosophies, the excellent book Designing Your Life: How to Build a Well-Lived, Joyful Life, and how his interpretation of it clarified his perspectives on life and work. We discuss the key tenets in Designing Your Life along with how you can use its many tools and exercises to determine your current position, assess your value, and define your compass. Giorgio goes on to share the thinking behind his foundational beliefs, like why you shouldn't play the status game, before reflecting on who he believes would benefit most from reading Designing Your Life. To hear all of Giorgio's fascinating insights and how to incrementally build your model of life, be sure to tune in today! Lees meer
Key Points From This Episode:
A quick recap and review of episode 100 with Professor Ken French. (0:02:57)
Introducing Giorgio Ugazio, aka Mr. RIP, his website, Retire Your Life, and how you can access his extensive notes on the book Designing Your Life online. (0:05:16)
An overview of Designing Your Life, guidance on how to classify problems, and a breakdown of what it means to prototype solutions. (0:08:49)
Insight into the tools, e…
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Episode 256: Prof. Hal Hershfield: Your Future Self
8 juni 2023 · 54 min
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! Lees meer
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 …
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Structured Products (Plus Just Keep Buying with Nick Maggiulli) (EP.255)
1 juni 2023 · 1 uur 9 min
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. Lees meer
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)
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David Blanchett: Regret Optimized Portfolios, and Optimal Retirement Income (EP.254)
25 mei 2023 · 1 uur 8 min
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! Lees meer
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 dr… -
Complex Financial Instruments with Prof. Paul Calluzzo (Plus Sean Silcoff on Losing the Signal) (EP.253)
18 mei 2023 · 1 uur 25 min
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. Lees meer
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)
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Prof. Burton Malkiel: 50 Years of A Random Walk Down Wall Street (EP.252)
11 mei 2023 · 1 uur 23 min
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. Lees meer
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:…
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Covered Calls (Plus Robin Powell and Jonathan Hollow on How to Fund the Life You Want) (EP.251)
4 mei 2023 · 1 uur 4 min
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! Lees meer
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,…
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Prof. John Y. Campbell: Financial Decisions for Long-term Investors (EP.250)
27 april 2023 · 1 uur 18 min
Navigating the world of finance and investing is undeniably complicated, sometimes unnecessarily so. And all too often the people who end up making the most costly financial mistakes are those who can least afford to do so. But what exactly needs to change in order for more people to make wise and well-informed financial decisions? And how do we go about implementing those changes? Joining us today to help us unpack this topic and the many decisions involved in the world of investing is John Y. Campbell, a British-American economist, professor of economics at Harvard, and founding partner at Arrowstreet Capital, a systematic asset management firm based in Boston. John has published over a hundred of articles on a range of topics including fixed income, equality valuation, portfolio choices, and household finance, all of which we explore in today's expansive conversation. We kick things off by discussing utility theory, why it's so important to the study of finance, and what it can teach us about risk aversion, before delving into portfolio structure, asset allocation, and hedging. John also expands on the study of household finance, the mistakes that households typically make, why household behaviour tends to differ from theoretical predictions, and how to bring theory and behaviour into alignment. We wrap things up by discussing how financial literacy, education, and regulation can improve outcomes for households before hearing John's advice on selecting an optimal mortgage contract along with an overview of the type of risk that mortgage contracts expose you to. Today's episode is jam-packed with information and insights from a profoundly knowledgeable figure in academia. Lees meer
Key Points From This Episode:
• An overview of asset pricing theory; unpacking the utility function in finance, what it teaches us about being risk averse, and how it is used to determine the value we place on any amount of money. (0:04:01)
• The implications of using the Capital Asset Pricin…
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What are financial advisors (measurably) useful for? (EP.249)
20 april 2023 · 1 uur 6 min
Our focus for this episode is the real utility of financial advisors, and Ben shares a host of research and findings about the supposed and actual value that advisors can offer investors. This segment continues our exploration of investment basics, a fundamental theme for this show and our work at PWL Capital. One of the biggest and clearest lessons that becomes apparent through this discussion is the need for financial literacy independent of advice and so-called expertise from the outside. With that said, we do find time to share some of the positives investors can accrue from dealing with a trustworthy advisor and the conditions necessary for this. Later in the episode, our colleague Lukas Fleck joins us to share his review of The Obstacle Is the Way by Ryan Holiday and some of his own reading habits and tips. We finish the episode with lighter content about hot sauces, TV shows, and Ben's latest home improvement. Lees meer
Key Points From This Episode:
• Introducing today's question about the usefulness of financial advisors. (0:03:35)
• Common financial mistakes made by households. (0:11:13)
• Some of the research and findings grounding today's discussion. (0:18:13)
• Investing and self-control; what we can learn from data about smokers. (0:22:49)
• Looking at some of the potential benefits of hiring an advisor for investors. (0:28:40)
• A quick review of Episode 43 with Dave Butler from 2019. (0:34:07)
• Today's book review of The Obstacle Is the Way, with Lukas Fleck, and some of the biggest takeaways. (0:36:43)
• A look at Lukas' reading habits, favourite recent books, and his increased focus on getting through books. (0:44:59)
• Advice for starting a book club and Lukas' reading hacks. (0:50:49)
• The after-show; Ben tells us about his basketball hoop, last week's episode of Succession, and the hot sauce debate. (0:54:44)
• Upcoming events, audience reviews, and future guests on the podcast. (0:58:31)
Ad mentioned by Ben:
Video: https://www.reddit.com/…
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Prof. William Goetzmann: Learning from Financial Market History (EP.248)
13 april 2023 · 1 uur 8 min
How the financial system works and how we interact with it has grown in complex ways and is a fascinating but nuanced topic. To guide us through the history of the economy is Professor William Goetzmann, who is an expert in finance, economics and art history, and whose research has been featured in top publications. As a highly respected scholar, he's authored numerous books on topics such as real estate and behavioural finance. It is fair to say Professor Goetzmann's work has left a significant impact on both academia and the world. In our conversation, we dive into financial market history and explore more than just broad market returns. We unpack the fascinating phenomenon of economic bubbles and booms, and how they have evolved and shaped the financial system. He also shares crucial insights from the past and advice for investors looking to leverage the market. And to wrap things up, Professor Goetzmann shares his views on money after digging deep into its historical roots. Tune in to unlock the secrets of the past and gain valuable insights for the future as we journey through the fascinating world of economic history. Tune in now! Lees meer
Key Points From This Episode:
• Why is it important to collect and examine long-term historical returns data, and how useful the findings can be for today's market. (0:03:21)
• The furthest back in time that Professor William Goetzmann has looked at equity returns and how much of an issue survivorship bias is in long-term historical data. (0:05:44)
• Reasons for the United States market trends concerning equity risk premiums and his approach to forecasting long-term returns of both stocks and bonds. (0:11:02)
• Whether current discount rates are better for estimating future returns than long-term historical returns. (0:17:08)
• How the markets of today compare to the markets of the 1900s, and whether investor behaviour has changed. (0:18:42)
• Learn how global finance changed after the First World War and how likely a global …
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Bank Runs (plus Jonathan Clements on "My Money Journey") (EP.247)
6 april 2023 · 1 uur 5 min
There's been a lot of interest in the topic of bank runs lately, and in today's episode, we take a look at the most relevant research to help us better understand why they happen and how they can be avoided. Our conversation unpacks the 2022 Nobel prize-winning work of Douglas Diamond and Philip Dybvig and examines the three primary risks that banks need to navigate to avoid a bank run related crisis. We discuss the immense value that banks provide and how they keep the economy moving, before reflecting on how their most valuable services are inexorably tied to the risk of bank runs. You'll also learn about the role of the media in triggering a bank run, and how the problems that arise with bank runs can be addressed through a combination of deposit insurance, bank regulation, and a diverse customer base — all of which are designed to keep depositors from panicking simultaneously. We also revisit a past conversation with Jonathan Clements, before catching up with him in real time to discuss his new book My Money Journey: How 30 People Found Financial Freedom - and You Can Too. Tune in for an in-depth look at bank runs, the value of writing your money story, and a timely reminder that when you're making a deposit, you're actually lending money to the bank. Lees meer
Key Points From This Episode:
• An introduction to the topic of bank runs including an overview of the Nobel prize-winning work done on the subject in 2022. (0:02:12)
• The three primary risks you need to manage as a bank in order to be a successful business. (0:07:28)
• Why liquidity, illiquidity, and duration risk can pose a problem, even for healthy banks. (0:12:47)
• How news stories can create unwarranted panic and cause a bank run, even if a bank isn't experiencing problems. (0:16:02)
• The multiple equilibria of banks as outlined in the Diamond and Dybvig paper. (0:16:31)
• How deposit insurance can function as a solution, at least in part, to bank runs. (0:19:34)
• What the Diamond and Dybvig paper…
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Daniel H. Pink: How to Use Regret (EP.246)
30 maart 2023 · 48 min
Human beings are undeniably complex, and what motivates us can often be a mystery, even to ourselves. So, how do we go about gathering and analyzing the data that will help us answer the most fundamental questions about our lives and our purpose? The answers may lie in an unexpectedly rich source of knowledge, our regrets. While regret is likely to have a decidedly negative connotation for most of us, it is also extremely powerful and can teach us a great deal about ourselves and what we value. It is an emotion that is present in all of us, and social scientists (like anthropologists and sociologists) have been fascinated by the subject for decades. Today on the show, we are joined by one such expert, Daniel Pink, author of the book The Power of Regret: How Looking Backward Moves Us Forward. In our conversation, Daniel shares details about the research he conducted for his book, how he determined the four main categories of regret, and what we can learn from our regrets by confronting them head-on. We also discuss Daniel's 2011 New York Times Bestselling title, Drive: The Surprising Truth About What Motivates Us, and what he thinks about working from home in light of the COVID-19 pandemic. Daniel is an exceptional storyteller and is highly knowledgeable on the subjects of regret, motivation, and the important role they play in our lives. To learn more about the many facets of regret and how it can help you thrive, be sure to tune in today! Lees meer
Key Points From This Episode:
● Understanding regret as an emotion, why it differs from disappointment, and how regret can help us make better decisions. (0:03:00)
● The four main types of regret (foundation, boldness, moral, and connections) and the methodology Daniel used to determine them. (0:07:30)
● The role that outcomes play when it comes to boldness regrets. (0:13:09)
● Why Daniel believes connection regret is so common, and what regret reveals about our values. (0:14:13)
● The World Regret Survey that Daniel conduc…
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Deeper Goals, and Retiring with Purpose (EP.245)
23 maart 2023 · 1 uur 7 min
Goal-setting is essential for personal and professional growth, helping individuals clarify their priorities, stay focused, and achieve success. We are pleased to welcome guests Samantha Lamas and Danielle Labotka to help us unpack the topic of goal-setting and how it relates to finance. Samantha Lamas is a Senior Behavioural Researcher at Morningstar and a recipient of the Montgomery-Warschauer Award for her research in financial planning. Her work centres on investor engagement and the factors that influence an individual's decisions when it comes to investing and managing their finances. As a Behavioral Scientist at Morningstar, Danielle Labotka examines the impact of various cognitive and linguistic factors on investors' financial decisions. Her research involves studying investors' behaviours, preferences, and attitudes in both everyday and financial planning situations. In our conversation with Samantha and Danielle, we gain insights into financial behaviour and decision-making, the biggest barriers to goal-setting, what deeper goals are, and how to focus on them. Then, we speak to Mark McGrath, who is licensed in insurance, holds several professional designations, including a Chartered Investment Manager and a Certified Financial Planner (CFP), and has more than a decade of experience in the industry. Mark tells us the emotional story about his dad, what motivated him to share his experience, and why you need to start thinking about retirement now. Finally, we review a past episode with Dennis Moseley Williams, a book from Will Storr, and go through feedback from the Rational Reminder community. Tune in now! Lees meer
Content Warning: Some of the discussion in this episode is about suicide. If you or someone you know is struggling with thoughts about self-harm, help is available. In Canada: 1.833.456.4566 or at https://suicideprevention.ca/resources/
Key Points From This Episode:
• How we became acquainted with the Morningstar team and background about our guests. …
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Charles D. Ellis: The Loser's Game (EP.244)
16 maart 2023 · 1 uur 7 min
When it comes to the world of investing, there are many options available to consumers. The range of financial products available can be overwhelming and confusing. Additionally, investing is not only about the rate of return but also about what you are investing for and why. To help us unpack this complicated subject is Charles Ellis, a highly respected investment consultant and founder of Greenwich Associates, a strategy firm focused on financial institutions. He is also a famous author and has written several books on the topic of finance and investment, such as Winning the Loser's Game which provides readers with insights into making the best financial decisions in an increasingly unpredictable market. In our conversation, we discuss why indexing is the better investment option, how the investment space has changed over time, tailoring your investment decisions to suit your needs and desires, and why looking at the bigger financial picture is essential. We also delve into why investors can be their own worst enemies, what advisors and investors should avoid, the theme of his book Inside Vanguard, various investment strategies, and much more. Tune in and hear insights on indexing, wise investing, and how to win the ultimate game from industry legend Charles Ellis! Lees meer
Key Points From This Episode:
• Charles explains what he means by 'a loser's game' and provides examples. (0:03:51)
• How the perception of active management has changed since publishing Winning the Loser's Game. (0:08:00)
• He unpacks how the market and market competition has changed since 1975. (0:10:33)
• Whether the sentiment towards active management has become too negative. (0:17:24)
• Discover why Charles thinks indexing is the best and preferred investment option. (0:19:22)
• His opinion on low-cost systematic strategies that seek higher expected returns in the market by owning riskier stocks. (0:24:55)
• Why investors and advisors should avoid trying to time or beat the market. (0:27:1…
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The Role of Debt in Financial Planning (EP.243)
9 maart 2023 · 1 uur 9 min
Debt can play an essential role in financial planning in several ways, such as financing large purchases, building credit, managing cash flow, and leveraging investments. However, it's important to remember that taking on too much debt can also have negative consequences that could impact your financial future. Therefore, it's vital to carefully consider your options and ensure that any debt you take on is manageable and aligns with your overall financial goals. In this episode, we talk about the essential aspects of debt and the role of debt in financial planning, and we unpack the two major forms of debt. Learn about debt in financial planning, consumption smoothing, the mindset and psychology behind debt, the risk that comes with debt, how credit cards impact how people interact with their money, integrated financial planning, and important aspects of mortgages. We also review a past episode with guest Dan Solin and the book, The Five Most Important Questions, which provides readers with a tool for self-assessment and transformation concerning productivity in the workplace. Lees meer
Key Points From This Episode:
• The role of debt in financial planning and the distinction between good and bad debt. (0:08:16)
• A brief overview of mortgages, credit cards, and their associated risks. (0:11:31)
• Consequences of borrowing money at a high-interest rate, and how financial literacy impacts effective debt management. (0:13:20)
• The psychological aspects related to debt and consumer spending. (0:16:10)
• Outlining the psychological interactions of established debt on mental well-being. (0:18:15)
• Credit cards, what they offer, and their psychological effect on paying. (0:22:10)
• Costs associated with not using a credit card. (0:28:45)
• Why mortgage debt is considered good debt for the borrower and the different facets of mortgages to consider. (0:32:48)
• The difference between fixed and adjustable mortgage rates and which is better. (0:37:25)
• Highlights and key…
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Erica Alini: Personal Finance Tactics for the Real World (EP.242)
2 maart 2023 · 1 uur 2 min
The intersection between economics and psychology makes the subject of personal finance complex. To help us elucidate this topic is personal finance reporter at the Globe and Mail and the author of the bestselling book "Money Like You Mean It, Personal Finance Tactics for the Real World.", Erica Alini. Her journey into finance journalism began when she started working for the Wall Street Journal immediately after the financial crisis of 2007/08. Since then, Erica has become an accomplished writer and journalist, having worked for many respected organizations. She is also the author of a best-selling book, Money Like You Mean It, which provides readers with a nuanced understanding of the economic forces that shape financial struggles and how to overcome them. In this conversation, we talk to Erica about the importance of knowing yourself and your debt, the money bucket system, and the definition of financial abuse. We also discuss the various types of debt traps people should avoid, the dangers of micropayments, and what to be aware of when looking for a mortgage, as well as advice for finding a reliable mortgage broker, the avalanche versus the snowball model, and much more. Tune in to discover how to take back control of your finances and avoid the burden of debt with personal finance expert, Erica Alini. Lees meer
Key Points From This Episode:
• Why Erica thinks Canadians have so much household debt. (0:02:24)
• Strategies that people can implement to avoid the debt trap. (0:04:58)
• Erica's opinion on budgeting as a tool to manage spending. (0:08:34)
• How the 'bucketing model' changes for a couple as opposed to an individual. (0:12:10)
• How couples with different incomes should share expenses. (0:14:17)
• Signs of an unhealthy financial relationship between partners. (0:17:06)
• The amount of money an emergency fund should have. (0:21:17)
• What consumers should know about the different debt products available. (0:24:08)
• Discover the downside of taking a mor…
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Basic Personal Finance Concepts (EP.241)
23 februari 2023 · 1 uur 16 min
Today we are spending most of the episode going further into the basic concepts that ground good financial practices and the personal finance topics that are often taken for granted. The three main areas we unpack in this episode are the cost of living, savings capacity, and emergency funds, and though these can be viewed as basic ideas, there are always areas of the simplest variety that deserve more attention. Listeners can also expect to hear a little more about what our role as financial advisors constitutes on a daily basis, as we respond to an audience member's question about how to conceptualize the profession. We welcome Dr. Wendall Mascarenhas back to the show for a brief cameo in which he shares his reading habits and approach with us, which contrasts with some of the opinions often expressed by other guests, so make sure to stay tuned in for that. We also find time for a quick recap of an old episode we had with Rick Ferri and a book review of Rethink Lead Generation by Tom Shapiro. Lees meer
Key Points From This Episode:
• Discussing the cost of living and why an accurate picture of your expenses is so important. (0:04:08)
• Working out your saving capacity and when and how to save. (0:21:32)
• General advice for emergency funds and further considerations for households. (0:32:51)
• Recapping our episode with Rick Ferri on his index investing philosophy and the lasting impact of John Bogle. (0:40:21)
• This week's book review of Rethink Lead Generation by Tom Shapiro. (0:42:26)
• Dr. Wendall Mascarenhas talks about his reading habits and his prioritization of reading for pleasure. (0:49:23)
• A few favourite book recommendations from Dr. Wendall Mascarenhas. (0:58:12)
• Current debates around ChatGPT and the sources of its information. (1:06:18)
• Information about upcoming meetups for the Rational Reminder community. (1:09:38)
• Further explorations on our recent goals survey and the input we received from Morningstar. (1:11:00)
Participate in our 23…
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Prof. Eric J. Johnson: Choice Architecture and Financial Decisions (EP.240)
16 februari 2023 · 51 min
The decisions we make may be further out of our control than we'd like to imagine. Today we are joined by Professor Eric J. Johnson to discuss choice architecture and its role in financial decision-making. Eric is a decision science expert and the author of the book, The Elements of Choice: Why the Way We Decide Matters. In this episode, we learn about the various factors that impact not only decision-making but the effort required to make a decision. Eric shares his philosophy on free will and shares advice for making important decisions and guiding clients to find the right choice as a financial advisor. Tune in to discover how to minimize the influence of the choice architect and take charge of your decisions! Lees meer
Key Points From This Episode:
• Introducing Professor Eric J. Johnson and this week's topic: financial decision-making. (0:00:26)
• The hidden partner that accompanies us when we make decisions. (0:03:42)
• How design choices impact our decisions. (0:04:54)
• The plausible path: what it is and how we choose it. (0:06:00)
• Advice for making important decisions. (0:08:21)
• The impact of recent events on decision-making. (0:10:33)
• How to be your own choice architect. (0:12:15)
• Factors impacting the effort required to make a decision. (0:13:22)
• The impact of default choices and what influences them. (0:16:09)
• How choice architecture can help people find the right choice. (0:20:17)
• The influence of sorting on what people choose. (0:25:18)
• How the order of options being presented and the way they're described impact decisions. (0:26:54)
• How exponential growth bias influences long-term decisions and how financial advisors can help clients understand the impact. (0:31:45)
• The effectiveness of Netflix as a choice engine, the role choice engines play in educating users, and the value of just-in-time education. (0:35:04)
• The impact of social media on people's attention and intentions. (0:40:08)
• Eric shares his philosophy on free…
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The Math of Financial Planning (EP.239)
9 februari 2023 · 1 uur 2 min
The concept of financial math is another foundational element of investing and good economic decision-making, and today we are carrying on the recent string of shows dealing with these kinds of fundamental aspects. First, we have a look at the central idea of the time value of money, and how this plays into many areas of our finances, such as retirement planning, spending, investing, and so on. From there, the conversation goes on to cover exponential functions, the tradeoffs between saving and spending, and regrets. Today's 60-second episode recap is of the great conversation we had with David Blitzer back on Episode 54, and we also do a quick book review of the potentially life-changing How to Live on 24 Hours a Day. We finish off this punchy episode with some news from the community and some thoughts on the ways in which competition and repetition can improve a skill. Lees meer
Key Points From This Episode:
• Introducing the time value of money, as well as the concepts of compounding and discounting. (0:03:07)
• Applying financial math in different ways to varied questions. (0:11:34)
• Lessons from Cameron's first business selling worms. (0:18:15)
• The challenges and biases associated with exponential functions. (0:20:27)
• Spending and saving; illuminating the reality of the tradeoffs. (0:27:26)
• The biggest problems of foundational regrets. (0:35:40)
• Looking back on the episode with David Blitzer on indexing. (0:42:33)
• Reviewing the 1908 book, How to Live on 24 Hours a Day. (0:44:25)
• TV shows, podcast reviews, updates from the community and more. (0:49:05)
• Incentives and leaderboards; unpacking the impacts of practice and competition. (0:56:43)
Participate in our 23 in 23 Reading Challenge:
23 in 23 Reading Challenge — https://rationalreminder.ca/23in23
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Participate in our Community Discussion about this Episode:
https://community.rationalreminder.ca/t/episode-239-the-ma…
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Prof. Ralph Keeney: Decision Analysis and Value-focused Thinking (EP.238)
2 februari 2023 · 1 uur 13 min
A large portion of what we talk about on this show boils down to decision-making, and today we have our focus squarely on the fundamentals of this process. Professor Ralph Keeney joins us to discuss some of the simplest and most profound elements of decisions, and why we so often miss these aspects. Ralph is a true expert on decision analysis, and his systematic process for decision-making, as laid out in his new book, Give Yourself a Nudge, has truly life-altering potential for anyone looking to improve their future. The book and this conversation are jam-packed with insightful and understandable ideas and examples, including clarifying objectives, the vital role of our values, generating alternatives, and a comparison between decision problems and decision opportunities. Ralph lays out a great way to get started on the path to better decisions, so make sure to join us to hear it all. Lees meer
Key Points From This Episode:
The focus of Ralph's research and how he articulates the importance of our conscious decisions. (0:03:48)
The shortcomings of the trial and error approach that many of us naturally employ. (0:10:46)
First steps towards being a better decision-maker; using personal decisions for practice. (0:13:08)
Ralph explains his conception and use of the idea of 'nudges'. (0:14:30)
A better awareness of the often-neglected front end of decision-making. (0:17:38)
An explanation of Ralph's value-focused decision-making process. (0:22:25)
Mistakes made around retirement decisions. (0:30:30)
Why clarifying your personal decision values can be so difficult. (0:32:15)
The process of translating values into objectives. (0:36:11)
Ralph's important question around the different possible situations in the future. (0:41:49)
Simple processes and common pitfalls for generating alternatives. (0:43:19)
Exploring decisions that require third-party permission or commitment. (0:47:59)
Differentiating between decision problems and decision opportunities. (0:52:27)
The mo…
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Who are you, and who do you want to be? (EP.237)
26 januari 2023 · 1 uur 16 min
Identifying your personal values is the foundation for making future decisions. In this episode, we discuss the profound ways in which personal values impact financial decision-making and share concrete steps to identify both your strategic and means objectives. Ben candidly shares his own objectives and expands on the other considerations involved in making major decisions. We then jump to the less abstract topic of 2022 returns, providing a thorough overview of the tilts and their consequences, followed by a brief summary of an early episode with Shane Parrish. In the latter half of this episode, we are joined by Zoobean co-founder and CEO Felix Lloyd to talk about Beanstack, the tech platform for reading, and Readwise co-founder Daniel Doyon. We also tackle the slightly left-field topic of marketing from a behavioural science standpoint through the lens of Nancy Harhut's tellingly-titled book, Using Behavioral Science in Marketing. Tune in for upcoming developments in the Rational Reminder community, and to discover how to make financial decisions that align with who you are and who you want to become! Lees meer
Key Points From This Episode:
How personal values impact financial decision-making. (0:00:25)
How to identify your life's values and objectives. (0:07:21)
The significance of means objectives and strategic objectives, and how to identify them. (0:16:25)
Ben's strategic life objectives and means objectives. (0:18:27)
Other considerations when making major decisions. (0:19:14)
An overview of 2022 returns. (0:22:43)
A summary of episode 19 with Shane Parrish. (0:28:59)
A brief interview with Zoobean co-founder and CEO Felix Lloyd to talk about Beanstack, the tech platform for reading. (0:31:15)
Cameron's review of Using Behavioral Science in Marketing by Nancy Harhut. (0:43:09)
What sells (from a behavioural science standpoint). (0:47:15)
A brief interview with Readwise co-founder Daniel Doyon. (0:52:52)
Summaries of recent Freakonomics, 10% Happier, and…