The Rational Reminder Podcast

Today we welcome Dave Nadig onto the show, who joins us off the back of a brilliant presentation he gave at the Wealth Stack conference last month in Scottsdale. Dave is the founder of etf.com and has had key positions at FactSet, Barclays Global Investors, and Cerulli previously. Today Dave sits down to talk about the difference between ETFs and mutual funds, EFT product saturation, the coming of Direct Indexing and well as non-transparent active funds, and risk probabilities in different asset security options such as gold and stocks. He also debunks the myth that ETFs lead to a pricing bubble, highlighting 401(k)s as part of what might be creating this illusion of top-heaviness. He also has a brilliant perspective on trusting the junk bond through a seeming disconnect, which is really one of timing that actually creates opportunities for price discovery. Dave also spends some time on the subject of his belief that the science of investing is largely figured out. He believes therefore that human behavior and decision making through a lifetime investment path is far more mysterious, and highlights the need for good financial advisors in this respect. Join us to take a deep dive into the world of ETFs with Dave today! Key Points From This Episode: Dave's perspectives on content and education in improving investor outcomes. [0:01:58.2] ETFs as a vehicle for trading multiple stocks, or wrappers for holding securities. [0:03:36.9] Authorized participants are what makes ETFs different from mutual funds. [0:04:46.1] Why the timing disconnect in junk bonds creates a vector for price discovery. [0:09:33.0] Why 401(k)s have caused the belief that ETFs are causing a price bubble. [0:25:50.0] How we have figured out investing but not financial advising. [0:14:40.8] Different ETFs benefit the market by suiting different investor classes. [0:17:49.6] The relationship between ETF indexes and material yields. [0:19:38.6] ETF value systems and the benefit of sticking to one index provider. [0:22:49.4] A slowing in ETF spreads and the coming of non-transparent active funds. [0:26:02.2] The evolution towards, and benefits of, direct indexing. [0:29:21.3] ETF as the most robust security short of stashing physical gold. [0:34:16.6] The value of financial advisors to investors who are more trustworthy nowadays. [0:38:10.2] Hourly financial advice rates work for those who don't need advice long term. [0:41:07.2] The benefits of the AUM model as long as it is made transparent. [0:43:45.9] Charging for advice fees separately stops clients from asking for advice. [0:45:09.3]

On today's episode, we cover a variety of topics, such as some tips for DIY investors, highlights from a conference Cameron recently attended, home country investment bias and whether it's possible to have too much money in your RRSP. We begin first by talking about what DIY investors can do to ensure that they are investing to the best of their abilities. As people who work in investment daily, we often forget how tricky a terrain it can be to navigate if you are not armed with all of the knowledge, so we hope to pass some of it on to you. After that, we move onto the lessons Cameron learned from the Dimensional Advisors conference. We unpack ideas such as why he believes the world is 'running towards factors,' how Dimensional is leveraging academic research to inform their work along with some other highlights. Following on from that and picking up on what was spoken about at the conference, we delve into the pros and cons of home country investment bias. In some instances, this bias makes perfect sense, both from a returns and tax perspective and in other instances less so. We take you through some of these scenarios and what they mean for an investor looking to diversify. And finally, in the planning portion of our show, we tackle RRSPs, whether it is possible to overinvest in them, how they compare to other investments and much more. To learn more, join us today! Key Points From This Episode: Our team is growing and we are looking to add some extra positions at PWL. [0:01:32.0] There are many challenges that DIY investors face not having access to professional advice. [0:05:00.0] How to overcome asymmetries of financial knowledge between spouses and within families. [0:07:30.0] Some of the fee-only planners available in Canada that we recommend. [0:08:49.0] Robb Engen's services and his discount for Rational Reminder listeners. [0:09:42.0] What factors are and why the world is 'running towards' using them. [0:12:38.0] Dimensional provides a framework for investing but does not guarantee answers. [0:14:09.0] Has the value-add factor become obsolete? [0:14:55.0] Highlights from Robert Novy-Marx's presentation at the conference. [0:16:18.0] Insights into and trends in the fixed income market. [0:20:31.0] What peer to peer bond trading is and why it has seen such huge growth? [0:21:17.0] All countries in the world, except for one, have a home country investment bias. [0:22:36.0] Factors to consider when deciding how much to allocate to home country investments. [0:23:58.0] Buying and trading costs and taxes are drivers to own more home-country stocks. [0:26:19.0] The difference between tax payable on international versus Canadian stocks. [0:27:50.0] An explanation of unrecoverable foreign withholding tax related to non-taxable accounts. [0:31:50.0] Some of the ways to get around the foreign withholding tax. [0:33:08.0] How the S&P 500 has been performing in Canada over the last ten years. [0:35:29.0] Why we are comfortable having a third of investments in Canada. [0:37:00.0] Is it possible to have too much in an RRSP? [0:39:40.0] Understanding the differences between an RRSP and a taxable account. [0:41:57.0] Which tax conditions make it better to use an RRSP. [0:44:00.0] The conditions under which your OAS will be clawed back. [0:48:07.0] The one exception where you may not want to contribute to your RRSP at all. [0:51:40] This week's piece of 'bad advice.' [0:53:12]

Today we are joined by Wesley Gray who is the CEO of Alpha Architect, a firm in the US that specializes in concentrated factor strategies. Having completed his MBA and PhD at the University of Chicago – the Harvard of the finance world – Wes is an authoritative voice when it comes to quantitative research and factor investing. Incredibly, he took a 4-year break during his PhD, joined the marines and went to Iraq, and has also written several books. He went from value investor and stock-picker to having a strong quant focus and realized that it was possible to eliminate the human biases while still capturing the factor premiums. Our talk with Wes illuminates the nuanced nature of factor investing, behaviour versus risk-based factor premiums and active management versus passive and indexing. He discusses the process of collecting data for his PhD, the rules according to which they structure portfolios, how their boutique firm differs from larger advisor companies and who their ideal client is. Wes also shares his views on selecting the best quant model, hedge funds, value premiums and market-cap indexing. Join us for another insightful episode! Key Points From This Episode: Wesley's experience as a stock picker and riding the wave of small-cap value. [0:03:31.0] The Value Investors Club as a data source to test stock-picking skills for his PhD. [0:06:43.0] From stock picker to a quant and realizing the need to eliminate biases. [0:09:38.0] The rules that govern how they build portfolios in his firm Alpha Architect. [0:14:26.0] Comparing Alpha Architect to Dimensional Fund Advisors and AQR. [0:17:13.0] Understanding reliability in the context of relativity and defining their ideal client. [0:22:28.0] Advice for retail investors about quant shops and choosing the best quant model. [0:26:55.0] Wesley's view on hedge funds and their strategies. [0:32:57.0] Why education rather than assets should determine the active risk that is included in a portfolio. [0:36:24.0] Thinking about persistence in the context of a behavioural component. [0:38:03.0] Why value premiums are not dead and how it relates to behavioural theory. [0:43:22.0] The global explosion of market cap indexing and guidelines for investing. [0:47:28.0] And much more!

In this podcast, the hosts discuss topics such as adjusting the stock and bond ratio, index investing, different types of risk, planning for longevity in retirement, and questionable actions from TD Ameritrade.

From a trader on Wall Street to a financial advisor with her own firm, our guest today, Jill Schlesinger, has accumulated a lifetime of knowledge in the investing and financial world. Today she is a household name and well-known media personality, appearing on a variety of CBS shows and hosting her own podcast called Jill on Money. But she is far more than an investment expert: she also has a ton of insight into people's emotional and psychological responses to money, sharing with listeners those areas that people tend to struggle with most when it comes to their financial lives. Jill also weighs in on the current talk about the inverted yield curve and the coming recession and gives her educated opinion about money in marriage, DIY investing, robo-advisors, buying versus renting and the FIRE movement. Be sure to join in our conversation! Key Points From This Episode: Common blind spots that cause smart people to make poor financial decisions. [0:03:33.1] Starting off as a trader and learning how different trading and investing are. [0:05:09.1] A balanced perspective on the inverted yield curve and the predicted recession. [0:08:11.1] Understanding that investing is half science, half art. [0:12:10.1] Couples who think differently about money and teaching the younger generation. [0:17:06:1] Weighing up DIY investing and acquiring the services of a financial advisor. [0:21:11.1] Robo-advisors and the mass democratization of financial management. [0:25:46.1] Thoughts on whether to buy or rent a home and the FIRE Movement. [0:28:26.1] Interviewing Julie Andrews and a perspective on what it means to be successful. [0:35:50.1] And much more!

Welcome back to Rational Reminder Podcast! We kick off today's episode with a discussion about the gap between investor performance and fund performance, the potential reasons why asset allocation funds produced a positive gap and the role that timing and volatility play in a negative behaviour gap. IPOs have been in the media a great deal lately – and not for particularly positive reasons and we tackle the topic with reference to specific companies. We also talk about Dimensional's paper on the issues with IPOs since the early nineties and then we introduce you to The Fama Portfolio, a valuable resource that we will likely quote quite a bit from in the future! As we have mentioned before, the use of empirical findings is incredibly limited without a theoretical framework and we talk about why the conversation around the efficient market hypothesis needs to change and why general statements about markets are not to be paid too much attention to. We discuss the bad advice for the week and the importance of goal setting in retirement. Key Points From This Episode: The news item for the week: the gap between investor and fund performance. [0:01:33.0] Possible reasons why asset allocation funds produced a positive gap. [0:03:09.0] How timing and volatility play into the negative behaviour gap. [0:06:22.0] All the private equity venture capital IPOs that's been covered in the media lately. [0:06:51.0] Companies who took large haircuts from their last private valuations before IPO. [0:08:05.0] How 1.3% of stocks delivered all the excess return between 1990 and 2018. [0:11:52.0] Dimensional's findings regarding IPO issues in the States since 1992. [0:13:01.0] The pyramid that should be used in making investment decisions. [0:16:06.0] The complex yet high-value insight to be gained from The Fama Portfolio [0:18:05:0] Why it is vital for empirical findings to be back up by a theoretical framework. [0:20:32.0] The paradox of the efficient market hypothesis and what markets are really like. [0:21:58.0] Goal setting in retirement, keeping focused and realizing that risk is always there. [0:25:51.0] Bad advice for the week about the deferred sales charge. [0:29:31.0] And much more!

Our guest today on the Rational Reminder Podcast is Dr. Wendall Mascarenhas. Wendall is a listener, DIY investor a medical professional. He actually reached out to us on Twitter and suggested this episode, a listener-centric discussion as well as one comparing the different approaches to evidence from the medical and the financial communities. We thought this was a great idea and the perspective that Wendall offers is very illuminating and thought-provoking. We discuss some of Wendall's own experience and background in both investing and medicine and from there go onto a more theoretical discussion of evidence and literature, asking the question why the financial industry is not more concerned with data. Wendall lays out the evidence pyramid and explains a few of its layers, we discuss a few tips and think about the extent to which DIY investors should involve themselves in their money with things like factor investing. Wendall also offers some of his thoughts on financial advice and the emergence of new information. For this fresh and insightful chat, be sure to join us! Key Points From This Episode: Why Wendall chose to reach out to us over Twitter. [0:03:01.8] Wendall's medical background and the perspective he brings to investing. [0:04:00.1] Index funds and diversified portfolios instead of active management. [0:06:41.7] The role of evidence and literature in medical prescriptions and treatment. [0:08:17.0] Trying to account for the differences in approach to medicine and investing. [0:10:58.2] A description of the different levels of the evidence pyramid. [0:12:23.5] Five tips for do-it-yourself investing from our guest! [0:19:20.5] Should you worry about factors as a DIY investor? [0:24:24.0] Wendall's thoughts on the value of good financial advice. [0:26:17.7] How new information is circulated in the medical community. [0:30:11.0] Why expert opinion is the least valuable type of evidence. [0:31:49.7] Wendall's definition of success in his life. [0:35:07.9] And much more!

Dive into the intriguing debate around Michael Burry's warning against indexing versus Jim Cramer's endorsement of it. Discover why dividends might be less crucial than you think and how they impact market behavior. The hosts also discuss the pitfalls of day trading and the implications of negative interest rates on global bonds. Finally, listen in as Benjamin attempts to break down complex factors for his mom, shedding light on how they drive portfolio differences and the importance of diversification.

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!