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.

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 teaches us about the Silicon Valley Bank (SVB) bank run. (0:21:35)

• The difference between households and banks, and the lessons households can learn from the narrative around bank runs. (0:22:59)

• A quick recap of our conversation with Jonathan Clements and a review of his new book My Money Journey: How 30 People Found Financial Freedom - and You Can Too. (0:27:16)

• We welcome Jonathan Clements back onto the show to discuss his new book and why he wrote it. (0:32:00)

• What readers can expect to learn from Jonathan’s book, like the impact parents have on your financial beliefs, and what inspires people to reassess their finances. (0:34:31)

• The impact of early habits on our finances. (0:38:36)

• Jonathan’s insights into the financial service industry, its complexity, and how our risk tolerance can shift over time. (0:40:19)

• Why regret in financial decision-making is virtually unavoidable and the value of writing your money story. (0:44:22)

• Past and upcoming meetups, feedback from our listeners, and a reminder of our 23 in 23 Reading Challenge. (0:47:42)

Read the Transcript:

Ben Felix: This is the Rational Reminder Podcast, a weekly reality check on sensible investing and financial decision-making from two Canadians. We're hosted by me, Benjamin Felix and Cameron Passmore, portfolio managers at PWL Capital.

Cameron Passmore: Welcome to Episode 247. By your voice, Ben, it sounds like you're getting a bit of a cold.

Ben Felix: Yes, I have four kids as you know. I also coach basketball for two groups, that my kids fall into the age groups that I coach, so I'm surrounded by children who are often sick. It's hard to avoid getting colds, which drives me nuts, but it's unavoidable.

Cameron Passmore: I had my first cold since the pandemic last week, first time. So anyways, feel better now.

Ben Felix: Lucky you.

Cameron Passmore: Lucky me. Anyways, so in today's podcasts, you're going to dive into a subject that I think is safe to say is getting a bit of interest lately, bank runs. Then we do a one-minute review of Episode 55 back in 2019 with Jonathan Clements, and then we're going to welcome back Jonathan to the podcast to talk about his upcoming book, My Money Journey: How 30 People Found Financial Freedom - and You Can Too. We'll do a book review, then he's going to join us for some questions. This is a bit of a theme that we're going to try out where we bring authors on to talk about finance books that they've written. So there's a bunch of people that we know that have written books that look interesting, so we've lined them for the next couple of months. That should be kind of fun to get them more exposure and get you guys in front of more finance books.

Then of course, at the end, we have the after show. I also wanted to reach out to everyone and say, I talked to a lot of advisors. As you know, Ben, people are kind of pinging me quite often on LinkedIn. I'm happy to talk to people. I've actually included a Calendly link in my Twitter handle. If anybody wants to reach out, there's a lot of advisors we know in Canada who might be looking for succession plans for their business that may not have an obvious solution, so we're happy to chat. If anyone is interested, just reach out and love to chat. Anything else to add, Ben?

Ben Felix: No, that all sounds good. Let's go ahead to the show.

***

Cameron Passmore: All right. Let's keep going to Episode 247. Ben, I am dying for you to dive into this topic. As people know, so I talked about this at the meet-up with people. I have not read these notes. Someone said at the meetup this week, "We love that you don't read the notes, that you're kind of listening to Ben for the first time like we are."

Ben Felix: Well, all right.

Cameron Passmore: That was underwhelming, hopefully.

Ben Felix: Hopefully you have some good questions, I guess. I don't know. Hopefully –

Cameron Passmore: Hopefully your message is cogent. We'll see.

Ben Felix: Hopefully it's clear. So the topic is bank runs, as our listeners know, and I think appreciate, we didn't jump on the SVB bandwagon and try and add information to the massive amount of information that was being created around that, both accurate and inaccurate, useful and not. Some may be the opposite of useful, detrimental, I don't know, damaging. We avoided that, but it was still a topic that we were looking to get more information about when all that stuff was happening, because we wanted to understand what was going on just like everybody else did.

There were a couple of Nobel Prizes in Economic Sciences awarded last year related to this, related to credit and the economy. That was Ben Bernanke. There was a shared price and bank runs, how bank runs happen, and what banking does in the economy. That was Douglas Diamond, and his co-author, Dybvig. Basically, when I read their stuff, and tried to put together a summary or a narrative, I don't know, based on that information, that will hopefully help people understand what was going on, and what is still going on that potentially causes concern.

The business of banks, and even this part's interesting. The business of banks is making loans, as people know, issuing deposits and processing payments. That's what banks do. That's the economic function that they serve. Not their main economic function, or the main economic function that this accomplishes, what banks will really add to the economy other than payment processing, which is also important. But the big thing is transforming the liquidity and maturity of assets. So they process payments, they facilitate the movement of money through the economy. That's a big piece.

Then the other big piece that – and this is one of the big contributions of Diamond and Dybvig is the liquidity and maturity transformation. Banks make loans, and when a bank makes a loan, they create an asset. That's an asset to the bank, that they could sell or they purchase bonds. Those are both illiquid, long-term assets. Then the other side of their balance sheet, the issue, highly liquid bank demand deposits. Demand deposits meaning that the depositor can go and take them back at any time.

Cameron Passmore: Exactly.

Ben Felix: On one side, they have these illiquid, long-term assets. On the other side, they have these short-term demand liabilities.

Cameron Passmore: This has been talked about at length with SVB.

Ben Felix: I mean, yes. The center of the issue was their management of the two sides of their balance sheet. I'll talk about that a little bit later. That intermediary function, and this is one of the things that the modelling of Diamond and Dybvig showed early on, is that that intermediary function is optimal, compared to individuals directly making loans to businesses. the reason is, that spreading deposits across a lot of different depositors who will need their cash back at different times and for different reasons. By doing that, by nature of doing that, banks are able to safely hold illiquid and longer-term assets, while giving depositors demand access to liquidity to their deposits.

Whereas, if I went and made a loan to a business, it's going to be illiquid. I can't just go and get it back anytime. But banks are able to spread the risk of depositors needing their money back across many different depositors with different – well, ideally, and this is one of the shortcomings of SVB. Ideally, different depositors with different sources of information, different sources of risk in their lives, all that kind of stuff. That function is core to what banks are offering to the economy. It's great when it works, but the very nature of the function, the very nature of the value that banks are adding, exposes them to the risk of bank runs. This has been true, as long as banking has been a thing, because to reiterate, the thing that it does, the thing that makes banking useful, also exposes it to the risk of bank runs. It's like fundamental to the existence of banking.

I'm going to go through a little bit of how banks work, which will be sort of an elaboration of what I just said. Bank deposits are liabilities for the bank. When you go and put money into a bank account, the bank owes you that money, and you can demand that any time, demand deposits. In exchange for borrowing your money, the bank is borrowing your money when you make a deposit, the bank is going to pay you some interest. Bank loans are assets for the bank. If a bank goes and makes a loan to an individual or a business, that loan is an asset to the bank. Successful banks, like the business of banking, are going to earn more on their loan portfolio than they pay to their depositors. That's what they want to do.

To be successful as a business banks have to manage three primary risks. They've got to manage credit risk. That's the risk that they make loans that can't be repaid. They've got to manage liquidity risk. That's the risk that their asset portfolio can't be liquidated at a good price when it's needed, when liquidity is needed, and it's got to manage duration risk. That's the risk. There's a mismatch in interest rate sensitivity between the bank's assets and liabilities. For managing those risks, a bank is going to earn a return. That's the business. But the risks have to be properly managed.

When banks do get into trouble, the markets for loans can tighten up, and that credit effect on the economy has real economic consequences, which is why we have so much regulation around banking. To manage credit risk, the risk that the bank makes loans that can't be repaid. The bank has to be good at assessing the credit quality of borrowers, or otherwise putting protections in place like collateral to compel the borrower to repay the loan. But even still, even if banks are really, really good at that, borrowers are always going to know more about their own creditworthiness and their intended use of the borrowed funds than the bank will.

Cameron Passmore: Naturally.

Ben Felix: That will always be true. There always be asymmetric information there, which is part of credit risk. Now, in credit risk management, sometimes there are failures. The great financial crisis, and then you could call that, I don't know if it's a failure in credit risk management. A lot of just straight-up fraud in that case, I think. But yes, that can go wrong, and we saw that go wrong, and we saw what can happen when that does go wrong. Banks are not going to avoid taking credit risk, though, because I mean, as we know, from talking about portfolio management, there is a credit risk premium, as the same thing for the bank. By making riskier loans, they expect on a higher premium, they just can't go too risky, or they'll end up taking losses.

To be useful, in addition to taking on the credit risk, like I mentioned earlier, banks need to take on liquidity and duration risk. That's a big part of their reason for existence. That's like their primary economic function, is that maturity and liquidity transformation. When we talked each Eswar Prasad in our crypto series, he made this point very strongly. Like banks have a function that you can't just replace with something like crypto in that conversation. So they're transforming long-term illiquid assets into short-term and liquid liabilities. They're uniquely positioned to do so. Bank loans are not typically liquid assets. As I mentioned earlier, illiquid assets are not that great for people, for individual people, because nobody knows when they will need liquidity.

Cameron Passmore: Exactly.

Ben Felix: Right. The cash flows from the bank's long-term assets are typically going to be less sensitive to changes in interest rates than bank deposits. So banks are taking on the risk, they'll be stuck with low-yielding long-term assets, in the case of interest rates rise, while having to pay higher interest on their deposit liabilities. Again, I don't want to make this whole thing about SVB, but that happened. Like all of a sudden, they had to pay 4% or whatever on deposits while they were still getting very low yields on their fixed-income portfolio.

Cameron Passmore: Yes. So they were upside down and part of their portfolio.

Ben Felix: Correct. Then, of course, the other problem in that scenario, and it's directly related to the cash flow side, is that the value, the mark to market value, or the liquid value of those longer-term assets falls when interest rates rise. That's the kind of the other side of the same coin with my comment about cash flows. Now, as long as the bank is able to maintain a positive spread than the net interest margin between cash flows on its loan, assets and deposit liabilities. And it can hold its long-term assets to maturity, which is an important part of this, it's going to be okay, the bank will be fine. But the problem can arise if they're forced to sell their long-term assets, which in this example have declined in value to meet withdrawals from depositors.

Banks are still in a better position to take on these risks than households, which again, is why they're useful. When the bank is the intermediary for the loan, they're able to spread the risk of needing liquidity across lots of different depositors who need to consume their assets at different times, and kind of see some ICAPM-type thinking in there. I don't know, different covariances different risk exposure. The bank has to diversify its intertemporal risks in the same way that we talked about with asset pricing.

Cameron Passmore: Absolutely. Absolutely. For sure. That's interesting to think about.

Ben Felix: Yes. Anyway, properly managed. The bank can hold these illiquid and longer-term assets on their balance sheet, while issuing demand deposits, which are short-term liabilities to their customers, because the bank does not expect everyone to withdraw their deposits at the same time. As long as they don't, everything's good. The bank serves a useful function. Another way to think about this, and I got this from one of the Diamond, Dybvig papers is the banks provide depositors with insurance against their unknown future liquidity needs. It's a pretty nice way to summarize what banks are doing.

And again, the idea that if I go and make a loan to your business, I can't go and sell it. But if I stick my money in the bank, instead, I am getting insurance against my unknown future liquidity needs.

Cameron Passmore: Love it.

Ben Felix: Makes you think again, about keeping your emergency fund in a bank account, where you have insurance against your unknown future liquidity needs, except for the problem that can arise in an emergency, probably, which is bank runs. That's the thing everyone's been talking about, obviously. Liquidity, and illiquidity, and duration risk are problems even for healthy banks, and this is the key point on bank runs. If all depositors decide they want their money back at the same time. Kind of like credit risk, banks will take on some liquidity and duration risk, because illiquid and longer-duration assets will typically pay higher yields.

Again, in the SVB case, I think we maybe saw a slightly more extreme version of this, where they are really reaching for yield. That setup, to be clear, allows for optimal risk sharing among the diverse group of depositors or the ideally diverse group of depositors as long as everyone believes that they will be able to get liquidity when they need it. But as soon as people think that the bank will be unable to meet its withdrawal liabilities, there's a risk of a bank run, where people will rationally, in that case, rush to withdraw their deposits before the bank runs out of assets.

Now, this doesn't require the great financial crisis scenario of banks making risky loans. And again, to draw the SVB example, a bank can hold the safest possible assets from the perspective of credit risk, like US Treasury bills. But if the duration of those assets is long, interest rates increase, pushing bond prices down and depositors withdraw their funds, the bank can still be in big trouble.

We take an example, like the bank takes in $1,000 in in deposits, buys $1,000 in bonds maturing in three years. The bank's earning 5% of this bond portfolio, and paying 1% on deposits. Interest rates rise and the bond price falls to $900. If a few depositors want their money back, it's no big deal, because the bank can take a small loss in selling some of the bonds while still making a profit on the net interest margin over time. What if all depositors want their money back at once, and the bank has to sell the asset, it's only got $900 in assets? But what's interesting is that the liquidity and duration risk of the assets of the bank holds.

Again, I've made this point a few times, but the duration, and illiquidity of the assets of the bank holds provide both the economic rationale for the existence of banks and the vulnerability of banks runs. I find that fascinating. The very reason that banks exist, exposes them to the risk of bank runs, if there's a loss of confidence.

Cameron Passmore: Exactly.

Ben Felix: So it's not like banks are bad, it's not like banks are mismanaged. We can argue about whether regulations are perfect or not. But in any case, the very existence of the function the banks provide, exposes them to the risk of runs. And they do provide economic value when they're functioning properly, because they provide insurance against unknown future liquidity needs for depositors. But then if they fail, there are real economic consequences because access to credit is reduced, and optimal risk sharing among depositors is destroyed.

Cameron Passmore: Exactly.

Ben Felix: If you think of an example, I don't know if this is an SVB example or not, this is just a hypothetical example. But a news story about a bank, being in poor financial health could result in even depositors who know that the bank is in good health, withdrawing their funds on the basis that they think other depositors will do the same. The bank doesn't have to be unhealthy, there just has to be a panic.

Cameron Passmore: Correct. And in that case, it's your own self-interest that may trump the collective self-interest.

Ben Felix: Yes. In one of the Diamond papers, they talked about how banking has multiple equilibria. One of those equilibria is like this panic scenario, where the rational behaviour of depositors is to go and get their money out, is to rush to try and get their money out, which causes the bank to fail. But that is the rational action in that case. One of the ways, one of the fundamental ways, and again, this isn't new, this isn't an SBV lesson. This is something that Douglas Diamond's been writing about since the '80s. One of the ways that banks can address this is by taking deposits from a diverse base of customers.

Cameron Passmore: It must be something to read that paper, having just lived this experience.

Ben Felix: Well, reading the paper was incredible, because exactly, there are so many things where it was like, I wonder if the SVB executives have read this paper, because there's so many things that was like a case study of what not to do, based on this research. Maybe there's, I don't know, maybe there's some kind of, I don't know if it's a selection bias or something in there, where these guys just won the Nobel Prize. SVB failed for basically all the reasons that they said that banks would fail. Is that a coincidence? I don't know. It seems like an unlikely coincidence. In the ideal case, depositors are sensitive to different risks, like I mentioned earlier, with a sort of ICAPM-type thinking. They need liquidity at different times. Because again, if everyone's exposed to the exact same risks, and they all need liquidity at the same time, that will cause a bank run.

But then the other thing that Diamond talks about is that they should have diversification in terms of their sources of information. Again, when I make my comment about SVB being a case study of what not to do, like there's all the memes and stuff, or I don't know if they're memes, or if they're real-life stories about a group chat that everyone's in. If all of the customers of your bank are in a single group chat, that's probably not ideal. That's definitely not a diverse set of information sources.

Cameron Passmore: And the news spreads so much faster than it might have been past runs.

Ben Felix: Well, so that that part is separate from the SVB case, right? Because even though we're not all in the same group chat, the news moves pretty quick. But even still, I don't know how people get their information from different sources, I don't know. It's not as extreme and explicit as a group chat, where everyone's literally getting information from the same closed conversation.

I do think that one of the, I mean, I think because I read this in a paper, one of the possible reasons for the relative robustness of the Canadian banking system throughout history, like there's a whole history of US banking panics over which Canada has not had banking panics over the same period. One of the possible reasons in the paper that I read on this is that they are extremely well diversified in terms of their depositor bases and their business in general, but their depositor bases in particular. And the fact that we have relatively few extremely large banks, means that they will be relatively well diversified, as opposed to a smaller, more niche bank.

Now, the solution or part of the solution to bank runs is deposit insurance. This is another thing that Diamond has written about extensively. When a bank has deposit insurance, it can make a credible promise not to have bank runs. It kind of has to be provided by the government, or that's at least optimal, because the government has taxation authority, and the government is kind of the only entity that can credibly guarantee against large losses without itself being at risk of a run. Kind of interesting thing about that, too. Now, of course, to the extent, this is another SVB lesson. To the extent that depositors hold deposits in excess of deposit insurance, there's still going to be the possibility of a run.

Another part of the solution is a central bank that serves as a lender of last resort when a bank is in need of liquidity. But in the SVB case, that was not helpful, because they just didn't have sufficient assets to post as collateral for loans. My understanding is that the lending window for the Bank of Canada works differently, but I don't have specific details on that though. And bank regulations are another thing that aimed to keep banks healthy enough to avoid the type of liquidity concerns that we saw with SVB. But as we learned in that case, and as we've heard through the media many times, those regulations were relaxed a little bit, which may have contributed to the issue that we saw.

On SVB, I think, as I mentioned earlier, it was kind of the antithesis of depositor diversification, where their customer base was not well diversified by industry, geography. Although I don't have details on their exact geographic diversification. They consumed information from the same sources, and they often had large deposits well in excess of the insured limit.

Cameron Passmore: Because they were giving such great service, as I understand, like they developed his niche and serve the niche very well. So the value proposition of a niche regional-type bank ended up being part of the causes of the run.

Ben Felix: Yes. I mean, if you read Douglas Diamond, it's like fundamental risk management for banking. You have a diverse depositor base. They had this SBV, this unique combination of losses in their asset portfolio, because they're holding these longer-duration bonds during a period when interest rates rose very aggressively. They had this risky depositor base that had the group chat to kick off a bank run. I think that SBV situation was somewhat atypical. I, of course, hope it doesn't signal larger issues in the banking system. But the scary part, and I'm not trying to make people panic, that's absolutely not what I want to do. The scary part is that even in a healthy banking system, enough panic among depositors can create liquidity problems that did not otherwise exist.

Cameron Passmore: No doubt.

Ben Felix: Which is – I mean, it's the multiple equilibria in banking. If everyone panics, the rational action is to get your money out.

Cameron Passmore: I remember someone telling me that about stocks long time ago. He said, don't forget. Like if everybody shows up to sell their stocks, and there's no buyers, what happens to the value of stocks?

Ben Felix: Would there have to be a buyer if they sold?

Cameron Passmore: But I'm saying, if everyone showed up to sell, buy to sell my house in the next hour, there's no one on the street. Well, theoretically, there's no value if I wanted to get cash.

Ben Felix: Yes. Maybe it's the same kind of issue. If you hold illiquid assets, and you want to go and sell them tomorrow, and you can't, and they're worth a lot less than you would have hoped. Now, to step away from banking for a second, households are obviously not banks, and we've talked about that, and how banks add value, because they're not households, because they can aggregate the risk of many households to transform maturity and liquidity. Which I think is just super interesting to think about the role of banks in the economy.

Households are not banks, but I think, to just step away from banking for a second, there are a couple of interesting lessons in here for households. A big lesson is that the definition of a risk-free asset depends on your liabilities. Like US Treasuries, as I mentioned earlier, as close to risk free as it gets from the perspective of credit risk, like they're probably not going to default. But then if you look at long-term treasuries, and this is not what SVB held, I just use it as an example, because the number was crazy. Long-term treasuries dropped more than 30% in 2022, in nominal terms. That's not even real. So they're really risky assets for people who needed their money last year. If you deposited your money in January and need it in December, not so good.

But long-term investors would expect to lose purchasing power more frequently in short-term bills than in long-term bonds, or even less so in stocks. That's kind of based on the Scott Cederburg stuff, where he looked at stocks, bonds, and bills for a 30-year investor, much more likely to lose money in bills. Holding your emergency savings account in long-term treasuries, probably not a good idea. But holding your long-term investments in short-term treasuries, probably not a good idea either. Both of those things are extremely risky, relative to the time horizon. It's the term structure of risk and assets, different assets are risky or safe, depending on your time horizon.

Cameron Passmore: I told you this morning, I relistened to our interview with Scott Cederburg and all that information is so interesting.

Ben Felix: Yep. As of the time that we're recording this a week from now, which actually is the day that this episode will be released, we'll be talking to John Campbell, who the comment that I just made about the term structure of a risk is something that we're going to talk to him about extensively. Banks are managing the same trade off, that I just talked about between short and long-term risks with the main difference being that they need to be able to meet demand deposits or demand liabilities that could potentially show up all at once if people panic, which is exactly what happens in a bank run.

You can think about it as if you're a long-term investor and you have all of your money in long-term bonds. Let's say it's in long-term treasuries, like last year, because you expect your liabilities not to show up for 20 years. But then, for some reason, you need to get all of your money back. It's kind of like the example you made earlier about the story. The thing someone mentioned you about stocks, if you thought your liabilities were far at the future, but they decide to show up all at once, you're going to be in trouble, and that's kind of what happens with bank runs.

I think banks serve a truly valuable economic function. I think that Diamond, Dybvig, and Bernanke all made that point quite well in their Nobel Prize acceptance talks. They transformed the liquidity and maturity of assets to provide depositors with insurance against their unknown future liquidity needs. Serving that function keeps the economy moving, but the very nature of the service that banks provide expose them to the risk of bank runs, if enough of their depositors panic at the same time. That problems kind of addressed through a combination of deposit insurance, bank regulation, and ideally a diverse customer base, which are all designed to keep depositors from panicking all at the same time.

Cameron Passmore: Those are fantastic.

Ben Felix: Hope so. Hope it was interesting. I thought it was interesting to read all that stuff.

Cameron Passmore: It's kind of cool to connect the Diamond research, along with what's happening in real life today. I find that really fascinating. I think a lot of people have a much greater appreciation for when you're making a deposit at a bank or actually lending money to the bank. You're a creditor of the bank. I think a lot of people didn't appreciate that before.

Ben Felix: Yes. And you're high up on the list of creditors, but if there's nothing wrong with creditor, you're still a creditor.

Cameron Passmore: You're still a creditor. All right. Let's jump to a bunch of stuff about Jonathan Clements. I said I'll do a quick review of his episode, and then we'll do a very quick review of his book, and then we're going to jump to a conversation with Jonathan. As you remember, Ben, back in the early days of the podcast, and we started kicking around the idea of having guests. You and I took a trip to New York City, which was super fun, and kind of funny to look back and to think that we actually did interviews that way, lugging equipment to New York City.

We even got stuck. Do you remember we got stuck overnight, because our flight was cancelled?

Ben Felix: Oh, yes. I remember.

Cameron Passmore: It was a Raptors game, and we ended up in this pretty sketchy hotel.

Ben Felix: That's terrible. It was horrible.

Cameron Passmore: Luckily, you're bigger than I am. Anyway, so I had a chance to meet Barry Ritholtz, which we've talked about David Blitz. We also did a review, and then Jonathan Clements was the third person we get to meet that day, which is pretty cool. Jonathan was great to meet, and great to interview, and Barry lent us his office, an office in his office to do the interview. Yes. Anyways, I wanted to review that episode, and then out of the blue, Jonathan dropped me an email said, "I've got a new book coming out." "Oh, cool. We'll do a book review, and then we'll have you on to talk about kind of the lessons from the book."

Jonathan was a long-time personal finance writer for The Wall Street Journal, and also founded the humble dollar blog, and has written a bunch of great books on personal finance. With that, let's start a very quick review of Episode 55 with Jonathan Clements. The interview started by him telling us as you recall, Ben, the story of his great-grandfather, who was the richest man in Britain when he passed away. However, Jonathan's grandfather's generation completely blew it and this impacted the family forever. They learned to appreciate thrift and the value of hard work.

So some of the lessons that Jonathan shared with us in the episode is, get your savings set up so you don't have to worry about it. Embrace simplicity, keep decisions and your portfolio to a minimum. It's a dream now that you can build low cost globally diversified portfolios for basically pennies. Money gives you time as you get older, so make sure you do the things you're passionate about, and spend your savings on special times with family and friends. Lastly, he talked about his job at the Wall Street Journal, where he wrote over 1000 articles. However, he said it felt like the same 20 articles being written 50 times over as there are only so many key things that you must do that are worth writing about. That was my quick review of Jonathan Clements, Episode 55.

This takes us to the book review. The book is called My Money Journey: How 30 People Found Financial Freedom - and You Can Too, which is going to be released April 25th. Jonathan sent us both an advanced PDF of the book. It's a collection of 30 people, including Jonathan's, money journeys. I found that super interesting to read. While you might expect a lot of the paths to financial freedom to be similar, the paths are remarkably different. Incredible for me to read these, and the details of what people went through, and how they decided to make a change, and how they made the decisions they did is really fascinating.

We asked Jonathan about this. One thing I took away is, so much of our lives and our financial decisions comes around luck. Quite often, the luck is bad luck, like a death in the family, or cognition issues, or a divorce or something happens. That causes people to say, "Oh, man. I got to do something. I'm retiring 15 years, I'm not ready. What do I do? Where do I go? So it's really interesting to see where people reach out to get information. In places like Reddit, and reading books, and podcasts, many of the guests were DIY-ers, and there's very little reference to any financial advisors in the book.

At the end of each journey, this I thought was really well done. At the end of each of the 30 journeys, there's three key takeaways that the writer of that journey had. So it's really nice, clean-written book. Then Jonathan, after the book was assembled, he kind of took a step back and identified eight key themes that were persistent and striking to him. So here's the eight. Number one, our parents mould our financial beliefs. Number two, the key to financial freedom is good savings habits. Number three, complexity is unnecessary. Number four, we don't need to be great investors. Number five, success is apparent only in retrospect. Number six, don't discount the role of luck. Number seven, we infuse money with meaning. Number eight, at some point, we need to declare enough.

Ben Felix: Great.

Cameron Passmore: So good. This is a guy who's been writing about this for decades, right? It's like the perfect person to assemble all this stuff. With that, Ben, let's go to our conversation with Jonathan Clements.

***

Cameron Passmore: Jonathan Clements, it's so great to welcome you back to the Rational Reminder Podcast.

Jonathan Clements: Hey, I really appreciate you having me on.

Cameron Passmore: Thanks for joining us to talk about your upcoming book, which we actually just reviewed, of course. and it's called My Money Journey: How 30 People Found Financial Freedom - And You Can Too, which is coming out, I believe, on April 25th. I must also add that you included your own story in the book, which for me was a great example of how real this book is and how real the stories are. You've had a very long and successful career in reading about personal finance. I'm curious, was there something left undone that caused you to create this book?

Jonathan Clements: It was less about something being left undone, and really more about the website that I built over the past six-plus years. I launched this website at the year-end 2016 as a sort of hobby. It's grown into something much more. What it has become is really a place where a host of amateur investors, who have an intense interest in personal finance tell their financial stories. When it came time to do a book, what I thought was to take these people who contributed to the site, and have them tell their financial stories at greater length. One of the things I tell the contributors to the website, is that you may not be an expert on personal finance, but you are an expert on your own financial life. As a consequence, you can talk about what you've done financially, whether it succeeded, whether it didn't, what the pitfalls are, that people should look out for. You can talk about it with far greater authority than if you talk about the markets in general or talk about estate planning in general.

Cameron Passmore: How did you choose the other contributors to your book?

Jonathan Clements: So there are 30 contributors. One of them is me. A couple of them are well known, Charley Ellis and Bill Bernstein. But most of them are just everyday investors who do indeed write for the website. In fact, everybody who's contributed to the book has written for the website at least a couple of times. I essentially just sent out an email to everybody and said, "Hey, I'm putting this book together. I bought essays of sort of 2,000 to 4,000 woods. Who's interested?" In addition to myself, 29 other people put their hands up. That's how we ended up with 30 contributors.

Cameron Passmore: How would you articulate for our listeners, like what is the most important reason people should read this book?

Jonathan Clements: I think the book is about the value of stories. We all know that we should pay more attention to statistics than anecdotal evidence. Nonetheless, we do respond much more to stories than numbers. The value of this book is in the stories, the stories of how people achieve financial freedom. For a lot of people, managing money seems like an overwhelming task and masking enough for retirement seems next to impossible. Yet, here you have 30 people, many of them have relatively ordinary means who have managed to achieve financial freedom. I hope for the readers of this book, that the essays within it are inspiring, that it shows that you really can get your finances under control, and reach retirement, show that it's doable, that there is no single path up the mountain. There are countless ways to succeed financially. Even if there are bumps along the way, it's still possible to reach that point where you do have financial independence.

Ben Felix: What impact do you think our parents play in our financial beliefs?

Jonathan Clements: When you look at the 30 essays, in almost every one of them, the contributors talk about the influence of their parents. As a parent myself, I have two kids. It is scary to realize how much influence you have on your kids, not just financially, and otherwise. I mean, so many of the contributors to this site talk about either adopting the financial attitudes of their parents, or fighting against them. When you're a parent, and you talk to your kids not just about money, but about life in general, you should realize that you are talking to them with a megaphone. You may want to pick your woods with great care, because if you don't, you may be a little bit surprised by how things turned out. I'll just give you a small example of this. Virtually, everybody who contributed to the book, I am extremely careful with money. I've been thrifty my entire life. This has affected my kids. Both my kids are super careful about money.

My son is just wrapping up his Ph.D. He's spent the last seven years earning his Ph.D. with a scholarship of $30,000 a year. Over the course of those seven years, my son has managed to amass more than $100,000 in savings out of his $ 30,000-a-year stipend. I feel like saying, "I'm sorry, I shouldn't have told you to be so careful about money. You should enjoy it more."

Cameron Passmore: The other thing I noticed in the book is that many of the contributors went through financial shock, like divorce or death of someone close before they were inspired to hit some sort of financial reset. Can you talk about the meaning behind that? What's the impact of that?

Jonathan Clements: We are all wired to focus heavily on today. What we're going to buy today, what we're going to eat today, what the financial markets are doing today. It does often take some sort of jolt to get us to think about the future. That jolt might be the loss of a job. It might be the death of somebody. We know – one of the things that we know about big life events, like a death in the family, like buying a house, like changing jobs, is that it tends to cause us to rethink not just our finances related to that one particular event, but our entire finances.

I would imagine, one of the biggest reasons that people end up heading into a financial advisor's office is because they've had one of these big life events and suddenly, they realize, "Hey, I need to get my act together. I'm not quite sure whether I'm doing the right things financially."

Ben Felix: You mentioned the story of your current story of your son saving up quite a bit, how important do you think early habits are?

Jonathan Clements: Early habits are huge. I mean, we know that there are a whole bunch of things that you can do to improve your financial standing. You can be careful about investment costs, you can avoid trying to outguess the financial markets instead, buy and hold securities for the long term. We know you can improve your financial standing by owning stocks for the long haul. But the number one habit that leads to financial success is being a good saver. If you're a good saver from the get-go, from the time you enter the workforce, you'll very quickly get yourself on the path to financial freedom.

In fact, I wrote about this separately from the book, in an article a number of years ago talking about the tipping point. If you save 12% to 15% of your salary for 12 to 15 years, you very quickly get to this point where the amount of money that you earn each year and the financial market starts to exceed the amount of money that you're actually saving. You reach this tipping point. Suddenly from that point forward, your portfolio explodes. You start doubling and tripling with great speed. But to get to that tipping point, you have to go through that initial 12 to 15 years of saving money, and not seeing a whole lot of financial progress.

But for those who do that, and stick with it, and do it early in their adult life, they can set themselves up for a very comfortable financial future, they might have the option to retire early, they'll certainly suffer less financial stress as a result of those early financial habits. These early habits are hugely important.

Cameron Passmore: Much of the financial services industry thrives on complexity, which you have said leads to possibly higher fees and is largely unnecessary. Can you talk about this and perhaps with some insights from both your book, but also your career and reading about personal finance?

Jonathan Clements: People tend to associate complexity with sophistication, and Wall Street is more than happy to feed this association. Wall Street is constantly coming up with these hugely complicated financial products. But complexity on Wall Street is usually an excuse to charge super high fees for most investors. Certainly, it's true for me, the best way to get ahead financially when it comes to investing is to stick with simple financial products. With broad market index funds, with low annual expenses. This isn't going to make your neighbourhood stockbroker rich, but it will make you rich.

If you want to succeed financially focus on simple financial products that you understand that have low expenses. Because you understand them, and because they have low expenses, not only will they help you succeed financially, but also you're more likely to stick with them at times of market turmoil. Because you actually understand what you earn, by contrast with many of these more sophisticated financial products, that people who end up owning them have no clue what they owed. When the rough times arrive, often, the first thing they want to do is bail out.

Ben Felix: Related to that, there's a quote from Bill Bernstein's section in the book, a sub-optimal portfolio you can execute is better than an optimal one that you can't. How important do you think it is to just get invested as opposed to finding that optimal portfolio?

Jonathan Clements: Yes. Getting started is hugely important. That even as you get started, one of the things that you really need to think about is what is your risk tolerance. I mean, that's what Bill's, quote there goes to. Discovering your risk tolerance is not an easy thing to do. There is no simple quiz that you can take that will tell you, you have this risk tolerance, or you have that risk tolerance. The fact that you are risk-taking in other parts of your life doesn't mean that you will be happy taking risk in the financial markets. Moreover, risk tolerance isn't stable. People find it easy to be aggressive when the markets going up. But it's when markets descend, when people start losing money, that's when they discover what their real risk tolerance is. That's when people who thought that they were big and brave suddenly discover that they're really actually quite meek. They'd rather be in bonds than in stocks.

Moreover, risk tolerance changes over time. People who are nervous investors, when they first start out may grow, used the financial markets and all the turmoil over time, and become much braver investors as they get into their 40s, and 50s, and 60s. But all of this is a process of discovery. For the people who don't see it as a process of discovery, who aren't cognizant of what their risk tolerance is, there is a grave risk. Then we get a market like we've had today, that they'll end up bailing out at just the wrong time.

Cameron Passmore: So there's little mention of financial advisors. But in the story, I saw many examples where a great advisor could help. Can you speak to the profile of the group and the role of advisors in general?

Jonathan Clements: Folks who contribute to this site – well, some of them are actually financial advisors themselves, most of them are everyday investors. They're do-it-yourself investors who have come by their financial knowledge the hard way, generally by making some bad mistakes and losing money. So yes, in many cases, they would have benefited, especially early on from having some financial guidance. But, I guess, fortunately for me, they learn themselves, they had these rough times, and the result may not have been great for their financial wealth, but it certainly makes for good reading.

Ben Felix: Regrets in the book were a common reflection. How do you feel about regrets in general? Do you think that they can or should be avoided?

Jonathan Clements: I think it's almost impossible to avoid financial regret. The fact is, when we make financial decisions, we're making them while facing an uncertain future. We don't know whether stocks are going to go up or down. We don't know whether we're going to end up getting a new job two years after we bought the house and we'll have to move. We don't know whether our spouse is going to leave us. There's a huge amount of uncertainty. So we make these decisions with the best knowledge that we have at the time and the best information. We hope it's right, but oftentimes, it's not and then we end up regretting those decisions, but we shouldn't.

If we make the best decision we can, with the knowledge that is available at that time, it's well thought out. If it doesn't turn out well, that's all life. We shouldn't beat ourselves up, simply because we made a financial decision that didn't go well. On the other hand, we are talking about well-thought-out financial decision. If you're making crazy financial decisions, taking a huge amount of risk, those blow up in your face, yes, you should regret those. But if it's a well-informed, well-justified decision, I don't think financial regrets should be a way of life and I don't think it's particularly useful.

Cameron Passmore: At the end of the book, you asked for others to send you their money story, how important is the exercise in writing one's money story?

Jonathan Clements: I think it's very important for a number of reasons. First of all, when we sit back and reflect on our financial lives, it helps us to figure out what we did wrong, what our values are, how we want to go forward. It helps us to think more clearly not just about our financial life, but also about our life more generally. An added point I would make here is your family, the generations to come will probably be really interested to read and not just your financial story, but your life story. When you write your financial story, you are essentially writing your life story. I mean, money touches every aspect of our life.

I know almost nothing about my great-grandparents. I would love to know more. I would love to read the story that they had to tell. But it's just, that's gone, that's lost now. But perhaps, for the people who are listening to this podcast, and want to make sure that the generations to come appreciate what their life is all about. Sitting down, and writing a couple of 1000 words, talking about your life, I think that would be hugely valuable. What I say to people all the time is, there is no immortality on this earth, except for the memory of others. One of the things that you want to do before you depart this earth is to make sure that those memories are good. That means not only doing your best to help the people around you, but also writing down your life story, your financial story, what you did right, what you did wrong and passing along that wisdom.

Cameron Passmore: What a great message. Jonathan, great to see you again. Thanks for joining us again, and congratulations on your truly wonderful book.

Jonathan Clements: Thank you so much. I really appreciate coming on.

Ben Felix: Thanks, Jonathan.

***

Cameron Passmore: All right. That was great to have Jonathan on.

Ben Felix: Yes, really cool conversation.

Cameron Passmore: All right. So we've had a couple of meetups, Ben. You and I were at the Ottawa one, and then Angelica and Sandrine’s of course. Then in Montreal, unfortunately, you couldn't make it. But I was there with a lot of people on our team, which is really fun. We probably had – I don't know, 15 people in Ottawa, maybe 20, 25 in Montreal. I assumed you enjoy your night out.

Ben Felix: In Ottawa?

Cameron Passmore: Yes.

Ben Felix: It was very, very nice to meet people. But I mean, as you know, I find social interaction exhausting. Not that I – I enjoyed very much, like all of the points that you're going to talk about, about what's been awesome about the meetups, I completely agree with, but still exhausting. Montreal, I plan to not to go because the logistics just ended up being really challenging with pickups after school and stuff like that, because we have one car. But that also ended up being the peak of my cold that I'm not getting over, so it would have been a disaster anyway.

Cameron Passmore: It's funny, so many people mentioned how much they liked the after-show. So, many said that they're one of the three people that keep on listening.

Ben Felix: Wait. They're more than three, more than the three people said that?

Cameron Passmore: I think it's more than three, believe it or not.

Ben Felix: Oh, no.

Cameron Passmore: Anyways, here's some of the comments that I heard quite a bit. So I ask people how they found the show. More often than not, your YouTube Common Sense Investing was the gateway. The heart of the show is clearly your deep dives and people love it. And many people said they love the deep dives better than the guest episodes. They kind of view the guests as a supplement to your perpetual learning journey and your deep dives, which is kind of cool. They love the fact that you have a no-opinions kind of approach. Follow the facts, avoid hyperbole, and this is the way it is, this is the way it is to the best that I can do some research. So good feedback.

They're very happy that we move the deep dive up to the top of the show and shrank the intro by and large. They appreciate the reviews of past episodes, because a lot of people have started lately, like the guidance of where to go back, and listen to, so that helps. While many of the people that were there might not need our services right now. They're often called the bond for advice, which is interesting. They become known in their centers of influence as kind of the financial person. They're often called upon as to where to refer people to which I thought was interesting.

They also said, if their portfolios get large enough, where their comfort level is not quite where it shouldn't be, they may end up working with us or someone like us. I can tell you a lot of people listen to this while they're walking their dogs on Thursday morning. I had one example too, titled book reviews. A lot of people liked the book reviews, which I was quite surprised by. Some people would even use some of the book reviews as a resource for proposals at work. One case was, someone asked to do a proposal around work from home strategy. Actually, went through and checked out the books we talked about, like deep work, running remote, that Priya Parker book on meetings. That helped them formulate their company's strategy and debate at work, which that was kind of cool. That's very cool.

Anyway, super fun. Got some recent content. So, your honour, the finale was fantastic. We also watched Navalny and The Whale. I'm not a big movie guy, but we watched those two. They're fantastic. We also watched Waco. Another really interesting story 30 years after the fact.

Ben Felix: Cool. I have not watched anything recently. I've been reading William Goetzmann and John Campbell's papers. Last night, actually, in the time that I would sometimes used to watch something with my wife, my wife gone to bed early. I ended up having a call with a friend of mine that I did my MBA with, who's now doing his Ph.D. in finance. He started listening to our podcast, he didn't know about it, and so we gotten back in touch recently. He's like, "Man, your podcast. You've interviewed all these crazy people." I actually sent him a draft of my questions for John Campbell, because he's like super into the stuff. We talked for an hour last night about that. That was fun.

Cameron Passmore: Yes. Not many people can say they did that. The ratings and reviews, we did get over,1000. Finally, we're up to 1,030 ratings, which is pretty cool.

Ben Felix: Yes, big jump. It was sitting at 999 for a while, and then –

Cameron Passmore: It pumped up by 31. Just like the ratings overall. We're ranked number one briefly in the investment category in Apple in Canada.

Ben Felix: I'm fairly certain at this point, that the rankings are at least largely based on incoming new reviews and ratings. Because every time there's a big influx of new reviews and ratings, we jump way up in the iTunes or the whatever Apple Podcast rankings.

Cameron Passmore: It could be. Anyways, we got a nice review from Gary Tokyo Paris from Japan. "Best listen of the week. Been listening from Tokyo for multiple years. That's the only podcast I listen to weekly. Great information density, great selection of topics, and guests, and great applicable advice on wealth and happiness management. Already recommended many episodes to friends, and family, and will continue doing so." That was the other comment I heard at the meetups. Thanks, Gary Tokyo for the comment. A lot of people said they really liked the fact that we've broadened over the past couple years into happiness and goal setting and the like. I really appreciated it all. Also, they love going back to basics. Love it. So kind of that foundational stuff.

Ben Felix: Interesting. We skipped that this week, and last week, our last non-guest episode. We'll get back to it. PVG 96 in Australia, "Lucky to have such high-quality information. I've been listening to this podcast over the last couple of years and it's introduced me to some novel topics such as factor investing. Love Ben and Cameron's work and appreciate what immense work and expertise that must take to put these together. Thank you."

Cameron Passmore: Spaceman Spiff from the states said, "A weekly must listen. It's the only podcast I've religiously listened to over the last four years. Topics are, they discuss it timely, while research and evidence-based. Interview questions are well crafted. They give guests space to answer without using interviews as a long way to brag about themselves as so many other podcast hosts do. This should be required listening for anyone looking to increase their financial literacy."

Ben Felix: I got to say, I'm not trying to brag about our interview style, but I don't listen to a ton of podcasts. But when we're preparing to interview a guest, I'll go and search for it typically, because the type of guests we have on, they typically haven't done a ton of podcast interviews. Go and try and find kind of all the podcasts interviews they've done. I'll listen to them. The point that this reviewer makes is valid. A lot of podcasts interview questions are long, and the host interrupt the guests and it drives me nuts.

Mike from Estonia, "Great to develop financial thinking. The podcast is really great in terms of developing how you think about investment and why one does it. Great stuff. Though listening to it from Estonia, still can find a lot of relevance."

Cameron Passmore: BSFGFL whatever from the states, "Have fantastic content. I recommend this podcast to everyone I meet if they're interested in personal finance and investing. Just content for all levels of knowledge. Thanks for spreading the word."

Ben Felix: Jay in the US says that, "It's a master's degree in personal finance." It was referred to the podcast by his stepson, and this has quickly become his number one listen. His introductory episode was the controversial episode, 229. When I read this review, I was not expecting 229 to be the controversial episode… there are more controversial ones. He was hooked after that. He says, "Thank you for giving Mark McGrath the platform to tell his story in Episode 245, it hit home.

Cameron Passmore: It sure did. Last one here, BC Mike from Canada, "Five star. Look forward to new podcasts weekly, enjoy the nerdy science-based financial explanations. But the real gem of this podcast is the linking of financial knowledge to goal setting and living a more examined and fulfilling life. They have interviewed very high-quality guests over the years. Thank you.

Ben Felix: It's interesting how much appreciation that is for that stuff, because there was a time when that wasn't really even on our radar. Then we started talking to Brian Portnoy, who had written his book, Geometry of Wealth. He since launched his service called Shaping Wealth. He was the one that planted the seed for us, where it was like, this whole thing of financial advice needs to consider all of these non-financial things about like, what is the actual objective, if it's living a good life, we need to know a little bit about that, so that it can be incorporated into financial advice. But then, we had to make a commitment to learning about it, and then we had made a conscious decision to start talking about it in the podcast. But that was like, I don't know, it was a risk at the time.

Cameron Passmore: Such a great body of information there, though. You can't ignore it. Like in hindsight, it's incredible stuff.

Ben Felix: Yes, it's incredible to look back and think that someone had to push us to learn about that. What were we doing? I was thinking about that recently. I look back at myself in the past and think like, "Man, like I didn't know anything, which I kind of view as a positive thing, because it means I learned a lot since then." But it's also kind of scary, because I know that my future self will look at my current self here now talking to the microphone and be like, "Oh, man. That guy was an idiot." I know my future selves and it think my current self as an idiot, which is both a good thing, because it means I'm going to learn a lot between now then ideally, but it's also scary.

Cameron Passmore: Also, someone asked me in Montreal, he said, "How did you meet Ben?" So I told a bit of a story. He was, "What was he like?" I said, "The Ben you see today is not the Ben that I met 10, 11 years ago." We'll leave it at that. So yes, we've all come a long way. I got a nice email to the team actually. To you, me, and the RR team, "I've been meaning to send a message over the last few months. One of my mini goals for 2023 has been to more open and vocal with my expressions of gratitude. I wanted to take a moment to thank you for the positive effect you've had on me, the enjoyment and entertainment I continue to get from the show every week. And the indirect positive effects for all of my friends, family and colleagues I referred to the show. I found myself in a position to begin to make financial plans that extended beyond more mere survival as a student, as a physician now with some understanding of finance, and also as a clinician scientists focus on the development and best use of clinical evidence. I was struck by how much of the personal finance industry was based around sales and biased sources, or compromise methodology and how the evidence would often be difficult or near impossible to find. And in many cases, obfuscated or misrepresented. In my search for sources of intelligent discussion around these important topics, I was very pleased to find the podcast pretty soon after you started, and I have been a dedicated listener ever since. I've also felt that you guys have also been developing and growing into topics around the same time I have. I've so enjoyed the journey into topics around happiness, productivity, personal growth, and choice, and a deep dive into the multifaceted elements and potential future of crypto and blockchain. I listen to a different number of podcasts, but I find that I look forward to my weekly RR dose more than any other podcasts. Thanks for what you do and the impact that you have on so many of us listening. Please keep it up."

Ben Felix: Very, very nice.

Cameron Passmore: Thank you. You're in the community more than I am. Any chatter going on there after Mark was on with his incredible story two weeks ago?

Ben Felix: Yes. So a few people, not a ton of people. But there were a few people who put a lot of effort into sharing stories that were not the same as Mark's. Well, it wasn't the same type of event, but similar overall feeling of the story, where there was a lack of purpose led to problems, basically. Some pretty heavy stories, also some about not acting on purpose soon enough, and kind of letting life happen, and then realizing it was too late, stuff like that.

I mean, if the Mark story resonated, if you want more in the community, there were some pretty powerful stories shared. We haven't mentioned this in a while, so I'll bring it up. But we rolled out a while ago, the ability to subscribe to a monthly support package or something in the community. But you can do like $3 a month up to $10 a month. We're up to, I think there's like 10 people now that are kind of funny, because I think that they're like 50,000 people that listen to the podcast approximately. But anyway, and 9,000 in the community. But the 10 people supporting us, we appreciate very much. If people who are listening, are enjoying and getting value to the community, it is helpful if people support it, because it's the technology that we use to run that thing is expensive. I think that the platform is awesome, and in conjunction with our moderation team, I think it creates a really, really nice space to have the type of conversations that the community has, but it's not cheap. So if people enjoy it, it can kick in a couple of bucks. That helps.

Cameron Passmore: The 23 and 23 Reading Challenge is of course continuing and it's never too late to join. You can see the tab on the rationalreminder.ca website. The Beanstalk app that we use is easy and fun. The instructions on how to sign up are all on the website. So far, this year, Ben, we have 404 people in the challenge, 1,133 books read so far this year. Five people already done their 23 books, and there are 83 book reviews in there. So if you're looking for ideas of what to read, hop in and you see all kinds of reviews, which is kind of cool.

In the store, don't forget, if you're a teacher, reach out. We'd love to send you a free deck of the Talking Sense cards to use in your class, every order. So we have hoodies, T-shirts, all kinds of stuff in there. Every order gets free pair of socks and a beverage koozie. Both of which we give out to people who came to the meetups, they loved it. All kinds of people posting their socks on.

Ben Felix: Is koozie like the official name of that thing.

Cameron Passmore: That's what it's called, the koozie. It's actually – it's a koozie brand koozie.

Ben Felix: Okay. It's a funny word. I always find it funny when you say koozie.

Cameron Passmore: Other things coming up. So I'm going to be at the Investment & Wealth Institute ACE Academy in San Diego at the end of this month. If anybody listening is going, drop me a note. Maybe we meet up. Also, I think we said this before, we're going to be recording a live episode of the podcast at the Future Proof Conference in Huntington Beach this fall. We are also considering hosting a Canadians breakfast. So if you're a Canadian advisor, and you're heading to the conference, drop us a note, info@rationalreminder.ca. We also might be hosting – because we've been asked to, a meet-up in the Los Angeles area on Saturday night, the 9th of September. So you can email us and we'll see if anyone's interested. We will be in Toronto for a meet-up on Wednesday, September 20th. Location to be chosen some time soon.

Ben Felix: Lots of travel.

Cameron Passmore: In case you haven't noticed, Ben is active on Twitter. Ben's upped his Twitter game lately.

Ben Felix: Well, I did for – there was a week where I was really active. But then this last week or so, I mean, it's really reading John Campbell's paper that –I mean, go try that if you're listening and see how much mental energy it takes.

Cameron Passmore: Yes, I'm still plowing through William Goetzmann's book, so I just want a peace with that. But we have a lot of like these finance authors that are coming up. I'm trying to get ahead of the curve in these books and get prepared for that. I think we have three or four lined up, which is nice. But yes, we're both getting more active, few more people on our team are active on Twitter and LinkedIn.

Ben Felix: Oh, yes. I used to be a little bit more active on Twitter. And I told you this story, Cameron, there's not really a story, kind of. I used to have my DMs open on Twitter, and I was around the time when my YouTube channel was growing like a lot. Over the course of January to March, I think, 2020, I received like hundreds, and hundreds of hundreds of DMs, of like people asking questions and people wanting to chat about, find out, whatever, all kinds of things. I don't know what's in them all, because I haven't read them all, because there are so many. So I shut off my DMs. I was like, "I can't keep up with this and I feel bad for ignoring people." So I just turned them off. Then, I didn't really go on Twitter for quite a while.

But then, since I've been back on, I recently started poking around in there. I've turned my DMs back on, and it's been now almost a month that I've been back on Twitter and I haven't received a single DM, so I don't know. I don't know what happened.

Cameron Passmore: Just wait. People are going to reach out, and give you their sympathy DMs.

Ben Felix: That's not what I want.

Cameron Passmore: Yes. I get hardly any DMs on Twitter. A lot of people reach out on LinkedIn, which I love. Awesome. Anything else this week?

Ben Felix: You mentioned this I think in the intro, we both put Calendly links in our Twitter profiles. Happy to chat to people that want to learn more about PWL. That's another thing. No one's clicked on my Calendly link either.

Cameron Passmore: Poor Ben. He's lonely.

Ben Felix: I'll be okay. I like being alone.

Cameron Passmore: Yes. As always, thanks everybody for listening and I wish you a good Thursday.

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My Money Journey: How 30 people found financial freedom - and you can too — https://amzn.to/439D5Hw

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Jonathan Clements on LinkedIn —https://www.linkedin.com/in/jonathanclements

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Jonathan Clements — http://HumbleDollar.com

Episode 55: Jonathan Clements — https://rationalreminder.ca/podcast/55

'Bank Runs, Deposit Insurance, and Liquidity' — https://www.journals.uchicago.edu/doi/10.1086/261155

'Liquidity Risk, Liquidity Creation, and Financial Fragility: A Theory of Banking' — https://www.jstor.org/stable/10.1086/319552

'Why didn't Canada have a banking crisis in 2008 (or in 1930, or 1907, or . . .)' — https://www.jstor.org/stable/43910017

'Long-Horizon Losses in Stocks, Bonds, and Bills: Evidence from a Broad Sample of Developed Markets' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3964908