Episode 67: The Pursuit of Finances and Fun with Jill Schlesinger

From a trader on Wall Street to a financial advisor with her own firm, our guest today, Jill Schlesinger, has accumulated a lifetime of knowledge in the investing and financial world. Today she is a household name and well-known media personality, appearing on a variety of CBS shows and hosting her own podcast called Jill on Money.  But she is far more than an investment expert: she also has a ton of insight into people’s emotional and psychological responses to money, sharing with listeners those areas that people tend to struggle with most when it comes to their financial lives. Jill also weighs in on the current talk about the inverted yield curve and the coming recession and gives her educated opinion about money in marriage, DIY investing, robo-advisors, buying versus renting and the FIRE movement. Be sure to join in our conversation!

Key Points From This Episode:

•    Common blind spots that cause smart people to make poor financial decisions. [0:03:33.1]

•    Starting off as a trader and learning how different trading and investing are. [0:05:09.1]

•    A balanced perspective on the inverted yield curve and the predicted recession. [0:08:11.1]

•    Understanding that investing is half science, half art. [0:12:10.1] 

•    Couples who think differently about money and teaching the younger generation. [0:17:06:1]

•    Weighing up DIY investing and acquiring the services of a financial advisor. [0:21:11.1]

•    Robo-advisors and the mass democratization of financial management. [0:25:46.1]

•    Thoughts on whether to buy or rent a home and the FIRE Movement. [0:28:26.1]

•    Interviewing Julie Andrews and a perspective on what it means to be successful. [0:35:50.1]

•    And much more!

Links From Today’s Episode:

Jill Schlesinger — https://www.jillonmoney.com/

Jill Schlesinger on Twitter — https://twitter.com/jillonmoney

CBS News — https://www.cbsnews.com/

Brown University — https://www.brown.edu/

CFP Board — https://www.cfp.net/

Warren Buffett — https://www.forbes.com/profile/warren-buffett/

Marriageology https://www.amazon.com/Marriageology-Art-Science-Staying-Together/dp/0399592369

Belinda Luscombe on Twitter — https://twitter.com/luscombeland?lang=en

Time https://time.com/

Bank of America — https://www.bankofamerica.com/

Merrill Lynch — https://www.ml.com/

RBC — http://www.rbcroyalbank.com/

Charles Schwab — https://www.schwab.com/

Michael Lewis — http://michaellewiswrites.com/

Howard Marks — https://www.oaktreecapital.com/

Julie Andrews on Twitter — https://twitter.com/JulieAndrews

Episode 66: Asset Allocation Funds, Private Equity IPOs, and The Efficient Market Hypothesis.

Welcome back to Rational Reminder Podcast! We kick off today’s episode with a discussion about the gap between investor performance and fund performance, the potential reasons why asset allocation funds produced a positive gap and the role that timing and volatility play in a negative behaviour gap. IPOs have been in the media a great deal lately – and not for particularly positive reasons and we tackle the topic with reference to specific companies. We also talk about Dimensional’s paper on the issues with IPOs since the early nineties and then we introduce you to The Fama Portfolio, a valuable resource that we will likely quote quite a bit from in the future! As we have mentioned before, the use of empirical findings is incredibly limited without a theoretical framework and we talk about why the conversation around the efficient market hypothesis needs to change and why general statements about markets are not to be paid too much attention to. We discuss the bad advice for the week and the importance of goal setting in retirement.

Key Points From This Episode:

•    The news item for the week: the gap between investor and fund performance. [0:01:33.0]

•    Possible reasons why asset allocation funds produced a positive gap. [0:03:09.0]

•    How timing and volatility play into the negative behaviour gap. [0:06:22.0]

•    All the private equity venture capital IPOs that’s been covered in the media lately. [0:06:51.0]

•    Companies who took large haircuts from their last private valuations before IPO. [0:08:05.0]

•    How 1.3% of stocks delivered all the excess return between 1990 and 2018. [0:11:52.0]

•    Dimensional’s findings regarding IPO issues in the States since 1992.  [0:13:01.0]

•    The pyramid that should be used in making investment decisions. [0:16:06.0]

•    The complex yet high-value insight to be gained from The Fama Portfolio book. [0:18:05:0]

•    Why it is vital for empirical findings to be back up by a theoretical framework. [0:20:32.0]

•    The paradox of the efficient market hypothesis and what markets are really like. [0:21:58.0]

•    Goal setting in retirement, keeping focused and realizing that risk is always there. [0:25:51.0]

•    Bad advice for the week about the deferred sales charge. [0:29:31.0]

•    And much more!

Links From Today’s Episode:

Alpha Architect — https://alphaarchitect.com/

“Mind the Gap 2019” Article — https://www.morningstar.com/articles/942396/mind-the-gap-2019

The Fama Portfoliohttps://www.amazon.com/Fama-Portfolio-Selected-Papers-Eugene/dp/022642684X

Episode 65: Investing Based on the Evidence Pyramid: A Few Lessons from the Medical Profession with Dr. Wendall Mascarenhas.

Our guest today on the Rational Reminder Podcast is Dr. Wendall Mascarenhas. Wendall is a listener, DIY investor a medical professional. He actually reached out to us on Twitter and suggested this episode, a listener-centric discussion as well as one comparing the different approaches to evidence from the medical and the financial communities. We thought this was a great idea and the perspective that Wendall offers is very illuminating and thought-provoking. We discuss some of Wendall's own experience and background in both investing and medicine and from there go onto a more theoretical discussion of evidence and literature, asking the question why the financial industry is not more concerned with data. Wendall lays out the evidence pyramid and explains a few of its layers, we discuss a few tips and think about the extent to which DIY investors should involve themselves in their money with things like factor investing. Wendall also offers some of his thoughts on financial advice and the emergence of new information. For this fresh and insightful chat, be sure to join us!

Key Points From This Episode:

•    Why Wendall chose to reach out to us over Twitter. [0:04:25.8]

•    Wendall's medical background and the perspective he brings to investing. [0:05:24.1]

•    Index funds and diversified portfolios instead of active management. [0:08:05.7]

•    The role of evidence and literature in medical prescriptions and treatment. [0:09:41.0]

•    Trying to account for the differences in approach to medicine and investing. [0:12:22.2]

•    A description of the different levels of the evidence pyramid. [0:13:47.5]

•    Five tips for do-it-yourself investing from our guest! [0:20:44.5]

•    Should you worry about factors as a DIY investor? [0:25:48.0]

•    Wendall's thoughts on the value of good financial advice. [0:27:41.7]

•    How new information is circulated in the medical community. [0:31:35.0]

•    Why expert opinion is the least valuable type of evidence. [0:33:13.7]

•    Wendall's definition of success in his life. [0:36:31.9]

•    And much more!

RR Episode 65.png

Episode 64: Back to the Basics: Dividends and Explaining Factors to Benjamin’s Mom.

Michael Burry says we should get out of indexing. Jim Cramer says it’s time to jump in. These are interesting times in the world of investing! On today’s episode, we discuss Burry’s recent claims about passive investing and advise on a plan of action should he turn out to be right. Benjamin recently posted a new video on dividends, and we have a conversation about the responses the video triggered and give some good reasons for our stance about the irrelevance of dividends. We also talk about negative interest rates, how they affect that market and explain why it’s not a good idea to do day trading for a living. In the second part of the episode, we are thrilled to be joined by Benjamin’s mom to whom we will attempt to explain the ABCs of factors. Following many requests from listeners to discuss factors in layman’s terms, we hope that our explanation today will shed some light on the topic!

 

Key Points From This Episode:

 

•    The irrelevance of dividends and the debate our video provoked. [0:01:54.0]

•    How much a portfolio should be tilted towards each factor and the overlaps. [0:05:57.0]

•    A balanced perspective on Michael Burry’s assertions about index funds. [0:09:43.0]

•    What you should do if Michael Burry is right and why you should do it anyway. [0:15:25.0]

•    How negative interest rates affect a global fixed income allocation. [0:17:57.0]

•    Some interesting facts about day trading for a living and why to stay away. [0:22:05.0]

•    Unpacking the terms “discounted cash flow” and “discount rate”. [0:26:58.0]

•    How the risk of a stock is determined and what the market mechanism does. [0:30:37.0]

•    Where the factors come from and the different types of risk. [0:33:26.0]

•    Using factors to explain the differences in returns between two portfolios. [0:40:03.0]

•    The crux of why you want a diversities portfolio. [0:41:20.0]

•    And much more!

Links From Today’s Episode:

Jim Cramer on Twitter — https://twitter.com/jimcramer?ref_src

Common Sense Investing: “The Irrelevance of Dividends” — https://www.youtube.com/watch?v=f5j9v9dfinQ

Daniel Crosby on Twitter — https://twitter.com/danielcrosby?ref_src

BlackRock — https://www.blackrock.com/

Vanguard — https://about.vanguard.com/

Eric Nelson on Twitter — https://twitter.com/servowealth?lang=en

Mad Money https://www.cnbc.com/mad-money/

Episode 63: Sustainable Investing: A Philosophical and Environmental Perspective on Your Money, with Tim Nash.

Our podcast episode today had Tim Nash, "The Sustainable Economist" as a guest to talk about socially responsible investing. Tim had some interesting arguments on how choosing sustainable investments can increase the cost of capital for the "bad companies" which may affect their behavior.

He also argued that changing your portfolio can have a much bigger environmental impact than changing your own behavior. For example, if you have a green portfolio but drive an SUV, you're still net positive. The concept is that because so much of the environmental impact comes from corporations vs. individuals, not owning bad corporations can dramatically reduce your individual carbon footprint.

However, this is challenging philosophically. For either action to have an impact (individual actions or avoiding bad companies) they have to be done at scale by a ton of people. One person not driving an SUV has no impact globally, but neither does one person not owning oil companies. These things need to happen at scale to effect change.

Tim also offered some feedback on Wealthsimple's socially responsible portfolios. In short, they consist of various "socially responsible" products, but by trying to appeal to every definition of socially responsible, they are likely to be unsavory for most definitions of social responsibility.

Tim shares a vast amount of knowledge and ideas with us on how investors wishing to put their money where their heart is can go about investing more ethically and sustainably. We hear about Tim's journey into investing and economics and how he wound up doing the work he currently does, helping investors clarify where their money is going and how to put it portfolios that are more aligned with their beliefs. He unpacks how these ideas and actions can have an impact and what it would take for some kind of systemic shift towards more sustainable industry and companies. We discuss the use of other modes of change as well as the personal practice of investors versus the placement of their money. Tim does such a great job of explaining how he goes about assessing different companies and portfolios and filtering which meet the criteria that he would suggest to his audience. The last part of the episode contains a really impressive argument from Tim around how investing this way can also be beneficial for strictly economic reasons and that it would suit all people to consider the factors he is espousing. For an inspirational chat with a truly great guest, listen in today!

Key Points From This Episode:

•    Tim's education and how he became The Sustainable Economist. [0:01:49.6]

•    The actual service that Time provides for his clients and audience. [0:04:18.1]

•    How does this type of sustainable investing have an impact? [0:05:41.9]

•    Considering the efficacy of other means to bring about change. [0:11:06.4]

•    Squaring personal practices and investing principles of an individual. [0:14:37.3]

•    The criteria that Tim uses to assess items in a portfolio. [0:21:17.1]

•    Tim unpacks his experiences of anarchist portfolios! [0:28:54.8]

•    Allowing ethical investors to feel good about their portfolios. [0:31:50.6]

•    The usefulness of so-called ESG screening for finding robust companies. [0:33:41.3]

•    The twofold imperative to ethical and sustainable investing. [0:38:11.2]

•    The product landscape for investors building sustainable portfolios. [0:40:57.8]

•    How Tim helps people through his fee for service planning. [0:45:48.2]

•    Tim's own definition of success! [0:47:44.6]

•    And much more!

 

Links From Today’s Episode:

Tim Nash on Twitter — https://twitter.com/timenash

Good Investing — https://www.goodinvesting.com

Dalhousie — https://www.dal.ca/

Unilever — https://www.unilever.com

Paul Polman — https://www.unilever.com/news/press-releases/2018/unilever-ceo-announcement.html

'Co Power Study infographic' — https://blog.copower.me/news/your-portfolios-dirty-secret/

Mark Carney — https://www.bankofcanada.ca/profile/mark-carney/

Wealthsimple — https://www.wealthsimple.com

Northwest Ethical Investments — https://www.neiinvestments.com

ExxonMobil — https://corporate.exxonmobil.com/

Michael Jantzi — https://ca.linkedin.com/in/michael-jantzi-5729312

Sustainalytics — https://www.sustainalytics.com

Enbridge — https://www.enbridge.com/

SNC Lavalin — https://www.snclavalin.com/en

Warren Buffett — https://www.forbes.com/profile/warren-buffett/#45dece364639

Horizons — https://horizons.gc.ca/en/about-us/

Episode 62: The Rational Round Up: Tax Loss Selling, Gold, Michael Burry and More!

Welcome back to another episode of the Rational Reminder! We are doing another variety show for all of you and this week we cover some news, current affairs, questions and of course our staple bad advice of the week! We start the show looking at the restructuring of swap-based ETF's from Horizons before looking at Michal Burry's latest commentary and predictions. From there we move onto John Rekenthaler's recent article on Morningstar about Canadian financial advice and what it is lacking. We discuss gold and why it is still not a good investment choice for almost all situations and even draw on some inspiring words from Warren Buffett on the subject! The conversation then turns to tax-loss selling; we unpack how it is possible to use this tactic to your advantage and look at some of the specifics that it entails. Lastly. we cover a particularly bad piece of advice that had the Twitter community up in arms recently! So for all of this and a bit more, listen in with us today!

Key Points From This Episode:

•    Horizons' restructuring of swap-based ETF's and what this means. [0:01:48.5]

•    Michael Burry says that index funds are creating a bubble in large stocks. [0:05:04.2]

•    'Canadian Financial Advice, Good Intentions but Bad Results'. [0:07:51.4]

•    Warren Buffet's classic gold explanation from a while back. [0:11:17.7]

•    The example of Brazil; hyperinflation and the price of gold. [0:14:38.2]

•    Tax loss selling and knowing the ins and outs of how much you are paying. [0:21:37.5]

•    Looking at some examples of tax loss selling and how they play out. [0:26:32.6]

•    The best hypothetical times to do a tax loss sale. [0:31:19.8]

•    This week's bad advice! [0:33:50.8]

•    And much more!

 Links From Today’s Episode:

 Canadian Couch Potato — https://canadiancouchpotato.com

Canadian Portfolio Manager Blog — https://www.canadianportfoliomanagerblog.com

Jamie Purvis — https://ca.linkedin.com/in/jaime-purvis-6980556

Horizons — https://horizons.gc.ca/en/

Michael Burry — https://www.barrons.com/articles/big-short-investor-michal-burry-is-now-long-gamestop-51566424832

The Big Short — https://www.rottentomatoes.com/m/the_big_short

Fama and French — https://www.investopedia.com/terms/f/famaandfrenchthreefactormodel.asp

Wes Gray — https://www.linkedin.com/in/alphaarchitect

Canadian Financial Advice: Good Intentions but Bad Results — https://www.morningstar.com/articles/943871/canadian-financial-advice-good-intentions-bad-results

John Rekenthaler — https://www.morningstar.com/authors/208/john-rekenthaler

Coddling the American Mind — https://www.thecoddling.com

Warren Buffett — https://www.forbes.com/profile/warren-buffett/

VGrow — https://www.vgrowadvisors.com

“Why Low Fee Investment Products are Bad for You" — https://www.thestar.com/life/opinion/2019/08/26/why-low-fee-investment-products-are-bad-for-you.html

Lesley-Anne Scorgie — https://www.thestar.com/authors.scorgie_lesley_anne.html

Episode 61: Ted Seides: Much More Than a Betting Man

We have another phenomenal guest joining us on the podcast today. You might know Ted Seides from his famous bet with Warren Buffett or, more recently, from his widely successful Capital Allocators Podcast. Ted is what we would call a classically impressive guy, having studied at both Ivy League frontrunners Yale and Harvard and having founded Protégé Partners, an asset management and advisory firm that specializes in hedge funds. In addition, he has trained under the legendary David Swensen, and together with his experience and training, has become a big name in the investing world. On this episode, he discusses the wealth of knowledge he has gained from David, the criteria for selecting a fund manager and how to approach evaluating the performance of that manager over time. Contrary to the assumptions about his views on index funds, he explains what he believes about them and whether he thinks the market is likely to become saturated. We then get into a conversation about the investment habits of the wealthy, why relationships are so important in this business and why he would not make the same bet again. Don’t miss out on this exciting conversation with Ted Seides!

Key Points from This Episode:

  • What Ted learned from David Swensen and his core beliefs about investing. [0:03:06.0]

  • The foremost criteria when selecting a manager and establishing your beliefs. [0:05:04.0]

  • Why endowment institutions and strategies are only beneficial for a select few. [0:10:59.0]

  • Formulating a hypothesis to measure the outcomes of your manager. [0:13:31.0]

  • Whether retail investors saving for retirement should consider hedge funds. [0:15:46.0]

  • Ted’s bet with Warren Buffett and his actual take on index funds. [0:19:02.0]

  • Fee compression in hedge funds and whether the market can become index saturated. [0:20:12.0] 

  • Why there is still a significant investment in actively managed mutual funds. [0:24:33.0]  

  • Observations about how people invest their money as their wealth increases. [0:26:52.0]

  • The importance of relationships in the world of investing. [0:29:40.0]

  • How the famous bet affected Ted and why he wouldn’t do it again. [0:31:12.0]

  • More about his Capital Allocators Podcast and how it has surprised him. [0:36:39.0]

  • And much more!

Episode 60: Valuation Theory and the Imminent Recession

Welcome back to the Rational Reminder everybody! We are taking this episode to round up all the recent goings-on and tackle a few residual issues that we believe need some attention. We start off by contemplating how much we have both been learning with the wealth of guests that come through our doors. We would never be confronted with this many ideas and inspiration if it were not for this great platform on which we find ourselves! From there we go on to discuss all the recent talk of a recession and the many assumptions that seem to be being made. Here at the Ration Reminder Podcast, we want to try and dissuade you from thinking you can easily predict the movement of the markets or believe those that say they can. It is just not that straightforward. Most often, a recession is only noticeable during or even after it has occurred. Rather stick to a good, diversified strategy without trying to guess and gamble on questionable information. The conversation also covers the portfolio changes from Wealthsimple before Benjamin does what he does best and explains valuation theory for all of us! So for all this and a few more goodies, be sure to listen in!

Key Points from This Episode:

 

•    Effects of hosting this podcast on our own money minds. [0:00:25.4]

•    The impending recession that everyone is talking about. [0:03:24.5]

•    Wealthsimple portfolio changes this week and the paper they published. [0:08:29.4]

•    Risk, return, low volatility, and balancing these in your favour. [0:17:32.2]

•    The theoretical underpinning of factor investing and valuation. [0:18:39.8]

•    Fama and French's Five Factor Model. [0:26:02.5]

•    Retiring early; spending rules for the FIRE movement. [0:28:18.2]

•    More viable alternatives for saving and preparing for retirement smartly. [0:33:21.6]

•    This week's bad advice! [0:35:28.2]

•    And much more!

Links From Today’s Episode:
Valuation Theory Summary Blog Post

Alexandra Macqueen — https://www.pensionacuity.com/

Moira Somers — http://moneymindandmeaning.com/about-moira/]

Trump — https://www.donaldjtrump.com

A Wealth of Common Sense — https://awealthofcommonsense.com

David Goetsch — https://www.imdb.com/name/nm0324477/

BMO — https://www.bmogam.com

Vanguard — https://investor.vanguard.com

Wealthsimple — https://www.wealthsimple.com

Robert Novy-Marx — http://rnm.simon.rochester.edu/

Eugene Fama — https://www.chicagobooth.edu/faculty/directory/f/eugene-f-fama

Kenneth French — https://mba.tuck.dartmouth.edu/pages/faculty/ken.french/

Modigliani-Miller Theorem — https://www.investopedia.com/terms/m/modigliani-millertheorem.asp

Fama-French Five Factor Model https://blog.quantinsti.com/fama-french-five-factor-asset-pricing-model/

Dave Ramsey — https://www.daveramsey.com

The Retirement Gamble — https://www.pbs.org/wgbh/frontline/film/retirement-gamble/

Valuation Theory Fomula -

Fama and French Formual.png

Episode 59: Financial Economics and Annuities: Rational Planning for Retirement

Welcome to another episode of the Rational Reminder Podcast! We have a fantastic guest joining us today to talk about annuities, or in more general terms, pensionization. Alexandra Macqueen is certified financial planner, who is also a financial author, editor, York University educator, consultant, and speaker. Alexandra co-wrote a book with Dr. Moshe Milevsky called Pensionize Your Nest Egg: How to Use Product Allocation to Create a Guaranteed Income for Life, an incredible resource on our topic today. In this episode, Alexandra talks about the important distinction between financial economics and financial planning, the former being much more rational and quantitative than the latter, which is largely based on folklores and rules of thumb. We discuss the concepts of retirement sustainability quotient (RSQ) and financial legacy value (FLV) and the impact they have on each other, before diving into explaining what annuities are and how they are meant to function. She also advises on the use of the GIC ladder, copycat annuities, and considerations for deferring your CPP. Don’t miss out on this insightful conversation!

Key Points from This Episode:

 

•    The distinction between financial economics and financial planning.  [0:02:38.8]

•    Product allocation and how it relates to pensionization. [0:04:15.8]

•    The retirement sustainability quotient (RSQ) and what it measures. [0:06:46.3]

•    How the RSQ affects your financial legacy value (FLV). [0:07:45.7]

•    The idea of eliminating the probability of ruin from your portfolio. [0:09:39.6]

•    What exactly is an annuity and how does it work? [0:10:15.3]

•    The type of person and age group that annuities appeal to. [0:13:53.2]

•    Why allocating to an annuity can allow you to spend more on your overall capital. [0:16:20.0]

•    The problem with the folklore rules around appropriate withdrawal rates. [0:19:47.8]

•    Suggestions for annuities for wealthy people under 50. [0:23:08.3]

•    Why a GIC ladder is not a guaranteed stream of income. [0:26:04.9]

•    Defining copycat annuities and their accompanying issues. [0:30:57.6]

•    CPP and the impact of deferring it at retirement. [0:33:52.4]

•    And much more!

Links From Today’s Episode:

 York University — https://www.yorku.ca/index.html

Pensionize Your Nest Egg on Amazon — https://www.amazon.ca/Pensionize-Your-Nest-Egg-Allocation/dp/0470680997

Moshe A. Milevsky — https://moshemilevsky.com/

Alexandra Macqueen — https://www.pensionacuity.com/

Wade Pfau on Twitter — https://twitter.com/WadePfau?ref_src

An Efficient Frontier for Retirement Income — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2151259

Why the 17% drop-out rule is key to your CPP entitlement — https://www.moneysense.ca/columns/ask-moneysense/17-percent-drop-out-rule-cpp/

Episode 58: The Ins and Outs of Real Estate: Mortgage Rate, Rentals, REITs and Variable Annuities

On today’s episode, Benjamin and Cameron are talking real estate, specifically mortgage rates and REITs. For the first time since the early 90s, fixed mortgage rates are lower than variable ones, which have always been the popular choice. However, due to the fact that Canada’s yield curve is inverted, short term rates higher than their long-term counterparts. This is not usually the case, which makes it a great time to consider a fixed term mortgage, bearing in mind that it requires some lifestyle considerations. Benjamin and Cameron also provide some insights into the rental property market changes since 2015, with some astonishing figures. They then discuss REITs, which many think should be considered their own asset class. While it is often recommended to have REITs in your portfolio, research is starting to show that you are taking a great deal of risk you are not being compensated for. This means you may be better off investing in other options such as high exposure bonds which bear much less risk. For all this and much more, join us today!

Key Points From This Episode: 

  • Why fixed-rate mortgages are now lower than variable-rate ones. [0:03:58.0]

  • Interest rates went up, but the shape of the yield curve changed as well. [0:06:25.0]

  • Property prices have almost doubled relative to rent since 2015. [0:07:12.0]

  • What a rental wage is. [0:12:48.0]

  • What a REIT is and the benefits of investing one in your portfolio is. [0:17:05.0]

  • Why the risk of a REIT may not be justifiable. [0:21:01.0]

  • Variable annuity investors routinely outperform mutual fund investors [0:26:23.0]

  • And much more!

Episode 57: A Masterclass in Business: Money Philosophy with Barry Ritholtz

On today's episode we are so happy to be joined by none other than Barry Ritholtz! As the founder and CIO of Ritholtz Wealth Management, host of the Masters in Business Podcast and regular financial blogger for more than 15 years, Barry is someone we have been dying to speak to on the show and who we have taken loads of inspiration from over the years. We talk to Barry about his own podcast which has been going strong for years now and is just about to reach its 250th episode! He also explains the beginnings of his firm and how his role has evolved in it since it started. From there, the conversation turns to the different parts of an investing philosophy we and Barry pretty much share and we ruminate on the state of the financial industry in US and Canada currently. We all feel that it is surprising that brokerage firms still find business in this day and age, when it has been shown so many times, for an extended period of time to be a far inferior business model for clients. Barry offers some pretty sensible advice on how to pursue financial growth in the long term and shares how RWM approaches client acquisition. For all of this and so much more, be sure not to miss this great episode!

Key Points From This Episode:

 

  • Why Barry feels he has the easiest gig in podcasting. [0:03:17.6]

  • The inspiration behind starting the firm and Barry's day to day work. [0:05:53.9]

  • The RIA model versus the brokerage model in investment firms. [0:12:45.4]

  • How Barry and the firm have chosen to run their business model. [0:16:03]

  • Specific portfolios at Ritholtz and the philosophy behind them . [0:21:18.8]

  • It's no good breaking a record if you crash straight after! [0:28:13.1]

  • How Barry and the firm find customers and the client conversations they have. [0:34:04.2]

  • Behavioral counseling as RWMC's biggest value proposition. [0:42:34.8]

  • Barry's opinions on robo-advisors and the factors to consider. [0:47:06.2]

  • Why are there still commission based advisors in 2019? [0:50:38.9]

  • Things Barry has changed his mind about since starting the firm in 2013. [0:55:09.9]

  • Small cap tilts, lower rates and the longer term vision that is necessary. [1:01:11.1]

  • How Barry defines success in his life. [1:07:01.5]

  • And much more!

Episode 56: GIC's, Portfolio Questions and Education Saving Plans: What's Right for You in Your Retirement and Education Preparations?

On the show today we are going back to basics, just Cameron and Benjamin going through some useful topics for your financial benefit! We start talking about GIC's and the article on MoneySense that led to this conversation. GIC's have a somewhat mix and match reputation, one which we believe has been often misunderstood and misrepresented. We try to show in which ways people have been misled into thinking that GIC's are the best option when, we believe, they are not. From there we turn to more general portfolio ideas, comparing the performance of the S&P 500 over time and drawing on a very useful study that illuminates the index's limitations. Our last topic for today is around saving for college and RESP's or registered education saving plans. We talk about asset allocation, how to think about starting and best practices when drawing on these funds. We finish off the show with some bad advice regarding dividend investing that actually referenced a video we made! So for all and a bunch more great stuff, be sure to tune in today!

Key Points From This Episode: 

  • Our recent summer travels and getting away from it all! [0:03:02.4]

  • The article by Jonathan Chevreau that sparked part of today's discussion. [0:05:46]

  • GIC's, long term returns and the financial implications of your choices now. [0:07:15.2]

  • Reasons why returns on GIC's can be misleading in the short term. [0:11:02.7]

  • The S&P 500's performance against other portfolio options. [0:13:56.3]

  • Market drops and risk appetites during panic periods. [0:19:15.2]

  • Saving and drawing on college funds and education plans. [0:22:40.2]

  • Asset allocation and the best way to think about covering costs. [0:27:41.1]

  • Withdrawing funds and making the most of unused college savings. [0:31:21.3]

  • This week's bad advice! An argument about dividend investing. [0:33:30.8]

  • And much more!

Episode 55: Being Frugal: The Crux of Financial Happiness

Joining us on the podcast today is Jonathan Clements, former Wall Street Journal columnist, founder of HumbleDollar and author of From Here to Financial Happiness, How to Think About Money and several other books. Jonathan is a well-known name in the world of personal finance as he has been giving financial advice for more than 20 years. Today he talks about the role of stories in shaping people’s understanding of and relationship with money by sharing an anecdote from his own childhood. He discusses how his investment philosophy has changed in favor of index funds, why investing is much simpler than people tend to believe and then he gives us a glimpse into his own investment portfolio and the financial decisions he is making in his personal life. Jonathan also offers a balanced perspective on home ownership from an investment point of view, advises on the things worth spending money on and then we debate the age-old question of whether money can in fact make you happy.

Key Points from This Episode:

  • Working as a financial journalist on Wall Street for more than 20 years. [0:02:01.0]

  • How old family stories taught Jonathan to be thrifty and careful with money. [0:02:28.0]

  • How his philosophy and the investment world has changed over the years. [0:06:09.0]

  • The hardest part of investing is accepting how simple it is! [0:07:39.0]

  • Why Jonathan tilts towards value in his own investment portfolio. [0:11:12.0]

  • Considering the many sides to home ownership as an investment. [0:13:57.0.]

  • How his partial retirement has affected how he thinks about his portfolio. [0:17:43.0]

  • What HumbleDollar is about and dealing with the human side of money. [0:19:58.0]

  • Three things to do to get more happiness from your money. [0:24:17.0]

  • What people should be talking more about in finance. [0:30:46.0]

  • And much more!

Episode 54: The S&P Dow Jones & S&P 500: A Brief History

Today on the Rational Reminder Podcast we have joining us Dr. David Blitzer who is the Managing Director and Chairman of the S&P Dow Jones index committee. He has been there from the time when indexes were barely even being traded and the first time S&P Futures began trading, and since then, indexing has turned into the massive phenomenon we all know today. Indeed, S&P indexes were (and still is) at the center of this explosion. Today Dr. Blitzer talks to us about the early days of indexing and shares some of his ideas about why indexing became so popular. We also discuss the possible reasons why some people still choose actively managed funds and the effect that the abundance of research has had on their dwindling appeal. Ever wondered where the rapid growth in indexing will end up? What happens after indexing? Can indexing become too big? Be sure to join us for this masterclass on indexing!

Key Points From This Episode:

When Dr. Blitzer joined S&P and how index investing has changed over time. [0:03:33.0]

The relationship between an S&P and a product manufactured like Vanguard. [0:06:03.0]

Considering the reasons why indexing became so popular and the role of ETFs. [0:10:11.0]

How research has impacted people’s perception about active management. [0:12:54.0]

Some theories on why it is so difficult to beat the S&P 500. [0:18:13.0]

How the change to indexing has affected smaller markets such as Canada. [0:25:39.0]

Dr. Blitzer’s thoughts on factor weighting. [0:30:28.0]

The line where we cross over from passive to active investing. [0:32:18.0]

Can indexing become too big, and what’s next? [0:41:00.0]

What Dr. Blitzer ascribes his success to. [0:45:26.0]

And much more!

Episode 53: The Real Value of Financial Advice: An Empirical Perspective

Live in the studio with us today is Preet Banerjee, renowned speaker, personal finance expert, consultant and author of Stop Overthinking Your Money. He is also the founder of MoneyGaps, a hybrid-advisor platform designed to help financial advisors make financial planning accessible to more Canadians. Having done a reality TV show and with a poplar YouTube channel, Preet is on the forefront of the finance world, and he is here to talk to us about the findings that his DBA research have produced. He discusses his endeavour of seeking empirical evidence for the actual contribution that advisors are making to the financial lives of people, and we talk about the crucial difference between robo and human advisors and how people’s diverse needs demand diverse solutions. This is a really insightful conversation with someone who knows what he’s talking about, so be sure to listen in on this one!

Key Points from This Episode:

  • What is the value of financial advice? Preet shares about his DBA research. [0:02:33.0]

  • Preet’s history in finance and how he gained a more objective perspective. [0:05:13.0]

  • Speculating around the findings and more about his research design. [0:06:41.0]

  • The relationship between wealth and financial advice: correlation or causation? [0:11:11.0]

  • Measuring the performance of someone who uses no advisor. [0:14:17.0]

  • How the financial security of the home you grew up in affects your finances. [0:16:26.0]

  • Building the model to score financial wellbeing and the challenges that surfaced. [0:20:20.0]

  • Paying more attention to aspects outside of portfolio management. [0:25:09.0]

  • MoneyGaps as a platform for affordable financial planning. [0:29:04.0]

  • How the value of human advisors depends on each individual consumer. [0:33:34.0]

  • The core benefits of human advisors. [0:34:44.0]

  • And much more!

Episode 52: A Closer Look at the CPPIB Report: What You Need to Know

Welcome to this week’s Rational Reminded Podcast! Today we’re diving into the recent CPPIB report that portrays actively managed funds in the most optimistic light. But before you trade in your index funds, we look at the methodologies and calculations employed by the report and show why there are a number of issues with their findings. Benjamin shares his proposal for an alternative analysis that employs a more risk appropriate benchmark, and we discuss why the report can be seriously misguiding. We also talk about the transitional issues that have result from MB Financial being taken over by Scotiabank and why some MB Financial clients have not been too pleased with it all. We tackle the issue of value versus growth stocks and look at a number of research papers that could explain the developments that have taken place in this regard. Nearing retirement and unsure when to take your CPP? Be sure to join us to find the answer to this complex question!

Key Points From This Episode:

  • The positive report about the active management strategy of the CPPIB. [0:01:19.0]

  • Why there is a red flag about the calculations done for this report. [0:03:19.0]

  • Benjamin’s alternative analysis and how he built up a more risk appropriate benchmark. [0:05:43.0]

  • The problem of CPP comparing a relatively safe portfolio with a much higher risk one. [0:09:02.0]

  • CPPIB’s argument for why they are investing in illiquid asset classes. [0:11:31.0]

  • A few repercussions of MD Financial being taken over by Scotiabank. [0:16:16.0]

  • Does value still make sense? Looking at the data of value relative to growth. [0:19:45.0]

  • An overview of three research papers on on the overreaction hypothesis. [0:25:10.0]

  • The complex question of when to take your CPP and when it’s better to wait. [0:33:27.0]

  • And much more!

Episode 51: Writing About Money: Advocating for Consumer Rights with Ellen Roseman

On the Rational Reminder today we are joined by Ellen Roseman from The Toronto Star, who has been writing and working in the realm of Canadian personal finance and consumer rights for many years. We have a great chat about her work history, what has driven her career and what motivates her to continue to pursue her path of creating financial awareness for more people. We discuss the position of advocacy for consumer rights and how that translates into her everyday work, her most important and recent areas of action, the classes she is involved in teaching and her most recent book, titled Fight Back. Ellen weighs in on the topics of financial advice and how to seek out the best of it, actively managed funds and how she is involved FAIR Canada. We finish off with a fun bit about how Ellen found herself blocked on Twitter by Suze Orman and Dave Ramsey! For all this and more, listen in today!

 

Key Points From This Episode:

  • What it means to Ellens to be an advocate for consumer rights. [0:02:43.1]

  • The most recent cause that Ellen has been championing through her work. [0:05:4]

  • Three tips from Ellen's most recent book, Fight Back. [0:07:59.0]

  • The class Ellen teaches at UFT, Investing for Beginners. [0:14:18.9]

  • Ellen's attitude towards seeking advice and when it is necessary. [0:16:19.6]

  • Bad investment advice and the cases that crop up the most for Ellen. [0:18:18.5]

  • Some of the results of Ellen's course and how it is laid out. [0:21:05.4]

  • Are actively managed mutual funds still holding the majority of Canadian assets? [0:26:03.2]

  • A little about FAIR Canada and Ellen's work there. [0:27:55.4]

  • Ellen's recent Twitter activity which led to get her getting blocked by Suze Orman. [0:32:14.5]

  • A definition of success from our wonderful guest! [0:38:14.0]

  • And much more!

Episode 50: Tax Tales: Considering The Tax Implications Of Asset Allocation ETFs

Welcome back to the Rational Reminder Podcast! We’re nearing our one-year anniversary, and we are still getting more listeners every episode and we have some incredible guests lined up for you! Today we are tackling more technical issues and some interesting topics overall. We explore the tax implications of VGRO or any of the asset allocation ETFs of Vanguard and iShares and discuss the scenarios in which it might be more advisable to configure the asset allocation that you want using a different form of fixed income and equities. We compare the tax rates on various funds and then dive into some literature on currency hedged global fixed income and what key role players have to say about diversification and dispersion. The spotlight is then diverted to disability insurance and we talk over whether it really is a necessity, what statistics show, and we advise you on the specific points to consider when looking for the right cover plan. For all of this and more, be sure to join us for this episode!

Key Points From This Episode:

  • The listener question about the tax efficiency of VGRO that keeps popping up. [0:01:58.0]

  • The tax issues with premium bonds and how interest rates impact their value. [0:02:41.0]

  • The benefits of the different ETFs that VGRO gets its bond market exposure from. [0:05:34.0]

  • Buying VEQT or other equity ETFs as an alternative to buying VGRO. [0:07:49.0]

  • Comparing the tax rates on funds and why tax efficiency is a vital consideration. [0:09:31.0]

  • Some interesting research findings on currency hedged global fixed income. [0:12:21.0]

  • Understanding the tax, liquidity and risk implications of GICs. [0:14:16.0]

  • Is it possible to over-diversify? And important points on dispersion. [0:16:31.0]

  • Considering disability insurance, what data shows and what do look for. [0:22:47.1]

  • And much more!

Read more on GICs replacing bonds here: https://www.pwlcapital.com/should-gics-replace-bonds-in-a-portfolio/ 

Episode 49: Insights into Horizons: Continuous Innovation in the Canadian ETF Market

On today’s episode, we are joined by Jaime Purvis, Executive Vice President at Horizons ETFs. Having been the company’s third ever employee, he has worked at the company for nearly 24 years and provides an in-depth inside look into how Horizons has come to have the reputation of being ahead of the curve in the Canadian ETF market. He takes us through some of Horizons history, how they got into ETFs, as well as giving some insights into how these products were chosen. Given the instability of the market today, it is important not only to innovate, but also to leverage experience when creating ETFs, which is what Horizons seeks to do. With such high levels of unpredictability, they aim to provide their clients with as much knowledge as they can to make informed decisions, especially given the Canadian national budget proposal, which will likely affect ETFs across the board greatly. Along with this, Horizons has also created a variety of ETFs, based on products they anticipate will soon play a huge role in daily lives, such as robotics and AI. Despite casting this wide net, these decisions are still made with careful consideration, drawing on the company’s extensive knowledge pool. This ability to continually innovate has put them at the forefront of the Canadian ETF market. To gain more insight into the world of ETFs and Horizons, join us today!

Key Points From This Episode:

  • How Horizons has swap structure works and why these swaps should not be feared. [0:06:55.0]

  • What the rationale behind the Canadian government swap-based ETF targeting is. [0:11:45.0]

  • What the redeemer’s methodology is and the effect that is has. [0:16:08.0]

  • What some of the risks associated with the swap-based ETF structure are. [0:23:56.0]

  • The situations where it does not make sense to have a swap-based ETF. [0:28:43.0]

  • How Horizons chooses their thematic ETFs. [0:30:35.0]

  • What the deciding factors in closing a stock down are. [0:36:29.0]

  • Why it is becoming increasingly difficult for starter ETFs to launch. [0:39:20.0]

  • And much more!

Episode 48: Current Investment Topics: Market Efficiency, Grossman-Stiglitz Paradox, and the Home Ownership Debate

Welcome back to your weekly reality check on sensible investing and financial decision making for Canadians. On today’s episode we kick it off with a combo of a current topics, answering listener questions, and discussing the bad advice of the week. We then dive into the huge shift in the industry in the US in terms of fund flows into index funds out of active mutual funds. When you look at the overall US market cap, 13% of it is in index funds. This means that price discovery is being done by 87%. Inside this episode we unpack what that means for investments overall and how it differs in the Canadian market. We then take to a deeper discussion on our portfolio management topic of the week, which is looking at the relationship between price and future returns. We know that when prices are high, future returns tend to be low, so we dive into how that affects the context of pricing. We also take a look at the AQR study, Vanguard’s dollar cost averaging versus lump sump study, and of course our planning topic for the week; renting versus buying a home and understanding the unrecoverable costs. Join us today and be sure not to miss out on today’s incredible episode!

Key Points From This Episode:

  • Answering a listener question: using dividend stocks to pay down your mortgage. [0:03:41.0]

  • Busting the beliefs and concepts of this week’s worst investment advice. [0:06:33.0]

  • The shift in the US market place: index funds versus active mutual funds. [0:11:27.0]

  • Understanding the Grossman-Stiglitz Paradox: market efficiency. [0:15:40.0]

  • Portfolio management topic of the week: relationship between price and future returns. [0:18:19.0]

  • Discussing the Vanguard study: Lump sum versus dollar cost averaging. [0:24:18.0]

  • A viral topic: understanding the debate of whether to rent or to buy a house. [0:28:28.0]

  • And much more!