As we continue to answer your questions from our most recent AMA, Ben, Mark, and Dan begin today’s episode with Bitcoin and how its value as an investment has changed over the years. Then, after briefly explaining how to find short clips of this podcast online, we discuss why many companies choose not to list directly on the TXS, how to implement factor investing without factor EFTS, the best way to invest if you could only make one EFT investment in your lifetime, and, and understanding buffered EFTs and market-linked GICs. We also cover expected returns in a corrupt market, return stacking for individuals, academia versus real-world applications, and why stock valuations will never be the same as they were in the past. To end, we look at lump sum investing versus dollar-cost averaging, what to remember regarding asset allocation, how we rebalance portfolios here at PWL Capital, and we wish Ben well as he awaits his diagnosis. 

Key Points From This Episode:

(0:00) Introduction and AMA format discussion

(3:32) Bitcoin as an investment and its role in a portfolio

(14:29) The debate on factor investing in markets where factor ETFs are unavailable

(19:40) The role of ETFs and whether a single all-equity fund is optimal

(22:22) The risks and opportunities of buffered ETFs

(26:25) Investing in markets with high corruption and low transparency

(29:42) Emerging market investing and its place in a diversified portfolio

(30:06) The concept of "Return Stacking" and its viability for investors

(38:55) Should individual investors use leverage for higher returns?

(40:51) Balancing Benjamin Graham’s philosophy with modern portfolio theory

(47:51) The role of valuation metrics like the Shiller PE ratio in predicting returns

(50:16) The impact of AI and tech stocks on market performance

(56:12) The psychology of investing and resisting market noise

Read The Transcript

Ben Felix: This is the Rational Reminder Podcast, a weekly reality check on sensible investing and financial decision-making from three Canadians. We are hosted by me, Benjamin Felix, Chief Investment Officer at PWL Capital, Dan Bortolotti, Portfolio Manager at PWL. Capital, and Mark McGrath, Associate Portfolio Manager at PWL. Capital.

Mark McGrath: AMA episode. They're fun.

Ben Felix: They are fun. Episode 345.

Mark McGrath: I was going to go into a blind this morning, getting ready for work. I was like, I should just go into this thing fully blind. Then I go and look at it, and Ben's got 17 pages of notes in there. I'm like, I probably should not go into this thing blind, so I tried to scan through it all, but I had meetings this morning, I didn't get through it all, so I'm going in half blind. That’s it. 

Ben Felix: Well, we did the first couple actually blind. I think Dan, you made the comment that maybe we can look at the questions beforehand. That's probably a good idea. I looked at the questions, and I immediately started writing pages and pages of notes. I couldn't help it.

Mark McGrath: Not suppressed.

Dan Bortolotti: Yeah, a lot of these things are questions that we deal with pretty regularly, so we've got, I don't want to call them stock answers, but we've already thought about a lot of it. Sure, you might need to dig up a bit of data, but mostly we know what direction we're going with these.

Ben Felix: That is true. Just a reminder that we are going to do these AMA episodes once a month now. It'll be one of every four episodes of BNAMA. We did get a new form set up that we'll post in the show notes for this episode, and you can find that in the Rational Reminder community, too. Keep the questions coming. We still have 80 left from the first time we put out a call for questions, but we definitely want to keep the questions coming, so we can keep these AMA episodes going.

I did also want to mention before we get on the episode that January was the highest month ever, as long as we've been recording the data, which is as long as I've been at PWL, for the number of people reaching out to learn about PWL's wealth management offering. Just a reminder, PWL, where all three of us work, is a full-service wealth management firm. We offer discretionary portfolio management using low-cost Dimensional funds and/or index funds. In the course of delivering portfolio management in the best interest of our clients, we gain a pretty comprehensive understanding of their tax and financial planning situations, which is then reflected in how we manage portfolios. As always, if anyone is listening and wants to reach out to talk to someone from PWL, please don't hesitate to do so. We're pretty friendly, I think.

Dan Bortolotti: Normally.

Ben Felix: Normally, most of the time.

Dan Bortolotti: At least online.

Ben Felix: We pretend to be friendly. Put up a good front. I did also want to mention that Dan, you were a guest on the Wealthy Barber Podcast. I thought you did a great job. I listened to the episode.

Dan Bortolotti: Thank you.

Ben Felix: It was a good discussion. You crushed it answering the questions and you provided, as usual, a ton of wisdom and practical advice. I definitely recommend people go and listen to that.

Dan Bortolotti: Thank you. I mean, he's done a great job. He's only done, I think, nine episodes so far of the podcast. I was the ninth one. But Dave Chilton, he's a legend for most Canadians who are in the personal finance space. We'll remember him. He was the OG and he's doing a great job with the podcast, which is really aimed at younger investors. He makes a lot of jokes about how old he is, but he does a great job of speaking to younger investors. I highly recommend it.

Ben Felix: I tweeted that episode and I said that you were the OG, index investing content and that people should listen to the episode.

Dan Bortolotti: Maybe in that specific context. He's been doing that Wealthy Barber, I think, when was the first book came out? ’89 or something.

Ben Felix: Something like that. Yeah.

Dan Bortolotti: Yeah. It goes way back.

Mark McGrath: Is it that long ago? Wow. Good for him.

Ben Felix: Yeah. He is the real personal finance OG in Canada, that's for sure.

Mark McGrath: Wow.

Ben Felix: Should we go ahead to our AMA episode number three?

Dan Bortolotti: Let's do it.

Mark McGrath: Let's do it.

[EPISODE]

Ben Felix: All right. I'll kick it off with the first question. This person had three questions. The first one is, do you still think Bitcoin is not a good investment? It's been my best performing asset bought in 2020. Average cost $25,000, though is just a small part of my portfolio. Love this question. Has Bitcoin been a good investment? As this person describes, it has been for them. With the benefit of hindsight, absolutely. If I could go back in time, I would also buy Bitcoin. Is it a good investment ex-ante, or looking toward the future? I think that's a lot harder to say.

Now, I've been wrong about that in the past. I didn't buy Bitcoin 10 years ago, or whatever I could have. Some people did. Some people have held on since then. I don't think very many have, but some have. Just because the numbers gone up in the past, just because Bitcoin's had good returns in the past, that alone does not give me much conviction that I should be buying Bitcoin now.

Fama was on a podcast recently and he went way further than I just did. He said that Bitcoin will likely be worthless within a decade. Now, he did also hedge a little bit. He said that the distribution of that prediction has very long pales. So, Bitcoin could stick around longer. I don't know if I'd say that. I don't think it's going to disappear. I think, as we've talked about a few times in the podcast in the past, it's a representation of a way to think about the world. It's a representation of libertarian ideals. That's really built in the software. That's what it was coded to do. When you read the white paper, that's pretty explicit.

I don't think Bitcoin's actually a good representation of that anymore. It's centralized in a lot of ways, faster than any technology ever. I do think it still offers some form of expression. I don't know if it's going to disappear. That doesn't make a good investment, though, looking forward. Then, the other thing I would say is, why are we even talking about Bitcoin? That is so 2021. NVIDIA has performed way better. Why is this still coming up?

Dan Bortolotti: We should just be all in on NVIDIA. Forget about this Bitcoin. Ben, I have a question for you, because I always think this is an interesting way of looking at it. For a long time, my approach to Bitcoin was the technology is interesting and will almost certainly have some impact on our lives going forward, the blockchain technology being. I can recall, there's a few episodes back, this came up in discussion and you had said, “Nobody thinks that anymore. It's basically a glorified Excel spreadsheet,” or something to that extent. I'm just interested hearing you elaborate on that a little bit more, because I respect what you know about this stuff.

Ben Felix: I mean, listen, I'm not an expert on databases, or on software technologies, but people who are that I've spoken with, including in the first episode of our exploring or understanding crypto series that we did, people who are experts in databases are not too excited about blockchain. I think, there is a phrase for a while, people who are blockchain, but not Bitcoin or something. I think Bitcoiners would make fun of those people. I don't think that blockchain itself is a very interesting technology. It is a database, as I understand it.

I've got a good friend, actually, who is a data engineer. We talk about this often, different from the person who was on our podcast and he agrees. There's nothing interesting there. When you look at the way, the actual innovation, the innovation within Bitcoin is combining the token incentive with the database. I think that makes it a pretty useless technology for most applications. I think it's died down. There's a time where hype around blockchain was everywhere, and I've not heard about it other than you bring it up just now for a very long time.

Dan Bortolotti: No, it definitely seems like an old idea. That's why I was just interested in updating that thought. The message here with so many different technologies, AI being a more recent example, sometimes just the best way to get exposure to that technology, own a total market index fund. Then no matter what companies benefit from that technology, you know for sure you have them in your portfolio. Now, you're not going to outperform the market that way, but you are going to make sure that you didn't miss the boat, because so often, these technologies evolve in ways that we were not expecting, like this thing called the Internet.

Ben Felix: You're right, though, because if it's such a revolutionary technology, then it will benefit all companies and the stock market will go up as it does due to innovation. Betting on innovation of any kind is historically a pretty bad bet. This question wasn't necessarily about the innovation aspect of Bitcoin, I don't think. I think Bitcoin has come to represent something else. I don't think people buy it anymore, because they think it's innovative. I think the notion of Bitcoin replacing the financial system has died down a lot.

Mark McGrath: I don't think so. I spend a lot of time on Bitcoin Twitter and I think that side of the argument, and maybe I'm just living in the echo chamber of Bitcoin Twitter, but that side of the argument, the maxis, the Bitcoin maxis are fierce in their approach to this. If you think about Bitcoin belief on a spectrum, then I agree with what you're saying. It's a representation of some ideological system. Those who've really fully believed that that's the future and that what we've been doing is wrong historically, Bitcoin is their solution to that. If you listen to them, they've put their entire net worth into it and it is destined to go to infinity. They're not backing down from that. Their conviction, I think, has even been redoubled in that sense.

Then, you've got people who are just, the number goes up. “I just want to make sure that I'm getting rich if Bitcoin goes up.” I think it depends where you are on that spectrum as to whether or not you want to include it. But look up Saylor, and now they've renamed themselves Strategy, I think, instead of Micro-strategy. He's got a ton of fans. His bull case for Bitcoin is, I think, 43 million per coin by 2030 or something. Absolutely absurd. But he has a massive, massive audience of people who think about it the same way he does.

I don't know. I'm not a maxi when it comes to Bitcoin. I do own a little bit. It's not a recommendation, but my whole thing is, what if I'm just wrong with all of this and Bitcoin is the future and I just didn't expose myself to it properly? I agree with what you're saying, Dan. If it's successful, then Bitcoin shows up on the balance sheets of companies. It already does, Micro-strategy and Tesla, these companies are going to transact in Bitcoin, or accept Bitcoin. You're going to participate in the growth of the technologies organically. I'm mixed and I own a little bit just as a hedge against myself being wrong about the whole thing.

Ben Felix: You own some pretty ridiculous stuff though. I don't know.

Mark McGrath: Sure. My son is a gambler. He’s six and he owns a Micro-strategy and all this other crazy stuff. I can't believe it.

Dan Bortolotti: Still triple leveraged on the queues.

Ben Felix: TQQQ. That's what I was thinking about when I said you own some ridiculous stuff.

Mark McGrath: My portfolio, my for long-term portfolio, doesn't own that stuff. I started a small account for my son and we put some absurd things in there and it's small now.

Ben Felix: Irresponsible parenting.

Mark McGrath: He's a degenerate gambler. He’s six. I don't know where he gets it from.

Ben Felix: El Salvador had tried to make Bitcoin legal tender and they've shut that down. I don't know, man.

Mark McGrath: It's half and half isn't it? I was reading something yesterday that was trying to answer the question, have they shut it down? It's yes and no. I don't know if it's as promoted as it once was, but people do still use it. I haven't followed that.

Ben Felix: I think the law making it legal tender is what changed. I think the adoption has been super low in El Salvador despite that law. Do I have other thoughts on Bitcoin? Maybe not. All right. Next question, they're asking if we have a clips channel. I asked Angelica about that. We had a YouTube channel, like a shorts channel for a while, but I guess, we stopped posting on it, because it wasn't getting much traction. We do post clips on Instagram, which apparently, get more interaction. There are short clips of Rational Reminder content on Instagram.

Mark McGrath: And TikTok. I see it on TikTok all the time. Super weird, because I'm scrolling TikTok and my face comes up sometimes and it's like, “What? What is this?” Because TikTok's algorithm just feeds you stuff. Then we do post the videos on LinkedIn and Twitter, the shorts as well. I usually see them there. I'm not on Instagram. Well, I am, but I just don't really understand Instagram, so I don't see them there.

Ben Felix: Why don't more companies direct list on the TSX, like Apple and NVIDIA, CDR fees, CDRs, or Canadian Depository Receipts, so you can invest in a foreign stock on the Canadian market, but they do have high fees. The amount of capital flying around in Canada is relatively small for a company like NVIDIA or Apple. There's probably listing fees and stuff like that that are not super necessary for a company that size to pay. They're not hurting for Canadian capital. I also think it's pretty easy for a Canadian, I mean, to pay foreign exchange fees, but it's pretty easy for a Canadian to go and buy a US stock from a Canadian brokerage account. I'm not surprised that a lot of companies are not listing in Canada.

Mark McGrath: Even through Canadian domiciled ETFs, you've got a ton of access to these stocks and US stocks. But Ben, you didn't even finish the question. The question ended with, “Love the content. You all are GOATed.” That was by far the best part of the question. Thanks whoever wrote that.

Ben Felix: I also don't copy the names down when I paste the questions over. When you read the questions one time, Mark, you were saying the name every time, and I'm sure people loved hearing their name and I just – man, I need to be more like you.

Mark McGrath: Next time, maybe we can do that.

Ben Felix: I'll try harder next time. We'll have more opportunities in our future AMA episodes.

Mark McGrath: There you go. Still learning.

Ben Felix: Someone asked for the workout routine. I was working out a lot before I had to get my testicle removed. I chilled out after that. Although, I did play basketball on Sunday, which was much sooner than I think the surgeon thought I would, but not that I should. He said, four weeks. I was like, “Really, four weeks? You sure?” He’s like, “Technically after two weeks, you could probably play and not get hurt, but I wouldn't recommend it.” Anyway, I played after two weeks. But I gained a bunch of weight working out before the testicle situation. But I haven't got back into it, because when we're recording, I won't find out until next Tuesday. By the time this comes out, I will have gotten my diagnosis, but I haven't got back into working out, because I don't know if it's going to get thrown off tracking and by future treatments.

Mark McGrath: What were you doing? You’re weightlifting.

Ben Felix: I was doing a ton of weights. I was using an app called Caliber. It generates workouts. I was doing that and eating a lot. Gained 15 pounds of muscle, which I've since lost.

Mark McGrath: What's the diet? Carnivore diet?

Ben Felix: No. I eat a lot of meat, but not only meat. I eat a pretty balanced diet. That's the carnivore diet, right? Only meat.

Mark McGrath: I think it's meat only. I know you eat a ton of meat. One of these days, you're going to have to post a picture of this awful quesadilla that you made one time. My wife's Mexican, and I've been eating Mexican food at home for 15 years, and you post that picture somewhere in our internal channel or something, and I was like, “I can't show my wife this. I can't let her know that Ben has disgraced her entire culture with this quesadilla. It's terrible.”

Ben Felix: That was a random late-night stack.

Mark McGrath: Still.

Ben Felix: Oh, yeah. Put some cheese on a tortilla and microwave it. What's wrong with that?

Mark McGrath: I don't microwave it, man. Stove top. Come on. No shortcuts.

Ben Felix: It's a quick snack.

Dan Bortolotti: Does anybody think they might have tuned into the wrong podcast here?

Mark McGrath: Yeah, maybe. No, you're in the right place. I use Caliber as well, actually. I was lifting weights somewhat regularly for the holidays. I just haven't gotten back into it. Caliber's great. I didn't have the pro version of it, but I think it's a great app. Yeah, you can generate tons of workouts, but you can also just customize your own workout. I was using that, which is great. I know, I wasn't asked this question, but I've had a treadmill, under the desk treadmill for a while that was sitting in the closet and I've got a sit-stand desk, but it's automated. It's electric, I guess. Since January 6th, I got back from Mexico for the holidays, January 6th, I haven't sat down to work since January 6th. I've been standing the whole time or walking.

If I'm answering emails, writing, researching, reading, all that stuff, as long as I'm not in a meeting like this, or with clients, I've been walking and I've been cranking out 12 to 17,000 steps per day. I was just telling some friends, and actually, I posted it on Twitter. I was like, my gut, my belly, the fat’s just dropping off. This is crazy. I haven't changed anything else. I haven't changed my diet, or anything like that. I hadn't weighed myself and I weighed myself this morning, actually. I'm down 5 kilograms in basically, six weeks, which is more than I probably should. I think a healthy amount is something like, at the most, a kilo a week. I guess, I'm on track for that. Yeah, it's great. Anybody who's a desk worker, if you can, it was 250 bucks from Amazon. It's cranking out steps all day long and yeah, it works. It's great.

Ben Felix: Good for you. That's awesome. I have the opposite thing. If I stop working out, I lose weight and I have to work out to gain weight.

Mark McGrath: Yeah, you're like nine feet tall. Your resting metabolic rate is probably at 17,000 calories a day.

Ben Felix: That's probably true. Okay. Back to investing questions. A little bit of a tangent there, I guess. What is the optimal way to make factor investing? I think, they mean implement factor investing, where ETFs related to factors are not available. If you're in a market where you don't have factor ETFs and you want to do factor tilting, what's the best way to do it? I'd probably just not do it. If you're going to go and pick individual stocks to try and build your factor tilt in. I'd looked at PWL's updated expected returns for one of the questions, I think later in the AMA. Our expected return difference, which is not a shot in the dark. That's not fair to say, because we put a lot of thought into it. But we expect about 40 basis points of additional expected return for a factor tilted ETF, or portfolio. It makes a bit of a difference, but it's nothing too, too crazy. If you don't have the proper tools to implement it, I think it can get pretty messy pretty quickly.

One thing I will say though is that there are some, and I'm not saying I would actually do this, but worth considering, there are products that might have a naive factor tilt. They're not designed specifically to target the Fama-French factors, or whatever. For example, a dividend ETF, or a dividend growth ETF, or dividend aristocrats or whatever might have value and profitability exposure. As one example, now has trade-offs, because when you're using a dividend screen, you're getting a big reduction in diversification, because roughly half of global stocks pay dividends and half don't. You've also got issues with tax inefficiency in a taxable account, or in a non-taxable account if it's foreign dividends. I would just be very cautious.

Mark McGrath: This question probably came from somebody that's not resident in Canada, I'm presuming, but Canada does have some ETFs by Manulife. Ben, I'm just curious, what do you think about those? It’s been the Manulife multi-factor ETFs, I think they're called, and they're sub-advised by Dimensional Fund Advisors. The fees are higher than Dimensional Funds, but a lot of people can access Dimensional Funds in Canada without an advisor. I'm just curious if you’ve looked at those ETFs.

Ben Felix: I actually have some notes on them specifically, because somebody asked a question like this about Canada specifically later in the AMA, so I can come back to those notes later maybe. Yeah, I'm aware of them. They are sub-advised by Dimensional. I think the factor tilts are a little bit lighter than the Dimensional Funds that we use, and the fees are a little bit higher. I looked at them years ago and was so, so on them. But in a pinch, I guess, they're doing it, but fees are a bit high. Although, I think they have come down since the last time I looked at them.

Mark McGrath: The last thing I'll say is I know US markets are available to a lot of investors. I've got a family member, my wife's family member, I think in Mexico, that uses IBKR, interactive brokers, but opened a non-domiciled Mexican account, an international account of some kind, and buys the US ETFs. Because that's just not a common thing, and Mexico is open to brokerage account and buy stocks, or ETFs. So, they were able to access US-listed ETFs. There are Avantis and DFA ETFs available in the US markets that you might be able to access as an international resident. I don't know a lot about that, but it might be worth looking into.

Ben Felix: I think, just generally speaking, I wouldn't get too hung up on fact tilting. If the products aren't there, if you've got to pay really high fees, or high foreign exchange costs or whatever to do that, I'd be pretty quick to just say, don't do it. Rather than trying to do a bunch of gymnastics to build in a factor tilt.

Dan Bortolotti: It does raise a really interesting point about how you define the certain factors. I mean, there's lots of different ways to do it. Something like small cap is a bit easier and more consistent, but value is a great example. Certainly, for ETF investors, if you scan the ETF availability for things that call themselves value funds and look at the various providers and then look at the methodologies, they're completely different. It's not at all unusual if you were to buy, or even to look at, say, three different Canadian equity value ETFs, the dispersion from year to year and those is enormous. You have no idea what you're buying, unless you really drill into the methodology.

If you're interested in value investing, better make sure you know how to define it. That's probably where Dimensional excels in that they know exactly what that problem is, and they know how to target the research-based factors, probably better than all of the other fund providers.

Ben Felix: That's such a good point. I read, I don't think it was an academic paper. I think it was a post somewhere, but it was talking about what you just said, Dan. The dispersion in value returns and value portfolio construction. If I remember correctly, a few of the value portfolios that were being looked at, I think they were ETFs, or maybe they're indexes, I can't remember. A few of them, they look more like growth funds. If you define value the way that Dimensional does, to your point, you have to be really careful about what are you trying to get exposure to? Does the name of the fund actually indicate what it's delivering? Because value can mean a lot of different things to different people.

Dan Bortolotti: Yeah, it's not a trademark term. There's no technical definition of it. I think we all have an understanding of what we think it means. You're right. That's nothing to stop any fund company from putting that label on a fund to make it sound attractive. It might have very little exposure to what Dimensional would define as the value factor, or what some academic might describe it as.

Ben Felix: The fund company probably believes it is. I remember, I think Cathie Wood has said something along the lines of she's a value investor, which when you look at the relative prices of the stocks in her portfolio, they're not value stocks. But she thinks that they're undervalued relative to their future cash flows, so she's a value investor. Does that count as value?

Mark McGrath: Yeah, everyone's a value investor. If you think about it that way, literally, that's the entire point of it.

Ben Felix: All right. Next one, if you could only pick one ETF to invest in for 30 years, and that is when you retire, after 30 years, would you go for market cap weighted, total market, like VT, so total international stock market, a mix of equity and bonds, a 60/40 portfolio, or a heavy factor tilt, like a small cap value portfolio. 

Personally, I would do something like DFA 607, which is what I actually do, which is total market with a Canadian home bias with some moderate factor tilts. If I can't pick DFA 607 as many people can't, I can buy that because I work at PWL. If I was precluded from buying that and had to stick with the list here, I would go VT. If I can go past this list, I would do one of the all-equity asset allocation ETFs from the big ETF issuers in Canada, like XEQT, or VQT, or ZEQT. I don't know what other letters there are now.

Mark McGrath: I think HEQT. I don’t know if TD as some ETFs as well. I don't think they have a full equity portfolio, though. I think TGRO is aggressive as they get with that. I’m the same. XEQT and [inaudible 0:20:20] is pretty much my motto at this point. I'm thinking about getting T-shirts, and I think it's just such an elegant solution for a portfolio management that it's difficult. To your point, I use DFA 607 for my own personal portfolio, but most people can't access it, and I think risk tolerance and profile allowing. If you're at the point of choosing VQT, ZEQT, or XEQT, whatever, pick one, but I've always been a fan of XEQT and that hasn't changed.

Dan Bortolotti: I'm surprised that this is phrased or framed as a product question, because it's basically the question is, what should your asset allocation be if you have 30 years to retirement? The product is really secondary here. The two choices that the listeners offered, basically 100% equities or 60/40. Well, how can you answer that question unless the individual's risk tolerance? Over 30 years, the chances of the 100% equity outperforming? I don't know, 99.9%. We can all agree on that. The question is, are you going to be able to stick to that for 30 years? To me, this is a question just simply, what is an appropriate asset mix for your time frame?

Then, question number two, what product should you use to implement that strategy? At that point, as you said, whether you're picking Vanguard, or iShares, or BMO version of whatever asset allocation fund doesn't make a huge difference. I always try to steer people away from the, what should I buy question, as opposed to what strategy should I use to invest, which is so much more important.

Ben Felix: Very good point.

Mark McGrath: I actually posted a screenshot from my book, and it's basically the iShares, Vanguard and BMO all in one ETFs, their costs and their asset mix or whatever. I tweeted out yesterday, I said something like, pick your fighter. Most people, it was VUQT, or XEQT. Other people were like, “Oh, what about Bitcoin? What about QQQ?” I'm like, “No, no, no, no, no. That wasn't the question.” To your point, once you nail down the strategy, the point of putting that in the book was, these are very, very equivalent costs asset mixes. They're essentially the same product. Once you align with the overarching strategy, then again, outside of the risk tolerance question and how much fixed income you want to have, it's not really a big deal which one you pick.

Ben Felix: Next question.

Mark McGrath: You want me to read it, Ben? You've been reading all of them.

Ben Felix: Please do.

Mark McGrath: Yeah, I'll read it, because you're going to answer this one. “What are your thoughts on using buffered ETFs for clients who have less risk capability, but still need to take more equity than they would have if it was just a normal stock, or bond split? What are your thoughts in general on buffered ETFs versus buffered annuities? Thanks. I love the podcast.” Do you want to explain buffered ETFs first?

Ben Felix: Yeah, they're called buffered ETFs, your defined outcome ETFs. They're structured products in an ETF format. They have downside protection, but you're capped on the upside. I don't know what a buffered annuity is and I did not look it up. I don't know if we have those in Canada. It sounds like a US product, because they got more variable annuities there. We don't really have those here. I don't love assets with this type of payoff. They're using options to cap the upside and protect the downside. I don't think they fit very well with the realities of the distribution of stock returns. I think people are behaviourally super worried about downside risk, which is fine. You have to take that into account. Stock returns are more often positive than negative. There are big up-days that explain a huge portion of returns. 

If you miss those best days, your returns can drop very, very quickly. You don't really capture the long-term returns that stocks have to offer. Buffering on the downside helps a little bit, because those really bad days hurt, too. I don't think the overall trade-off on both sides combined makes a whole lot of sense. It's just not obvious to me that this is a really good way to increase your expected returns relative to a balanced portfolio, if that's the objective. I've seen the argument more for structured products, but I think it applies here, too. That in some cases, this is the only way to get someone to have any exposure at all, whatsoever to the stock market. The alternative is to stay in cash. If you're really going to twist my arm there, sure, I guess.

I looked at some of the returns of buffered ETFs that are tracking US stocks, for example. The returns have been much higher than cash. They're still more volatile than cash. If someone came to me and said, “I'm either going to invest in cash for the next 50 years, or this buffered ETF because I'm so scared of downside volatility.” I mean, fine, I guess. I wouldn't use them personally and I wouldn't use it for client accounts. But that's the only way I could see them making sense. What do you guys think?

Mark McGrath: Yeah, similar. I mean, where's the free lunch there? I guess, is always the question. You want equity-like returns and bond-like volatility, don't we all?

Dan Bortolotti: Me too.

Mark McGrath: You overlay the expensive option strategies in there and options markets are pretty darn efficient and mathematical. You're just paying additional fees for a balanced portfolio profile, probably if you were to track some of these. I'm sure you could find an equity fixed income mix that tracks and correlates very highly with a lot of these ETFs. I haven't taken a good look at them. Had clients asked about them years ago and took a look at them, but I'm generally in agreement with you, Ben. I'm not a fan.

Dan Bortolotti: You obviously have to be very suspicious of anything that promises upside without corresponding downside. I think, Ben, you make a good point. People have asked me not so much about buffered ETFs, but about market-linked GICs, these ideas that you get a little bit of the upside if the market goes up, and you don't lose anything if the market goes down. You get only a small fraction of the upside and none of the downside. As you said, if you're just a type of person who could not possibly bring yourself to invest in equities and you can tolerate zero loss, it's better than nothing, I suppose. That's not really high praise, is it?

Mark McGrath: No, and those things have marketing GICs. I think the floor is usually zero. I haven't taken a lot of look at those, but you're trading off something like a guaranteed fixed income return through something like a GIC for the potential for a zero, or 10%. These are nominal returns, so there's some inflation risk over that horizon. Yeah. I mean, I think that's a trade-off that people would have to consider. It's not obvious to me that buying something like a market linked GIC, which could have a return of zero over five years, is necessarily better than just getting a fixed income pay out of 3% to 4%, depending on what rates are doing.

Ben Felix: I haven't looked super closely on how the mechanics of the buffered ETFs, but I know in the market linked GICs and the principal protective notes and all that stuff, they're typically linked to price-only index returns. That's another cost where the bank hedges their exposure using total return and they keep the dividends and you don't get any piece of that.

Mark McGrath: It's taxed as interest usually with one of these structured products, is it not?

Ben Felix: Yeah, I think so. There's a legislative change around that a while ago. We don't use them at all. Next one.

Mark McGrath: Sure. Dan, you want to read it?

Dan Bortolotti: Yeah. How should we think about market efficiency and expected returns when investing in markets with low transparency and/or high corruption, China, some emerging markets, etc? Is there an efficient way to tilt the international portion of a portfolio away from these risks? My first reaction is this. I think this is a good question and it is certainly one that I have heard from clients expressed slightly differently. We normally include the entire global stock market in our portfolios, which includes an allocation to emerging markets. We've had some clients say, “I'm not comfortable investing in emerging markets in general,” sometimes mentioning specific countries that have a reputation for corruption and low transparency.

The efficient market part of me wants to say, well, those risks are already priced in and the expected return is higher if the expected risk is also higher, etc., etc. That all may very well be true. But in practice, if a client says to me, “I don't want to include emerging markets in my portfolio. I just want to include Canada, the US and international developed countries,” I'm not going to argue with them. I think it's a perfectly legitimate position to take. Again, is it optimal? I don't know. But you need to invest according to your values, I think, too. If it just makes you uncomfortable, whatever potential benefit there might be from including emerging markets is going to be outweighed by your discomfort and your resistance to it. It's a question that I think is okay to not invest in that asset class, if you feel the trade-off is not worthwhile.

Mark McGrath: Well, and emerging markets, by definition, it's going to be a low percentage position in the portfolio just based on its relatively small market cap anyway. It's not like you're saying, “I don't want to invest in the US,” which is two-thirds of the global market. Okay, well, now there's a much bigger trade-off there. If those are your values, then yes, you have to make that trade-off. But if it's 6% of the portfolio that you want to allocate to developed markets instead, I agree. Long term, it's not likely to be the biggest difference maker.

Ben Felix: I've had that conversation with clients on both sides that you've had, Dan, where in some cases, I've had clients wanting to allocate more to countries like China, because they see that it's got high expected growth and that it's maybe a bit riskier, so they expect higher returns, which in the case of China has not really been the case. That was a bit of a flop, I think, relative to what a lot of people expected. Then likewise, in the other direction where people just don't want to invest in these markets. It's not great to you. It's not a hill that I would die on.

I think if someone said, “I don't want any international developed markets. I only want to be US,” still, probably not the end of the world. But I'd put more of a fight up on that one than I would on emerging markets. The distribution of returns for emerging markets is also weird. We did an episode on this, and I did a video on it a while ago. I said that it looks like a reverse lottery, where they've got theoretically higher expected returns, because they're riskier. Historically, they've had periods of really high returns. But if you hold on to them for a really long time, they had these periods of extreme catastrophic losses from time to time. I call it a reverse lottery, because you can win most of the time, but occasionally you might lose really, really big.

Mark McGrath: It's Russian roulette.

Ben Felix: Yeah. Dimensional does think about this. I wanted to mention that. Before investing in a market, particularly in an emerging market, they look at the costs and frictions associated with investing there. They'll look at the market liquidity, they'll look at market regulation, accounting standards, listing requirements, stuff like that. If there are any red flags, they will underweight, or potentially exclude an emerging market.

I remember when the Russian stock market effectively went to zero for foreign investors, I think Dimensional's weight was half of the market weight of Russian stocks, because they had had concerns about property rights in that country previously. It wasn't an active bet. It was like, these are our criteria for investing in emerging markets. This country is not fitting that criteria right now, so we're going to reduce the weight. Still, a tiny weight to the overall portfolio. It's not like it made a huge difference, but it is interesting.

Mark McGrath: I'll read the next one, Ben, because you're going to talk for the next four hours on this question. Pensions and other institutions use portable alpha, now being rebranded as return stacking. If the stacking is done with low-risk assets, one would already have a global market index and treasuries. Can this be a good idea for an individual?

Ben Felix: Return stacking has been the greatest recent marketing success in the ETF industry. It comes up a lot. Been getting a lot of questions about it. These are products that give you leveraged exposure to multiple sources of expected return. You invest a dollar in the fund and it gives you $1 of exposure to stocks and $1 of exposure to treasury bills. For example, that's one way to set it up. 

There are other ones too, like more exotic sources of expected return that are stacked in some of these products, but it's giving you a bunch of leverage and it's giving you something that, in theory, could make sense. I think people love the idea of using leverage. We did an episode on leverage years ago, and so many people, clients were like, “Okay, I want to use leverage now.” I was like, “Whoa, wait. That wasn't what we were trying to do.” Robert Merton talked about this, too. In theory, it makes sense to use leverage when you're young, but I don't know if that's practically always super sensible.

Anyway, theoretically, levering up the maximum Sharpe ratio portfolio to your desired level of expected return is superior, than concentrating in higher expected return assets. In theory, you're better off levering up a stock and bond portfolio, assuming it's got a higher Sharpe ratio than an all-stock portfolio. To get a higher expected return, then you are going all into stocks to increase your expected returns. That's based on the assumptions in the capital asset pricing model. I think people get excited about that theoretical optimality thing.

There was a good discussion in the Rational Reminder community on this. After our last episode or two episodes ago, episode 343, on asset allocation, someone asked about this in there. I answered their question. Then, Corey Hoffstein, who makes return stacking products, he joined the community and joined the discussion. Then Scott Cederburg was in there too, who's done research that's pretty relevant to this. It’s pretty cool. I mean, Corey and Scott are both people that I respect. It was neat to see them going back and forth about this. It was neat that I was able to participate in that.

I had said, to answer someone's question on that Scott Cederburg's paper, the most recent version of it, showed that even in the lowest cost of leverage scenario, so Scott looks at basically, what's the optimal portfolio over someone's lifecycle. In the most recent version of the paper, they allow leverage to see if that changes the optimal asset allocation. In there, they find that in the lowest cost of leverage scenario, they test a few different ones. With a 100% leverage limit, the optimal portfolio did have a small bond allocation. Not huge. I think it was 15%. That was my response. Even in this really low-cost leverage case, where you've had a huge leverage allowance, only a bit of bonds makes sense in the portfolio.

Then Corey jumped in and explained that in his view, Scott's study used a cost of leverage that was too high. He also said that the maximum drawdown in Scott's optimal portfolio was 96%. Corey is saying, that's ridiculous. Nobody would invest in that portfolio. Scott, in the course’s discussion, mentions that that drawdown occurs in the simulations with a probability of 0.003%. It's pretty unlikely. Then, the other thing that's interesting is that Corey disagreed with Scott's use of utility of consumption and bequest, which is how they measure the different outcomes in their paper. Because one of the things they look at is comparing their results to a 1996 period that Cliff Asness had done on why you should not invest in a 100% equity portfolio.

In Cliff's paper, he had used the Sharpe ratio based on annualized monthly standard deviations to show that the levered 60/40 portfolio is superior to a 100% stock portfolio, which again, in basic CAPM theory, that's what you'd expect. Corey is saying, “Well, Scott used utility to disagree with Cliff, who'd use Sharpe ratios. Those two things aren't comparable.” That alone is an interesting discussion point. Should we use Sharpe ratios for long-term portfolios? Or should we use utility of consumption? Which thing matters more?

I think that the way that Scott set it up probably makes more sense, because Sharpe ratios fall apart at long horizons for a couple of reasons. Long-term returns are skewed, as we'll hear about next week with Hendrik Bessembinder. We talk a lot about that, long-term returns are skewed. Then the other thing that Scott's paper captures with their block bootstraps is that there's auto correlation and returns. Returns from yesterday are related to returns tomorrow. The CAPM assumes that returns are ID independent and identically distributed. The Sharpe ratio is just not designed for the realities of long-term returns. It's really a single period model. It has some assumptions that I think real returns, actual return distributions violate.

Then, the way Scott measured it with utility functions, they acknowledge that stuff and capture it. I do also want to say that Cliff acknowledges this in his 1996 paper. He says, if stock and bond returns are independent from period to period, and investors are risk-averse with constant relative risk aversion, then a longer horizon changes nothing. The relative weight of stocks and bonds will be constant across otherwise similar investors with different horizons. The solution changes only if the volatility of stocks increase more slowly with time than does the volatility of bonds.

Then continuing the quote, there is some evidence that stock returns do in fact exhibit negative long-run auto correlation. Best volatility does go up more slowly than if returns were independent. Many have challenged the existence of this negative auto correlation. But if it does exist, it could lead to stocks being a larger part of optimal long horizon portfolios. Cliff acknowledges in his 1996 paper that a lot of people use to disagree with Scott's paper. No, look, Cliff showed this, but I don't know if he did. He acknowledges where his results would not be the same as what he presents in the paper.

Scott's paper, on the other hand, is specifically designed to address that comment that I just read from Cliff, that Cliff acknowledged would change results. Scott's paper even does report on variance ratios, showing that the volatility of stocks increases more slowly with time than the volatility of bonds, which is what Cliff said would change his results. On the cost of leverage, this is another interesting point. Corey had said that Scott's assumptions were too high. Scott had leverage spreads over treasury bills from 0.37% to 6.5%. Both of those numbers are based on academic research, other papers looking at what is the cost of leverage. The optimal levered portfolio with the lowest cost leverage and the 100% leverage limit that I mentioned earlier did have a small allocation of bonds. But then with higher costs of leverage, or up to a 55% cap on leverage, bonds did not have a place in the optimal portfolio.

Hopefully, people are following this discussion. The question is, should you be stacking stocks and bonds in portfolio using leverage? That Scott's research is showing no, probably not. That's what this discussion is about. What is the cost of leverage, I think, is a really interesting and important question, because as Scott's research showed, with higher costs of leverage, bonds don't get a place in the optimal portfolio. Funds using treasury futures, which a lot of the return stacking products use do have very low implied financing rates through futures, pretty close to the risk-free rate. That 0.37% is, I think, a pretty fair assumption for that case.

Then, the other interesting question, I think, is whether the fee and a product using leverage also needs to be included in the cost of leverage, because products using leverage, like an ETF that is internally using leverage, are going to tend to have higher fees than the cost of investing in the underlying assets on their own. If you take a hypothetical fund that for every $1 of investment invests $1 in stocks and $1 in treasuries, and it's got a financing rate of the say, 0.37% over T-bills we've been talking about, but it also has a fee of 40 basis points, while investing in the underlying stocks and bonds would otherwise cost five basis points, which I think is pretty reasonable. I would say that there's an additional 35 basis points cost of leverage.

Even though the actual cost of leverage inside the fund is whatever, 37 basis points, because you're paying a higher fee, I think your actual cost of leverage as an investor is higher than the funds cost of leverage. That can change the results materially. Scott's results are pretty sensitive to that cost of leverage. Corey made the point in the discussion also that Scott's findings depend heavily on the data generating process used. Scott uses block bootstrap thing with a whole bunch of historical data. That's absolutely true. I think Scott's final comment in this discussion really captures the essence of the whole conversation, which is really whether bonds are actually good diversifying assets for long-term investors. This is a quote from Scott's post, the fact that our investors don't like bonds, absolutely does depend on the fact that bonds didn't do well in our sample period. When our sample period is all of modern history in developed countries, at some point we have to ask why we expect bonds to start giving higher returns. It's pretty good.

Anyway, so the whole question is, should you be levering up stocks and bonds to get higher expected returns, instead of just investing in stocks? I don't think so. I personally don't think so. I don't think that you need a return stacking product if your intention is to increase your expected returns up to level of an equity portfolio. I think you can just invest in stocks.

Mark McGrath: Yeah, you took the words right out of my mouth. I was about to say all that myself.

Dan Bortolotti: Yeah. I was just going to offer a more succinct answer to that and say, no. Probably not.

Ben Felix: Do you guys have any other comments though? You probably do have great comments to add.

Mark McGrath: I like the idea that you said on paper, it looks, yeah, great, if I can basically get these other sources of returns stocked on top of each other at a really low cost. That intuitively makes sense. But when you maybe peel back the layers, it's not as obvious. My son does own RSST, which is return stacking ETF. Going on Corey’s ETFs. Again, my son, actually, it's his birthday today. He’s seven. He's financially mature enough to make these decisions now at seven-years-old. If that's what he wants to do, then I'm not going to stop him. They're cool products. Like he said, this thing has been around for a while by different names. I think his ETFs have been very, very successful in the marketplace, too, which is cool to see, and they've got different flavours. Some with managed futures in there and some of just US equities and treasuries. See where they go. But I don't understand them to the degree that Ben does, so I don't have further comments on the topic.

Ben Felix: They're not that complicated. I do also want to say, actually, that they are pretty incredible pieces of financial technology. The fact that you can get all this leverage and some pretty interesting, to varying degrees of evidence-based sources of expected return in one product. I mean, for somebody that wants that, that's pretty cool. I don't think they're terrible in the stuff I just said. It's not like, one is clearly dominating the other. It's not like the levered stock bond portfolio is massively inferior to the stock portfolio. I just think when you account for the complexity, the cost of leverage, I think there's probably some product risk in there, too. I don't see the allure. I'd rather just invest in stocks, which are pretty straightforward.

Mark McGrath: I think if you're going to seek out leverage investing, I think it's probably a great way to do it, because a lot of people would otherwise be using a home equity line of credit, or margin. There's a lot of potential downside risk for using those types of products to embed the leverage in there. I mean, it implies the volatility, but there's not, or maybe it doesn't, but maybe you're not going to get margin called and lose your house, or something like that. If you're seeking out leverage, I think it's a cost effective and maybe safer way to do it. What do you think?

Ben Felix: Like I said, they're really cool pieces of financial technology. For someone that wants that exposure, that's a pretty neat way to do it. Robert Merton talked about this when he was on Rational Reminder a while ago, that if people should have leverage, it needs to be built into products, because people implementing leverage on their own is a disaster. I don't disagree with the premise. I just wouldn't use them. In that discussion, the question that was asked, if a stacking is done with low-risk assets, one would already have gold market index and treasures can be a good idea for an individual.

I mean, the question is really asking the fundamental question that Cliff addressed in his 1996 paper, which is, are you better off levering up multiple sources of expected return that without leverage would have a lower expected return? Are you better off levering that up to the equity level of expected returns, or are you just better off investing in inequities? I think that you're perfectly fine being just in equities.

Mark McGrath: Okay, should we move on?

Ben Felix: Yup.

Mark McGrath: “How do you balance Graham and Buffett's business philosophy with your intentionality of academic finance and promotion of Fama-French and other modernists? This is what Buffett's career has been built on. If you follow the tenets of modern finance theory, it's easy to get caught up thinking more like an academic and less like a businessman. As Benjamin Graham has famously said, investment is most intelligent when it is most business-like. I prefer to think about investing through the lens of a business person, and as little as possible through the lens of academics.” That's from, We Study Billionaires, the Investors Podcast Network from December 2000. I guess, he's just trying to juxtapose the difference between academics studying finance and then the real-world success of people like Buffett.

Ben Felix: Do you guys have thoughts, or do you want me to go?

Mark McGrath: You've done a lot of work on this. We had an episode, I think, on Buffett, where I think, Ben, you covered a lot of that in detail, but no, I’ll let you guys go.

Ben Felix: I think there are a lot of people that talk like that, that comment that we just read, and I am familiar with that podcast. There are not a lot of people with Buffett's returns. There are a lot of people that talk like they want to invest like Warren Buffett, but there's one Warren Buffett for a very good reason. Here's something else that Ben Graham said. Later in his life, less famously, because it's not as good of a sound bite and it's not as good at promoting stock picking, which a lot of people want to imagine can work. He said this in 1976, in an interview that's documented in the Financial Analyst Journal. When he was asked if he still advised careful study and selectivity of individual common stocks, which is basically what this person in the question is talking about, as Ben Graham promoted. This is later in his life. I think he passed away, I think, it was not long after. This is Ben Graham in 1976. 

Mark McGrath: He passed away September 1976.

Ben Felix: Yeah. It was soon after. He's asked if he still advised careful study and selectivity of individual common stocks. “In general, no. I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity say, 40 years ago.” Keeping in mind this was in 1976. “When our textbook Graham and Dodd was first published. But the situation has changed a good deal since then. In the old days, any well-trained security analysis could do a good professional job of selecting undervalued issues through detailed studies. Then in the light of the enormous amount of research now being carried on,” again, this is in 1976, “I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost. To that very limited extent, I'm on the side of the efficient market school of thought, now generally accepted by the professors.” I mean, Ben Graham realized that the quote that we were being asked about probably didn't make a whole lot of sense later on in his career.

Mark McGrath: That was before index funds even existed, I guess, to that point. Maybe at an institutional level, they were just getting started, but –

Ben Felix: ’76 is around when Vanguard’s first index fund came out.

Dan Bortolotti: Yeah, it's right around that time. I quoted this same paragraph in my book, because I think it's such a good example of basically, the godfathers of stock picking. Again, we were bent over backwards to say this in the episode we did on Buffett. This is not to take anything away from these guys in their tremendous scale and what they've added to the world of finance. Even they, essentially, not only has Buffett famously recommended that most people use index fund, even Ben Graham, his tutor, was saying that 50 years ago.

Now, obviously, he's not explicitly recommending index funds here, but that's because index funds barely existed. I think that they've essentially said, what we recommended to investors probably doesn't work very much anymore, because the playing field is just so much more difficult. The number of people, I think, who have listened to that advice is close to zero, because people refuse to let go of that idea that you can just be smarter than everyone else and do more research and work harder and take a more common sense business-like approach. It's a dream that is very hard. It's going to take a while for it to evaporate.

Mark McGrath: They're not alone. Buffett himself, as we talked about, has said most people should invest in index funds. Peter Lynch has said the same thing. Burt Malkiel, Michael Lewis, some of the most famous, or at least well-decorated investors and most famous investors have all come to largely the same conclusion. I'm sure there's many that haven't. To invoke quotes and ideas selectively from people like Buffett, or Lynch, or whatever, just confirm your own biases. Okay, if you want to listen to their advice, then you got to listen. You got to take all their advice and you can't just cherry pick the things that confirm your own biases.

Ben Felix: Cherry pick a quote from 1942.

Mark McGrath: Of course.

Ben Felix: I shouldn't be laughing. I'm not trying to make fun of the person who asked this question, but it is a little bit funny. There's another quote, I don't have it written down, from Ben Graham from the 1950s in one of his books, where he doesn't talk about index funds specifically, because they did not exist at the time. But he does talk about a systematic cross-sectional approach. He says that security analysts should not discount the idea that people that are just using a naive cross-sectional approach, which is basically an index fund, analysts shouldn't discount the idea that people using that strategy will outperform a lot of analysts.

He was aware of this for a very long time, of the idea that it's hard to beat the market. It's definitely interesting to think about Ben Graham changing his mind over the course of his career. In that paper, actually, one in the Financial Analyst Journal, where I pulled that first quote from, they asked him how he would recommend investing, or something like that. He describes a systematic strategy that looks like what today we would call factor investing. Views, characteristics of stocks systematically, and you can build a diversified portfolio that loads on what ends. It's like, okay, that makes sense. But it's very different from acting like a business owner.

I do think that the framing of buying a business, thinking about buying the discounts with future cash loads of a business, I think thinking about that can make a lot of sense, even as an index investor, thinking about the fact that there are all of these underlying businesses, because I think that helps people understand that it's really hard for the index that represent the whole entire market to go to zero, because underlying it, there are all of these businesses that are doing things and adding value. I think that's a worthwhile frame of reference.

I don't think it makes sense to imagine that you get any special insight by thinking of yourself as a business owner and analyzing individual companies as if you were buying the whole thing and doing something with it. Maybe in private markets. Maybe. There I can see it if you're literally buying whole companies and maybe even adding some value to them after the transaction. Okay. But in public markets, I think the market's pretty good at pricing assets in a way that it doesn't eliminate mispricing, but it makes any mispricings that do happen pretty close to random, which makes it really hard to add value through security analysis, as I think Ben Graham would agree, unless you asked him in 1932.

Mark McGrath: I think price is the large component of that the people, your average investor has a lot of trouble deriving. You can look at a business and look at their free cash flow and price earnings and all this stuff and be like, “Oh, yeah. This looks great.” The point is that you've got to buy it at a certain price that makes sense. You can look at like, “Oh, there's free cash flow growing and everything.” But if you're going to overpay for that, then your expected returns are lower. 

You've got to get the price rate as the output of all of that exercise and the markets got to agree with you over time. The average investor, even above average investors, I think over long, long periods of time are likely not going to outcompete the market.

Ben Felix: Yup. We talked with that next week with Hendrik Bessembinder. There's a ton of skewness in stock returns and that leads to a ton of skewness in active mutual fund returns. It's tough. Tough game to win. Should I read the next one?

Mark McGrath: Sure.

Ben Felix: It's been a long question. I'm not going to read the whole thing. The question is, basically, when we look at the Shiller Price Earnings Ratio, it's high, but it's been high for a long time. Should we expect it to revert to the historical mean, or is it reasonable to think that it's permanently higher? What do you guys think?

Mark McGrath: I was talking to somebody about not this exact question, but on Twitter yesterday, and they were basically concerned about the concentration risk of the Mag7 stocks. I was trying to just point out that I get that. They are expensive historically. They are concentrated historically. But, however many years ago, people were terrified about Fang. Then it became something else. Then with Fang with two A's and then something else, Fang 5. I don't remember all of the different acronyms that were given to these top stocks. But had you got out of them, or tilted away from them significantly at the time where this was first being talked about, you missed an absolute ton of upside. This is the problem with all of these types of metrics that you look at. It's a timing risk. You've got to time it right more than once.

I tend to, just for my own sake, ignore these types of ratios. I am aware of them. I see that. But when you're looking at a broadly diversified portfolio to some of the stuff we talked about earlier, I went and looked at VEQT. I think I figured out that the Mag7 weighting of VEQT as of yesterday was 13% of the entire portfolio. People are honing in on the concentration risk of the stocks in the US. Sure, if it's a market cap weighted US portfolio, you've got way more exposure. But this is the whole reason that we diversify globally in the first place. It's much less of a concern when you're looking at something like XEQT, or VEQT as we talked about. That's not a direct answer to the Shiller PE Ratio, but it's just another way of saying, there's a bunch of expensive stuff. What do we do with it?

Dan Bortolotti: I think it comes down to, this is a really good example of how valuations can be very problematic in the sense that they don't tell you very much about short to medium-term returns. It's so difficult that, I mean, Vanguard did a paper a while back, and I'm just going from memory. Ben, you probably know. But they looked at 14 or 15 different metrics that people use for valuations. They looked at their predictive power over some 40 or 50-year period. They threw in a couple of random ones as well, like rainfall in Arkansas, or something, just as an idea saying, we'll throw in some random thing and see how well that one did.

It turned out that one, it was better than some actual metrics. The best, the one with the most predictive value actually was the Shiller PE Ratio. Even then, it explained something in the order of 40% to 50% of returns forward-looking. That's pretty impressive as it is, but it's literally less than half. You can easily try to make decisions based on these valuations, but you need to recognize you're going to be wrong, probably half the time. The opportunity cost for being out of those markets and complaining that they're too expensive is very high, as we've all seen with US stocks. Look, there may be a day of reckoning going forward. If you've been out of US stocks for the last eight years, because you think they're overpriced, good luck trying to get those returns back.

A balanced approach, like you said, Mark, is what it's all about. That doesn't mean go all in on the best recent performers. It means also, don't go all out on them and include everything in the portfolio, including, for example, now international stocks seem to look much more fairly priced. Maybe over the next 20 years, those will outperform. We have no idea. I think the best thing to do is avoid those extreme moves and hold everything all the time and carry on.

Ben Felix: I agree with that. I do remember that Vanguard paper now. I think I remember finding it through one of your blog posts. I do remember it.

Dan Bortolotti: It's a good one.

Ben Felix: Yeah, it is a good one.

Dan Bortolotti: We should post it in the show notes, or something after. We'll track it down.

Ben Felix: See if we can find it. I've got some analysis that I did a while ago that I wasn't planning on talking about, but I think it's relevant. I'll talk about it in a sec. To answer the listener's question, I think there are good reasons why stock valuations could be a permanently higher now than in the past. I don't think it's necessarily the case that we should expect a reversion to historical levels of valuation. Markets are way easier to access due to innovations, like index funds, or return stacked products and discount brokerage accounts. Investing is probably safer today than it was when Ben Graham was writing about it.

The ease of diversifying a portfolio today is nothing that was ever available in the past, because you can buy the whole market with one fund today. In Ben Graham's time, I mean, you didn't have much of a choice but to pick individual stocks. It was too costly to build an index portfolio, even if you had the idea to do so back then. There are also some accounting changes that probably contributed to current valuations being higher than the past. I mean, that's another important consideration.

I don't think it's necessary that we assume that valuations are going to go back to some historical mean, or to what they've been in the past. That doesn't mean they're going to stay where they are, but I don't think we need to build into our expectations that they're going to fall back to where they were 60 years ago. The other thing is we don't need to expect valuations to normalize or to fall to have lower expected returns. Valuations falling would result in low returns over a short period of time, but high valuations with no positive-earning surprises in the future also point to low expected returns.

Antti Ilmanen, when he was on our podcast and in one of his books, talked about how when you have valuations, they're going to resolve either through fast pain valuations resolving a crash type situation, or slow pain, where you just have high valuations and therefore, low expected returns for a long time. Those are all important things to think about. I did this analysis a while ago. I posted on Twitter. People talk a lot about US CAPE. The US CAPE Ratio is high right now relative to its own history. That's interesting to think about. I mean, there's limited statistical power with one market like that, even over a long time series, because there aren't very many independent non-overlapping samples.

Something that I did earlier this year is I looked at, I think it was 10 developed markets where I got the CAPE Ratios and the forward 10-year returns from the starting CAPE ratios. I just looked at, what does it look like when we take a broader sample, instead of just the US market? My sample started in 1982 and went to December 2024. It's pretty interesting. When you sort US returns by CAPE and look at periods where the CAPE was as high as it is today, future returns in the US are low. In my sample, starting with a CAPE of 35 to 40, the average 10-year return, which is where the US roughly is now, or when I wrote this at least, the 10-year return was 6.4% on average in these 10 markets with those high starting CAPEs.

It was below the sample average of 8.7% percent, but still not crazy low. Then there's one case where the future return with a CAPE of 35 starting point, the 10-year annualized return was 17.28% in Hong Kong. There's this massive range of outcomes, even when CAPE is high. Canada had some crazy ones, too. There was a 10-year return with a starting CAPE just below 40, starting in 1998, and the annualized 10-year return was 14%. There can be a high CAPE and high future returns. To your point, Dan, saying, “Oh, well, the CAPE is high. I'm going to get out of this market.” There's a non-zero chance that that market goes on to have really high returns in the future.

Dan Bortolotti: More than non-zero. I mean, it's a pretty significant chance that the momentum will continue for at least a while longer. It's just, to try to get that timing right as folly.

Ben Felix: I agree with that. There are good reasons to think that valuations will stay higher. That doesn't mean that expected returns are high. You can still have low expected returns without mean version in valuations, but it's also really hard to time the market. I've been talking about US stock valuations being high forever and that you should build lower expected returns in your financial plan. I've also said, you shouldn't try and time the market, because future returns could still be really high.

Dan Bortolotti: Yeah. Let's agree that US stock returns could be significantly lower in the next 10 years than they were in the previous 10 years and still be pretty darn good.

Ben Felix: Very true. Next one should be a quick one. My salary is paid once a month. Is lump sum investing the better option on a one-month timeframe? Or should I expect better results from dollar-cost averaging small investments daily throughout the month? Interesting question. If you're getting paid monthly, I would invest monthly. I wouldn't try and do intermediate investments. That does imply holding cash, because you're getting a lump sum when you get paid and your dollar-cost averaging that throughout the month. Investing sooner is always better, at least in the data. If you want to do the statistically optimal thing, investing sooner rather than later is always going to look better. Investing your pay check when you get it, as opposed to averaging it in over the course of the month is probably better.

I also think, doing daily investments, I don't think there's any world where that's not ridiculously expensive.

Dan Bortolotti: I don't know how you do that.

Mark McGrath: Well, simple has daily purchases. Ask me how I know.

Dan Bortolotti: Your son is using that?

Mark McGrath: He's using it. To your point, I think a lot of them are offering fractional shares now. Because if you're doing daily investments, likely the daily contribution to their portfolio is going to be relatively small. I mean, the markets are open what on average, 21 days a month. If you're saving whatever, it is 500 bucks a month, you're talking less than 20 bucks a day. If you're buying something even like, again, XEQT is trading at around $35. You're buying fractional shares a lot of the time. I just haven't really looked into the mechanics of this, but I assume that liquidity and bid asks and stuff on fractional share purchases, like implied costs of buying these things is going to be way higher than if you're buying whole shares and full lots and that type of thing. There's maybe a hidden cost to doing it on that frequent of a basis.

To your point, I don't think there's any actual advantage to doing so, even if the cost was the same. Ben, you've done work on holding cash to buy dips and statistically, you're better off to lump sum invest as soon as you have the money available, assuming a sufficient time horizon, then asset allocation and everything else.

Dan Bortolotti: Just a quick note. I know you know this, Ben, but when you said statistically lump sum investing is better than dollar-cost averaging, you of course mean on average. If you run a thousand trials, lump sum investing is going to win more often than not. In individual specific situations, not dollar-cost averaging can be pretty catastrophic. I personally believe that dollar-cost averaging can make a lot of sense for behavioural reasons if you have a very large one-off lump sum to invest and you're terrified about putting it all into the market at once. But that's not what we're talking about here.

For anybody who earns a regular income, whether it's bi-weekly, monthly, just get a little bit in every pay check and don't try to hyper-optimize that, because the time period, whether you invest once a month, or quarterly, or twice a year, over the long term is not going to make much difference. Just get the money in there and implement your plan.

Ben Felix: I agree with all that. I did a paper on dollar-cost averaging a while ago and everything you said is absolutely correct, Dan, that it's not a guaranteed way to get a better outcome. A lot of times, a lot. I think it's about two-thirds of the time that lump sum investing wins, comes out ahead. One of the really interesting things that I looked at to your point is in the worst outcomes for lump sum investing, did dollar-cost averaging save you?

If I remember correctly, my result was that it was about 50-50. If you take the worst lump sum outcome, so you knew before the fact that this is going to be one of the worst times to do a lump sum, would dollar-cost averaging give you a better outcome? It was about 50-50 in that case too, which I thought was super counterintuitive.

Dan Bortolotti: The big issue with dollar-cost averaging, and I've seen this a lot, is just behaviour.

Ben Felix: Oh, yeah.

Dan Bortolotti: I always say to people, it will never feel like a good time to put a huge amount of money into the markets. Because if they performed well recently, you're terrified that they're overdue for decline. If they perform poorly recently, you just think it's going to continue, and you get sucked into that trap, and you do nothing. If you can get somebody to invest a lump sum gradually, then they should do it. But the expectation is not that you will achieve a higher return, because most of the time you won't. You'll probably achieve a higher return than you would if you just sat on the sidelines for two years, terrified to put that cash in.

Mark McGrath: Have you guys seen Ben Carlson? It's an older piece now. The world's worst market timer.

Dan Bortolotti: That's a good one.

Mark McGrath: Yeah, it's great. It explains this so well. Dan, you're talking about the one-off windfall, the inheritance that was in cash. Now, you're going to put it in to the market, and there's a end of one. What if this is the time that the market crashes 50% and stays down for 20 years? Sure. Ben Carlson's piece was Bob, who basically saves all of his money in cash, and then only lumps it in right before the biggest historical stock market crises that we've seen, Black Monday and the tech crash and everything else, and how did things play out for him? He lumps it in the night before Black Monday, takes the whole drawdown, and then he keeps saving monthly in cash, and then right before the tech crash or something like that, he lumps in his next component to his portfolio.

Over the sample period that Ben Carlson looked at, it was something like a 7% to 8% annualized returns in US stocks. Of course, it was lower than the market, but Bob still became millionaire at the end. You're good.

Dan Bortolotti: That's a great piece, because people always worry about they're going to have real unfortunate timing, and they might. But if you stick to that plan long term and you're saving and investing, the timing is unlikely to be too catastrophic.

Ben Felix: What do you guys think? Maybe two more questions and then go to the after show?

Mark McGrath: Sure.

Dan Bortolotti: Yeah, that sounds good.

Ben Felix: We've gotten through nine so far. I have 17 in the document, so we'll kick the rest forward to a future episode.

Mark McGrath: The question on return stacking ended up being a pretty big one.

Ben Felix: Yeah, that's fair. Hopefully, it was interesting. I'm interested in your take on this one, Dan. I've got thoughts, too. There's plenty of information available on how to start investing, but where do I find generalized information on whether or not people should change their asset allocation to take on less risk as their time horizon shrinks? When the time comes, which assets should you sell first?

Dan Bortolotti: Well, I feel like the show we just recently did on how to choose the right asset allocation offered, I hope, some insight into this. To me, it really just comes down to those principles that we talked about, this willingness ability and need to take risk. Your ability to take risk gets shorter as your time horizon gets shorter. It does make sense, I think, for most people to gradually make their portfolios more conservative as they get older and their time horizon shrinks. What exactly does that glide path look like? It depends. I don't think it needs to be something that's done. I've definitely had people say to me, “Well, I'm going to reduce my asset, my equity target 1% a year for the next 20 years.” I think you can go in bigger chunks than that. You don't have to make it so gradual. Just maybe do it in 5% increments over five years instead. I think that makes sense to gradually take it down.

Where do you end up in retirement? It depends on all of those other things. I would say, hopefully, you will still keep a significant allocation to equities in that you won't go overboard, because you feel like, “Well, I'm going to retire in five years. So, my time horizon is five years.” Because of course, it isn't. Your time horizon is until your death, not your retirement. There's no easy formula for it.

To answer the second part, which assets to sell first? I mean, I think there's only one way to go. If you're going to be more conservative, you've got to sell equities and buy more fixed income. Obviously, there's some challenges there if your portfolio is non-registered and you're going to realize huge capital gains by doing it, which is why you need to do it gradually and consistently. Overall, I think it's just a general question about how do you choose the right asset allocation? We did go through that pretty deep dive in our previous episode.

Ben Felix: I think the question, the word in there, where do I find generalized information? I think that's a really tough piece of the question. I don't know if there is generalized information, because you said this earlier, Dan, it's a very personal decision. It's going to be specific to the individual, to their situation and their preferences and their aversion to risk. There is some interesting stuff though, even though it's a little bit extreme and it's quite controversial as well. Scott Cederburg's paper saying, you should be 100% equities forever is interesting. He did do a specification. I don't know if this version is out yet, but I've seen an early version of it. Same paper, but they did an update.

One of the things they looked at is finding the optimal portfolio if you did the optimal allocation every single year, as opposed to the optimal allocation over your lifetime. They did find in one specific case that the optimal portfolio did include, it was all equities up until retirement, I think, and then it had an allocation to bills that was decreasing for five or six years into retirement. That was interesting. It was a pretty small economic difference, but just interesting to see. I don't know if that helps answer this question, though.

Mark McGrath: I would just jump back and say, in terms of the generalized information, I mean, I think the framework that we provide is generalized information, because it doesn't assume that everybody has the same situation. It's a series of questions that you can ask yourself to assess your own personal situation and where you might go. Larry Swedroe's book, which is where we stole the idea of the ability, willingness, and need to take risk, I think it's called The Only Guide to the Best Financial Plan You'll Ever Need. He has that series that all have similar titles, but it's the one with the term financial plan in it, and that's one where it doesn't talk a great deal about investing in that book. It's really more about the planning process. There's some good information in there about how to choose an appropriate asset allocation.

Ben Felix: Yeah, you're right. That is generalized. The most general research that I'm aware of on this is Francisco Gomes, who was a guest on this podcast a while ago. He has data showing that investors become more risk-seeking with increasing wealth, which in a lifecycle model does imply either a mildly decreasing, or flat allocation to stocks over the lifecycle. Not 100% stocks, like in the Scott Cederburg research, but whatever your allocation to stocks is, Francisco Gomes data shows that it shouldn't necessarily change, and he actually talked about that on the podcast. It surprised me to the point where I emailed him afterwards to say, “Can you send me the research?” Because I don't know if I understood that from reading his papers. He did send me the paper showing that. But I think that's pretty interesting, that if you could just pick an asset allocation, whether it's 100% stocks or, I mean, probably not, but 60% stocks, 70 whatever, there's at least research showing that you could keep that forever and not have to worry about decreasing allocation.

Now, that doesn't take into account the ability, willingness need stuff, which again, is going to be very specific to each person. I mean, it's tough to say, everybody should do this, which I think is why, to the point in this person's question, there isn't a lot of information saying every retiree should do this glide path, because I don't think that there's a lot of consensus around that.

Okay, last one. How does PWL Capital handle the rebalancing of client portfolios from an operational perspective? Dan, I want to hear what you have to say. I'm just going to say real quick, what we do. I think your comments are going to be more interesting than mine, though. Mark and I use largely self-rebalancing portfolios from Dimensional. The operational rebalancing process for those is basically non-existent, because it's being done inside the product by Dimensional.

We do have some accounts where we're doing the rebalancing, a combination of Dimensional funds and ETFs. In those cases, we have asked allocation targets, and we monitor those using software for deviation from those targets, and then we trade if they get outside of those limits. Using those allocation funds from Dimensional, I think you might have mentioned this in Dave Chilton's podcast. I can't remember, Dan. They've been super tax efficient, because the rebalancing is happening inside of the product, and the way that tax calculations work for funds in Canada, there's a mechanism that without getting too into the weeds, when there are cash flows, it's usually possible for the fund to limit capital gains distribution. Dimensional has been super successful doing that with our allocation products. That may not always be true, but since the inception of those allocation funds that we use, they've been ridiculously tax efficient. Did you talk about that?

Dan Bortolotti: Yeah, I did, because the idea is all of those asset allocation funds in Canada, I think, are still growing in popularity, so there's a lot of positive inflows. Most of the time, they don't need to rebalance by selling what's overweight. They just rebalance by buying what's underweighted with new cash flows. That really limits the amount of realized gains that those funds distribute. They will have to distribute some gains if we have a huge market move. For more moderate moves, yeah, that rebalancing with cash inflows is a really tax efficient mechanism.

Ben Felix: Do you want to talk about your rebalancing process, Dan?

Dan Bortolotti: It's very similar to what you had mentioned, Ben, the second part of your answer. We typically don't use all-in-one ETFs for our client portfolios, at least not across the board. We might use them in a single account, or especially the smaller accounts. Mostly, we're holding the individual asset class ETFs. We also mix in GICs with a lot of our clients for the fixed income side. There is a fair bit of active rebalancing going on. Yeah, and it's simpler. We just have the software screens periodically for portfolios that are out of balance. Our threshold is typically 5 percentage points. If you've got a 70% equity portfolio, we're going to rebalance when you hit 75 or 65 in the other direction. We can use a little bit of discretion on that. The discretion is never for market timing reasons. There might be 5.1% over the target. We know if we rebalance, we're going to have to realize some pretty large capital gains.

It's September, we might say, well, maybe let's give it another three months and rebalance in January and defer those taxes for another year, something like that. There's a little bit of decision-making going on almost entirely for tax purposes. Yeah, it is a little bit more work to get in there and we're making more transactions for sure. But it does give us a little bit more control on asset location and tax efficiency of some funds.

Ben Felix: How do you find in a situation like COVID when the market tanks all of a sudden and portfolios were off their allocations, how do you find the process in that case?

Dan Bortolotti: That was a great example. It took a little bit, well, it took a lot more, I think, effort on our part to get in and actually make those trades, which we had talked about, was really, really difficult, behaviourally. That was one very specific situation. We're having a all-in-one type of fund, like a VBAL, XBAL thing, would have actually served you really, really well. The reason being that we actively had to sell bonds and buy stocks in March of 2020, April of 2020. You'll recall, the bond market locked up for a period there. It was really, really hard to make efficient transactions in the bond market as just entering your trades manually. Whereas, if you were on the institutional side, you probably could have got some better pricing there and you could have done it in a bit more gradual way.

I don't know. It would have been interesting to compare the returns of, say, a portfolio like a VBAL that's 60% equities with our own clients' portfolios that were also 60% equities and see if any differences were explained by anything other than fees. I don't know, we didn't do that systematically, but that was definitely a challenge. I remember making this point for DIY investors. It was hard for us. You can imagine what it was like for DIY investors and having those asset allocation funds that took that rebalancing away from you and put it in the hands of the funds, just incredibly valuable for a time like that.

Ben Felix: We had both, because we do have component portfolios, like I mentioned. On the one hand, the DFA portfolios, they're rebalanced and that was it. We didn't have to do anything. Then the component ones, there's for sure pressure on us to do it, like you were just talking about. Then there are cases where you're meeting with the clients and telling them that we're about to do this rebalancing trade. They're like, “Really? Are you sure?”

Dan Bortolotti: Yeah. There was definitely some resistance. I mean, I'm trying to remember. I'm sure we had a few clients who said things like, “You're probably thinking about rebalancing, but I'm asking you, please don't.” We have to say, “Okay, let's talk about this.” Because the end of the day, it's your decision, but it's not really, that's going against our better judgment. Again, it was a very difficult time. I do not blame anybody for being nervous about doing it at that time. Were we rewarded for active rebalancing? Yeah, absolutely. But did we know that in March 2020? Certainly not.

Sometimes taking those decisions out of people's hands is very valuable. At other times, you just happen to, or hope that you have an advisor who will implement it and not fall into those same behavioural traps that most investors do.

Ben Felix: All right, we'll kick the rest of the questions we have in here to the next AMA episode. Let's go to the after show. I did want to talk about my testicle for a second. I heard from a ton of people, which was cool. I didn't keep track, but it's in the high tens or low hundreds of people that have reached out through email and Twitter DMs and the Rational Reminder community. It's been interesting and very nice. A couple of my mom's friends who listen to the podcast, I guess, give their well wishes to my mom, which is pretty funny. I was like, “Wow, your friends listen to my podcast? I guess, maybe we'll get a kick out of hearing this.”

Now, I heard from a ton of people who've been through the same experience with having lost a testicle to suspicion of cancer. In most cases, it ended up actually being cancer. That was me, too. Not surprising, though, one of the reasons that I wanted to be open about this is that I know our audience demographics, which are heavily tilted toward men aged 25 to 34. That is by far our biggest audience demographic. Based on the countries that they listen from, I would hazard a guess that they're largely Caucasian men. That is the sweet spot for testicular cancer. White men age, I think, it's 15 to 40, technically, but white men within that age group are the most likely of any demographic group to get testicular cancer.

I wasn't surprised necessarily to hear from a ton of people, but I was. Say, it's close to 100 people that reached out to say, everything goes well. Probably 20 people that reached out to say, “Hey, this happened to me five years ago. Hey, this happened to be 20 years ago. Hey, I'm going through this right now.” A lot of them appreciated the fact that I'm being open about it. Because I guess, some of them told me that it was hard for them to tell even their immediate family and friends. Having someone talk about it in a more public platform, I guess, meant a lot to a lot of people.

I mentioned earlier, I still don't have a diagnosis at the time of recording. We're recording on Friday. I'll get that diagnosis on Tuesday. By the time this is out, I will know what's up. But as of now, I do not. A couple of reviews. I better read the first one.

Mark McGrath: Yeah, I was going to say you got to read the first one.

Ben Felix: Kind of awkward to ask you guys to read it. One nut, five stars.

Mark McGrath: Oh, man.

Ben Felix: Best financial podcast I've ever listened to. Research-backed data and insightful commentary. Ben, thanks for sharing your health story and best of luck, brother, by Pod Crass from Canada.

Mark McGrath: That's good. Next one, great resource. Really enjoy this podcast and how normal you all are. No sensationalism that has become so prevalent these days. Thanks, Ben, for sharing your health situation and wishing you all the best. Also, looking forward to the AMA episodes. Oh, there you go. Long-time listener and original Canadian couch potato reader. You've all done me a great service in my financial journey. By Eves76 from Canada.

Dan Bortolotti: All right, I'll take the last one. Fantastic. This is a must listen podcast for financial education. It goes into much more depth than most personal finance shows. With engaging guests who are experts, the information discussed here is an encyclopaedia of knowledge, by FinanceEDU from the United States of America on iTunes. Nice cross-section of reviews there.

Ben Felix: Good reviews. All right, anything else from you guys?

Dan Bortolotti: No. Just wishing you all the best, Ben.

Mark McGrath: Yeah, likewise.

Dan Bortolotti: Looking forward to an update.

Ben Felix: Yup, me too. I told my wife that even if the news is the worst news ever, I would rather have it. If I had to choose between getting the worst news and waiting another week, I would take the worst news now. It's killing me.

Mark McGrath: Oh, I'm sure.

Dan Bortolotti: Let's hope it's the best news, but I can only imagine. That weight feels so long.

Ben Felix: It's brutal. All right, cool. Thanks, everyone, for listening.

Dan Bortolotti: Thanks, guys.

Mark McGrath: Thanks.

Is there an error in the transcript? Let us know! Email us at info@rationalreminder.ca.

Be sure to add the episode number for reference.

Participate in our Community Discussion about this Episode:

Papers From Today’s Episode: 

Stock Market Participation and Portfolio Shares Over the Life-Cycle - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3808350

Why Not 100% Equities - https://www.pm-research.com/content/iijpormgmt/22/2/29

Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4590406

Links From Today’s Episode: 

Rational Reminder on Apple Podcasts — https://podcasts.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582
Rational Reminder Website — https://rationalreminder.ca/ 

Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/

Rational Reminder on X — https://x.com/RationalRemind

Rational Reminder on YouTube — https://www.youtube.com/@rationalreminder/

Rational Reminder Email — info@rationalreminder.ca
Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin Felix on X — https://x.com/benjaminwfelix

Benjamin Felix on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Dan Bortolotti — https://pwlcapital.com/our-team/

Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/
Mark McGrath on X — https://x.com/MarkMcGrathCFP