The Rational Reminder Podcast

Michael Burry says we should get out of indexing. Jim Cramer says it’s time to jump in. These are interesting times in the world of investing! On today’s episode, we discuss Burry’s recent claims about passive investing and advise on a plan of action should he turn out to be right. Benjamin recently posted a new video on dividends, and we have a conversation about the responses the video triggered and give some good reasons for our stance about the irrelevance of dividends. We also talk about negative interest rates, how they affect that market and explain why it’s not a good idea to do day trading for a living. In the second part of the episode, we are thrilled to be joined by Benjamin’s mom to whom we will attempt to explain the ABCs of factors. Following many requests from listeners to discuss factors in layman’s terms, we hope that our explanation today will shed some light on the topic! Key Points From This Episode: The irrelevance of dividends and the debate our video provoked. [0:01:54.0] How much a portfolio should be tilted towards each factor and the overlaps. [0:05:57.0] A balanced perspective on Michael Burry’s assertions about index funds. [0:09:43.0] What you should do if Michael Burry is right and why you should do it anyway. [0:15:25.0] How negative interest rates affect a global fixed income allocation. [0:17:57.0] Some interesting facts about day trading for a living and why to stay away. [0:22:05.0] Unpacking the terms “discounted cash flow” and “discount rate”. [0:26:58.0] How the risk of a stock is determined and what the market mechanism does. [0:30:37.0] Where the factors come from and the different types of risk. [0:33:26.0] Using factors to explain the differences in returns between two portfolios. [0:40:03.0] The crux of why you want a diversities portfolio. [0:41:20.0] And much more!

We have a really special episode in store today as we welcome Tim Nash, the Sustainable Economist! Tim shares a vast amount of knowledge and ideas with us on how investors wishing to put their money where their heart is can go about investing more ethically and sustainably. We hear about Tim's journey into investing and economics and how he wound up doing the work he currently does, helping investors clarify where their money is going and how to put it portfolios that are more aligned with their beliefs. He unpacks how these ideas and actions can have an impact and what it would take for some kind of systemic shift towards more sustainable industry and companies. We discuss the use of other modes of change as well as the personal practice of investors versus the placement of their money. Tim does such a great job of explaining how he goes about assessing different companies and portfolios and filtering which meet the criteria that he would suggest to his audience. The last part of the episode contains a really impressive argument from Tim around how investing this way can also be beneficial for strictly economic reasons and that it would suit all people to consider the factors he is espousing. For an inspirational chat with a truly great guest, listen in today!   Key Points From This Episode: Tim's education and how he became The Sustainable Economist. [0:01:49.6] The actual service that Time provides for his clients and audience. [0:04:18.1] How does this type of sustainable investing have an impact? [0:05:41.9] Considering the efficacy of other means to bring about change. [0:11:06.4] Squaring personal practices and investing principles of an individual. [0:14:37.3] The criteria that Tim uses to assess items in a portfolio. [0:21:17.1] Tim unpacks his experiences of anarchist portfolios! [0:28:54.8] Allowing ethical investors to feel good about their portfolios. [0:31:50.6] The usefulness of so-called ESG screening for finding robust companies. [0:33:41.3] The twofold imperative to ethical and sustainable investing. [0:38:11.2] The product landscape for investors building sustainable portfolios. [0:40:57.8] How Tim helps people through his fee for service planning. [0:45:48.2] Tim's own definition of success! [0:47:44.6] And much more!

Welcome back to another episode of the Rational Reminder! We are doing another variety show for all of you and this week we cover some news, current affairs, questions and of course our staple bad advice of the week! We start the show looking at the restructuring of swap-based ETF's from Horizons before looking at Michal Burry's latest commentary and predictions. From there we move onto John Rekenthaler's recent article on Morningstar about Canadian financial advice and what it is lacking. We discuss gold and why it is still not a good investment choice for almost all situations and even draw on some inspiring words from Warren Buffett on the subject! The conversation then turns to tax-loss selling; we unpack how it is possible to use this tactic to your advantage and look at some of the specifics that it entails. Lastly. we cover a particularly bad piece of advice that had the Twitter community up in arms recently! So for all of this and a bit more, listen in with us today!   Key Points From This Episode: Horizons' restructuring of swap-based ETF's and what this means. [0:01:48.5] Michael Burry says that index funds are creating a bubble in large stocks. [0:05:2] 'Canadian Financial Advice, Good Intentions but Bad Results'. [0:07:51.4] Warren Buffet's classic gold explanation from a while back. [0:11:17.7] The example of Brazil; hyperinflation and the price of gold. [0:14:38.2] Tax loss selling and knowing the ins and outs of how much you are paying. [0:21:37.5] Looking at some examples of tax loss selling and how they play out. [0:26:32.6] The best hypothetical times to do a tax loss sale. [0:31:19.8] This week's bad advice! [0:33:50.8] And much more!

We have another phenomenal guest joining us on the podcast today. You might know Ted Seides from his famous bet with Warren Buffett or, more recently, from his widely successful Capital Allocators Podcast. Ted is what we would call a classically impressive guy, having studied at both Ivy League frontrunners Yale and Harvard and having founded Protégé Partners, an asset management and advisory firm that specializes in hedge funds. In addition, he has trained under the legendary David Swensen, and together with his experience and training, has become a big name in the investing world. On this episode, he discusses the wealth of knowledge he has gained from David, the criteria for selecting a fund manager and how to approach evaluating the performance of that manager over time. Contrary to the assumptions about his views on index funds, he explains what he believes about them and whether he thinks the market is likely to become saturated. We then get into a conversation about the investment habits of the wealthy, why relationships are so important in this business and why he would not make the same bet again. Don’t miss out on this exciting conversation with Ted Seides!   Key Points from This Episode: What Ted learned from David Swensen and his core beliefs about investing. [0:03:06.0] The foremost criteria when selecting a manager and establishing your beliefs. [0:05:04.0] Why endowment institutions and strategies are only beneficial for a select few. [0:10:59.0] Formulating a hypothesis to measure the outcomes of your manager. [0:13:31.0] Whether retail investors saving for retirement should consider hedge funds. [0:15:46.0] Ted’s bet with Warren Buffett and his actual take on index funds. [0:19:02.0] Fee compression in hedge funds and whether the market can become index saturated. [0:20:12.0]  Why there is still a significant investment in actively managed mutual funds. [0:24:33.0]   Observations about how people invest their money as their wealth increases. [0:26:52.0] The importance of relationships in the world of investing. [0:29:40.0] How the famous bet affected Ted and why he wouldn’t do it again. [0:31:12.0] More about his Capital Allocators Podcast and how it has surprised him. [0:36:39.0] And much more!

Welcome back to the Rational Reminder everybody! We are taking this episode to round up all the recent goings-on and tackle a few residual issues that we believe need some attention. We start off by contemplating how much we have both been learning with the wealth of guests that come through our doors. We would never be confronted with this many ideas and inspiration if it were not for this great platform on which we find ourselves! From there we go on to discuss all the recent talk of a recession and the many assumptions that seem to be being made. Here at the Ration Reminder Podcast, we want to try and dissuade you from thinking you can easily predict the movement of the markets or believe those that say they can. It is just not that straightforward. Most often, a recession is only noticeable during or even after it has occurred. Rather stick to a good, diversified strategy without trying to guess and gamble on questionable information. The conversation also covers the portfolio changes from Wealthsimple before Benjamin does what he does best and explains valuation theory for all of us! So for all this and a few more goodies, be sure to listen in!   Key Points from This Episode: Effects of hosting this podcast on our own money minds. [0:00:25.4] The impending recession that everyone is talking about. [0:03:24.5] Wealthsimple portfolio changes this week and the paper they published. [0:08:29.4] Risk, return, low volatility, and balancing these in your favour. [0:17:32.2] The theoretical underpinning of factor investing and valuation. [0:18:39.8] Fama and French's Five Factor Model. [0:26:02.5] Retiring early; spending rules for the FIRE movement. [0:28:18.2] More viable alternatives for saving and preparing for retirement smartly. [0:33:21.6] This week's bad advice! [0:35:28.2] And much more!

Certified financial planner Alexandra Macqueen joins the podcast to discuss the distinction between financial economics and financial planning, retirement sustainability quotient (RSQ), financial legacy value (FLV), annuities, GIC ladder, copycat annuities, and considerations for deferring CPP.

On today’s episode, Benjamin and Cameron are talking real estate, specifically mortgage rates and REITs. For the first time since the early 90s, fixed mortgage rates are lower than variable ones, which have always been the popular choice. However, due to the fact that Canada’s yield curve is inverted, short term rates higher than their long-term counterparts. This is not usually the case, which makes it a great time to consider a fixed term mortgage, bearing in mind that it requires some lifestyle considerations. Benjamin and Cameron also provide some insights into the rental property market changes since 2015, with some astonishing figures. They then discuss REITs, which many think should be considered their own asset class. While it is often recommended to have REITs in your portfolio, research is starting to show that you are taking a great deal of risk you are not being compensated for. This means you may be better off investing in other options such as high exposure bonds which bear much less risk. For all this and much more, join us today! Key Points From This Episode:  Why fixed-rate mortgages are now lower than variable-rate ones. [0:03:58.0] Interest rates went up, but the shape of the yield curve changed as well. [0:06:25.0] Property prices have almost doubled relative to rent since 2015. [0:07:12.0] What a rental wage is. [0:12:48.0] What a REIT is and the benefits of investing one in your portfolio is. [0:17:05.0] Why the risk of a REIT may not be justifiable. [0:21:01.0] Variable annuity investors routinely outperform mutual fund investors [0:26:23.0] And much more!

On today's episode we are so happy to be joined by none other than Barry Ritholtz! As the founder and CIO of Ritholtz Wealth Management, host of the Masters in Business Podcast and regular financial blogger for more than 15 years, Barry is someone we have been dying to speak to on the show and who we have taken loads of inspiration from over the years. We talk to Barry about his own podcast which has been going strong for years now and is just about to reach its 250th episode! He also explains the beginnings of his firm and how his role has evolved in it since it started. From there, the conversation turns to the different parts of an investing philosophy we and Barry pretty much share and we ruminate on the state of the financial industry in US and Canada currently. We all feel that it is surprising that brokerage firms still find business in this day and age, when it has been shown so many times, for an extended period of time to be a far inferior business model for clients. Barry offers some pretty sensible advice on how to pursue financial growth in the long term and shares how RWM approaches client acquisition. For all of this and so much more, be sure not to miss this great episode!   Key Points From This Episode:   Why Barry feels he has the easiest gig in podcasting. [0:03:17.6] The inspiration behind starting the firm and Barry's day to day work. [0:05:53.9] The RIA model versus the brokerage model in investment firms. [0:12:45.4] How Barry and the firm have chosen to run their business model. [0:16:03] Specific portfolios at Ritholtz and the philosophy behind them . [0:21:18.8] It's no good breaking a record if you crash straight after! [0:28:13.1] How Barry and the firm find customers and the client conversations they have. [0:34:04.2] Behavioral counseling as RWMC's biggest value proposition. [0:42:34.8] Barry's opinions on robo-advisors and the factors to consider. [0:47:06.2] Why are there still commission based advisors in 2019? [0:50:38.9] Things Barry has changed his mind about since starting the firm in 2013. [0:55:09.9] Small cap tilts, lower rates and the longer term vision that is necessary. [1:01:11.1] How Barry defines success in his life. [1:07:01.5] And much more!

On the show today we are going back to basics, just Cameron and Benjamin going through some useful topics for your financial benefit! We start talking about GIC's and the article on MoneySense that led to this conversation. GIC's have a somewhat mix and match reputation, one which we believe has been often misunderstood and misrepresented. We try to show in which ways people have been misled into thinking that GIC's are the best option when, we believe, they are not. From there we turn to more general portfolio ideas, comparing the performance of the S&P 500 over time and drawing on a very useful study that illuminates the index's limitations. Our last topic for today is around saving for college and RESP's or registered education saving plans. We talk about asset allocation, how to think about starting and best practices when drawing on these funds. We finish off the show with some bad advice regarding dividend investing that actually referenced a video we made! So for all and a bunch more great stuff, be sure to tune in today!   Key Points From This Episode:  Our recent summer travels and getting away from it all! [0:03:02.4] The article by Jonathan Chevreau that sparked part of today's discussion. [0:05:46] GIC's, long term returns and the financial implications of your choices now. [0:07:15.2] Reasons why returns on GIC's can be misleading in the short term. [0:11:02.7] The S&P 500's performance against other portfolio options. [0:13:56.3] Market drops and risk appetites during panic periods. [0:19:15.2] Saving and drawing on college funds and education plans. [0:22:40.2] Asset allocation and the best way to think about covering costs. [0:27:41.1] Withdrawing funds and making the most of unused college savings. [0:31:21.3] This week's bad advice! An argument about dividend investing. [0:33:30.8] And much more!

Joining us on the podcast today is Jonathan Clements, former Wall Street Journal columnist, founder of HumbleDollar and author of From Here to Financial Happiness, How to Think About Money and several other books. Jonathan is a well-known name in the world of personal finance as he has been giving financial advice for more than 20 years. Today he talks about the role of stories in shaping people’s understanding of and relationship with money by sharing an anecdote from his own childhood. He discusses how his investment philosophy has changed in favor of index funds, why investing is much simpler than people tend to believe and then he gives us a glimpse into his own investment portfolio and the financial decisions he is making in his personal life. Jonathan also offers a balanced perspective on home ownership from an investment point of view, advises on the things worth spending money on and then we debate the age-old question of whether money can in fact make you happy.   Key Points from This Episode: Working as a financial journalist on Wall Street for more than 20 years. [0:02:01.0] How old family stories taught Jonathan to be thrifty and careful with money. [0:02:28.0] How his philosophy and the investment world has changed over the years. [0:06:09.0] The hardest part of investing is accepting how simple it is! [0:07:39.0] Why Jonathan tilts towards value in his own investment portfolio. [0:11:12.0] Considering the many sides to home ownership as an investment. [0:13:57.0.] How his partial retirement has affected how he thinks about his portfolio. [0:17:43.0] What HumbleDollar is about and dealing with the human side of money. [0:19:58.0] Three things to do to get more happiness from your money. [0:24:17.0] What people should be talking more about in finance. [0:30:46.0] And much more!