The Immortality of Bonds (EP.197)

Many people have been contemplating the death of bonds, which is why for the main topic of today’s episode we’re going to be talking about their immortality. After a vicarious trip to The Masters, an overview of The Art of Insubordination, and an explanation of why we’re concerned about the changes that WealthSimple has made to their business model, we get into the world of bonds. Bond returns have not been good this year, and bond index funds are down all round, but that doesn’t mean that bonds are necessarily the riskier choice of investment in the long term, or that you should be feeling disheartened about them. Tune into our conversation today to hear why!

Key Points From This Episode:

• The incredible experience of attending The Masters, and how you can win a ticket. [0:02:21]
• Three business-focused TV series that we highly recommend. [0:02:27]
• Upcoming guests, and some very positive listener reviews. [0:03:34]
• An overview of The Art of Insubordination. [0:09:16]
• Why change is challenging for most people, and the value of creating environments that encourage dissent. [0:11:12]
• How dissenters can make their actions more impactful, and what leaders can do to encourage dissent. [0:13:16]
• Key takeaways from The Art of Insubordination. [0:16:39]
• Why we are disappointed with the changes that Wealthsimple has made to their business. [0:18:47]
• Nuances that Wealthsimple has left out of their venture capital analysis. [0:23:51]
• Today’s main topic: the immortality of bonds. [0:33:38]
• Statistics which highlight the fact that bond returns have not been good this year. [0:33:51]
• Why volatility is not the only risk that matters. [0:35:06]
• How Ken French defines risk. [0:37:51]
• Some of the pros and cons of bonds and stocks. [0:38:56]
• Calculations which show that stocks are not necessarily less volatile than bonds in the long run. [0:40:48]
• The five components of long-run predictive variance. [0:43:23]
• An explanation of a model we created for the dispersion of outcomes. [0:45:10]
• Why now is the time to get excited about bonds. [0:49:27]
• Today’s first misconception: high growth sectors/regions/companies are good investments. [0:53:52]
• Today’s second misconception: you can lose all of your money in stocks. [0:55:57]