In this episode, Ben, Dan, and Mark tackle another Ask Me Anything (AMA) session, covering a wide range of investing and financial planning topics. They begin with a highly requested debate on factor investing versus market cap-weighted portfolios and unpack the theory, research, and practical considerations behind both strategies. Ben explains why he prefers factor tilts when managing client portfolios, while Dan shares his perspective on why a simple market cap-weighted approach is more practical and sustainable. Then, they delve into the drivers of investor behaviour, common mistakes investors make, and powerful strategies to help investors overcome biases and improve their decision-making abilities. They also discuss the role of bonds in a portfolio, whether international bonds offer additional benefits, key retirement planning strategies, and the impact of sequence-of-returns risk. Join the conversation to discover how large corporations manage cash reserves, unpack the SPIVA Canada 2024 report findings, and explore the continued struggles of active management. Tune in now!

Key Points From This Episode:

(0:01:06) Ben explains why market cap weighting is a valid strategy but prefers factor tilting.

(0:06:58) Dan shares why he prefers market cap weighting approaches over factor tilting.

(0:13:45) Hear how client expectations shape their investment approaches.

(0:18:12) How to overcome the psychological challenges of investing and reframe your mindset.

(0:22:02) The role of bonds and fixed income in a portfolio and sequence of withdrawal risk.

(0:36:19) Recommendations for factor ETFs and the home biases associated with them.

(0:39:48) Unpack the 4% rule for retirement planning and amortization-based withdrawals.

(0:47:47) Expected returns for a “millennial” portfolio and why 10% annualized is unrealistic.

(0:52:38) Find out if PWL would ever open a branch in the US and about their US partnerships.

(0:53:20) Explore how corporate cash management differs from typical household investing.

(0:55:59) Uncover the value of bonds and the common misconceptions surrounding them.

(1:00:40) Learn about the pros and cons of investing in stocks and ETFs.

(1:09:13) Aftershow: the SPIVA Canada 2024 report, activate management struggles, updates, and more.

Links From Today’s Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.

Rational Reminder Website — https://rationalreminder.ca/ 

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

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

Rational Reminder on TikTok — www.tiktok.com/@rationalreminder

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

Rational Reminder Email — info@rationalreminder.ca

Benjamin Felix — https://pwlcapital.com/our-team/

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

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

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

Mark McGrath on X — https://x.com/MarkMcGrathCFP

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

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

Canadian Couch Potato Blog — https://canadiancouchpotato.com/

Canadian Couch Potato Podcast — https://canadiancouchpotato.com/podcast/

Dimensional (DFA) vs. Vanguard — https://www.youtube.com/watch?v=JfknibBat2A

Episode 93: Cliff Asness from AQR — https://rationalreminder.ca/podcast/93

Episode 135: William Bengen — https://rationalreminder.ca/podcast/135

Episode 297: Do Stocks Return 10-12% On Average? — https://rationalreminder.ca/podcast/297

Episode 340: Ben Mathew — https://rationalreminder.ca/podcast/340

Episode 343: How to Choose an Asset Allocation — https://rationalreminder.ca/podcast/343

Credit Suisse Data — https://marketdata.credit-suisse.com/pmdr/en/index.html#/

SPIVA® Canada Year-End 2024 — https://www.spglobal.com/spdji/en/spiva/article/spiva-canada/

The Wealthy Barber Podcast — https://thewealthybarber.com/podcast/

Books From Today’s Episode:

Wealthier — https://www.amazon.com/Wealthier-Investing-Field-Guide-Millennials-ebook/dp/B0CX2VD1CW