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

In today's episode, Cameron sits down with Mark McGrath to talk about his trip to Trondheim, Norway, the event he attended there, and his presentation in which he shared top lessons from prestigious Rational Reminder Podcast guests. Tuning in, you'll hear Cameron's top takeaways from conversations with Nobel laureate Eugene Fama and his collaborator Kenneth French, as well as Robert Merton, Antti Ilmanen, Professor Ludovic Phalippou, and more. We also delve into the changing industry trends regarding index investing and the many benefits that come with embracing it, including how it helps financial advisors better serve their clients. Stay tuned for our after-show section, where we discuss advice for new advisors, from developing a robust investment philosophy to building a network, along with insights to help consumers navigate the industry and much more. To learn all about Cameron’s trip to Norway, top guest takeaways, and industry trends around index investing, be sure to tune in!

Key Points From This Episode:

(0:01:13) An overview of today’s episode and a discussion on industry trends.

(0:03:56) Our conversation with Håkon Kavli on managing Reitan Kapital.

(0:04:38) What it was like for Cameron to meet Håkon Kavli and Magnus Reitan in Norway.

(0:05:42) The excellent event in Trondheim, Norway, and their impressive lineup of speakers.

(0:08:56) Unpacking industry trends in index investing and why more people are embracing it.

(0:09:42) The light bulb moment for Mark and Cameron regarding index investing.

(0:19:07) Highlights from our interviews with Eugene Fama, Ken French, and Robert Merton.

(0:25:28) Dr. Annamaria Lusardi's insights and takeaways from our John Cochrane interview.

(0:29:05) Top lessons from our conversation with Antti Ilmanen on low-expected returns.

(0:30:58) Insights from talking with Professor Ludovic Phalippou about private equity.

(0:32:22) Closing thoughts on Cameron’s presentation in Norway and index investing trends.

(0:39:44) Our aftershow segment: advice for new advisors, ways the industry has changed, tips for consumers, technology insights, personal updates, 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/

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

Professor Marcos López de Prado — https://www.orie.cornell.edu/faculty-directory/marcos-lopez-de-prado

Erik Hilde — https://www.linkedin.com/in/erik-hilde-9570a785/?originalSubdomain=no

Dan Bortolotti — https://www.canadianmoneysaver.ca/authors/dan-bortolotti

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

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

Justin Bender — https://www.linkedin.com/in/justin-bender-cfa-cfp%C2%AE-tep-195b8b27/?originalSubdomain=ca Episode 200: Prof. Eugene Fama — https://rationalreminder.ca/podcast/200 Tune Out the Noise — https://www.dimensional.com/film Episode 100: Prof. Kenneth French — https://rationalreminder.ca/podcast/100 Episode 234: Prof. Robert C. Merton — https://rationalreminder.ca/podcast/234

Episode 232: Dr. Annamaria Lusardi — https://rationalreminder.ca/podcast/232 Episode 169: Prof. John Cochrane — https://rationalreminder.ca/podcast/169

Episode 202: Antti Ilmanen – https://rationalreminder.ca/podcast/202

Episode 210: Prof. Ludovic Phalippou — https://rationalreminder.ca/podcast/210

Fama and French Three Factor Model — https://www.investopedia.com/terms/f/famaandfrenchthreefactormodel.asp

Books From Today’s Episode:

Investing Amid Low Expected Returns — http://www.aqr.com/serenity

The Empowered Investor — https://www.amazon.ca/Empowered-Investor-Canadian-Investment-Experience/dp/0991978307

What happens when index investing dominates the market? In this episode, we’re joined by Davidson Heath, Assistant Professor of Finance at the University of Utah David Eccles School of Business, to explore this question and its surprising answers. Davidson’s research dives into the unintended impacts of passive investing, examining how it influences price stability, corporate governance, and even the way we define shareholder responsibility. He unpacks how index funds, while supporting price efficiency, may be weakening governance structures by reducing shareholder oversight, a shift that could have lasting effects on corporate accountability. We also discuss the promise and limitations of socially responsible investing (SRI), as Davidson introduces the term “impact washing” to describe how some SRI funds fail to achieve real change despite their green branding. In a forward-looking segment, Davidson shares insights on the collaboration between AI and human intelligence in finance, giving a reassuring perspective on the future of machine and human co-existence in complex decision-making. This episode is a must-listen for anyone curious about the hidden dynamics of passive investing and the evolving role of technology in finance!

Key Points From This Episode:

(0:02:22) Davidson’s paper On Index Investing; Why active managers are important to indexing.

(0:08:42) Conclusions on how index investing is affecting price efficiency.

(0:11:10) The role of shareholders in corporate governance.

(0:13:06) How the incentives of index funds to monitor portfolio firms differ from active funds.

(0:15:10) Measuring how well index or active funds are monitoring the companies they own.

(0:16:54) How the expense ratios of index funds affect their quality of monitoring.

(0:18:08) What shareholders can do to monitor and make themselves heard. (0:20:31) How index fund ownership affects other firm-level governance issues.

(0:21:30) Recap and takeaways on index funds and the market.

(0:25:39) The impact of socially responsible investing (SRI) and how successful they are at selecting firms with better environmental, social, and governance (ESG) characteristics.

(0:28:08) Unpacking “impact washing” in SRI funds and its consequences.

(0:33:04) Insights on how ETFs are replicating index funds.

(0:37:03) The implications of Davidson’s findings for index ETF investors and the markets.

(0:38:57) Details on Davidson’s Cyborg Trading project and how it’s using AI to complement human intelligence.

(0:42:42) How Davidson defines success: being a part of a worthwhile endeavour.

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

Davidson Heath — https://davidsontheath.github.io/ Davidson Heath on LinkedIn — https://www.linkedin.com/in/davidson-heath-5a28999a/ Davidson Heath on Google Scholar — https://scholar.google.com/citations?user=Fr-HyLEAAAAJ&hl=en

Cyborg — https://www.imdb.com/title/tt0097138/

Papers From Today’s Episode: 

‘On Index Investing’ — https://dx.doi.org/10.2139/ssrn.3055324

‘Do Index Funds Monitor?’ — https://doi.org/10.1093/rfs/hhab023 ‘Does Socially Responsible Investing Change Firm Behavior?’ — https://doi.org/10.1093/rof/rfad002

‘The Rise of Passive Investing and Active Mutual Fund Skill’ — https://dx.doi.org/10.2139/ssrn.4190266

‘Counterproductive Sustainable Investing: The Impact Elasticity of Brown and Green Firms’ — https://dx.doi.org/10.2139/ssrn.4359282

Unlocking the power of education savings is often a complex task, but with the right strategies, a Registered Education Savings Plan (RESP) can be a game-changer for Canadian families planning their children's future. In this episode, Ben Felix, Dan Bortolotti, and Mark McGrath take a deep dive into the mechanics of the RESP, covering everything from optimal contributions and grant maximization to tax-efficient withdrawals and asset allocation. They discuss critical factors like the Canada Learning Bond (CLB) for low-income families and the intricacies of group RESPs, noting how pooled plans, though easy to join, can financially penalize those who don’t stay the course. With the RESP’s unique 35-year lifespan and its flexible range of education options, this in-depth conversation brings clarity to a valuable tool often overshadowed by its complexity. Tune in to discover practical strategies that could transform how you fund education, optimize your investments, and make the most of Canada’s RESP benefits.

Key Points From This Episode:

(0:02:43) Purpose and structure of the RESP as a tool to fund post-secondary education.

(0:06:25) Insight and tips for how contribution limits and government matching grants work.

(0:07:13) How the CLB supports low-income families with up to $2,000 without contributions.

(0:10:13) Family RESPs, which allow multiple beneficiaries to share contributions and earnings.

(0:11:54) Distinguishing between Education Assistance Payments (EAP), Post-Secondary Education Payments (PSE), and their tax implications for beneficiaries.

(0:14:27) Front-loading versus annual contributions: optimal contribution strategies to maximize grants and investment growth.

(0:23:22) Tips for tax-efficient RESP withdrawals, especially if beneficiaries have other income.

(0:35:28) Education outside of Canada, over-contribution penalties, and other considerations.

(0:37:28) RESPs and estate planning, including naming a successor subscriber in your will.

(0:42:54) Asset allocation advice: prioritize growth early and stabilize as educational costs near.

(0:48:00) Constructive criticism of RESP policies to increase access for low-income families.

(1:02:02) Summing up the benefits and challenges of RESPs and encouraging families to use them wisely as part of their education savings plan.

(1:07:39) The aftershow: reviews, praise for Dan, and a community debate on expected returns.

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 — https://benderbenderbortolotti.com/about/our-team/

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

Registered Education Savings Plan (RESP) — https://www.canada.ca/en/services/benefits/education/education-savings/plan.html

Canada Learning Bond — https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-education-savings-plans-resps/canada-education-savings-programs-cesp/canada-learning-bond.html

Aaron Hector: ‘Optimal RESP funding strategies if you have $50,000 to invest’ — https://x.com/AaronHectorCFP/status/1787188396248731967 

Aaron Hector: ‘How to draw down a $200k RESP over a 4 year university program’ — https://x.com/AaronHectorCFP/status/1788196751821738360

Employment and Social Development Canada (ESDC) — https://www.canada.ca/en/employment-social-development.html

'How to Invest Your RESP’ — https://benderbenderbortolotti.com/how-to-invest-your-resp/

‘The Regulation of Group Plan RESPs and the Experiences of Low-Income Subscribers’ — https://seedwinnipeg.ca/wp-content/uploads/2024/09/The_Regulation_of_Group_Plan_RESPs_and_the_Experiences_of_Low-income_Subscribers.pdf

Episode 326: Dr. Sunil Wahal: Exploring the Nuances of Financial Science — https://rationalreminder.ca/podcast/326

Papers From Today’s Episode: 

‘The Anatomy of Value and Growth Stock Returns’ — https://dx.doi.org/10.2139/ssrn.806664

‘Migration’ — https://dx.doi.org/10.2139/ssrn.926556

Have you ever wondered how the world's top financial thinkers shaped the way we invest today? In this episode, Ben and Cameron sit down with Professor Stephen Foerster from the Ivey Business School to explore the evolution of modern investing. As a distinguished financial expert and co-author of In Pursuit of the Perfect Portfolio, Professor Foerster dives into the groundbreaking work of financial pioneers like Harry Markowitz, Bill Sharpe, Gene Fama, and others, unpacking their remarkable contributions to portfolio management, risk assessment, and market efficiency as we know it today. Tuning in, you'll gain a deeper understanding of Markowitz's revolutionary diversification theory, Sharpe's introduction of beta as a risk measure, and Fama’s Efficient Market Hypothesis, as well as each of their perspectives on the “perfect portfolio,” tying together the history, theory, and practical application of modern investment strategies. Whether you're looking to sharpen your strategy or build your investment knowledge from the ground up, this conversation with Professor Foerster is packed with actionable takeaways and fascinating stories that could change the way you approach your financial future. Don’t miss this opportunity to learn from the thought leaders who shaped the market!

Key Points From This Episode:

(0:03:29) Contrasting the historical art of investing with the modern science of investing.

(0:04:44) Markowitz’s diversification theory and the importance of balancing risk and return.

(0:09:39) Sharpe’s capital asset pricing model (CAPM) and his contribution to measuring risk.

(0:16:13) Insight into Fama’s Efficient Markets Hypothesis and the joint hypothesis problem.

(0:19:13) The rise of factor investing and the significance of Fama-French’s three-factor model.

(0:23:26) Unpacking Shiller and Fama's main point of disagreement on bubbles.

(0:26:50) Bogle’s perfect portfolio and persistence about the index fund, despite resistance.

(0:29:37) How the Black-Scholes-Merton (BSM) option pricing formula changed the world.

(0:34:37) Ways that Merton contributed to portfolio theory and his take on TIPS.

(0:36:20) Key takeaways from talks with Martin Leibowitz, Charlie Ellis, and Jeremy Siegel.

(0:37:35) An interesting analogy for Professor Foerster’s take on the “perfect portfolio.”

(0:40:53) Correlation vs. causation in stock pricing and how it applies to factor investing.

(0:46:38) Examples of masterly inactivity and investor lessons from Madoff's Ponzi scheme.

(0:52:07) The dangers of FOMO, a SPACs cautionary tale, and lessons from value investors.

(1:00:43) Winning at tennis vs. investing and risks of over-reliance on automated decisions.

(1:06:02) Long-term lessons from pioneers in finance to improve investment strategies today.

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 — https://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/

Professor Stephen Foerster — https://stephenrfoerster.com/

Ivey Business School — https://www.ivey.uwo.ca/

Stephen Foerster on LinkedIn – https://www.linkedin.com/in/stephen-foerster-26b85319/

Stephen Foerster on X – https://x.com/profsfoerster

Stephen Foerster Books — https://www.amazon.com/stores/author/B001KDO1L0

‘Cristiano Ronaldo snubbed Coca-Cola. The company’s market value fell $4 billion.’ — https://www.washingtonpost.com/sports/2021/06/16/cristiano-ronaldo-coca-cola/

Books From Today’s Episode:

In Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest — https://www.amazon.com/dp/0691229880

Trailblazers, Heroes, and Crooks: Stories to Make You a Smarter Investor — https://www.amazon.com/dp/B0DHLVYK1Q

In Pursuit of the Unknown: 17 Equations That Changed the World — https://www.amazon.com/dp/0465085989

A History of Interest Rates — https://www.amazon.com/dp/0471732834

Winning the Loser's Game: Timeless Strategies for Successful Investing — https://www.amazon.com/dp/0071813659

Stocks for the Long Run — https://www.amazon.com/dp/1264269803/

Extraordinary Tennis For The Ordinary Player — https://www.amazon.com/dp/0517511991

Papers From Today’s Episode: 

‘Efficient Capital Markets: A Review of Theory and Empirical Work’ — https://doi.org/10.2307/2325486

‘The Loser’s Game’ — https://doi.org/10.2469/faj.v31.n4.19

'The Pricing of Options and Corporate Liabilities’ — https://doi.org/10.1142/9789814759588_0001

What does it take to manage a $60 billion wealth management firm while keeping investment strategies grounded in scientific thinking? In this episode, we’re joined by Don Calcagni, Chief Investment Officer at Mercer Advisors. Don chairs the firm’s investment committee and provides guidance on mergers and acquisitions, investment integration, and long-term strategic planning. His expertise spans fiduciary oversight, portfolio management, private equity, and financial mathematics. In our conversation, we discuss how his firm constructs client portfolios, engages with academic and industry experts, and leverages a factor-based investment approach. He also explains the importance of having an investment philosophy rooted in fiduciary principles and delves into how Mercer Advisors manages fiduciary oversight for billions of dollars in assets across thousands of families. Explore the details of portfolio governance and the role of the firms’s alternative investment platform space. Gain insights on value metrics, factor investing, and how Mercer works to provide a family-office experience for everyday clients. Tune in for a deep dive into portfolio construction and the evolving landscape of wealth management with Don Calcagni!

Key Points From This Episode:

(0:05:22) Learn about Mercer Advisors and the range of services it has on offer.

(0:07:10) Unpack Mercer Advisors’ approach and philosophy to portfolio construction.

(0:11:55) The Building Better Portfolio Summit and the purpose of the event.

(0:17:08) How the meetings are structured and the main takeaways from the last event.

(0:24:45) What topics cause extreme points of agreement and disagreement at the meetings.

(0:29:21) Find out how takeaways from the events are implemented into client portfolios.

(0:31:19) Mercer Advisors’ recently launched alternative investment platform space.

(0:40:23) Don shares valuable recommendations and advice for the average investor.

(0:42:23) Aftershow: the controversy surrounding the RBC options trading incident.

(0:49:57) Listener feedback, reviews, updates, and upcoming events.

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://linkedin.com/in/dan-bortolotti-8a482310/ 

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

Don Calcagni on LinkedIn — https://linkedin.com/in/donald-calcagni-8104b546/

Mercer Advisors — https://merceradvisors.com/

‘Building Better Portfolios | 2023 Summit’ — https://youtu.be/TWYukQogQPA

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

BlackRock — https://blackrock.com/

Avantis — https://www.avantisinvestors.com/

AQR — https://aqr.com

Carlyle — https://carlyle.com/

Royal Bank of Canada (RBC) — https://www.rbcroyalbank.com

Future Proof Festival — https://futureproofhq.com/festival/

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

Episode 323: Renting Versus Buying a Home in Canada 2005-2024 — https://rationalreminder.ca/podcast/323

Episode 325: Addressing 200+ Comments on Renting vs. Owning a Home — https://rationalreminder.ca/podcast/325

Papers From Today’s Episode: 

‘Portfolio Selection’ — https://doi.org/10.1111/j.1540-6261.1952.tb01525.x

What are the critical factors driving investment success? How can investors balance profitability and risk? In this episode, we sit down with Dr. Sunil Wahal, the Jack D. Furst Professor of Finance and Director of the Center for Responsible Investing at the W.P Carey School of Business at Arizona State University, to delve into the intricacies of financial science. With over 25 years of academic and practical experience, Dr. Wahal shares his unique perspective on factor investing, profitability premiums, and how to approach value investing in today’s complex financial environment. He talks about the joint distribution of value and profitability, explains how profitability premiums work, and discusses the challenges faced when integrating academic research into practical investing strategies. Dr. Wahal also touches on common misconceptions in financial theory, the long-term benefits of maintaining a diversified investor base, and why understanding the nuances of financial risk is key to avoiding costly mistakes. Gain insights into building a successful investment portfolio grounded in the principles of financial science and how to avoid common pitfalls in factor investing. Join us to hear actionable strategies for balancing risk, understanding factors, and applying academic research to real-world scenarios with Dr. Sunil Wahal!

Key Points From This Episode:

(0:04:15) Dr. Wahal’s work on profitability, data sourcing challenges, and its significance.

(0:08:01) The impact of controlling the value of the profitability premium.

(0:10:08) Correlations between value and profitability and the benefits of “tilted” portfolios.

(0:14:48) Steps for unleveraged long-term investors to build profitable portfolios.

(0:17:27) How the joint distribution of value and profitability differs from a profitability screen.

(0:20:43) Approaches of large financial firms to implementing value and profitability in portfolios.

(0:24:41) Time horizons for tiled portfolios and their expected returns after cost. 

(0:30:53) Insight into how institutions decide on which investment managers to hire and fire.

(0:38:00) Exploring how the hiring and firing of managers affects institutional performance. 

(0:40:16) Ways the relationships with institutions influence hiring decisions and performance.

(0:44:35) Uncover how institutions select which private market firms to invest in.

(0:48:58) Key takeaway lessons from Dr. Wahal’s research for institutional investors.

(0:50:52) Why frequently hiring and terminating managers may not be the best approach.

(0:52:32) Advice for retail investors and the importance of cost in managing portfolios.

(0:59:22) Reasons that institutions avoid indexing and the competitiveness of mutual funds.

(1:02:29) How diversification among mutual fund investors affects performance.

(1:09:19) Performance overview of actively managed global equity mutual funds.

(1:12:35) The role of practitioner interaction and his concept of 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/

Sunil Wahal on LinkedIn — https://www.linkedin.com/in/sunil-wahal/

W. P. Carey School of Business — https://wpcarey.asu.edu/

Avantis Investors — https://www.avantisinvestors.com/

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

UpWork — https://www.upwork.com

NVIDIA — https://www.nvidia.com

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

Books From Today’s Episode:

The Interpretation of Financial Statements — https://www.amazon.com/dp/0887309135

Papers From Today’s Episode: 

‘Long-Term Shareholder Returns: Evidence from 64,000 Global Stocks’ — https://doi.org/10.1080/0015198X.2023.2188870

‘Long-Run Stock Market Returns: Probabilities of Big Gains and Post-Event Returns’ — https://dx.doi.org/10.2139/ssrn.3873010

‘Prudential Uncertainty Causes Time-Varying Risk Premiums’ — https://dx.doi.org/10.2139/ssrn.2176896

‘A Five-Factor Asset Pricing Model’ — https://dx.doi.org/10.2139/ssrn.2287202

‘Do Institutional Investors Exacerbate Managerial Myopia?’ — https://doi.org/10.1016/S0929-1199(00)00005-5