The Rational Reminder Podcast

Pim van Vliet is on a mission to put the low volatility factor on the map. In his role as Head of Conservative Equities and Chief Quantitative Strategist at Robeco, he focuses on leveraging the effect of low-risk investing. Pim has also published a book, High Returns From Low Risk: A Remarkable Stock Market Paradox, where he unpacks some of the key aspects that guide his work and underpin his success. During this conversation, Pim shares his insights on volatility, the changing market, and combining low-risk with other traditional factors. He equips listeners with key considerations for evaluating strategies or products when allocating low-risk and offers his perspective on out-of-sample-testing, distinguishing between global-factor and cross-sectional premiums, and more. Listeners will get Pim’s perspective on the pros and cons of the Sharpe ratio, and we examine risk-adjusted returns on long and short legs before hearing his Fama-French Five Factor Model analysis. We touch on inflation and gold, and finally, Pim shares his inspiring perspective on success in his financial and personal life. Tune in today to hear more!    Key Points From This Episode:   Introducing Pim Van Vliet and his mission to put low volatility on the map as a factor. (0:00:41) Defining the low-risk effect with reference to volatility and its impact on other asset classes. (0:04:47) Low-risk portfolio performance in relation to the changing market. (0:12:02) Combining low-risk with other traditional factors. (0:21:43) Considerations for evaluating strategies or products when allocating low-risk. (0:24:35) Out-of-sample testing. (0:31:28) Distinguishing between global factor premiums and cross-sectional premiums. (0:35:18) Weighing the pros and cons of the Sharpe ratio as an evaluation tool. (0:40:19) Examining the risk-adjusted returns of long and short legs. (0:41:20) Issues with the Fama-French Five Factor Model. (0:44:37) Why factor premiums vary through inflation regimes. (0:50:41) How an allocation to gold holds up as a downside hedge. (0:52:53) Pim’s definition of success in his life. (0:56:31)   Links:    Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-264-pim-van-vliet-the-volatility-effect-revisited-discussion-thread/24622 Book From Today’s Episode: High Returns From Low Risk: A Remarkable Stock Market Paradox — https://amzn.to/3rMkJxQ 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 Pim van Vliet on Twitter — https://twitter.com/paradoxinvestor Pim van Vliet — http://www.paradoxinvesting.com 'The Volatility Effect' — https://www.robeco.com/files/docm/docu-the-volatility-effect-2007.pdf 'The Volatility Effect Revisited' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3442749 'Ten Things You Should Know About Low-Volatility Investing' — https://www.robeco.com/en-int/insights/2017/07/ten-things-you-should-know-about-minimum-volatility-investing 'The Conservative Formula: Quantitative Investing Made Easy' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3145152 'Media attention and the volatility effect' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3403466 'When Equity Factors Drop Their Shorts' — https://www.robeco.com/en-int/insights/2021/02/when-equity-factors-drop-their-shorts 'The Cross-Section of Stock Returns before CRSP' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3969743 'Global factor premiums' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3325720 'Investing in Deflation, Inflation, and Stagflation Regimes' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4153468 'Five Concerns with the Five-Factor Model' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2862317 'The golden rule of investing' — https://www.robeco.com/en-int/insights/2023/04/the-golden-rule-of-investing

With the recent passing of Harry Markowitz, we wanted to take this opportunity to spend some time honoring this giant of financial economics. Joining us on today's episode is our friend Alex Potts, who shares some of his touching memories of Harry, and talks about the unmistakable impact he had on the field. Harry is commonly viewed as the father of modern portfolio theory but also might be considered the grandfather of behavioural finance and a huge proponent of intelligent diversification. Alex graciously shares the nine lessons he learned from Harry, a few 'Harryisms' and some fond and surprising anecdotes from the time he spent with the man. Following this, we welcome Edward Goodfellow to the show to explore his new book, 7 Steps to A Better Portfolio. Edward is a fellow Canadian financial advisor, and we get to hear from him about the motivations for his book, its intended audience, and his insight into a host of central and familiar themes that we deal with on the show, so join us to hear it all.    Key Points From This Episode: Looking back on the irreplaceable contributions of Harry Markowitz. (0:05:24) Alex talks about reaching out and meeting Harry in 2010. (0:10:00) Harry's amazing work ethic, unusual approach to problem-solving, and the nine lessons that Alex learned from him. (0:14:23) Edward shares his motivations for writing 7 Steps to A Better Portfolio, the questions that gave it structure, and its intended audience. (0:25:53) Understanding math and emotion, the four questions to ask before investing, and dangerous investment personalities and influencers. (0:29:39) Categorizing the different types of risk we encounter as investors, and the role of predictions and expectations. (0:35:41) Charting the evolution of a strategy over time, how to reassess and determine risk tolerance, and evaluating performance. (0:38:06) Edward describes different types of active and passive investing and the seven steps from his book. (0:40:26) Comparing financial science and active management research, and how to manage strategy risk. (0:49:42) How Edward looks at the value of financial advice and his biggest takeaway from writing the book. (0:52:58) The best way to approach figuring out the contradictions in the world of finance. (0:54:24) Today's after-show featuring listener reviews, community updates, and future episode guests. (0:56:20) Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-263-a-tribute-to-harry-markowitz-with-alex-potts-7-steps-to-a-better-portfolio-with-edward-goodfellow-discussion-thread/24528 Book From Today’s Episode: 7 Steps to A Better Portfolio — http://www.7stepstoabetterportfolio.com/ 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 Alex Potts — https://buckinghamstrategicwealth.com/people/alex-potts Edward Goodfellow — https://www.pifinancialcorp.com/advisor/edward-goodfellow

Household finance has grown considerably as a field of study in recent years. And with the decrease in defined benefits pension plans, households are increasingly needing to take more responsibility for their own financial fates (much more so than they needed to in the past). Joining us today to discuss household finance and the growing importance of households in the economy, is Professor Francisco Gomes. Francisco is a Professor of Finance at London Business School and earned his PhD in economics at Harvard with his main areas of expertise being household finance, capital markets, asset allocation, and macroeconomics. In our expansive conversation with Francisco, we discuss the increasingly important role of households in the economy, how this has contributed to household finance becoming a more prominent field of study, and what can be done to make sure that academic findings reach, and positively impact, households. Francisco shares a detailed outline of what he’s learned from his research, covering topics like level of education, automation at work, peer effects, and culture, with explanations of how these elements can impact household financial decisions. We also learn about his passion for financial literacy, why he is such a big proponent of ensuring that everyone has access to a quality personal finance education, and the personal finance course he currently teaches at London Business School. To learn more from Francisco about the study of household finance and how to improve outcomes for households, be sure to tune in today!   Key Points From This Episode:   What it means to maximize your wealth over your lifetime and the crucial ratio determining optimal asset allocation. (0:02:53) How optimal asset allocation changes over your life cycle and how our human capital diminishes with age. (0:08:08) Building a buffer stock of wealth and the evidence that people become more comfortable with risk as they get richer. (0:10:03) The importance of simplifying life cycle asset allocation models to help households make decisions and have a tangible impact on people’s lives. (0:16:28) The biggest gap between theory and what households do; not investing in stocks. (0:20:32) An overview of the biggest mistakes people make when they invest in stocks and why it ties back to financial literacy. (0:23:49) How the process of optimizing asset allocation changes at retirement, the importance of hedging longevity risk, and why annuities are so useful. (0:25:40) A rundown of some of the reasons behind why annuity uptake is so low and why it is often referred to as the annuity puzzle. (0:29:20) The impact of automation in the workplace on household wealth accumulation and how exposure to automation is measured. (0:35:02) How one’s level of education affects the interaction between automation and wealth and how households should respond to automation at work. (0:38:12) Lessons from Francisco’s research for households thinking about the future after a change in their financial situation. (0:45:18) Why household finance has become more prominent as a field of study in recent history and what economists need to do to ensure their findings positively impact households. (0:47:30) How culture can influence household financial behaviour and the evidence that people learn from their peers. (0:50:47) Insights into the potential for financial advice to improve the finance of households and why Francisco is such a big proponent of personal finance education and financial literacy. (0:52:35) Learn about Francisco's personal finance course at London Business School and what he’s most excited about in his upcoming research. (0:54:01) Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-262-francisco-gomes-consumption-and-portfolio-choice-over-the-life-cycle-discussion-thread/24433   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 Prof. Francisco Gomes on Twitter — https://twitter.com/Franc_J_Gomes Prof. Francisco Gomes — https://sites.google.com/view/francisco-gomes/home 'Optimal Life-Cycle Investing with Flexible Labor Supply: A Welfare Analysis of Life-Cycle Funds' — https://www.jstor.org/stable/29730037 'Consumption and Portfolio Choice over the Life Cycle' — https://academic.oup.com/rfs/article-abstract/18/2/491/1599892?redirectedFrom=fulltext ' Portfolio Choice Over the Life Cycle: A Survey' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3744669 'Longevity risk, retirement savings, and financial innovation' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X11002339 'Stock Market Participation and Portfolio Shares Over the Life Cycle' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3808350 'Optimal Life-Cycle Asset Allocation: Understanding the Empirical Evidence' — https://www.jstor.org/stable/3694770 'Do Robots Increase Wealth Dispersion?' — https://academic.oup.com/rfs/advance-article-abstract/doi/10.1093/rfs/hhad050/7192998?redirectedFrom=PDF 'Evidence on Expectations of Household Finances' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3229980 'Household Finance' — https://www.aeaweb.org/articles?id=10.1257/jel.20201461

Our focus for today's episode is the topic of structured products and we welcome two expert guests to weigh in with their research and insight on the subject. Felix Fattinger is an Assistant Professor of Finance at the Vienna Graduate School of Finance whose research focuses on complexity from a number of perspectives. Petra Vokata is an Assistant Professor of Finance at Ohio State University, currently working in areas of household finance, financial innovation, and consumer financial protection. Both Felix and Petra offer some amazing takeaways for retail investors, deftly balancing the data with their ability to read it and implement the lessons we should learn about structured products. We then welcome Jill Schlesinger back to the show to talk about her new book, The Great Money Reset. We hear from her about the process of writing the book, her aims for its publications, and the main questions it can help individuals answer.  Felix Fattinger thanks his co-authors Marc Chesney, Jonathan Krakow (both University of Zurich) and Simon Straumann (WHU – Otto Beisheim School of Management).   Key Points From This Episode:   Felix talks about his interest in complexity and how to understand the three different types of structured products. (0:07:23) The definition of headline rates and their relationship to expected returns. (0:18:23) Laying out the biggest lessons from Felix's research; price competition regulation, expected returns, and simulating portfolios. (0:32:21) Petra shares her reasons for researching structured products and what she focuses on. (0:40:36) The doubts Petra has about YEPs, the evolution of their fee structure, and estimating their expected returns. (0:49:02) The YEP index and how it can help investors mitigate certain issues. (1:02:42) Actions by banks that increase headline rates of return and how this relates to expected returns. (1:06:56) Unpacking the biggest lesson from Petra's research about understanding fees and payoff. (1:10:12) A 60-second recap of Jill Schlesinger's previous episode with us. (1:14:53) Explaining the idea of the 'great money reset' and why Jill's latest book was so much easier to write than her first one. (1:17:22) Jill shares the five steps to go through before a reset and expands on the important considerations. (1:21:33) Tips for negotiating with your boss and final thoughts on approaching a financial reset. (1:32:04) Today's after-show; recent time off, listener reviews, community and event updates, and a song from RootHub. (1:41:22)   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/  Felix Fattinger — https://www.wu.ac.at/en/finance/people/faculty/felix-fattinger-1/ Petra Vokata — https://petravokata.com/ Petra Vokata on Twitter — https://twitter.com/vokataa Jill Schlesinger — https://www.jillonmoney.com/ Jill Schlesinger on Twitter — https://twitter.com/jillonmoney The Great Money Reset — https://www.amazon.com/Great-Money-Reset-Change-Wealth-ebook/dp/B09Y44ZJXT Episode 67 with Jill Schlesinger — https://rationalreminder.ca/podcast/67 Jill on Money Podcast — https://www.jillonmoney.com/podcasts The Dumb Things Smart People Do with Their Money — https://www.amazon.com/Things-Smart-People-Their-Money/dp/0525622179 Neil Pearson — https://giesbusiness.illinois.edu/profile/neil-pearson Episode 236 with Harold Geller — https://rationalreminder.ca/podcast/236 Episode 102 with Brian Portnoy — https://rationalreminder.ca/podcast/102 Future Proof — https://futureproof.advisorcircle.com/ The Most Hated F-Word Podcast — https://themosthatedfword.com/ RootHub — https://www.roothub.com/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on Twitter — https://twitter.com/RationalRemind Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.ca Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/  Benjamin on Twitter — https://twitter.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on Twitter — https://twitter.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Today we welcome James Choi, Professor of Finance at the Yale School of Management, to the show to share some of his insight into what he has dubbed practical finance. James has focused his research on behavioural finance, behavioural economics, household finance, capital markets, health economics, and sociology, and is turning this expertise into pragmatic knowledge marketed towards ordinary people. This reframing and reconfiguration of the theory for all people and the decisions they make, could not be more in line with what we are trying to do here at Rational Reminder, and this conversation with James was packed with so many surprising and informative responses to relatable questions. We ask James about index funds, the benefits of advisors, optimal equity, diversification, and much more. We also spend a little bit of time exploring the individual reasons that people have for their decisions, with James expanding on the disconnect between people's philosophy and their actions. Further topics include the role and impact of education, renting versus buying, and the formulation of his concept of practical finance, so make sure to join us and catch it all.   Key Points From This Episode:   The failure of economic theory to explain everyday financial decisions. (0:03:03) A little about James' course on personal finance at Yale. (0:06:29) Economic theory and popular personal finance advice on optimal savings and consumption. (0:12:06) Looking at economic theory and popular personal finance's suggestions about optimal equity allocations for households. (0:19:33) The kinds of personal aversions people have towards their finances. (0:27:07) The impact that James' survey research has had on his perspectives on equity. (0:29:42) Practical application of economic theory to household decisions. (0:32:29) Increased awareness of the benefits of index funds. (0:42:59) James shares a few famous economists' investment strategies. (0:44:11) Some thoughts on approaches to and avoidance of diversification. (0:45:48) Differentiating between mistakes and unique behaviours we cannot justify. (0:52:26) The efficacy of education, financial advice, and personal experience in improving investment decisions. (0:55:44) Liquid and illiquid assets and renting versus buying property. (1:02:26) James talks about his excitement around his current work in practical finance. (1:07:50) How James defines success at this point in his life. (1:09:52) Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-260-prof-james-choi-practical-finance-discussion-thread/24227   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 James Choi — https://faculty.som.yale.edu/jameschoi/ 'Behavioral Household Finance' — https://www.hbs.edu/ris/Publication%20Files/behavioral_household_finance_a3b33098-e0c7-40e0-bf2f-fa4ceb6e6d06.pdf 'Finance for the Rest of Us' — https://www.linkedin.com/posts/james-j-choi-finance_finance-for-the-rest-of-us-activity-6997910789097414656-5epq/?originalSubdomain=ba 'Popular Personal Financial Advice versus the Professors' — https://www.aeaweb.org/articles?id=10.1257/jep.36.4.167 'Millionaires Speak: What Drives Their Personal Investment Decisions?' — https://www.nber.org/papers/w27969 'What Matters to Individual Investors? Evidence from the Horse's Mouth' — https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12895 'Are Empowerment and Education Enough? Underdiversification in 401(k) Plans' — https://www.jstor.org/stable/3805120 'Why Does the Law of One Price Fail? An Experiment on Index Mutual Funds' — https://www.nber.org/papers/w12261 '$100 Bills on the Sidewalk: Suboptimal Investment in 401(k) Plans' — https://www.nber.org/papers/w11554

Join us as we present a compilation of segments on expected returns and the dynamics that shape investment outcomes. We deep dive into the world of financial predictions and gain a comprehensive understanding of how expected returns influence your financial decision-making. We also go back to the episode with Dr. Brian Portnoy where we delved into his book, The Geometry of Wealth. Lastly, joining our conversation is our colleague Matt Gour who discusses The Power of Moments by Chip and Dan Heath. We discuss how extraordinary moments have the power to shape our lives and the pivotal importance of crafting unforgettable experiences. Tune in now!   Key Points From This Episode:   What Pressor Fama had to say about expected returns. (0:03:35) Looking at returns through a historical lens with Professor Goetzmann. (0:08:23) Professor Cederburg explains the usefulness of historical data. (0:11:38) Hear Professor Cochrane’s perspective on expected returns. (0:15:19) Professor Cornell shares his contrasting view on historical returns. (0:23:41) We recap our discussion with Professor French about uncertainty. (0:34:23) Breaking down the conventional viewpoint of uncertainty with Professor Pastor. (0:38:34) A brief overview of our approach to estimating expected returns. (0:44:03) Highlights from our conversation with Dr. Brian Portnoy about his book. (0:47:56) Matt Gour joins us for our weekly book review of The Power of Moments. (0:51:15) He shares an impactful moment from his childhood. (0:54:04) We unpack a main takeaway from the book: the peak-end rule. (0:56:23) The four elements needed to create a defining moment. (0:57:51) Learn about the different types of defining moments. (1:01:02) How to be deliberate about creating powerful moments. (1:01:02) Main takeaways from the book. (1:04:55) The aftershow, planned meetups, upcoming projects, and more. (1:07:15)   Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-259-comprehensive-overview-estimating-expected-returns-discussion-thread/24077 Book From Today’s Episode: The Geometry of Wealth: How to shape a life of money and meaning — https://amzn.to/46qpjl5 The Power of Moments: Why Certain Experiences Have Extraordinary Impact — https://amzn.to/3pmYJJb 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 Nick Maggiulli on Instagram — https://instagram.com/nickmaggiulli Benjamin on Twitter — https://twitter.com/benjaminwfelix Cameron on Twitter — https://twitter.com/CameronPassmore 'Financial Planning Assumptions for Market-Cap Weighted and Factor Tilted Portfolios – Methodology Guide' — https://www.pwlcapital.com/resources/financial-planning-assumptions-for-market-cap-weighted-and-factor-tilted-portfolios-methodology-guide/  Episode 38: Feelings in the Decision Making Process — https://rationalreminder.ca/podcast/38 Episode 92: Dr. Moira Somers and Dave Goetsch — https://rationalreminder.ca/podcast/92 Episode 100: Professor Kenneth French — https://rationalreminder.ca/podcast/100 Episode 102: Dr. Brian Portnoy — https://rationalreminder.ca/podcast/102 Episode 124: Professor Lubos Pastor — https://rationalreminder.ca/podcast/124 Episode 151: Professor Brad Cornell — https://rationalreminder.ca/podcast/151 Episode 169: Professor John Cochrane — https://rationalreminder.ca/podcast/169 Episode 189: Regret (and How to Read More w/ Neil Pasricha) — https://rationalreminder.ca/podcast/189 Episode 200: Professor Eugene Fama — https://rationalreminder.ca/podcast/200 Episode 224: Professor Scott Cederburg — https://rationalreminder.ca/podcast/224 Episode 248: Professor William Goetzmann — https://rationalreminder.ca/podcast/248

Behavioural finance provides a realistic and comprehensive framework for understanding financial markets and decision-making. Incorporating insights from psychology, it enhances our understanding of investor behaviour, market dynamics, and risk management, leading to more effective investment strategies and improved financial outcomes. In this episode, Professor Meir Statman, a renowned expert in finance and behavioural finance, takes us on a captivating journey through the intriguing world of maximizing well-being through finance. Professor Statman is a distinguished financial expert and a leading authority in the field of behavioural finance. His groundbreaking research has shaped the understanding of investor behaviour and its impact on financial decision-making. Through his academic contributions and practical insights, Professor Statman has become a trusted guide in navigating the complex intersection of finance and human behaviour. In our conversation, he unravels the secrets of maximizing well-being through finance and the intricacies of the field. We explore the captivating world of behavioural finance and its connection to efficient markets, the distinction between normal and rational investors, the allure of lottery-like assets, and the downsides of consuming dividends. We unpack the aversion to realizing losses and the debate between dollar-cost averaging and lump-sum investing. We delve into the rising popularity of alternative investment strategies, the influence of status on rational investor behaviour, the role of financial advisors, and much more. Tune in for this enlightening conversation that will not only reshape your understanding of finance but human behaviour too.   Key Points From This Episode:   Defining what behavioural finance is and how it relates to efficient markets. (0:04:37) How traditional financial economists responded to Professor Statman's early behavioural work and the current state of behavioural finance research. (0:06:12) The various generations of behavioural finance and how they differ. (0:08:51) Differences between a normal investor and a rational one. (0:13:10) What investors really want and why normal investors like lottery-like assets. (0:15:48) Reasons normal investors have a preference for cash dividends. (0:20:17) Downsides of consuming dividends and not capital. (0:22:09) Unpacking why normal investors are averse to realizing losses. (0:25:40) Dollar-cost averaging versus lump sum investing. (0:27:57) The popularity of alternative investment strategies to normal investors. (0:31:13) Insights about the difference between an error and what a person wants. (0:34:49) The influence of status on rational investor behaviour and whether financial advisors should cater for elevating status. (0:36:37) Currency hedging, regret, the value of financial literacy, and the distinction between behavioural portfolio theory and traditional mean-variance portfolio theory. (0:40:50) Applying the market's portfolio theory to behavioural portfolio theory. (0:49:36) Exploring theories through a CAPM lens and behavioural theory's interpretation of return premiums from factors like size and value. (0:50:51) The role of financial advisors in correcting behavioural errors of clients. (1:00:16) Professor Statman's definition of success. (1:09:25)   Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-258-prof-meir-statman-financial-decisions-for-normal-people-discussion-thread/23934   Book From Today’s Episode: Behavioral Finance: The Second Generation — https://amzn.to/3qR7AmM   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 Prof. Meir Statman on Twitter — https://twitter.com/meirstatman Prof. Meir Statman — https://www.scu.edu/business/finance/faculty/statman/ 'Behavioral Efficient Markets' — http://doi.org/10.3905/jpm.2018.44.3.076 'What Is Behavioral Finance?' — https://www.cfainstitute.org/-/media/documents/book/rf-publication/2019/behavioral-finance-the-second-generation.pdf 'Behavioral Finance: The Second Generation' — https://www.cfainstitute.org/-/media/documents/book/rf-publication/2019/behavioral-finance-the-second-generation.pdf What Investors Really Want — http://doi.org/10.2469/faj.v66.n2.5 Explaining investor preference for cash dividends — http://doi.org/10.1016/0304-405x(84)90025-4 The Disposition to Sell Winners Too Early and Ride Losers Too Long: Theory and Evidence — https://doi.org/10.1111/j.1540-6261.1985.tb05002.x A Behavioral Framework for Dollar-Cost Averaging — http://doi.org/10.3905/jpm.1995.409537 Behavioral Aspects of the Design and Marketing of Financial Products — http://doi.org/10.2307/3665864 Options and structured products in behavioral portfolios — http://doi.org/10.1016/j.jedc.2012.07.004 Lottery Players/Stock Traders — http://doi.org/10.2469/faj.v58.n1.2506 Hedging Currencies with Hindsight and Regret — http://doi.org/10.3905/joi.2005.517170 Behavioral Portfolio Theory — http://doi.org/10.2307/2676187 Portfolio Optimization with Mental Accounts — https://www.cambridge.org/core/services/aop-cambridge-core/content/view/4B23CFB326982C52014A1BA447FA9244/S0022109010000141a.pdf/portfolio-optimization-with-mental-accounts.pdf Making Sense of Beta, Size, and Book-to-Market — http://doi.org/10.3905/jpm.1995.409506 Affect in a Behavioral Asset-Pricing Model — http://doi.org/10.2469/faj.v64.n2.8 From Financial Advisers to Well-Being Advisers; Well-Being Advisers — http://doi.org/10.3905/jwm.2023.1.202

What are your guiding philosophies on work and life? And how do they influence your daily decisions and the trajectory of your career? If these questions feel somewhat daunting, and you aren’t sure how to answer them, then this episode is a great place to start! Joining us today is Giorgio Ugazio, a self-described content creator, startup founder, and father. Giorgio is a software engineer by training, with a Master's degree in Artificial Intelligence and robotics, and spent over seven years working at Google. He is the founder of Retire In Progress, a blog where he shares his thoughts on life, work, achieving financial independence, and retiring early. The platform has amassed a dedicated following thanks to Giorgio’s many unique insights on life, design, and living intentionally. In today’s conversation, we talk with Giorgio about the underpinnings of his philosophies, the excellent book Designing Your Life: How to Build a Well-Lived, Joyful Life, and how his interpretation of it clarified his perspectives on life and work. We discuss the key tenets in Designing Your Life along with how you can use its many tools and exercises to determine your current position, assess your value, and define your compass. Giorgio goes on to share the thinking behind his foundational beliefs, like why you shouldn’t play the status game, before reflecting on who he believes would benefit most from reading Designing Your Life. To hear all of Giorgio’s fascinating insights and how to incrementally build your model of life, be sure to tune in today!   Key Points From This Episode:   A quick recap and review of episode 100 with Professor Ken French. (0:02:57) Introducing Giorgio Ugazio, aka Mr. RIP,  his website, Retire Your Life, and how you can access his extensive notes on the book Designing Your Life online. (0:05:16) An overview of Designing Your Life, guidance on how to classify problems, and a breakdown of what it means to prototype solutions. (0:08:49) Insight into the tools, exercises, and processes that the book offers: how it helps you determine where you are, assess your value, and define your compass. (0:13:05) How to do the Odyssey Planning exercises. (0:16:22) The four key areas covered in the book, why Giorgio added the categories learning, money, and creativity, and how he incorporates lessons from the book into his life. (0:18:18) Determining your views on life and work, and how the two interact. (0:21:54) The Pomodoro technique: what it is, and how to use it. (0:23:12) Giorgio’s perspective on work: why we do it, the purpose it serves, and the criteria he uses to assess his position. (0:25:11) What you learn when you take money out of the equation, why you should ignore the status game, and the importance of finding ways to enjoy your life. (0:29:46) Giorgio’s view on life, the philosophers that inspire him, and his guidelines for what he thinks a good life should be. (0:36:41) Some of the misalignments between Giorgio’s ideal life and his actual life. (0:42:29) How life and work both drive and complement one another. (0:44:16) Giorgio’s advice on applying lessons from Designing Life and who he thinks will benefit most from reading it. (0:48:51) Our thoughts on the movie Air, some of the wonderful reviews we’ve been getting from listeners, and news about upcoming meetups. (0:51:26)   Book From Today’s Episode: Designing Your Life: How to Build a Well-Lived, Joyful Life — https://amzn.to/3N5Xp57   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 Giorgio Ugazio on Twiter — https://twitter.com/retireinprogres Giorgio Ugazio — http://retireinprogress.com Giorgio’s Notes on Designing Your Life — mr.rip/dyl Episode 100: Prof. Kenneth French: Expect the Unexpected — https://rationalreminder.ca/podcast/100

How does the connection we have with our future self impact the decisions we make today? And what active steps can we take to improve our connection with our future selves? Today on the show we welcome back Hal Hershfield, whose new book Your Future Self: How to Make Tomorrow Better Today delves into the science of our relationship with our future selves and what we can do to change it for the better. In our conversation with Hal, we discuss the concept of the self, how we change over time, and why so many of us feel disconnected from our future selves. He describes the research surrounding these subjects and their findings, including how the brain scans they performed demonstrate that we mostly see our future selves as strangers, and why this is caused, at least in part, by the fact that our future selves don’t technically exist yet. We also discuss the interventions that have been shown to improve our relationship with our future selves, like viewing age-progressed images or exchanging letters with our future selves, and why everyone responds to these interventions differently. Having a strong connection with your future self has many benefits. It means you’re more likely to make decisions that will serve you later in life, like saving for retirement, eating healthily, and exercising regularly. But Hal also warns that we risk losing sight of the present and what truly matters when we focus solely on the future. To hear all of Hal’s knowledgeable insights on this topic and what he wants to explore next, be sure to tune in today! Key Points From This Episode: Defining the self and how our identity shifts depending on age, context, and the people we surround ourselves with. (0:04:08) An overview of Hal’s research and what it reveals about how most people connect (or don’t connect) to their future selves. (0:08:29) How empathy can influence our connection to our future selves. (0:11:36) Insights into why we tend to think of our future self the same way we think about strangers or acquaintances. (0:14:19) Our level of connection to our future self and how it affects wealth accumulation and financial well-being. (0:17:53) The definition of ‘present bias’ and ‘hyperbolic discounting’ and the role they play in decisions about the future. (0:19:28) The end-of-history illusion and the impact it has on our decisions. (0:23:02) How viewing age-progressed images of yourself can help you build a connection with your future self. (0:26:35) The research Hal is conducting with MIT Media Lab using an AI chatbot called Future You. (0:29:35) © 2023 Rational Reminder Podcast 1 RRP 256 Show Notes Dan Pink’s work on the power of regret and how it overlaps with Hal’s research and findings. (0:31:59) The findings on being presented with age-progressed images of ourselves and how they impact our decision-making and relationship with our future selves. (0:35:20) How writing to your future self can improve your decisions. (0:40:16) The problems that arise when we become too focused on improving life for our future self and how to find harmony between the present and future. (0:44:03) The COVID-19 pandemic and its impact on our collective relationship with the future. (0:48:10) Learn about the live episode we’ll be recording at the upcoming Future Proof conference with Hal as our guest. (0:51:24)   Links From Today’s Episode: Hal Hershfield — https://www.halhershfield.com/ Hal Hershfield on Twitter — https://twitter.com/HalHershfield Hal Hershfield on LinkedIn — https://www.linkedin.com/in/hal-hershfield-a2b91510/ Your Future Self: How to Make Tomorrow Better Today — https://www.halhershfield.com/ yourfutureself Episode 141: Hal Hershfield: The Psychology of Long-term Decision Making — https:// rationalreminder.ca/podcast/141 The Power of Regret: How Looking Backward Moves Us Forward — https://www.amazon.com/ Power-Regret-Looking-Backward-Forward/ Episode 246: Daniel H. Pink: How to Use Regret — https://rationalreminder.ca/podcast/246 Future Proof Festival — https://futureproof.advisorcircle.com/ Brian Knutson — https://profiles.stanford.edu/brian-knutson Dan Martell — https://www.danmartell.com/ Derek Parfit — https://www.britannica.com/biography/Derek-Parfit Daniel Gilbert — http://www.danielgilbert.com/ ING — https://www.ing.com/Home.htm Merrill Lynch — https://www.ml.com/ Shlomo Benartzi — http://www.shlomobenartzi.com/ Stephen Shu — https://steveshuconsulting.com/ 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 YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.ca
 Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on Twitter — https://twitter.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on Twitter — https://twitter.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Structured products can offer unique investment opportunities and customization but also come with risks and complexities. It is vital to thoroughly understand the product's structure, risks, and potential returns before investing. In this episode, we delve into the value of structured products and recap a past episode about the philosophy of money before continuing our focus on reading and finance by diving into the book, Just Keep Buying by Nick Maggiulli. Nick is a highly regarded author known for his insightful and engaging works on finance and investing. With a passion for demystifying complex financial concepts, Nick has earned a reputation for his ability to present information in a clear and accessible manner. His ability to blend storytelling with data-driven insights made his articles immensely popular among readers of all backgrounds. We discuss the pros and cons of financial products, why investors prefer them, the dark side of structured products, and what investors need to avoid. We recap a past episode with Barry Ritholtz about the philosophy of money and the main takeaways from our conversation with him. Then, we delve into Just Keep Buying and the invaluable lessons and uncover hidden gems it offers readers before speaking to Nick about savings and investing. We discuss the best strategies for investing, how to spend your money comfortably, why you should never wait for the markets to dip, and much more. To learn everything about structured products and valuable insights about saving and investing, tune in now.    Key Points From This Episode:   •    Learn about structured products and what they offer investors. (0:03:12) •    Why structured products can be a problem for investors. (0:07:00) •    We discuss whether the pricing of structured financial products is fair. (0:12:05) •    How financial institutions use complexity to exploit uninformed investors. (0:14:51) •    Outline of key findings from research conducted on structured financial products. (0:17:47) •    The behavioural aspect of structured products and why investors prefer them. (0:22:20) •    A recap of the main takeaways from our interview with Barry Ritholtz. (0:26:10) •    This week’s book review of Just Keep Buying. (0:28:54) •    Nick explains the difference between saving and investing. (0:32:54) •    A comparison of just keep buying and dollar cost averaging strategies. (0:35:21) •    Whether people should wait for a dip in the market before investing. (0:37:23) •    Why you do not need as much savings as you think you need. (0:39:04) •    What the biggest lie is regarding personal finance. (0:42:29) •    Find out how to spend your money guilt-free. (0:44:13) •    He unpacks what comes after the just keep buying strategy, and how to be comfortable spending more in retirement. (0:46:48) •    Financial advice that Nick has for listeners. (0:51:03) •    The aftershow: upcoming guests, feedback about the show, and more. (0:53:59)    Links From Today’s Episode: Nick Maggiulli — https://ofdollarsanddata.com/ Nick Maggiulli on LinkedIn — https://www.linkedin.com/in/nicholasmaggiulli/ Nick Maggiulli on Twitter — https://twitter.com/dollarsanddata Just Keep Buying — https://www.amazon.com/Just-Keep-Buying-Proven-wealth/ Episode 57: Barry Ritholtz — https://rationalreminder.ca/podcast/57 Episode 248: Professor William Goetzmann — https://rationalreminder.ca/podcast/248 Episode 253: Professor Paul Calluzzo — https://rationalreminder.ca/podcast/253 Episode 126: Dr. Brian Portnoy and Josh Brown — https://rationalreminder.ca/podcast/126 ‘The dark side of financial innovation’ — https://www.sciencedirect.com/science/article/abs/pii/ ‘Catering to Investors Through Security Design’ — https://academic.oup.com/qje/article- abstract/132/3/1469/3057435 ‘Engineering lemons’ — https://www.sciencedirect.com/science/article/abs/pii/ S0304405X21001653 ‘Ex-post Structured Product Returns’ — https://www.pm-research.com/content/iijinvest/24/2/45 Ritholtz Wealth Management — https://ritholtzwealth.com/ Animal Spirits Podcast — https://animalspiritspod.libsyn.com/ Masters in Business Podcast — https://www.bloomberg.com/podcasts/series/master-in- business Die With Zero — https://www.amazon.com/Die-Zero-Getting-Your-Money/dp/0358099765 Superfans — https://www.amazon.com/Superfans-Stand-Tribe-Successful-Business/dp/ 1949709469 Storyworthy — https://www.amazon.com/Storyworthy-Engage-Persuade-through-Storytelling/ dp/1608685489 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 YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.ca
 Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on Twitter — https://twitter.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on Twitter — https://twitter.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/