Today we are joined by the Professor of Finance at the University of Utah, Matt Ringgenberg to discuss everything related to anomaly returns. Matt’s research – mainly centred on the actions of short sellers – has been published in all the major journals including the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies. We begin with the definition of an asset pricing anomaly before learning about the anomalies that Matt’s research is primarily focused on. Then, we unpack anomaly returns and how they relate to anomaly signal information, what causes anomalies, the risk versus mispricing debate, and the barriers to accessing financial data that allow anomalies to persist. We also weigh Matt’s research against its anomaly-denying counterparts, assess anomaly behaviour before and after publicly available signal information, explore models that help to predict future anomalies, and learn more about the economic mechanism underlying asset pricing anomalies. To end, we dive into Matt’s paper, ‘The Loan Fee Anomaly’ and explore the relationship between cross-sectional predictors and market returns, and Matt explains why long-term happiness is the only true marker of success. 

Key Points From This Episode:

(0:05:07) Matt Ringgenberg defines an asset pricing anomaly and describes the anomalies his research is focused on. 

(0:06:27) When anomaly returns appear relative to the release of anomaly signal information.

(0:07:57) How the annual forming of portfolios in June affects anomaly returns. 

(0:08:50) The cause of anomalies, and the risk versus mispricing debate on anomaly returns.  

(0:10:35) Unpacking the barriers to accessing financial data that allow anomalies to persist.  

(0:13:41) How Matt’s rebalancing approach could affect anomaly-denying research.

(0:14:37) Applying his work to valuation-based anomalies and to investors capturing anomaly returns in live-traded portfolios.  

(0:16:04) How anomalies behave before anomaly signal information is publicly available.

(0:17:48) Exploring the models that can be used to predict future anomaly signals. 

(0:19:05) How anomaly premiums traded on predicted signals compare to trades on actual information release dates.

(0:19:37) Understanding the economic mechanism underlying asset pricing anomalies.

(0:24:38) Dissecting one of Matt’s short-selling papers, ‘The Loan Fee Anomaly’.

(0:32:51) The relationship between cross-sectional predictors and market returns.

(0:39:11) What Matt hopes to pass on to his students in his Introduction to Investments course.

(0:40:48) How Matthew Ringgenberg defines success.

Links From Today’s Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

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 X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — [email protected]Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://pwlcapital.com/our-team/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP

Matthew Ringgenberg on Google Scholar — https://scholar.google.com/citations?user=NArgYXUAAAAJ 

Matthew Ringgenberg on LinkedIn — https://www.linkedin.com/in/matthewringgenberg/ 

Matthew Ringgenberg on X — https://x.com/Ringgenberg_M 

University of Utah — https://www.utah.edu/ 

Davidson Heath on LinkedIn — https://www.linkedin.com/in/davidson-heath-5a28999a/  

Management Science — https://pubsonline.informs.org/journal/mnsc 

Journal of Financial and Quantitative Analysis — https://jfqa.org/ 

Morningstar Direct — https://www.morningstar.com/business/brands/data-analytics/products/direct 

YCharts — https://ycharts.com/ 

Andre Chen — https://andrewchen.substack.com/ 

David Booth | Dimensional Fund Advisors — https://www.dimensional.com/hk-en/bios/david-booth 

Papers From Today’s Episode: 

‘A Conversation with Benjamin Graham’ — https://www.jstor.org/stable/4477960

‘The Loan Fee Anomaly: A Short Seller's Best Ideas’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3707166 

‘Do Cross-Sectional Predictors Contain Systematic Information?’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3459229

PWL Capital is undergoing an exciting change that will help the company bring a greater positive impact to the Canadian Wealth Management space and serve more clients effectively. In this episode, Ben Felix and Cameron Passmore welcome Mike Sullivan, co-founder of OneDigital, to share the inside story behind PWL Capital's recent decision to join forces with OneDigital. With nearly 25 years of experience in growth through acquisitions, Mike explains how their unique culture and strategic vision led to this exciting collaboration. We discuss Mike’s role in driving OneDigital's expansion and how the company’s values align with PWL's mission to offer low-cost, client-centric, systematic investing. He provides insights into why this partnership represents more than just a business transaction by amplifying a shared vision for Canadian investors. Our conversation also delves into the dynamics of mergers and acquisitions and examines the importance of culture and purpose in making these critical decisions. Today’s episode offers a rare inside look at an M&A transaction with key players that many listeners will already be well-acquainted with. Tune in now to hear it all!

Key Points From This Episode:

(0:00:16) Details on PWL Capital's decision to partner with OneDigital.

(0:14:31) An introduction to co-founder Mike Sullivan and OneDigital.

(0:16:38) How Mike knows when an acquisition will be a good fit.

(0:19:13) The opportunities for building a different kind of wealth management firm in Canada.

(0:21:14) What attracted Mike to PWL as a potential OneDigital partner.

(0:34:05) Mike’s insights on applying what’s worked to the Canadian marketplace.

(0:36:14) How being part of OneDigital will make PWL better.

(0:37:59) Mike and his co-founder Adam Bruckman’s objectives for OneDigital.

(0:40:20) Why you shouldn’t expect changes to PWL’s service offerings or teams.

(0:45:02) How being part of OneDigital will help PWL assist other like-minded advisors.

(0:46:36) The typical advisor profile that PWL/OneDigital Canada would like to attract.

(0:53:15) Reflections on our hopes and goals: what we are looking forward to at PWL.

(0:57:45) Mike’s definition of success, plus Cam and Ben’s answer to the success question!

Links From Today’s Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

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 X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — [email protected]Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://pwlcapital.com/our-team/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/

Mark McGrath on X — https://x.com/MarkMcGrathCFP

Mike Sullivan on LinkedIn — https://www.linkedin.com/in/mikesullivanatdigital/

OneDigital — https://www.onedigital.com/

What drives the best financial planning decisions? In this episode, Ben Felix and Mark McGrath sit down with Ben Mathew, a PhD in economics from the University of Chicago and author of Economics: The Remarkable Story of How the Economy Works. The discussion explores the lifecycle model of economics, a powerful yet underutilized framework for financial planning, and contrasts it with traditional approaches like safe withdrawal rates (SWR). Ben Mathew shares insights into the lifecycle model, its origins, and its practical applications in aligning financial decisions with personal goals over a lifetime. We also dig into Ben’s innovative financial planning tool, TPAW (Total Portfolio Allocation and Withdrawal) Planner, designed to bring the lifecycle model into practice. While the discussion delves into the complexities of financial planning, it’s packed with actionable insights for listeners seeking smarter, evidence-based strategies. Join us for a deep dive into the lifecycle model and discover how it compares to traditional safe withdrawal rates.

Key Points From This Episode:

(0:02:31) Identifying the main problem financial planning aims to solve and the biggest challenges in creating a plan for saving and spending across a lifetime.

(0:05:49) Exploring the effectiveness of simple rules of thumb, like the 4% rule, and the economic models available to analyze financial planning problems.

(0:09:16) Why the lifecycle model isn’t more widely adopted.

(0:12:06) The basic premise of the lifecycle model.

(0:16:45) How withdrawals in the lifecycle model relate to amortization and how risk affects amortization-based withdrawals.

(0:21:12) Examining how amortization-based variable spending aligns with consumption smoothing and responds to portfolio drops.

(0:25:25) How updating expected return assumptions mitigates behavioural worry during market drops.

(0:26:37) The variability in spending seen in historical simulations, how variable spending can be tailored to individual preferences, and the recommended frequency for updating financial calculations.

(0:38:30) What the lifecycle model advises about asset allocation.

(0:42:00) The importance of expected return assumptions in lifecycle asset allocation advice.

(0:45:28) Adjusting lifecycle advice for when you have limited information about expected returns and how retirement glide paths compare to the lifecycle model. (0:50:03) How asset allocation in the model changes based on the time horizon of the goal.

(0:54:10) The influence of different wealth levels on asset allocation in the lifecycle model.

(0:56:43) How the safe withdrawal rate methodology works and key problems with its approach.

(01:08:11) Connecting the probability of success metric to the utility function and differentiating variable safe withdrawal rates (SWR) from amortization-based withdrawals.

(01:17:02) An overview of Ben’s exciting online tool, TPAW (Total Portfolio Allocation and Withdrawal) Planner, for bringing the lifecycle model into practice.

Links From Today’s Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

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 X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — [email protected]Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://pwlcapital.com/our-team/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP

Ben Mathew — http://www.benmatheweconomics.com/

Ben Mathew on LinkedIn — https://www.linkedin.com/in/bmathecon/ 

TPAW Planner — tpawplanner.com

Bogleheads — https://www.bogleheads.org/wiki/Main_Page

Books From Today’s Episode:

Economics: The Remarkable Story of How the Economy Works — https://www.amazon.com/Economics-Remarkable-Story-Economy-Works/dp/0988669102

The Missing Billionaires: A Guide to Better Financial Decisions — https://www.amazon.com/Missing-Billionaires-Better-Financial-Decisions/dp/1119747910

In our second episode of 2025, Ben, Mark, and Dan continue to work through the listener questions we received in our 2024 AMA. We begin with home country biases and how to continue to grow your money from an already diversified portfolio before comparing the benefits of stock trading strategies and EFT portfolio strategies. Then, we discuss the impact of volatile blockchains on the wider securities market, whether you need to adjust your investment strategy when new tariffs are imposed, the ins and outs of terminal wealth management, the benefits of focusing on a total market index, and the personal finance perspective of renting versus buying in Canada. To end, we explore the best practices for increasing risk exposure, take a closer look at FIRE (financial impendence, retire early), assess investing behavioural biases and misconceptions that still pose a threat to even literate investors, and learn about how the Rational Reminder podcast is changing the lives of our listeners.

Key Points From This Episode:

(0:01:59) Whether owning a home affects your home country bias and financial asset portfolio.

(0:02:43) The correlation between the economic risks of housing and the local stock market.

(0:07:21) How to keep growing your money if you already have a diversified portfolio.

(0:14:16) When to split your portfolio, and stock trading strategy versus EFT portfolio strategy.

(0:22:20) The impact of Bitcoin and volatile blockchains on the wider securities market.

(0:24:46) Adapting your investment strategy after the introduction or increase of trading tariffs. 

(0:26:20) Maxing out tax-free savings accounts for non-incorporated high-income professionals.

(0:33:22) Switching to a total market index to avoid index funds that overvalue the market.

(0:37:48) Renting versus buying in Canada, from a personal finance perspective.

(0:42:39) The best practices for increasing risk exposure. 

(0:51:19) Unpacking FIRE – financial independence, retire early. 

(0:56:05) Balancing allocations between traditional retirement savings vehicles and real estate.

(1:00:56) Investing behavioural biases and misconceptions that harm even literate investors. 

(1:09:24) Whether bonds actually exist, and everything we’ve changed our minds about in 2024.

(1:19:21) Shaping worldviews, on-demand information, and other highlights from your reviews. 

Links From Today’s Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

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 X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — [email protected]Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://pwlcapital.com/our-team/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP 

Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ 

Peter Mladina on LinkedIn — https://www.linkedin.com/in/peter-mladina-177194125/ 

Benjamin Felix Quote on X — https://x.com/benjaminwfelix/status/1760356591000301739 

Robb Engen — https://boomerandecho.com/robb-engen/ 

Renaissance Technologies — https://www.rentec.com/Home.action?index=true 

Long Blockchain Corp — https://cryptohead.io/acquisitions/long-blockchain/ 

Nick Maggiulli on X — https://x.com/dollarsanddata 

Canadian Couch Potato Podcast — https://canadiancouchpotato.com/podcast/ 

Bitcoin Uncensored — https://www.podchaser.com/podcasts/bitcoin-uncensored-463350  

Episode 335 - What About Warren Buffett — https://rationalreminder.ca/podcast/335 

Episode 332: Randolph Cohen & Michael Green — https://rationalreminder.ca/podcast/332

Papers From Today’s Episode: 

'Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice' — https://dx.doi.org/10.2139/ssrn.4590406

‘Action Bias among Elite Soccer Goalkeepers: The Case of Penalty Kicks’ — https://www.researchgate.net/publication/222676583_Action_Bias_among_Elite_Soccer_Goalkeepers_The_Case_of_Penalty_Kicks

In today’s episode, we unpack how rigorous research translates into actionable strategies for wealth management. Ben and Mark are joined by Peter Mladina, Executive Director of Portfolio Research at Northern Trust Wealth Management and professor at UCLA. With an impressive body of published work and practical innovations like his goals-based asset allocation software, Peter offers a unique perspective on bridging the gap between theory and practice. The conversation delves into foundational topics like asset allocation and factor models, with a special focus on practical applications of research in wealth management. Peter shares insights from his research, including intriguing findings on factor investing and joint tests of market efficiency. From real estate investment trusts to the nuances of the Intertemporal Capital Asset Pricing Model (ICAPM), the discussion covers how these concepts can directly inform financial planning and portfolio construction. Tune in to explore the intersection of academic insight and everyday financial decision-making!

Key Points From This Episode:

(0:00:17) Introducing Peter Mladina and his wealth management research.

(0:04:00) Theoretical and practical shortcomings of Markowitz's Modern Portfolio Theory (MPT).

(0:05:24) How the Capital Asset Pricing Model (CAPM) resolves MPT’s shortcomings, and how the Intertemporal CAPM (ICAPM) resolves the CAPM and MPT’s shortcomings.

(0:10:16) Key distinctions between an optimal ICAPM portfolio and an optimal CAPM portfolio.

(0:15:33) Allocating between liability hedge assets and risky assets, and when it’s sensible for individual investors to try to fully hedge consumption liabilities.

(0:20:14) The role of Monte Carlo simulation and human capital in building ICAPM portfolios.

(0:24:15) Steps for practitioners starting with ICAPM and how to advise their clients.

(0:37:18) Insights from Peter’s papers on factor models: why common risk factors should explain returns across most asset classes.

(0:40:11) The value of looking at asset classes through a factor lens.

(0:41:54) Main factors Peter uses in his research and observations on the zoo of factors.

(0:46:23) Takeaways from Peter’s paper on real estate (and why he doesn’t like it that much).

(0:56:45) Unpacking hedge fund returns and factor models and Yale’s endowment performance.

(01:02:44) Peter’s research on traded portfolios and jointly testing factor models and manager performance.

(01:07:14) How Peter defines success, both professionally and personally.

Links From Today’s Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

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 X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — [email protected]Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://pwlcapital.com/our-team/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP

Peter Mladina on LinkedIn — https://www.linkedin.com/in/peter-mladina-177194125/

Peter Mladina on SSRN — https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=890472

Northern Trust — https://www.northerntrust.com/

Episode 169: John Cochrane — https://rationalreminder.ca/podcast/169

Papers From Today’s Episode: 

‘Real Estate Betas and the Implications for Asset Allocation’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3134732 ‘An ICAPM Framework for Asset Allocation’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4319731

‘An ICAPM for Goals-Based Investing’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4943241

'Portfolios for Long-Term Investors' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3790823

‘Yale's Endowment Returns: Manager Skill or Risk Exposure?’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2959074

As the year draws to a close, the Rational Reminder Podcast team delivers an engaging year-end special with a unique twist. Rather than curating clips from previous episodes, Ben Felix, Dan Bortolotti, and Mark McGrath dive into an AMA-style episode, answering listener-submitted questions. They share reflections on lessons learned, highlight impactful community discussions, and provide thoughtful takes on investing strategies, personal growth, and financial planning. They discuss their evolving views on human capital integration, portfolio diversification, and the importance of behavioural finance in long-term planning. They also revisit key themes from earlier episodes and offer heartfelt thank-yous to their team and audience for a remarkable year. Join us for a mix of practical insights, entertaining banter, and a glimpse into what’s ahead for the Rational Reminder Podcast. Don’t miss this memorable year-end wrap-up!

Key Points From This Episode:

(0:00:00) Episode format and a thank you to the PWL Capital team, producers, and audience.

(0:05:14) Influential community discussions and their insights on efficient ETF design.

(0:10:14) Hear the reason behind Ben's decision to shave his head for so long.

(0:13:51) How to integrate human capital into useful financial planning and strategy.

(0:19:33) They share their thoughts on the evolving definition of success in life and work.

(0:23:33) Their top finance and investment book recommendations for retail investors.

(0:28:50) Uncover the nuances of assessing a value premium within an ETF.

(0:30:46) How real-life events shaped their approach to providing guidance and financial advice.

(0:37:18) Return stacking and a comparison of Dimensional's and Avantis' vector portfolios.

(0:41:05) Risks of bonds, bills, and credit and why past returns do not guarantee future results.

(0:48:27) Explore the complexities of tax-efficient ETFs and Thrift Savings Plan (TSP) options.

(0:56:50) Balancing long-term investment assumptions with short-term market dynamics.

(1:03:23) We debate the U.S. market's valuation and the implications for asset allocation.

(1:10:15) Hard financial lessons from Ben, Mark, and Dan's investment journeys. 

(1:16:29) Unpack the pros and cons of life insurance, infinite banking, and whole life insurance.

(1:28:35) Aftershow: reviews, Marks's beard, a final thank you, and more.

Links From Today’s Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

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 X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — [email protected]Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP

Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/

Canadian Couch Potato — https://canadiancouchpotato.com/

The Podcast Consultant — https://thepodcastconsultant.com/

Morgan Housel — https://www.morganhousel.com

Dimensional Fund Advisors — https://dimensional.com/

Avantis — https://avantisfi.com/

Dan Solin — https://danielsolin.com/

Global X — https://globalxetfs.com/

Episode 138: Factor Investing in Fixed Income — https://rationalreminder.ca/podcast/138

Episode 163: Dave Plecha — https://rationalreminder.ca/podcast/163

Episode 198: Gerard O’Reilly — https://rationalreminder.ca/podcast/198

Episode 316: Andrew Chen — https://rationalreminder.ca/podcast/316

Episode 332: Randolph Cohen & Michael Green — https://rationalreminder.ca/podcast/332

Books From Today’s Episode:

Are You a Stock or a Bond? — https://amazon.com/Are-You-Stock-Bond-Financial/dp/0133115291

Reboot Your Portfolio — https://amazon.com/Reboot-Your-Portfolio-Successful-Investing-ebook/dp/B09P4G9LR7

Wealthier — https://amazon.com/Wealthier-Investing-Field-Guide-Millennials-ebook/dp/B0CX2VD1CW

The Psychology of Money — https://amazon.com/Psychology-Money-Timeless-lessons-happiness/dp/0857197681

Thinking, Fast and Slow — https://amazon.com/Thinking-Fast-Slow-Daniel-Kahneman/dp/0374533555

A Random Walk Down Wall Street — https://amazon.com/Random-Walk-Down-Wall-Street/dp/0393330338/

Winning the Loser's Game — https://amazon.com/Winning-Losers-Game-Strategies-Successful/dp/1264258461/

Wealth Planning Strategies for Canadians 2024 — https://amazon.ca/Wealth-Planning-Strategies-Canadians-2024/dp/166871504X

Becoming Your Own Banker — https://amazon.com/Becoming-Your-Own-Banker-Infinite/dp/B001NZO1DS

— 

Papers From Today’s Episode: 

'Who Are the Value and Growth Investors?' — https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12473

'Portfolios for Long-Term Investors' — https://academic.oup.com/rof/article/26/1/1/6484661

'Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice' — https://dx.doi.org/10.2139/ssrn.4590406

What shapes investor beliefs and behaviours? Steve Utkus, a leading expert in investor behaviour and former Global Head of Investor and Retirement Research at Vanguard, brings decades of groundbreaking insights to this episode. Drawing on exclusive access to Vanguard’s anonymized client data and investor surveys, Steve uncovers the intricate links between what people believe and how they invest. In the first half, he reveals surprising findings from his research into investor beliefs and portfolio decisions. The second half dives into the impact of financial advisors, both human and robotic, on improving investor outcomes. Steve’s reflections, enriched by years of collaboration with academic leaders and personal conversations with Vanguard founder Jack Bogle, offer a rare window into the world of data-driven financial research. Join us today for this fascinating conversation as we unpack fresh perspectives on investor behaviour and the evolving role of financial advice!

Key Points From This Episode:

(0:00:20) The importance of understanding investor belief, Steve’s unique approach to studying it, and the benefits of using survey data.

(0:08:37) Understanding the effects of individual beliefs on portfolio equity shares.

(0:13:40) How equity sensitivity varies with things like trading frequency and how observed sensitivity compares with predictions of an asset pricing model.

(0:17:27) The variation of beliefs across different groups and the strong effect of being a pessimist, optimist, or having a middle-of-the-road perspective.

(0:21:29) Investor cash flow expectations, how it affects stock return expectations, and how it aligns with models of equilibrium.

(0:24:35) The impact of stock market disaster expectations on future stock returns and the effect of COVID-19 on investor expectations.

(0:33:37) ESG investing motives, portfolio impact, and the role of financial returns.

(0:38:35) Unpacking the impact of robo-advisors on previously DIY investors and who benefits.

(0:45:21) Pros and cons of human financial advisors: the needs they satisfy over robo-advisors.

(0:53:12) How unadvised investors' needs differ from those who get financial advice.

(0:54:04) What determines how much value investors place on financial advice and how they think about the trade-offs between fees and the value of advice.

(01:00:00) Reasons traditionally-advised people give for not switching to robo-advising.

(01:03:15) Having a relationship with a good advisor: how it impacts investor behaviour through poor market performance periods, and the importance of frequent quality communication.

(01:13:07) The key attributes of a high-retention advisor and what they should be focusing on.

(01:19:02) Success, retirement, timing, and knowing when to leave, according to Steve.

Links From Today’s Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

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 X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — [email protected]Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://pwlcapital.com/our-team/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP

Steve Utkus on LinkedIn — https://www.linkedin.com/in/steveutkus/

Episode 278: Juhani Linnainmaa — https://rationalreminder.ca/podcast/278

Books From Today’s Episode:

Bogle on Mutual Funds — https://www.amazon.com/Bogle-Mutual-Funds-Perspectives-Intelligent/dp/111908833X

Papers From Today’s Episode: 

‘Political Cycles and Stock Returns’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2920401 Scott Cederburg Paper — ‘The Diversification and Welfare Effects of Robo-advising’ — https://www.sciencedirect.com/science/article/abs/pii/S0304405X24000928

‘Who Benefits from Robo-advising? Evidence from Machine Learning’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3552671

‘Human Financial Advice in the Age of Automation’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4301514

‘The Misguided Beliefs of Financial Advisors’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3101426

What makes Warren Buffett’s investment legacy so iconic, and how has his advice shaped the world of investing? In this episode, we delve into Warren Buffet's investment philosophy and the lessons he offers everyday investors. In our conversation, we unpack the impact of his investment strategies on the financial world, debunk common misconceptions, and discuss how his strategies have changed over time. We also examine the structural barriers to replicating his success, the complexities of scale and changing market dynamics, and the parallels between his approach and modern asset pricing models. Discover Warren Buffett’s astonishing historical returns, his perspectives on diminishing returns for active managers, and the misunderstood nuances of his advice regarding index funds. Gain insight into academic research on Warren Buffett’s success, his pragmatic view on cash holdings, and his opinion on the value of dividends for investors. Tune in to learn about the world's greatest investor and how you can apply his wisdom to your own portfolio!

Key Points From This Episode:

(0:04:55) Warren Buffett’s legacy and Berkshire Hathaway's performance history.

(0:13:04) The problem of diminishing returns to scale and finding skilled active managers.

(0:18:37) Reasons Buffett repeatedly advises most investors to choose low-cost index funds. 

(0:23:14) Why identifying skilled managers before they outperform the market is impossible.

(0:30:15) Research explaining Buffett's success using multi-factor asset pricing models.

(0:35:30) Insight into why Berkshire Hathaway holds large cash reserves as part of its strategy.

(0:44:02) Buffett’s views on dividends and why his focus remains on reinvestment.

(0:48:16) Why diversification concentration is a bad strategy and Buffett's investing superpower.

(0:57:07) Aftershow: Ben’s experience of being on The Wealthy Barber podcast.

(0:58:07) Reviews and feedback from the episode with Randolph Cohen and Michael Green.

(1:04:58) Changes to our year-end episode format and what listeners can expect.

Links From Today’s Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

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 X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — [email protected]Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP

Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/

CPP by the Fire — https://pages.pwlcapital.com/webinar_cpp_by_the_fire

Braden Warwick on LinkedIn — https://linkedin.com/in/braden-warwick-a40b48a3/

PWL Capital CPP Tool — https://research-tools.pwlcapital.com/research/cpp

Berkshire Hathaway — https://berkshirehathaway.com/

Berkshire Hathaway Shareholder Letters — https://berkshirehathaway.com/letters/letters.html

Richard Ennis — https://richardmennis.com/author/richard-m-ennis

Home Trust — https://hometrust.ca/

Ben on The Wealthy Barber Podcast — https://thewealthybarber.com/podcast/ben-felix-a-deep-dive-into-the-world-of-investing-twb-podcast-5/

Episode 61: Ted Seides — https://rationalreminder.ca/podcast/61

Episode 220: Jonathan Berk and Jules van Binsbergen — https://rationalreminder.ca/podcast/220

Episode 332 - Randolph Cohen & Michael Green — https://rationalreminder.ca/podcast/332

Books From Today’s Episode:

The Intelligent Investor — https://amazon.com/dp/B0CBQ18KDB/

Papers From Today’s Episode: 

'Buffett’s Alpha' — https://doi.org/10.2469/faj.v74.n4.3

'Mutual Fund Flows and Performance in Rational Markets'— https://journals.uchicago.edu/doi/abs/10.1086/424739

How do you balance family values, evidence-based investing, and building long-term wealth? In this episode, we are joined by Magnus Reitan, CEO of Reitan Kapital, to discuss his evidence-based approach to wealth management. Reitan Kapital is a leading investment firm specializing in index fund strategies and innovative portfolio optimization techniques. Under his leadership, the firm has become a key player in the investment industry, known for its analytical approach and commitment to sustainable and effective financial solutions. In our conversation, we delve into the disciplined, evidence-based philosophy driving Reitan Kapital’s investment strategy, the importance of simplicity in managing wealth, and the lessons he’s learned as an investor and a leader. We also explore the nuances around managing family wealth, unpack the importance of aligning investment strategies with family and business goals, and uncover the influence of Norway’s Sovereign Wealth Fund on Reitan Kapital’s approach. Join us as we explore the intersection of finance, legacy, and innovation and learn why a low-cost, evidence-based investment strategy works with Magnus Reitan. Tune in now!

Key Points From This Episode:

(0:03:27) The Reitan family’s journey from a single grocery store to a multinational group.

(0:04:20) How Reitan Kapital fits into the broader Reitan Group and how it started.

(0:06:35) Discover how Reitan Kapital defines risk and the role of access liquidity. 

(0:08:06) Magnus shares how he developed his personal investment philosophy.

(0:09:33) Hear how his personal interest in finance led to founding Reitan Kapital.

(0:11:24) Explore the differences between managing a business and a family portfolio.

(0:12:26) Why the company chose to hire a CIO who was not part of the Reitan family.

(0:13:59) Reitan Kapital’s values: long-term perspective, diversification, liquidity, and low costs.

(0:17:37) Hear how the family decided on and agreed to the company's investment approach.

(0:18:58) Asset allocation at Reitan Kapital and the reasons behind its approach.

(0:21:50) Avoiding portfolio complexity and the benefits of evidence-based investing.

(0:24:30) The influence of Norway’s Sovereign Wealth Fund on Reitan Kapital’s philosophy.

(0:26:07) Sources of information for learning about portfolio management and financial markets.

(0:27:00) Lessons and key takeaways from the recent Reitan Kapital investor conference.

(0:29:38) He shares his definition of success and why passion is important.

Links From Today’s Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

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 X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — [email protected]Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://pwlcapital.com/our-team/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Magnus Reitan on LinkedIn — https://linkedin.com/in/magnus-reitan-3a6b90225/

Reitan Kapital — https://reitan.no/no/selskap/170/reitan-kapital

Reitan Retail — https://reitanretail.no/en

Reitan Eiendom — https://reitan.no/no/selskap/171/reitan-eiendom

Episode 321: Evidence in Practice with Håkon Kavli — https://rationalreminder.ca/podcast/321

Håkon Kavli on LinkedIn — https://linkedin.com/in/haakonkavli/

Sindre Drevland on LinkedIn — https://linkedin.com/in/sindredrevland/

What does Trump’s re-election mean for the markets? In this episode, Ben and Mark explore The Presidential Puzzle, a phenomenon revealing that equity risk premiums have historically been higher under Democratic presidencies than Republican ones. With Trump returning to office as the 47th U.S. president, they examine how voter risk aversion shapes political outcomes and market expectations, offering surprising insights into this intriguing connection between politics and investing. They also delve into market timing pitfalls, the importance of diversification, and how financial advisors can help investors navigate emotionally charged decisions. To wrap up, Ben and Mark reflect on listener perspectives and explore the intriguing future of Bitcoin in finance. Tune in to learn what Trump’s win means for expected stock returns and more!

Key Points From This Episode:

(0:00:18) Mark and Ben’s experiences at the Physician Financial Independence Conference.

(0:06:53) Republicans vs. Democrats: What the election results mean for the stock market.

(0:09:09) The Presidential Puzzle and how belief informs asset choices among voters.

(0:15:12) How risk aversion and the economy impact election outcomes and expected returns.

(0:20:08) What investors should and should not do with this information.

(0:24:38) The dangers of making financial decisions based on emotional predictions.

(0:30:02) Unpacking the relationship between global risk aversion and U.S. presidencies.

(0:31:20) Our aftershow segment: digging into recent reviews, the podcast topic puzzle, Ben’s recent trip to Boston, and Bitcoin.

Links From Today’s Episode:

Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p

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 X — https://x.com/RationalRemind Rational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — [email protected] Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://pwlcapital.com/our-team/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP

Episode 217: The Expected Returns of Financial Literacy — https://rationalreminder.ca/podcast/217

Episode 313: When Should You Hire a Financial Advisor? — https://rationalreminder.ca/podcast/313 Episode 124: Ľuboš Pástor — https://rationalreminder.ca/podcast/124

Papers From Today’s Episode: 

‘Belief Disagreement and Portfolio Choice’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3934061

‘Political Cycles and Stock Returns’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2920401

‘The Presidential Puzzle: Political Cycles and the Stock Market’ — https://www.jstor.org/stable/3648176

Are index funds a silent disruptor? Or are the concerns overblown? In this grab-your-popcorn episode, Michael Green returns to the show after his previous appearance elicited a wave of compelling feedback from listeners. These included very smart individuals in academia and practice who were interested in hearing a counter perspective. Joining Michael today for a lively debate is Randolph Cohen, Senior Lecturer of Entrepreneurial Management in the Finance Unit at Harvard Business School. In our conversation, Michael shares his deep concerns about how index funds and target-date funds might be distorting financial markets, honing in on the tension between market efficiency and price elasticity. Randolph counters with an academically grounded perspective, drawing on his PhD and years of research and teaching at one of the world’s leading business schools. With Ben and Cameron moderating, the discussion explores both sides without reaching a definitive conclusion. Tune in to witness this spirited, nuanced exchange and decide where you stand!

Key Points From This Episode:

(0:00:14) Introducing Michael Green, Randolph Cohen, and today’s topics of debate.

(0:06:00) Defining passive investing, distinguishing between the two different meanings of “the rise of passive investing”, and how much of the market is currently held by passive investors.

(0:12:53) Michael’s concerns with the high levels of passive investing and Randy’s response.

(0:20:55) Addressing the proliferation of target-date funds and their use in different scenarios.

(0:28:48) Debating risk in the market, raised valuations, and retirement savings diversification.

(0:42:22) A breakdown of the biggest thing Michael and Randy disagree on: how passive investing is impacting stock market valuations.

(0:57:06) Answering the question: does inelasticity rise with passive, and how does it shape the impact of active managers?

(01:06:14) Unpacking whether the rise of passive has made the markets more efficient; an accompanying refresher on the two types of passive.

(01:09:27) Reasons to doubt whether there really is a rise in both types of passive and the effect of the rise in mega firms.

(01:19:16) The state of fundamental analysis in the current market and Michael’s response to a recent paper by Goldman Sachs attempting to isolate the component of passive.

(01:23:30) Unpacking the cross-sectional impact on stock valuations from index investing and insights on the work of Valentine Haddad.

(01:31:28) The implications of today’s subject matter for investors and what they should be doing with this information.

(01:44:22) Reflection on why more experts don’t share Michael’s level of concern.

(01:47:42) Randy’s takeaways from today’s conversation, why he still does not share Michael’s level of concern, and what he might be worried about.

Links From Today’s Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p

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 X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — [email protected]Benjamin Felix — https://pwlcapital.com/our-team/

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://pwlcapital.com/our-team/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Michael Green on Substack — https://substack.com/@michaelwgreen Michael Green on LinkedIn — https://www.linkedin.com/in/michael-green-9a15142/ Michael Green on X — https://twitter.com/profplum99 ‘Yes, I give a fig… Thoughts on markets from Michael Green’ — https://www.yesigiveafig.com/ Randolph Cohen — https://www.hbs.edu/faculty/Pages/profile.aspx?facId=6597

Randolph Cohen on LinkedIn — https://www.linkedin.com/in/randy-cohen/

Dangerous Visions Podcast — https://podcasts.apple.com/us/podcast/dangerous-vision-with-randy-cohen/id1477519445

Episode 302: Michael Green — https://rationalreminder.ca/podcast/302 Episode 322: Marco Sammon — https://rationalreminder.ca/podcast/322 Episode 310: Antoinette Schoar — https://rationalreminder.ca/podcast/310 Episode 212: Ralph Koijen — https://rationalreminder.ca/podcast/212 Episode 314: Valentine Haddad — https://rationalreminder.ca/podcast/314 Episode 224: Scott Cederburg — https://rationalreminder.ca/podcast/224 Episode 284: Scott Cederburg — https://rationalreminder.ca/podcast/284 The Grossman - Stiglitz Paradox (feat. The Plain Bagel) — https://www.youtube.com/watch?v=zoXMZxe8crI

Books From Today’s Episode:

Irrational Exuberance — https://www.amazon.com/Irrational-Exuberance-3rd-Robert-Shiller/dp/0691166269 

Papers From Today’s Episode: 

‘The Disappearing Index Effect’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4294297

‘Passive Investing and the Rise of Mega-Firms’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4851266

‘Retail Financial Innovation and Stock Market Dynamics: The Case of Target Date Funds’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3723265

Valentine Haddad on Google Scholar — https://scholar.google.com/citations?user=PlPjP48AAAAJ

‘How Competitive is the Stock Market? Theory, Evidence from Portfolios, and Implications for the Rise of Passive Investing’ — https://papers.ssrn.com/sol3/Papers.cfm?abstract_id=3821263

‘Household Portfolios and Retirement Saving Over the Life Cycle’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4068063

‘The equity premium: A puzzle’ — https://www.sciencedirect.com/science/article/abs/pii/0304393285900613 ‘In Search of the Origins of Financial Fluctuations: The Inelastic Markets Hypothesis’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3686935