Lessons from 100+ Years of Global Stock Returns (EP.166)

In this week’s episode, Cameron and Benjamin share what’s on their mind and delve into listener questions on subjects ranging from the CAPE ratio to how to go about changing someone’s mind. Tuning in you’ll get a preview of some of the formidable guests featured on future episodes, like John Cochrane and Hersh Shefrin. We also cover book recommendations and unpack the concept of libertarian paternalism from the highly influential best-seller, Nudge: The Final Edition by Richard Thaler and Cass Sunstein, and how it can be a force for good. We cover various facets of passive investing and index funds including how, despite its proven effectiveness, many people continue to take a dim view of it. Learn why certain personality types may be more drawn to active investing and why. We also share tips for reasoning with skeptics, including some useful questions to ask when things get heated. Next, we take an in-depth look at index funds and global returns over the last century based on the research of Dimson, Marsh, and Staunton and their book Triumph of the Optimists. We also answer questions from our Talking Cents Cards and take a look at the best bad advice from the previous week. This episode is packed with fascinating anecdotes and excellent recommendations that you won’t want to miss! Tune in today!

Key Points From This Episode:

• We reflect on some of the reviews and feedback we’ve received over the past week. [0:03:00.7]
• An overview of the guests that listeners can look forward to on future episodes. [0:06:15.8]
• Talking Cents Cards and how they can introduce your family to conversations about money. [0:07:01.2]
• Introducing Nudge: The Final Edition by Richard Thaler and Cass Sunstein, and the concept of libertarian paternalism. [0:08:50.0]
• Cameron shares his story of the week, an article from Magnify Money on how emotions can influence investor decisions. [0:13:53.3]
• An update on our response to a listener question on the CAPE ratio by discussing the work of John Cochrane on determining predictability. [0:17:24.2]
• We unpack a listener question on whether one should be looking to convert family members who fit into the average, active investor archetype. [0:21:47.6]
• What Benjamin has learned from Think Again by Adam Grant, about how to talk to people you disagree with. [0:24:15]
• How Benjamin experienced a revelation on index funds. [0:29:28.5]
• An examination of index funds and global returns over the last century based on the research of Dimson, Marsh, and Staunton and their book Triumph of the Optimists. [0:36:30.3]
• An in-depth look at how global events factor into Dimson, Marsh, and Staunton’s data. [0:39:35.9]
• How dictatorships, civil troubles, wars, unsuccessful economic and monetary policies, and communism have prevented countries from transitioning from emerging to developed. [0:42:43]
• Cameron and Benjamin answer a Talking Cents card question by sharing the first big purchases that they saved up for. [0:50:47.6]
• Cameron and Benjamin answer a second card question: What is a creative way to save money in today’s digital era? [0:52:53.8]
• Hear this week’s bad advice from an Entrepreneur article titled: 7 Downsides to Passive Investing and Why it Can Be Bad for Your Portfolio. [0:54:09.2]