The Rational Reminder Podcast

• Episode 345 - AMA #3

  As we continue to answer your questions from our most recent AMA, Ben, Mark, and Dan begin today’s episode with Bitcoin and how its value as an investment has changed over the years. Then, after briefly explaining how to find short clips of this podcast online, we discuss why many companies choose not to list directly on the TXS, how to implement factor investing without factor EFTS, the best way to invest if you could only make one EFT investment in your lifetime, and, and understanding buffered EFTs and market-linked GICs. We also cover expected returns in a corrupt market, return stacking for individuals, academia versus real-world applications, and why stock valuations will never be the same as they were in the past. To end, we look at lump sum investing versus dollar-cost averaging, what to remember regarding asset allocation, how we rebalance portfolios here at PWL Capital, and we wish Ben well as he awaits his diagnosis. Key Points From This Episode: (0:03:30) Unpacking the value of Bitcoin as an investment; past, present, and future.  (0:09:58) Why we don’t use YouTube Shorts anymore and how to find our bite-sized clips.  (0:10:29) Understanding why many companies refrain from directly listing on the TXS.  (0:11:29) An interlude on how we take care of our bodies.  (0:14:22) Implementing factor investing without factor ETFs, and Manulife’s multifactor ETFs. (0:19:21) What we would do if we could only invest in one ETF until retirement. (0:22:23) Buffered EFTs and market-linked GICs.   (0:26:15) Market efficiency and expected returns in a low transparency/high corruption market.   (0:29:50) Whether return stacking is a good idea for individuals, and unpacking leverage.  (0:40:44) Balancing proven business philosophies with academic thinking.  (0:47:39) The Shiller PE Ratio; why stock valuations are permanently higher than in the past.   (0:54:58) Lump sum investing versus dollar-cost averaging.  (1:00:09) Asset allocation and how to know which assets to sell first.  (1:04:57) How PWL Capital rebalances client portfolios – an operational perspective.  (1:10:42) The after show: Testicular cancer and heartwarming 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] 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/   ‘Episode 80: A Planning Checklist, Portfolio Concentration, and Leverage’ — https://rationalreminder.ca/podcast/80  ‘Episode 343: How to Choose an Asset Allocation’ — https://rationalreminder.ca/podcast/343 ‘Episode 234: Prof. Robert C. Merton: ICAPM, Retirement, and Models in Finance’ — https://rationalreminder.ca/podcast/234   ‘Episode 335: What About Warren Buffett?’ — https://rationalreminder.ca/podcast/335  ‘Episode 202: Antti Ilmanen: The Building Blocks of Long-Run Returns’ — https://rationalreminder.ca/podcast/202   ‘Episode 262: Prof. Francisco Gomes: Consumption and Portfolio Choice over the Life Cycle’ — https://rationalreminder.ca/podcast/262   ‘Dan Bortolotti: Index Investing, ETFs and Financial Planning’ — https://thewealthybarber.com/podcast/dan-bortolotti-index-investing-etfs-and-financial-planning-twb-podcast-9/   Manulife Investment Management — https://www.manulifeim.com/retail/ca/en  Dimensional Fund Advisors — https://www.dimensional.com/hk-en/financial-professionals  Scott Cederburg on LinkedIn — https://www.linkedin.com/in/scott-cederburg-0917b0121/  Corey Hoffstein on LinkedIn — https://www.linkedin.com/in/coreyhoffstein/   We Study Billionaires — https://www.theinvestorspodcast.com/we-study-billionaires/   Hendrik Bessembinder | ASU Search — https://search.asu.edu/profile/2717225  Shiller PE Ratio — https://www.multpl.com/shiller-pe  ‘What if You Only Invested at Market Peaks?’ — https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/   Books From Today’s Episode:  The Only Guide You'll Ever Need for the Right Financial Plan — https://www.amazon.com/Only-Guide-Youll-Right-Financial/dp/1576603660    Papers From Today’s Episode:  ‘Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4590406  ‘Why Not 100% Equities’ — https://ibs-masters.narod.ru/olderfiles/1/asness_100equities.pdf   ‘A Conversation with Benjamin Graham’ — https://www.jstor.org/stable/4477960  ‘Forecasting Stock Returns: What signals matter, and what do they say now?’ — https://fairwaywealth.com/wp-content/uploads/Vanguard-Research-11-30-2014.pdf  ‘Dollar Cost Averaging vs. Lump Sum Investing’ — https://pwlcapital.com/wp-content/uploads/2024/08/Dollar-Cost-Averaging-vs-Lump-Sum-Investing.pdf

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• Episode 344 - Michael Mauboussin: The One Job of an Equity Investor

  What if the key to successful investing is about understanding how market expectations, intangible assets, and even your own biases shape the outcome? In this episode, Cameron sits down with Michael Mauboussin, a renowned expert in investment strategies and behavioural finance, to explore how the evolving dynamics of investing influence valuation, investor decision-making, and market efficiency. Michael is the head of Consilient Research at Counterpoint Global, part of Morgan Stanley Investment Management, and an adjunct professor at Columbia Business School, where he teaches courses on investing and decision-making. His work focuses on behavioural biases, skill versus luck, complex adaptive systems, and valuation. In our conversation, we discuss the core principles of equity investing, unpack the evolution of intangible assets, and explore how market dynamics are influenced by index funds. You’ll learn about capital allocation strategies, the shifting landscape of private equity, accounting challenges with intangibles, and how traditional investment frameworks are being redefined. Michael also provides insight into the "free dividend" fallacy, the importance of understanding the basic unit of analysis, the paradox of skill in active management, and more. Join us to learn about market and investing fundamentals to improve your strategy with Michael Mauboussin. Tune in now!   Key Points From This Episode:   (0:03:08) What the primary job of an equity investor is and the origin of stock returns. (0:05:37) Why dividends are less critical to total shareholder return unless fully reinvested. (0:08:43) Dissect the behaviour of investors in dividend stocks and the "free dividend fallacy." (0:10:01) Value versus growth classifications and how intangible assets impact valuations. (0:16:39) Learn about the potential advantages for companies investing in intangible assets. (0:20:20) How to determine a company's position in the competitive advantage life cycle. (0:24:42) The phase that offers the highest returns and what to consider about newer industries. (0:26:18) Explore the tradeoffs of intangible-intensive companies and the impact on base rates. (0:29:22) Pitfalls of valuation multiples and the implications for systematic value investors. (0:32:25) Relevance of market metrics and how index funds have affected alpha opportunities. (0:38:14) Effects of rising indexed assets and what to consider about market concentration. (0:45:01) Discover the historical link between market concentration and future returns.  (0:46:31) How active managers benefit markets and misconceptions about skilled managers.  (0:48:46) The value of active managers and advice for structuring investment portfolios. (0:52:44) Unpack the shift from public to private equities and why it happened.  (0:55:40) Insights into the benefits of private over public equities for investors.  (0:58:00) Ways intangible assets influenced the rise of private equity.  (0:59:27) What the market says about future returns and using public equity for diversification.   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] 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 Mauboussin — https://www.michaelmauboussin.com/ Michael Mauboussin on LinkedIn — https://www.linkedin.com/in/michael-mauboussin-12519b2/ Michael Mauboussin on X — https://x.com/mjmauboussin Columbia Business School — https://business.columbia.edu/ Morgan Stanley | Counterpoint Global — https://www.morganstanley.com/im/en-us/individual-investor/about-us/investment-teams/active-fundamental-equity/counterpoint-global-team.html The Heilbrunn Center for Graham and Dodd Investing — https://business.columbia.edu/heilbrunn Episode 332: Randolph Cohen and Michael Green — https://rationalreminder.ca/podcast/332   Books From Today’s Episode:   The Success Equation — https://www.amazon.com/Success-Equation-Untangling-Business-Investing/dp/1422184234 More Than You Know — https://www.amazon.com/More-Than-You-Know-Unconventional/dp/0231143729 Expectations Investing — https://www.amazon.com/Expectations-Investing-Reading-Prices-Returns/dp/159139127X Think Twice — https://www.amazon.com/Think-Twice-Harnessing-Power-Counterintuition/dp/1422187381 Creating Shareholder Value — https://www.amazon.com/Creating-Shareholder-Value-Managers-Investors/dp/0684844109 Capitalism Without Capital — https://www.amazon.com/Capitalism-without-Capital-Intangible-Economy/dp/0691175039 The New Goliaths — https://www.amazon.com/New-Goliaths-Corporations-Industries-Innovation/dp/0300255047 Security Analysis — https://www.amazon.com/Security-Analysis-Foreword-Buffett-Editions/dp/0071592539 —    Papers From Today’s Episode:    'The Dividend Disconnect' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2876373 'Trading Stages in the Company Life Cycle' — https://www.morganstanley.com/im/en-gb/intermediary-investor/insights/articles/trading-stages-in-the-company-life-cycle.html

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  1:04:31
• Episode 343 - How to Choose an Asset Allocation

  Choosing an asset allocation is a crucial investment decision, as it determines expected returns and risk exposure. During this episode, we uncover what this means, exploring topics such as why risk may not always be the best assessment method. We unpack the three factors that John Grable’s risk profiling framework considers: behavioural loss tolerance, the ability to take risk (which assesses the financial capacity to withstand losses without affecting lifestyle), and the need to take risk. Many investors sabotage their returns by selling after losses and buying after gains, and we discuss the reasons behind this. We also explore why stocks tend to become less risky over long horizons, while bonds can be vulnerable to inflation and interest rate changes, before explaining why investors should focus on compensated risks. In the aftershow, we address listener comments on absolute returns, XEQT, why we have made certain sponsorship decisions, and more. To gain a deeper understanding of risk and avoid common pitfalls that can undermine your returns, tune in today!   Key Points From This Episode:   (0:05:10) The critical importance of choosing an asset allocation and understanding risk.  (0:08:35) How behavioural loss tolerance impacts asset allocation.    (0:18:42) Psychological theory on risk tolerance and willingness to engage in financial behavior.  (0:30:48) Assessing your need to take risks.  (0:39:24) Why market volatility is not where the true risks lie. (0:47:42) Private credit, other portfolio alternatives, and GICs.  (0:53:03) The aftershow: demystifying the AMA controversy. (1:00:20) Absolute returns, XEQT, and sponsorship on the Rational Reminder. (1:12:05) An update on Ben’s health and what he has learned from this experience.    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] 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 — https://pwlcapital.com/our-team/ Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/ Canadian Couch Potato Blog — https://canadiancouchpotato.com/ Canadian Couch Potato Podcast — https://canadiancouchpotato.com/podcast/   Papers From Today’s Episode:  'The Grable and Lytton risk-tolerance scale: a 15-year retrospective’ — https://static.arnaudsylvain.fr/2017/03/The-Grable-and-Lytton-risk-tolerance-scale-15-year-retrospective.pdf

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  1:16:20
• Episode 342 - Matthew Ringgenberg: When Do Anomaly Returns Happen?

  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] 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

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  41:55
• Episode 341 - PWL’s Next Chapter

  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] 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/

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  1:03:03

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