The Rational Reminder Podcast

In today’s episode of The Rational Reminder, we tackle the subject of inflation in a twofold manner. Firstly, there are details around how people perceive inflation that often get overlooked, and secondly, these expectations have investment implications that are worth unpacking. Before diving into the main topic, we talk about Colin Bryar’s Working Backwards which tracks the role of failure and customer obsession in Amazon’s growth path. After getting into this week's news and listener question, we begin the first part of our session on inflation. Some of the main points we make here are that everybody experiences inflation differently, that perceptions of inflation are connected to experience, and that biased inflation estimates can explain household borrowing and investing behaviour. This leads us to part two of our discussion, where we unpack how expected inflation influences asset pricing and the role of unexpected inflation in the performance of stocks and bonds. We attempt to locate other asset classes that can act as inflation hedges, but find that with the tradeoffs and poor correlations involved, it makes the most sense to vouch for a properly diversified portfolio of stocks and bonds with exposure to multiple sources of expected return. So before you base too much of your decision-making on inflation, be sure to consider some of the points we make in today’s show.   Key Points From This Episode: TV shows, listener feedback, Peloton’s stock price, and RRP updates. [0:00:19.2] Lessons from Amazon’s growth story in this week’s book, Working Backwards. [0:07:55.2] News: Vanguard’s ‘High-Conviction Active Funds’ and Wealthfront’s intention to sell. [0:14:23.1] Whether size premium is influenced by a reduction in IPOs and publicly traded companies. [0:17:36.2] Main topic: Overlooked aspects of inflation and their implications on investing. [0:23:46.2] Metrics from the CPI and how everybody experiences inflation differently. [0:26:36.2] How to work out your personal inflation rate and what Ben and Cameron’s are. [0:28:07.2] Inflation expectations are influenced by inflation experiences. [0:30:43.2] Biased inflation estimates can explain household borrowing/investing behaviour. [0:34:03.5] The implications of the fact that the CPI doesn’t account for substitution. [0:36:07.2] Debunking the assumption that those close to retirement are most exposed to inflation. [0:39:13.2] How financial assets are priced using discount rates and the effects of unexpected inflation on them. [0:43:36.2] The effects of high, low, and expected inflation on stocks and bonds. [0:45:41.2] Whether other asset classes than stocks can be inflation hedges. [0:48:15.2] The relationship of different commodities to inflation at different periods and regions. [0:53:05.2] Questions of status, greed, and decisions in this week’s Talking Sense. [0:56:54.2]

The contemporary world is saturated with ways in which we can experience rewards that were historically much more difficult to access. Although this idea of a world filled with dopamine fixes is not new, it can be continually surprising just how extreme this reality has become. Here on the show today to talk about this issue and her most recent book, Dopamine Nation, is Dr. Anna Lembke, and we have a fascinating and important conversation in which she unpacks the human body and mind in relation to the world around us at present. One of the main points from this chat is the weakness of humans, and how unaware we can be of the way our brains compel us to engage in behaviours and seek pleasure. We get into some strategies and solutions for healthier ways to exist, talking about mindfulness, awareness, and dopamine fasting, in the face of accelerating tech and overabundance. Dr. Lembke gives us a great introduction to dopamine and how it functions in our bodies, unpacks the four properties of addictive substances and activities, the different ways to frame and understand addiction, and shares some realistic ideas about moderation. So to hear all this and much more, tune in to this great episode of the Rational Reminder Podcast.   Key Points From This Episode: An introduction to dopamine and its functions in the human body. [0:03:03.2] The human brain and the current overabundance of addictive experiences and substances. [0:05:36.1] Contemporary increasing in different types of addiction. [0:08:13.8] Considering the inherently negative connotation of the word 'addiction'. [0:11:44.4] The reasons that make gambling so addictive to the human mind. [0:14:12.7] Applying what we know about addiction and gambling to speculation and the stock market. [0:18:03.2] Why working also falls into the category of addictive behaviours. [0:21:46.8] Looking at the addictive nature of spending money and shopping. [0:24:01.5] A shocking story about water addiction from Dr. Lembke's practice. [0:25:12.1] Thoughts on recognizing addiction and possible ways to stop the behaviours. [0:26:22.2] Using in moderation; Dr. Lembke comments on the realities of this idea. [0:29:32.7] Long-term decision making versus a dopamine-laden environment; the battle of our time. [0:31:00.4] Understanding hormesis, seeking pleasure through pain, and embracing volatility in a portfolio. [0:34:54.6] The impacts of increased leisure time and the question of what we need. [0:38:47.6] Lembke's advice around retirement and the dangers of dopamine deficit states. [0:42:43.3] How the era of the pandemic has affected these trends in addiction. [0:45:20.2] The relationship between radical honesty and dopamine; how lying is related to reward pathways. [0:48:39.6] Radical honesty and better parenting; Dr. Lembke's thoughts on transparency. [0:54:01.3] Weighing the value of shame and its power as a socially regulating force. [0:55:51.2] Lembke's definition of success and its connection to being a good parent and becoming a positive force in the world. [1:00:01.6]

Today we have a guest join us on one of our 'us episodes', and we are very lucky to welcome Mathias Hasler to take part in the last section of today's podcast. Mathias is a Visiting Assistant Professor of Finance at Boston College, and his primary research focuses are empirical asset pricing, market efficiency, value investing, and corrections for data mining. In our chat with him today, we zoom in on a specific paper of his and its proposition about 'the six decisions' and their alternatives. Before we dive in with Mathias, we spend a little time with our usual round-up; looking at a new book by Hubert Joly, and fielding a very interesting listener question about value and investing in relation to green investments. Also, make sure to stay tuned for some thought-provoking Talking Sense cards with Mathias at the tail end of today's podcast.   Key Points From This Episode:   This week's book review for The Heart of Business and a look at some of its main ideas. [0:05:12.4] A quick recap of some fundamental information regarding inflation hedging. [0:09:45.1] A listener question about value and ESG investing, and the relationship between factors and sectors. [0:13:40.4] Unpacking the six decisions that Mathias outlines in his recent paper. [0:34:42.8] The process that Mathias went through testing his alternatives to the six decisions. [0:40:18.3] Differences between conditional and unconditional value premiums estimates. [0:43:39.5] The implications of Mathias' findings for investors pursuing value. [0:47:08.2] A round of Talking Sense cards with Mathias relating to saving and spending, job outcomes, and more. [0:49:20.1]

Today we are tackling the vitally important subject of financial literacy from the standpoint of parents wanting to educate their children. We have a true expert on the show today to help us with this discussion, and we cannot wait to share this highly actionable and impactful conversation with our audience. Robin Taub is a former CPA turned author, and her book, The Wisest Investment, approaches the need to educate children from an early age, and the best strategies that parents can use for this task. Robin previously worked at Citibank in derivatives marketing and brings the high-level expertise of accounting to her book and this episode of the podcast. We strongly support her perspective on financial education and believe the framework she discusses here and shares in her book is well worth any parent's time. In our conversation, we cover all the important bases; financial values, summer jobs, investment apps, human capital, and everything in between, so make sure to listen with us to hear it all.   Key Points From This Episode: Unpacking Robin's beliefs about the importance of financial education in the family. [0:02:55.2] Financial education in the Canadian schooling system; Robin weighs in on its success. [0:04:08.6] The assessment that parents can make about being role models to their children. [0:06:53.1] The communication of values through the process of teaching and learning. [0:09:01.8] Ideas for the appropriate time to start teaching kids about money. [0:11:40.5] Using teachable moments to begin the conversation about money. [0:14:35.3] Thoughts about allowances and best practices for parents. [0:18:09.7] The evolution of money conversations as children grow older; increasing sophistication over the years. [0:23:46.9] Benefits and considerations when introducing the concept of working for money. [0:27:30.3] How social media can impact young people's spending, and how to mitigate these effects. [0:31:26.2] Robin weighs in on the question of cellphones and when children should get one. [0:38:42.6] Increasing financial responsibilities as children grow older, and beginning the conversation about investments. [0:40:37.3] The impact of investment apps and how to minimize the damage they can do. [0:45:21.1] Teaching children about philanthropy and the importance of sharing. [0:47:04.6] Weighing up the idea of getting a financial advisor involved in your child's life. [0:49:27.3] The concept of human capital and how to approach it in your family. [0:50:51.1] Robin's thoughts on conversations about entrepreneurship. [0:54:48.6] Breaking the cycle of financial problems in a household that is struggling. [0:57:54.3] Minimizing entitlement in a family of greater financial means. [0:59:42.8] Reasons for the shift that Robin made from her career as a CPA to becoming an author. [1:03:30.1] Robin's personal definition of success; finding satisfaction in the important areas of life. [1:05:20.5]

It sounds reasonable to say that investing in the most popular companies would produce the best returns, but this is just not how asset pricing works. Today on the show, we unpack the ‘good company is a good investment’ fallacy. Before diving into the main topic, we kick off our discussion on the subject of index funds with Robert Wigglesworth’s Trillions. From there, we share some updates about custom indexing and home buying in Canada, along with the immense valuation of Tesla as well as Elon Musk’s net worth. This acts as a great segue into the focus of today’s show: a so-called good company has high historical returns, strong earnings growth, strong forecasted earnings growth, and high prices. But just because the good companies have done well historically, this does not mean they will continue to be a good investment. In fact, there is a premium that says that higher-priced stocks earn lower returns than lower-priced stocks and value stocks. We unpack several papers that explore the concept that it is the lesser-known companies that tend to have better returns. We also get into how growth extrapolation, the skewness effect, and the big market delusion plays into the good company is a good investment fallacy. Our discussion concludes with the idea that investors are better off paying attention to expected returns rather than falling victim to extrapolation errors. Tune in today!   Key Points From This Episode:   Introductory comments: modifications to the show, listener feedback, and more. [0:00:30.2] Book review of the week: Trillions by Robert Wigglesworth. [0:08:28.3] News updates: custom indexing, Tesla valuation, homebuyer gifts, and more. [0:12:23.2] Introducing today’s topic: the ‘good company is a good investment’ fallacy. [0:19:30:9] Investing in good companies is irrational because of how asset pricing works. [0:20:44.7] The threat that crypto and decentralized applications pose to good companies. [0:21:50.5] Higher-priced stocks earn lower returns than lower-priced and value stocks. [0:24:40.3] Findings from papers exploring glamorous stocks and investor bias. [0:27:21.2] The problem of extrapolating growth too far into the future. [0:34:07.1] Behaviour patterns of lottery-like stocks with high expected skewness. [0:37:17.4] Declining prices and the big market delusion. [0:39:51.1] The high prices and low expected returns of the NIFTY 50 companies. [0:44:05.2] What the Fama French Five-Factor Model has to say about how assets are priced. [0:45:30.2] Talking Cents: Questions about the price we pay for riches. [0:46:50.2]

In our conversation this week, we take a deep dive into factor investing. We are joined by the formidable Antonio Picca, Head of Factor Strategies at Vanguard, to help us navigate this complicated topic. Antonio is one of the largest asset managers in the world, with over seven trillion dollars under management. Among his credentials is a Master's in Finance and Economics from the London School of Economics, as well as a Doctorate in Finance and Economics from Chicago, where he was also a teaching assistant with Gene Fama. During our discussion, we cover a broad series of questions on factor investing, while also venturing into deeply technical territory. We examine how one might make the transition to factor investing after gaining confidence in passive investing and unpack important questions around factor investing and risk. Another fascinating topic we cover is how factor investing resembles active investing, including some crucial distinctions. Next, we take a look at some of the negative connotations of active investing and investigate why those issues may not apply to factor investing. Antonio goes on to explain why factor investing is a natural extension of a broad equity market investing and illustrates how it aligns with Vanguard’s philosophy, which is a belief in low-cost, long-term focus, and broad diversification. You won’t want to miss this excellent opportunity to gain a deeper understanding of factor investing from one of the leading experts in the field. Tune in today to hear it all!   Key Points From This Episode:   Introducing today’s guest Antonio Picca, Head of Factor Strategies at Vanguard. [00:00:17] How Antonio would explain factor investing to an existing Vanguard client who's already sold on the idea of low-cost, cap-weighted index investing. [00:03:16] Why clients need to be educated on factor investing, and why factor investing is a form of active investing. [00:04:31] The benefits of targeting other factors in addition to the market risk factor. [00:05:20] Some of the drawbacks to a strategy that targets other factors in addition to the market risk factor. [00:06:41] How Vanguard helps clients determine whether factor investing is the correct course of action for them. [00:08:19] The role that cap-weighted investing plays in the structure of factor products when capital forms the core of your investing, and factor portfolios are secondary. [00:09:35] How investors should think about sizing their factor position, relative to their market cap-weighted position. [00:11:12] How they decide which factors to target in Vanguard's product lineup. [00:12:37] Vanguard’s approach to capacity when considering factors. [00:15:03] How Vanguard decided to target momentum as a standalone factor. [00:16:24] More on the liquidity factor and how Vanguard is targeting it. [00:17:40] A breakdown of what the value factor is. [00:20:12] Why factor investors should want to be active, rather than follow a factor index, despite the negative connotations that come with active investing. [00:22:25] Why negative connotations of active aren’t applicable to active factor investing. [00:24:27] The frequency with which factor funds need to be rebalanced to effectively capture the factor premiums. [00:25:52] Instances where it is possible to quantify the benefit of more frequent rebalancing, or more flexible rebalancing. [00:27:01] Some of the days in early 2020 where there were market movements of multiple percentage points and how Vanguard made decisions accordingly. [00:28:05] Antonio's thoughts on the prospect of quantifying premiums for factors. [00:30:46] The paper that Vanguard is currently working on to determine whether it is possible to time factor premiums, or whether investors maintain consistent exposure to them. [00:32:32] How factor investing is different from traditional active management. [00:33:51] Some of the instances where a factor portfolio can replace an active manager. [00:35:40] Antonio’s experience leading the factor group at Vanguard during a period when large-cap growth stocks have dominated so powerfully. [00:36:43] How Antonio addresses client concerns that factor premiums have changed or decreased. [00:39:30] Antonio’s thoughts on winner-take-all companies and their proliferation. [00:41:47] What Antonio advises investors should be looking for when they're choosing a factor fund. [00:45:49] Some insights into how Antonio’s clients are using factor products. [00:47:15] How Antonio approaches combining multiple factors. [00:48:33] Antonio shares his thoughts on do-it-yourself investors implementing factor portfolios and why he thinks advisors are essential. [00:50:21] How Antonio defines success in life and investing. [00:54:38]

Today we welcome Rob Carrick back to the show to talk about a range of interesting topics, focusing on the Canadian housing market and some of the recent developments from the banking and investment space. Rob has such a balanced and measured approach, qualities that are visible in his long-standing work at The Globe and Mail. We start today's episode with some fun recommendations of books and TV content, before diving into the meat of our conversation. Rob weighs in on the range of perspectives on whether to rent or buy, offering the assurance that renting is a completely acceptable way to manage your needs and means. He also comments on the utility of robo-advisors, the impacts of the recent banking regulations, and shares his surprise at which of his articles have proved most popular. We always feel like we should have Rob on the show more often, and this episode is such a good argument for that very idea. So, to hear all Rob has to say, be sure to join us today.   Key Points From This Episode: This week's book and TV recommendations; Impeachment, Capital, Trillions, and more. [0:00:39.2] A call for applicants here at PWL Capital, and some recent reviews for the show. [0:07:17.7] Looking at an excerpt from Azeem Azhar's book, The Exponential Age. [0:11:45.4] A recent study comparing renting and buying in Canada. [0:18:18.6] Rob's observations on the new banking rules in Canada and what they mean for the advisor community. [0:29:27.2] Thoughts on trends in the banking space and the roles of financial professionals. [0:36:07.1] Canada's adoption of indexing: measuring the speed of changes in the country. [0:38:38.7] The role of robo-advisors and why Rob believes strongly in their value. [0:41:48.5] Rob weighs in on the debate of buying versus renting property. [0:44:39.6] Generational flows of money from boomer parents to millennial and Gen Y children. [0:50:52.3] Rob's message to Canadians feeling like they are stuck renting. [0:54:24.1] Some of Rob's most popular articles from over the years. [0:55:20.7] Lessons from Sweden's housing market and considering Canada's possible future. [0:59:03.6] A round of Talking Sense cards with Rob dealing with most prized possessions, lending, and happiness. [1:02:26.3] Assessing some of Robert Kyosaki's recent comments on a looming crash. [1:08:29.1] The present is exciting in finance; why Rob is enjoying the ride. [1:14:22.5]

For this week’s episode (our longest to date), we get together with the legendary Professor Campbell R. Harvey and take a deep dive into a diverse range of topics that draw on his incredible breadth of knowledge and extensive research. Campbell is the Professor of International Business at Duke University and is also a Research Associate at the National Bureau of Economic Research. In 2016 he served as the President of the American Finance Association, and from 2006 to 2012 he occupied the incredibly demanding role of Editor for the Journal of Finance. One of his earliest achievements was identifying the inverted yield curve’s ability to predict a recession, a highly regarded metric that is near-ubiquitous in its implementation. For the first half of our conversation, we focus on his research in areas like skewness and emerging economies. We cover specific topics like the factor zoo, why it’s problematic, and how Campbell, along with his student Yan Lui, found through their research that approximately half of the published empirical research in finance at the time was, in fact, false. We also unpack his most downloaded paper entitled The Golden Dilemma and get into the intricacies of why gold is an unreliable inflation hedge. For the latter half of our conversation, we hear about Campbell’s latest book DeFi and the Future of Finance along with his most recent research. Discover how Campbell first became interested in the topic several years ago and decided to put together a course for his students. We also delve into the rise of decentralized finance (DeFi) and how we can expect it to shape global finance, trading, and the future of the internet. Join us today for this essential episode on everything from the pitfalls of academia, to emerging markets, to Bitcoin, and much more!   Key Points From This Episode:   Introducing this week’s guest Professor Campbell Harvey. [00:02:46] How Campbell’s research brought him to Chicago's Ph.D. program. [00:03:55] How Campbell identified that an inverted yield curve had preceded the past four recessions and could be a reliable economic predictor. [00:07:03] Hear about Campbell’s research on skewness, as opposed to simply mean and variance, which is often the focus of portfolio theory. [00:11:40] Why it’s surprising that skewness is still largely disregarded in favor of mean and variance. [00:16:42] Why mean and variance are insufficient for measuring risk when comparing a concentrated portfolio with a more diversified portfolio. [00:20:45] Some of the special considerations that Campbell prioritizes when assessing emerging markets in context and managing an overall portfolio.[00:22:04] Observations on the cost of capital being higher before integration and liberalization. [00:25:11] The implications that Campbell’s research on emerging markets has on asset allocation. [00:26:51] Dynamic asset allocation, Campbell’s research in emerging markets, and how those lessons can be applied when investing in emerging markets at a time when the cost of capital is high. [00:30:04] The factor zoo, why it’s problematic, and how it is caused by data mining. [00:32:26] How Campbell and his student Yan Lui estimated that half of the published empirical research in finance was false and how this has occurred in other industries due to data mining. [00:33:02] How economic incentives from the investment industry inform research. [00:39:38] The important distinction between academic research and practitioner research, and asset management. [00:44:15] The extent to which asset management research could be considered to be more reliable than academic research. [00:47:23] Some of the mistakes that investors make when they pursue these factor premiums that have been identified [00:49:29] Machine learning and its impact on investment decisions for retail and institutional investors. [00:56:06] Whether the benefits of potential alpha from machine learning will be passed on to investors or remain within a firm as their scale increases. [01:00:22] Campbell’s research on traditional active management within the context of a firm’s ability to continue delivering alpha in the future, and how that incrementally decreases as their asset base increases. [01:06:23] The arguments in favor of allocating gold to a portfolio, especially at times of higher inflation, and whether it holds up to scrutiny. [01:09:54] How technological changes can affect the real expected return. [01:16:51] Why gold can be a valuable asset in diversifying your portfolio. [01:17:22] How Campbell became interested in DeFi, cryptocurrency, and blockchain technology. [01:19:19] How digitized finance cuts out the inefficiency of having a middle person and fosters inclusion and financial democracy. [01:26:35] Harvey’s thoughts on how cryptocurrencies facilitate criminal and fraudulent activity. [01:31:07] How DeFi could disrupt traditional asset management and how to prepare for those changes. [01:36:43] How to invest in DeFi even though it’s decentralized. [01:38:33] How companies can increase their revenue by using cryptocurrencies in their transactions. [01:43:24] Why the current wave of FinTech will be replaced by DeFi. [01:44:58] Why it’s important to have a very diverse portfolio when investing in DeFi. [01:51:22] How DeFi will allow people to monetize their content and disrupt the money that Google and Facebook make from their users’ data. [01:52:22] Some of the risks of DeFi and investing in cryptocurrencies. [01:55:27] How Campbell defines success: positively impacting the world. [02:00:17]

For decades, owning a home has been seen as a hallmark of the ‘American dream’ and a major life milestone. While we take it for granted that home ownership is good, we make the argument in today’s episode that, from the perspective of subjective well-being, owning a home isn’t necessarily the key to happiness. This conversation covers the non-financial aspects of homeownership and why owning a home isn’t necessarily superior to renting one. This is supported by data from a number of different studies that describe the relationship between experienced happiness and life evaluation, and how the decision to buy or rent relates to effective forecasting, for example. Benjamin unpacks concepts like focalism, hedonic adaptation, and buyer's remorse, as well as social comparison and happiness when it comes to material purchases like homes. He concludes with the following words of wisdom: buying a house will not make you happy, but that doesn’t mean it’s a bad decision. During the course of today’s episode, we also touch on Shane Parrish’s The Great Mental Models Volume 3: Systems and Mathematics, how individuals engage in panic selling according to the recent MIT study, ‘When Do Investors Freak Out?’, and some of the listener discussion points that arose from our in-depth conversation with John Cochrane in Episode 169. Tune in today for all this, plus so much more!   Key Points From This Episode:   Find out why you should listen to Tim Ferriss’ interview with Micheal Dell. [0:07:06] Today’s recommended book: The Great Mental Models Volume 3 by Shane Parrish. [0:08:05] Unpacking how individuals engage in panic selling according to the MIT study, ‘When Do Investors Freak Out?’ [0:11:10] We weigh in on three top Canadian banks halting sales of third-party mutual funds in preparation for Know Your Product (KYP) rule reform. [0:13:53] Ben highlights some listener discussion points following the John Cochrane episode. [0:16:34] Learn how predictable returns result from unpredictable cashflows in the long run. [0:18:23] What this means for long-term investors: focus on cashflow payoffs, not returns. [0:18:59] Why stocks are less risky for long-term investors if returns are predictable, which introduces horizon effects and impacts portfolio theory. [0:20:49] Key takeaways: outside income streams as additional asset classes, value versus growth, pure wealth investors versus labor market investors. [0:21:42] Introducing Ben’s topic for this week: does owning a home make you happy? [0:28:15] Some perceptions about the correlation between homeownership and happiness. [0:29:53] Why the non-financial aspects of renting might make it superior to home ownership. [0:31:50] Expanding on the 2011 paper, ‘The American Dream or the American Delusion?’ [0:32:10] Conclusions from the 2019 paper, ‘Homeownership and Happiness’, that Swiss homeowners are no happier or even less happy than renters. [0:33:57] The relationship between ownership and slightly elevated reflective life satisfaction; the difference between experienced happiness and life evaluation. [0:34:15] Ben reflects on how the decision to buy or rent relates to affective forecasting. [0:35:02] Focalism: how experience is shaped by how we spend our time rather than more stable circumstances like paying for housing. [0:37:50] How to deal with poor affective forecasting, hedonic adaptation, and buyer's remorse by making smaller, more frequent experiential purchases. [0:41:26] What Elizabeth Dunn and Michael Norton have to say about homeownership in Happy Money. [0:43:14] Social comparison and happiness when it comes to material purchases like homes. [0:43:57] How housing impacts life satisfaction: quality, economic effects, prestige, freedom. [0:46:09] Ben on how working from home can exacerbate possible issues for homeowners. [0:51:28] Concluding this topic: why homeowners are not automatically happier than renters. [0:52:05] Personally, Ben shares why he would rather own more of his time than his home. [0:53:27] Suggested reading, including Positive Psychology and The Happiness Hypothesis. [0:54:35] Talking Sense: whether success is based on money, cost versus value, and more! [0:57:38]

Today's conversation is an extremely enlightened and highly detailed one, that you may want to return to, in order to accrue all of its value. We host John Cochrane, an economist specializing in financial economics and macroeconomics. John has a popular blog and podcast called The Grumpy Economist and also hosts the GoodFellows Podcast. He is a Rose-Marie and Jack Anderson Senior Fellow at the Hoover Institution and a senior fellow at Stanford Institute for Economic Policy Research, and was a Professor at the Booth School of Business at the University of Chicago. In this fascinating chat, John shares so much of his expertise, going in-depth on the subjects that we and our audience are constantly exploring and excited about. We discuss long-horizon stocks, market inefficiency and return predictability, classic portfolio theory, risk-less assets, and performance evaluation. John also shares his perspectives on the future of centralized finances, digital and cryptocurrencies, and where the business of financial advice is headed. So for all this and more from a leader in his field, be sure to join us for this great episode of the Rational Reminder.   Key Points From This Episode: Breaking down the basics of why stock prices go up and looking at the market as a whole. [0:02:05.8] The information contained in valuation ratios about long-horizon stock returns. [0:04:25.3] Market inefficiency and return predictability; unpacking the opinions on the correlation. [0:07:17.8] What the research on available information and market timing tells us about predictability. [0:12:59.6] Under-appreciating risk and asking important questions about dividend growth in the future. [0:18:46.5] The huge impact that predictability can have on classic portfolio theory. [0:22:36.2] Volatility aversion and communicating important concepts across divides. [0:28:11.7] John explains the risk-less asset for the long-term investor. [0:30:12.6] Using the example of bonds to get to grips with performance evaluation. [0:36:26.8] Unpacking the roots of wealth inequality and the best perspectives for understanding it. [0:40:30.4] Misguided thoughts about the market and the usefulness of keeping general equilibrium in mind. [0:44:14.1] Market portfolios and the zero-sum game; hedging state variable risk. [0:52:40.5] Decisions about the ability to bear the value risk premium and allocation. [0:58:10.7] John's thoughts on the future of financial advice. [1:01:27.8] Describing the fiscal theory of the price level and its predictions about inflation. [1:06:03.6] Cryptocurrencies and value maintenance; John's perspective. [1:13:12.8] Assessing the longevity of traditional or centralized finance. [1:19:15.4] John's own definition of success in the different areas of his life. [01:22:06.1]