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Investing in the Unexpected Return
A high price typically indicates a low expected return. The unexpected return is related to new information that was not previously in the price. As an investor, I think it's really challenging to bet on the unexpected return because new information cannot be reliably predicted. If you believe market prices reflect all available information, the optimal portfolio for the average investor is well represented by the market portfolio of stocks and bonds.
Today is our final episode featuring just the two of us before our annual wrap-up show, and we thought we would use this opportunity to cover some important foundational aspects of rational investing. Ben goes over some of the most fundamental concepts about market prices, risk, and actual returns before answering five common questions that relate to this level of information. From investing in an employer's stock to predicting the future and real estate comparisons, these five touch-points are always worth returning to, and should even interest the more experienced of our listeners. For the second half of the show, we offer a quick book review of The Culture Playbook by Daniel Coyle, and have a brief and illuminating conversation with Professor Amer Kaissi about his book, Humbitious, and some of his thoughts on the part that reading plays in rich and progressive life. Press play to catch all this and more on the Rational Reminder Podcast.
Key Points From This Episode:
Participate in our Community Discussion about this Episode: Books From Today’s Episode:
Humbitious: The Power of Low-Ego, High-Drive Leadership — https://amzn.to/3WjHjry
Mindset — https://amzn.to/3Wzl7Kr
Quiet — https://amzn.to/3htlN4X
The Five Dysfunctions of a Team — https://amzn.to/3YmKqRv
The SPEED of Trust — https://amzn.to/3UWCljq
Top Five Regrets of the Dying — https://amzn.to/3uQcUWf
The Assertiveness Workbook — https://amzn.to/3VVDVUf
How to Raise Your Self Esteem — https://amzn.to/3BDM33p
Ego Is the Enemy — https://amzn.to/3BAyCkZ
Links From Today’s Episode:Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/
Shop Merch — https://shop.rationalreminder.ca/
Join the Community — https://community.rationalreminder.ca/
Follow us on Twitter — https://twitter.com/RationalRemind
Follow us on Instagram — @rationalreminder
Benjamin on Twitter — https://twitter.com/benjaminwfelix
Cameron on Twitter — https://twitter.com/CameronPassmore
Amer Kaissi on Twitter — https://twitter.com/amerkaissi10
Amer Kaissi on LinkedIn — https://www.linkedin.com/in/amer-kaissi-ph-d-38258919/
Amer Kaissi — http://www.amerkaissi.com
'The Value of Goals-Based Financial Planning' — https://www.financialplanningassociation.org/article/journal/JUN15-value-goals-based-financial-planning
'Excessive Extrapolation and the Allocation of 401(k) Accounts to Company Stock' — http://independent401kadvisors.com/library_articles/ExcessiveExtrapolation.pdf
'The Agony of Ecstasy: The risks and rewards of a concentrated stock position' — https://assets.jpmprivatebank.com/content/dam/jpm-wm-aem/global/pb/en/insights/eye-on-the-market/agony-ecstasy-2021.pdf
'The financial resilience and financial well-being of Canadians during the COVID-19 pandemic' — https://www150.statcan.gc.ca/n1/pub/75f0002m/75f0002m2021008-eng.htm
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Listen to the best highlights from the podcasts you love and dive into the full episode