The Rational Reminder Podcast

Episode

• "I Sold 50% of My Portfolio. What Now?" | #418 (AMA) 16.07.2026 1j 5mnt

  In this AMA episode, Ben Felix, Dan Bortolotti, and Ben Wilson tackle a wide range of practical investing questions submitted by listeners. They begin by discussing one of the most common investing mistakes—market timing—and explain why getting back into the market is often harder than getting out. From there, they explore the evidence behind lump sum investing versus dollar-cost averaging, why high valuations rarely justify sitting in cash, and how your discomfort with investing may reveal a mismatch between your portfolio and your true risk tolerance.   The conversation also pulls back the curtain on PWL Capital's investment committee, detailing how new investment products are evaluated, how due diligence is conducted, and why even seemingly simple index funds require ongoing scrutiny. They then examine whether any recent Canadian ETF innovations are genuinely useful, discuss retirement-focused T-Series asset allocation ETFs, debate whether gamified trading creates opportunities for active management, and respond to questions about inflation, currency debasement, and the real drivers of long-term stock returns. As always, the episode closes with a lighter listener question before reading a review from the audience. Key Points From This Episode: (0:04) Introduction and why AMA episodes continue to resonate with listeners. (0:55) A listener asks how to reinvest after selling half their portfolio over bubble concerns. (2:00) Why successful market timing requires being right twice. (3:04) Why all-time market highs are normal and poor signals for investment decisions. (4:00) What market valuations can—and cannot—tell us about future returns. (5:00) The evidence comparing lump sum investing with dollar-cost averaging. (6:34) Why even the worst historical entry points rarely favor dollar-cost averaging. (9:07) How investment anxiety often points to an overly aggressive asset allocation. (11:37) The psychology of buying after market crashes and why investors rarely do. (13:20) Why the best strategy is often whichever gets you invested and keeps you there. (16:14) A behind-the-scenes look at PWL Capital's investment committee. (17:23) How new securities are researched, reviewed, and approved. (19:10) How acquisitions have changed the firm's investment oversight process. (20:15) Annual due diligence on ETF providers and fund managers. (21:55) Why even plain-vanilla index funds require performance monitoring. (25:17) Are there any genuinely innovative new Canadian ETFs? (26:27) Why most ETF innovation is driven by investor demand rather than better investing. (28:19) Avantis ETFs and discount bond ETFs as notable recent developments. (33:52) Why ETF issuers tend to launch products after investment themes become popular. (33:52) Where investors should spend their planning time when wealth is still relatively small. (35:00) Why growing human capital often has a greater impact than optimizing investments. (37:59) Budgeting, saving, and account selection early in an investing journey. (39:14) BMO's new T-Series asset allocation ETFs and how they generate retirement income. (41:56) Understanding managed distributions and return of capital. (44:08) Why these retirement ETFs may suit DIY investors but not every retiree. (48:31) Whether gamified trading and meme stocks create opportunities for active managers. (50:08) What the evidence says about active management in small-cap growth stocks. (53:39) Why market competition limits persistent opportunities from retail speculation. (53:39) Do stocks only rise because governments debase currencies? (55:59) Inflation measurement, currency debasement, and common misconceptions. (58:10) Why productive businesses—not money printing alone—drive long-term stock returns. (59:53) Ben answers a listener's basketball shoe question. (1:02:02) A listener review from Switzerland and closing remarks. 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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Dollar Cost Averaging vs Lump Sum Investing - https://pwlcapital.com/wp-content/uploads/2024/08/Dollar-Cost-Averaging-vs-Lump-Sum-Investing.pdf Buy The Dip - https://pwlcapital.com/wp-content/uploads/2024/08/PWL-Felix-Warwick-Buy-The-Dip_A.pdf   Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)  
• A Financial Plan For Your Entire Life | #417 (Dr. Paul Kaplan) 09.07.2026 1j

  In this episode, we are joined by Dr. Paul Kaplan, economist, CFA charterholder, former Director of Research at Morningstar Canada, and co-author of Lifetime Financial Advice, for a fascinating exploration of life cycle finance. Drawing on decades of research in economics, portfolio construction, and asset allocation, Paul explains how financial planning should be grounded in optimizing lifetime consumption rather than relying on disconnected rules of thumb.   We explore how life cycle finance integrates consumption, saving, investing, and retirement spending into a single framework, why risk tolerance and risk capacity are fundamentally different concepts, and how human capital should be treated as part of an investor's balance sheet. Paul also walks through the life cycle model he and Tom Idzorek developed, explains why traditional retirement rules like the 4% rule lack theoretical foundations, and demonstrates an open-source spreadsheet that allows anyone to experiment with the model for themselves. This conversation brings together economics, portfolio theory, and financial planning into a practical framework for making better lifetime financial decisions.   Key Points From This Episode: (0:04) Introduction to Dr. Paul Kaplan and the topic of life cycle finance. (4:38) What life cycle finance is and why consumption smoothing is its central objective. (5:20) How life cycle models optimize saving, investing, retirement spending, insurance, and annuities. (6:36) Linking life cycle finance with Harry Markowitz's mean-variance optimization. (8:38) Why consumption—not wealth accumulation—is the true focus of financial planning. (9:56) The concept of an economic balance sheet: financial assets, human capital, liabilities, and net worth. (10:59) Holistic investor profiling beyond traditional risk tolerance questionnaires. (13:23) Why risk tolerance and risk capacity should never be combined into a single score. (16:48) Assessing the risk characteristics of human capital. (17:36) Applying utility theory behind the scenes in financial planning software. (19:15) Sample profiling questions that measure lifetime consumption preferences. (20:54) Why maximizing lifetime utility ultimately means optimizing consumption. (22:55) How preferences, needs, and circumstances shape lifetime financial plans. (24:13) The primary outputs of a life cycle model: consumption and asset allocation. (25:01) The roles of life insurance and annuities in lifetime financial planning. (27:44) How uncertain investment returns influence both spending and asset allocation. (28:19) Why longevity assumptions are critical in retirement planning. (29:37) Simplifying complex life cycle optimization into practical formulas. (30:27) Why life cycle finance challenges rules of thumb like the 4% withdrawal rule. (31:12) Flexible retirement spending versus fixed withdrawal strategies. (34:01) Why consumption should be treated as an output rather than an input. (36:05) The importance of asset location and after-tax portfolio construction. (37:04) Why asset allocation and asset location should be solved simultaneously. (38:19) Harry Markowitz on why asset allocation became the foundation of modern investing. (40:06) The need for financial planning software built on life cycle theory. (41:55) A walkthrough of Paul's open-source life cycle finance spreadsheet. (46:58) Understanding economic balance sheets and asset mix visualizations. (49:17) Which investor characteristics have the greatest influence on optimal asset allocation. (50:52) Why Nobel Prize-winning life cycle finance research has yet to become mainstream practice. (51:37) The evolving role of financial advisors in helping clients make rational financial decisions. (52:50) How Paul's own investment philosophy emphasizes indexing and asset allocation. (54:13) Factor investing, popularity theory, and connecting behavioral finance with asset pricing. (56:42) Paul's definition of success: applying first principles with rigor and integrity throughout his career. 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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Dr. Paul Kaplan: https://www.paulkaplan.com/  Lifetime Financial Advice (CFA Institute Research Foundation): Lifetime Financial Advice| Research Foundation  Life Cycle Finance Spreadsheet (Paul Kaplan's website): https://www.paulkaplan.com/lifetime-financial-advice  *Disclosure: Links to third-party materials are provided for your convenience and do not constitute an endorsement or recommendation of the products or services offered therein. Frontiers of Modern Asset Allocation (Wiley): https://www.wiley.com/en-us/Frontiers+of+Modern+Asset+Allocation-p-9781118029689  Popularity: A Bridge Between Classical and Behavioral Finance (CFA Institute Research Foundation): https://rpc.cfainstitute.org/research/foundation/2021/popularity-a-bridge-between-classical-and-behavioral-finance   Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)  
• Is VEQT Costing You? (& Other Questions) | #416 02.07.2026 58mnt

  In this AMA episode, Benjamin Felix, Dan Bortolotti, and Ben Wilson tackle a wide range of listener questions covering portfolio construction, diversification, active management, pensions, fiduciary duty, and short-term investing decisions. They examine whether breaking apart all-in-one ETFs is worth the complexity, why global diversification remains the default despite long stretches of underperformance, and how investors should think about risk when they have defined benefit pensions or short-term financial goals. Along the way, they discuss the limits of active management, why simplicity often beats optimization, and even reveal their favorite board games. Key Points From This Episode: (0:01:12) Whether investors should replace asset allocation ETFs with individual component ETFs to save on management fees.  (0:01:40) Why simplicity has real economic value—and how small fee savings compare to behavioral costs.  (0:05:38) Portfolio drift, rebalancing discipline, and the hidden costs of managing multiple ETFs.  (0:06:08) How recent fee reductions narrowed the cost gap between VEQT and its component funds.  (0:06:51) When using individual ETF components may make sense for larger portfolios or asset location strategies.  (0:11:16) The hosts share their favorite board games—and why poker has surprising parallels to investing.  (0:15:01) What true diversification actually means beyond simply owning the S&P 500.  (0:16:07) Why the global market portfolio remains the logical starting point for most investors.  (0:19:46) Addressing claims that modern index funds have become "too concentrated."  (0:21:52) Why active managers tend to lose their edge as assets under management grow.  (0:22:15) Diminishing returns to scale and the efficient market for manager skill.  (0:27:03) How defined benefit pensions should factor into portfolio construction and risk capacity.  (0:33:53) Understanding fiduciary duty for Canadian portfolio managers and financial advisors.  (0:37:17) Why publicly holding yourself out as a fiduciary carries legal and ethical implications.  (0:39:22) Can individual investors outperform active funds by picking stocks themselves?  (0:42:32) Why time, effort, and research alone rarely translate into market-beating performance.  (0:45:04) Why international stocks have lagged U.S. equities—and why diversification still matters.  (0:47:10) The role of valuation expansion in explaining decades of U.S. outperformance.  (0:50:05) How to invest money earmarked for a home down payment over a three-to-five-year horizon.  (0:53:31) Applying the same time-horizon framework to RESP investing and education savings. 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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Shannon Lee Simmons: How To Stop Feeling Broke | #415 25.06.2026 1j 19mnt

  In this episode, we are joined by Shannon Lee Simmons—Certified Financial Planner, Chartered Investment Manager, bestselling author, and founder of the New School of Finance—for a wide-ranging conversation about the emotional side of money. Drawing on more than two decades of working directly with Canadians, Shannon explains why financial stress has become so pervasive, how social comparison shapes spending habits, and why a well-built financial plan can be one of the most powerful antidotes to money anxiety. We also explore decision-making during financial crises, the psychology of regret, why traditional budgeting often fails, and how couples navigate money differently—particularly in retirement. Shannon shares practical frameworks for aligning spending with personal values, avoiding emotional financial mistakes, and helping households make confident decisions through life's biggest transitions. Key Points From This Episode: (0:03:56) Why people worry about money—and why financial uncertainty often feels like uncertainty about life itself. (0:04:24) Why so many middle- and upper-income Canadians still feel broke despite earning good incomes. (0:05:18) The importance of having a financial plan and reducing harmful social comparison. (0:06:55) How social media fuels overspending, comparison, and "financial dysmorphia." (0:08:35) Why cashless spending has fundamentally changed our relationship with money. (0:11:52) How perceived life milestones—especially home ownership—shape financial decisions and expectations. (0:13:36) Practical ways to manage financial stress, restore confidence, and build resilience. (0:15:55) The growing "spending arms race" and how rising expectations have redefined what's considered normal. (0:18:09) Why Shannon dislikes traditional budgeting—and what to do instead. (0:20:32) Her four-bucket framework for worry-free spending and maintaining financial flexibility. (0:22:35) A practical test for deciding whether a large purchase is truly affordable. (0:25:01) Aligning spending decisions with personal values using an "emotional return on investment." (0:28:12) Helping couples navigate different financial priorities without turning disagreements into conflict. (0:30:28) Separating good decisions from bad outcomes to overcome financial regret. (0:33:48) The major financial decision crises people commonly face—from divorce to illness to retirement. (0:35:16) Using "micro financial plans," guardrails, and scenario planning during periods of uncertainty. (0:37:45) The three phases of a financial decision crisis and how planners can help through each stage. (0:41:41) Why retirement often reveals differences in couples' relationships with money that never surfaced while saving. (0:45:19) The psychological challenge of withdrawing from investment portfolios after decades of accumulation. (0:46:41) Using cash wedges and realistic retirement projections to reduce anxiety around spending in retirement. (0:49:42) How saver-versus-spender dynamics can evolve into power struggles during retirement. (0:53:12) The question almost every client is really asking: "Am I going to be okay?" (0:54:41) Why planners should ask about clients' hidden DIY investment accounts. (0:56:21) The risks of becoming emotionally attached to concentrated investment gains. (0:57:16) The most impactful parts of a financial plan: realistic spending projections and actionable next steps. (0:58:25) How often financial plans should be updated—and when life events require immediate revisions. (1:01:08) Who benefits most from fee-only planning and who may be better served with ongoing advice. (1:07:00) Why implementation—not recommendations—is often the hardest part of financial planning. (1:10:00) The strengths and trade-offs of fee-only planning versus assets-under-management advice models. (1:15:05) Shannon's advice for improving financial well-being: build a plan, focus on your own values, and stop comparing yourself to everyone else.   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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Shannon Lee Simmons – https://shannonleesimmons.com/  New School of Finance – https://www.newschooloffinance.com/  Worry-Free Money – https://www.amazon.ca/Worry-Free-Money-guilt-free-approach-managing/dp/1443454451  Making Bank: Money Skills for Real Life – https://www.amazon.ca/Making-Bank-Money-Skills-Real/dp/1443469815    Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)   
• Answering Your Financial Questions | #414 18.06.2026 1j 15mnt

  In this episode, Ben Felix and Ben Wilson tackle a wide range of listener questions covering portfolio construction, home-country bias, currency exposure, ETF selection, retirement decumulation, leasing versus buying a car, discounted cash flow valuations, and the real work of portfolio management. Along the way, they revisit the Rational Reminder model portfolios, discuss how new products like CAGE have changed the DIY investing landscape, and explore whether Warren Buffett's long-term record still provides evidence that active management can outperform. The conversation also offers a behind-the-scenes look at PWL Capital's planning-centric approach to wealth management and why helping clients make better financial decisions often matters more than portfolio construction itself. Key Points From This Episode: (0:28) Why AMA episodes have become less frequent despite hundreds of listener questions waiting to be answered.  (2:07) Ben shares observations from PWL's growing institutional investment business and why low-cost, planning-focused institutional advice remains surprisingly rare.  (6:37) Revisiting the original Rational Reminder model portfolios and how newer products have simplified implementation.  (10:09) Should U.S. investors underweight the U.S. market relative to global market-cap weights?  (11:07) Research, home-country bias, and Ken French's arguments for overweighting domestic stocks.  (18:11) Asset-allocation ETFs in retirement: Is there any benefit to separating stocks and bonds during withdrawals?  (21:03) Leasing versus buying a vehicle, opportunity costs, depreciation, and convenience.  (26:13) Currency exposure, RRSPs, withholding taxes, and common misconceptions about USD-denominated ETFs.  (30:30) If Dimensional funds were unavailable, what would Ben choose instead?  (31:26) Are there any popular ETFs investors should avoid? A look at Canada's largest ETF holdings.  (38:28) Why discounted cash flow models often produce wildly different valuation estimates.  (41:47) What portfolio managers at PWL actually do when they are not trying to beat the market.  (45:57) Concentrated stock positions, client coaching, and helping investors make better long-term decisions.  (50:02) Why financial planning questions are often portfolio management questions—and vice versa.  (52:53) Helping clients navigate the transition from wealth accumulation to wealth preservation and spending.  (58:06) Revisiting Berkshire Hathaway's long-term performance versus broad-market index funds.  (1:02:35) The challenges of active management as assets under management grow larger.  (1:04:22) Aftershow: Ben reflects on his experience appearing on Diary of a CEO with Steven Bartlett. 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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)  
• How Canadian ETFs Actually Work | #413 (Morley Conn) 11.06.2026 1j 8mnt

  In this episode, we are joined by Morley Conn, Director of Sales and Strategy, ETF Services at Scotia Global Banking and Markets, for a deep dive into the mechanics of the ETF ecosystem. With more than 30 years of experience across equities, foreign exchange, and money markets, Morley pulls back the curtain on the creation and redemption process, ETF liquidity, block trading, market making, and the often-overlooked infrastructure that allows ETFs to trade efficiently every day. We explore how authorized participants and market makers facilitate liquidity, why ETF liquidity is driven by the underlying holdings rather than trading volume, and how large institutional ETF trades are executed. Morley also explains the differences between Canadian and U.S. ETF markets, discusses common misconceptions investors have about ETF trading, and shares practical advice for retail investors seeking better execution. This conversation offers a rare look at the operational machinery behind one of the most important innovations in modern investing. Key Points From This Episode:   (0:04) Introduction to Morley Conn and his role in ETF market making. (4:29) The key participants in the ETF ecosystem: issuers, custodians, market makers, advisors, and dealers. (5:53) What market makers and authorized participants actually do. (7:03) How ETF creation and redemption works and why it matters for liquidity. (10:58) How ETF portfolio management differs from traditional mutual fund management. (12:44) Why ETF trading volume often greatly exceeds primary-market creations and redemptions. (13:35) The capital gains refund mechanism and its relationship to ETF trading activity. (16:04) What happens when ETF market prices diverge from net asset value (NAV). (18:24) Lessons from the March 2020 bond ETF dislocations and what they revealed about market pricing. (19:16) How market makers price ETFs when underlying securities are illiquid or difficult to value. (20:38) Managing ETF market-making risk when underlying markets are closed. (21:35) The major factors that influence ETF bid-ask spreads. (23:26) Why market makers prioritize trading volume and investor experience over wide spreads. (26:45) How large ETF block trades are executed and hedged behind the scenes. (29:26) Why ETF liquidity is determined by the underlying holdings rather than visible trading volume. (30:43) The difference between NAV trades and at-risk trades. (32:46) How market makers contribute to the development of new ETF products. (34:20) Best practices for retail investors when trading ETFs. (37:34) Factors that determine when block trades make sense. (38:46) Why pricing ETF blocks is both an art and a science. (43:14) What happens when an ETF is shut down and how investors are affected. (46:22) The balance between retail and institutional participation in the Canadian ETF market. (48:27) How institutions and retail investors use ETFs differently. (51:23) Key differences between Canadian and U.S. ETF markets. (54:56) ETF tax efficiency in Canada versus the United States. (56:23) Common misconceptions investors have about ETF liquidity and assets under management. (1:00:13) How CRM3 total cost reporting could influence ETF adoption in Canada. 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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)  
• Ben Carlson: Investing at All-Time Highs | #412 04.06.2026 49mnt

  In this episode, we are joined by Ben Carlson, Director of Institutional Asset Management at Ritholtz Wealth Management and author of Risk & Reward, for a wide-ranging conversation about market history, investor psychology, and the realities of long-term investing. Ben brings his trademark blend of data-driven thinking and plainspoken storytelling to topics like market crashes, inflation, diversification, and why investors are so tempted to time the market. We explore the lessons from Japan's historic asset bubble, the lingering impact of the Great Depression, and why diversification remains one of the few true free lunches in investing. Ben also explains the difference between volatility and risk, why the stock market is not the economy, and how investor behavior—not market performance—is often the biggest determinant of success. Along the way, we discuss inflation hedges, lost decades, speculative behavior, and the psychological challenge of staying invested through inevitable downturns.   Key Points From This Episode: (0:00:20) Introducing Ben Carlson, his new book Risk & Reward, and his long-running blog A Wealth of Common Sense. (0:03:16) Why investors shouldn't panic about investing at all-time highs. (0:03:58) The Japanese bubble and crash as one of history's biggest market anomalies. (0:05:39) Why Japan's long-term returns look very different when viewed over 50 years. (0:06:27) Lessons from the Great Depression and the worst stock market crash in U.S. history. (0:07:43) Why the best long-term returns often follow the worst crashes. (0:08:53) The role of diversification and self-awareness in managing portfolio risk. (0:09:55) Defining investment success by achieving personal goals—not beating benchmarks. (0:10:42) Why inflation feels so painful psychologically for investors and households. (0:11:42) Ben's three favorite long-term inflation hedges: human capital, housing, and stocks. (0:13:47) Why market timing is psychologically seductive—and so difficult to execute successfully. (0:15:00) Why handling losses is the single most important skill in investing. (0:16:13) How devastating the economic side of the Great Depression really was. (0:18:49) What policymakers learned from the Great Depression and 2008. (0:20:39) The difference between recessionary and non-recessionary bear markets. (0:21:52) Why the biggest up days and down days tend to cluster together in bear markets. (0:23:18) Preparing for inevitable bear markets with a durable long-term plan. (0:25:07) Why the stock market and the economy can diverge dramatically. (0:28:10) The difference between volatility and risk—and why risk is often personal. (0:29:37) Why comparing the stock market to a casino is fundamentally wrong. (0:31:55) How modern investing platforms encourage speculative behavior. (0:33:18) How extreme Japan's 1980s asset bubble became before collapsing. (0:35:43) The most important diversification lessons from Japan's lost decades. (0:37:39) How common "lost decades" actually are in stock market history. (0:40:58) Three dimensions of diversification: geography, asset class, and strategy. (0:41:53) Why there is no perfect portfolio—only the right portfolio for you. (0:42:52) Common ways investors lose money in markets. (0:44:03) Why investors should be skeptical of billionaire market predictions. (0:45:57) Ben's evolving definition of success and raising good, kind children.   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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Market Simulations & Financial Planning | #411 (John Yang) 28.05.2026 1j 17mnt

  In this episode, Ben Felix and Braden Warwick unpack the surprisingly complex world of expected return modeling and why it matters so much for retirement projections, portfolio construction, and financial advice. They explain how PWL Capital currently estimates expected returns across asset classes, why traditional Monte Carlo methods relying on Gaussian distributions may miss important market behaviors, and how new research could improve the realism of long-term financial planning simulations. The conversation also explores a fascinating collaboration between PWL and Columbia Engineering student John Yang, who worked with Professor Michael Robbins on a project to build more realistic synthetic return data for financial planning. John explains how his team used empirical distributions, t-copulas, and Extreme Value Theory to better capture market crashes, fat tails, and asset co-movements during periods of stress. Ben and Braden then analyze how these improved simulation methods affect financial planning outcomes, sustainable spending estimates, and projections for long-term wealth accumulation.   Key Points From This Episode: (0:00:00) Introduction to expected return modeling and why it matters for financial planning.  (0:00:25) The importance of volatility, correlations, distribution shape, and time-series behavior in portfolio projections.  (0:01:26) How Scott Cederburg's research on block bootstrapping influenced PWL's thinking on simulations.  (0:02:03) Introduction to Columbia Engineering student John Yang and the industry research collaboration.  (0:03:30) How Conquest Planning allows PWL to upload custom return simulations.  (0:04:05) A new PWL client's detailed reasoning for moving from DIY investing to working with an advisor.  (0:06:22) Why financial planning and Monte Carlo simulations were central to the client's decision.  (0:07:22) Cross-border financial complexity and the value of professional advice.  (0:08:03) Estate planning, cognitive decline, and the role of trusted financial relationships.  (0:10:02) Research on cognitive decline and its impact on financial decision-making.  (0:12:00) Delegation, accountability, and reducing mental overhead through advisory relationships.  (0:13:47) Why the client chose PWL specifically and the appeal of evidence-based investing.  (0:15:25) Ben and Braden discuss the perceived disconnect between online discourse and demand for AUM advisors.  (0:16:12) Overview of PWL's methodology for estimating expected returns across asset classes.  (0:17:05) How PWL combines historical returns with market-implied expected returns.  (0:18:07) The use of factor premiums and expected return composition in taxable projections.  (0:18:48) Why PWL previously relied on Gaussian multivariate normal distributions for simulations.  (0:19:41) Arithmetic vs. geometric mean returns and why the distinction matters.  (0:21:01) A simple example illustrating volatility drag.  (0:23:29) Why diversification benefits must be incorporated into expected portfolio returns.  (0:25:15) How correcting portfolio math improved expected return estimates by 20–30 basis points.  (0:27:12) Transition to John Yang's interview and introduction to synthetic data generation.  (0:30:07) John explains the limitations of Gaussian return assumptions.  (0:31:04) Why realistic sequences of returns matter for retirement planning.  (0:32:16) Empirical evidence that returns are not truly random.  (0:33:25) The three modeling challenges: unique asset behavior, realistic co-movement, and tail risk.  (0:37:49) Separating marginal distributions from dependency structures in the modeling process.  (0:38:48) Using a t-copula to better model asset co-movement during market stress.  (0:39:39) Why historical data alone struggles to capture rare crisis events.  (0:40:06) Applying Extreme Value Theory and Generalized Pareto Distributions to model tail risk.  (0:42:15) How Monte Carlo simulations generate many realistic future return paths.  (0:43:00) Imposing forward-looking expected returns and volatility assumptions onto the simulations.  (0:44:56) How the new framework better preserves skewness and kurtosis.  (0:46:38) Evaluating the new model using marginal shape, tail behavior, and co-movement scores.  (0:48:10) Why the new model significantly improved tail realism without sacrificing correlations.  (0:49:05) Future extensions including dynamic correlations and volatility clustering.  (0:50:28) Potential future use of GANs and machine learning for synthetic financial data.  (0:52:02) Key takeaway: financial planning requires realistic return paths, not just summary statistics.  (0:53:41) Braden analyzes how the new simulation framework affects financial advice.  (0:55:04) Why monthly index data produced fatter tails than long-term annual DMS data.  (0:58:47) The new model improved Monte Carlo success rates by roughly 2–3%.  (1:00:25) Sustainable spending estimates changed only modestly under the new simulations.  (1:02:27) Why the improved methodology matters more for alternative asset classes.  (1:04:25) The surprising finding that median wealth outcomes increased while mean outcomes decreased.  (1:05:47) Why Gaussian simulations can create unrealistic runaway wealth scenarios.  (1:07:20) The practical implications for estate planning and multi-generational wealth projections.  (1:08:30) Why better simulation methods are especially important for concentrated and alternative investments.   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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/   Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)  
• Episode 410: The State of Investing in 2026 21.05.2026 58mnt

  In this episode, we are joined by Shelly Antoniewicz, Chief Economist at the Investment Company Institute (ICI), for a data-rich exploration of the modern fund industry. Shelly walks us through the staggering scale of global regulated funds, how ETFs and mutual funds shape capital allocation, and why the rise of indexing may not be as disruptive as critics fear. We discuss the growth of ETFs versus mutual funds, increasing concentration among large fund sponsors, and how financial advisors are reshaping portfolios around low-cost investment products. Shelly also explains why fund fees keep falling, how 401(k) plans have democratized investing for middle-class households, and why investor choice remains central to healthy capital markets. Along the way, we unpack active ETFs, intraday liquidity, interval funds, private credit exposure, and the evolving role of retail investors in financial markets.   Key Points From This Episode: (0:00:00) Introducing Shelly Antoniewicz and the role of the Investment Company Institute.  (0:01:14) The Investment Company Fact Book and why it has become a foundational resource for fund industry data.  (0:03:31) Regulated funds globally now account for roughly $88 trillion in assets.  (0:04:47) The U.S. market contains nearly 17,000 investment companies across mutual funds, ETFs, and related structures.  (0:05:40) U.S. equity funds alone hold roughly $27 trillion in assets.  (0:06:52) More than half of mutual fund and ETF assets are now in index strategies.  (0:07:40) Why index funds still represent only a minority share of the overall U.S. stock market.  (0:09:48) What academic research says about indexing's impact on price discovery and market efficiency.  (0:13:10) There are nearly 770 fund sponsors in the U.S., though industry concentration continues to rise.  (0:13:42) ETF sponsors experienced enormous inflows in 2025, with 90% receiving net new cash.  (0:15:23) Why the largest fund complexes now control a much larger share of industry assets.  (0:16:06) Compliance costs and regulation as drivers of industry consolidation.  (0:17:31) Falling expense ratios as evidence that the industry remains highly competitive.  (0:19:28) How investor flows often reflect rebalancing behavior rather than performance chasing.  (0:22:32) Why ETF investors highly value intraday liquidity, even if most do not actively trade.  (0:23:27) Research on ETF trading behavior among younger investors and retail participants.  (0:27:11) The massive shift from actively managed U.S. equity mutual funds toward indexed products.  (0:27:51) How financial advisors increasingly use model portfolios built around ETFs.  (0:31:20) Why active ETFs exploded in popularity after the ETF rule streamlined launches.  (0:32:31) The growing distinction between ETF wrappers and investment strategies themselves.  (0:33:05) Leveraged and niche ETF products, investor choice, and financial education.  (0:35:48) More than half of U.S. households now own regulated investment funds.  (0:36:41) How 401(k) plans dramatically increased middle-class participation in capital markets.  (0:39:16) Households remain the dominant owners of mutual fund assets.  (0:40:28) The demographic profile of the typical mutual fund-owning household.  (0:41:16) ETF-owning households tend to skew younger, wealthier, and more risk tolerant.  (0:42:03) Mutual fund assets continue to grow despite persistent outflows toward ETFs.  (0:43:39) How investor risk tolerance changes with age and market conditions.  (0:46:22) Economies of scale and the continued decline in fund fees.  (0:47:51) Interval funds, BDCs, and the rise of regulated private credit products.  (0:49:36) Redemption caps and liquidity management inside interval funds.  (0:52:51) Shelly reflects on the enduring popularity of the Investment Company Fact Book.  (0:55:05) Shelly's definition of success: raising children who tell you they love you.   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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/   Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Episode 409: Investment Banker - What Private Equity Doesn't Tell You 14.05.2026 1j 15mnt

  In this episode, we are joined by Jeff Hooke, former investment banking, private equity, and private debt executive turned academic critic of alternative investments, for a rigorous and provocative examination of private equity, private credit, and institutional investing. Jeff draws on decades of experience in finance and years of academic research to challenge many of the assumptions driving institutional and retail allocations to private markets. We discuss why pension plans and endowments continue pouring capital into alternatives despite evidence of underperformance, how private market valuations can obscure true risk, and why the fee structures embedded in private funds create enormous hurdles for investors. Jeff explains the methodological challenges of benchmarking private investments, the role of investment consultants and industry incentives, and why illiquidity and opaque reporting make private assets especially difficult for retail investors to evaluate. Along the way, we explore survivorship bias, public market equivalents, unrealized valuations, and the growing push to bring private assets into retirement portfolios. This conversation is an in-depth look at the incentives, risks, and realities shaping the modern alternatives industry.   Key Points From This Episode: (0:00:18) Introduction to Jeff Hooke and the focus on private equity, private credit, and alternative investments. (0:04:21) Why institutions and retail investors continue allocating heavily to alternatives. (0:04:33) What institutional investors are and how pension plans and endowments operate. (0:05:52) Why institutional staff may prefer complexity over simple index investing. (0:07:55) How early private equity outperformance fueled lasting enthusiasm for alternatives. (0:08:47) Why trustees often rely heavily on staff and consultants for investment decisions. (0:09:29) The social and psychological appeal of "exotic" investments. (0:10:28) Why institutional investors often resist criticism of private markets. (0:11:56) The CalPERS example: underperforming a simple 60/40 index despite complexity. (0:13:28) The role investment consultants play as institutional "gatekeepers." (0:15:42) Why many pension plans and endowments may have underperformed due to alternatives. (0:17:26) Findings from The Grand Experiment and research on private equity fund performance. (0:18:30) Why institutions struggled to replicate Yale's endowment success under David Swensen. (0:20:57) Gross versus net performance in private equity—and the impact of fees. (0:21:30) The extreme dispersion between top- and bottom-performing private equity funds. (0:23:26) The weak persistence of private equity manager outperformance. (0:25:27) Why private investments expanded rapidly after the Global Financial Crisis. (0:25:54) The illusion of smoother returns in private markets due to subjective valuations. (0:28:13) Why benchmarking private equity performance is methodologically difficult. (0:31:13) How private market data can support conflicting performance narratives. (0:33:41) Why public market equivalent (PME) is one of the best benchmarking approaches. (0:36:59) Survivorship bias and non-reporting funds in private market databases. (0:40:09) The rise of private credit and its role in financing leveraged buyouts. (0:42:29) Findings from Jeff's private credit research: no evidence of outperformance versus public ETFs. (0:45:15) Jeff's response to Cliffwater's critique of his private credit paper. (0:47:15) Why retail investors may underestimate the risks and costs of private alternatives. (0:49:14) Conflicts of interest and fee incentives in wealth management distribution. (0:51:03) The impact of unrealized valuations and unsold holdings on reported returns. (0:53:15) Why many private equity funds still hold large unrealized positions after a decade. (0:56:05) Whether private equity ownership actually improves company operations. (0:57:42) The major liquidity risks facing retail investors in private funds. (0:59:20) Canadian private real estate funds, gating, and redemption problems. (1:02:01) Comparing private market fees to ultra-low-cost public index funds. (1:06:46) The long-term impact of bringing private assets into retail retirement accounts. (1:08:17) How much "play money" investors should allocate to speculative alternatives. (1:10:49) Why leverage layered on top of private funds creates additional risk.   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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Episode 408: Elroy Dimson – Investing & Optimism 07.05.2026 1j 14mnt

  In this episode, we are joined by Elroy Dimson, Professor of Finance at Cambridge Judge Business School and co-creator of the Dimson-Marsh-Staunton (DMS) dataset, for a sweeping and deeply insightful conversation on financial history, market behavior, and the evolution of global investing. Elroy walks us through the origins of the groundbreaking Triumph of the Optimists, the challenges of assembling over 100 years of global return data, and the critical biases that once shaped our understanding of markets. We explore how expanding beyond U.S.-centric data reshaped expectations for the equity risk premium, why economic growth doesn't necessarily translate into higher stock returns, and what history reveals about diversification, factor investing, and investor behavior. Elroy also shares lessons from his work with major institutions like Norway's sovereign wealth fund, discusses the surprising long-term outperformance of railways, and offers a grounded perspective on future expected returns. This episode is a masterclass in using history to inform better financial decisions. Key Points From This Episode: (0:04:00) Introduction to Elroy Dimson and the significance of the DMS dataset. (0:05:07) Why understanding financial history is essential for thinking about the future. (0:05:24) The origin story of Triumph of the Optimists and assembling global return data. (0:09:06) How long-term datasets are built from academic and commercial sources. (0:11:33) Survivorship bias in historical indices and why it matters. (0:13:35) "Easy data bias" and how it leads to overstated historical returns. (0:15:32) Accounting for failed markets and geopolitical disruptions in global data. (0:18:33) How global data changed expectations for the equity risk premium. (0:21:09) Why 20th-century equity returns were a "pleasant surprise." (0:22:17) U.S. market dominance and the challenge of extrapolating its success. (0:24:11) Market composition in 1900 and the dominance of railway stocks. (0:25:52) Why railways outperformed despite shrinking market share. (0:29:03) The surprising disconnect between economic growth and stock returns. (0:31:28) Why investing in recovering markets requires extreme patience and conviction. (0:33:32) Value investing: historical success and recent struggles. (0:35:00) Why economic growth benefits many—but not necessarily stock investors. (0:35:59) The long-term benefits of global diversification. (0:40:01) Why diversification reduces risk—but doesn't create returns for everyone. (0:42:29) Explaining persistent home country bias among investors. (0:47:46) Industry diversification becoming more important over time. (0:49:50) The rise and evolution of size, value, and momentum factors. (0:54:17) Why factor premiums should be monitored—not blindly followed. (0:57:27) The equity risk premium: why it's crucial—and uncertain. (1:00:15) A realistic estimate: ~3% equity risk premium going forward. (1:02:33) Translating that into ~5% real expected equity returns. (1:05:10) Staying optimistic: invest long-term and live modestly. (1:05:58) The risk of pessimism: losing purchasing power in safe assets. (1:08:06) The evolving role of bonds as diversifiers. (1:09:55) Why market timing is a losing strategy. (1:11:00) Elroy's definition of success: happy children and grandchildren. 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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Benjamin Warwick on LinkedIn - https://www.linkedin.com/in/braden-warwick-a40b48a3 Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Episode 407: Michael Kothakota - The Shape of Financial Planning 30.04.2026 1j 18mnt

  In this episode, we are joined by Michael Kothakota for a deeply technical and thought-provoking conversation on interdependent integrative financial planning theory. Drawing from his background in academic research and real-world advisory practice, Michael introduces a mathematical framework designed to capture the full complexity of financial planning—where decisions across domains like taxes, investments, and estate planning are interconnected and constantly evolving. We explore why traditional economic models fall short in capturing the individualized and multi-dimensional nature of financial planning, and how Michael's approach uses tools like multi-objective optimization and dynamic programming to better reflect reality. He explains how client preferences, time-varying priorities, and uncertainty all interact within the model—and why even identical financial situations can lead to very different optimal decisions. This episode is a deep dive into the mechanics of financial advice, offering a new lens on how planners can create value by integrating decisions across domains and aligning them with what clients truly care about.     Key Points From This Episode: (0:04:00) Introduction to the episode and why this topic leans heavily into financial planning complexity. (1:04:00) The core takeaway: integrating all financial planning domains leads to better outcomes than siloed advice. (5:35:00) What interdependent integrative financial planning theory is—and why interdependencies matter. (7:16:00) Why traditional economic theories like portfolio optimization and consumption smoothing fall short. (9:37:00) The central insight: financial planning must account for structure, preferences, and time. (12:12:00) Modeling financial planning as a complex, preference-weighted system over time. (14:25:00) Why identical financial situations can still lead to different optimal advice. (17:50:00) Multi-objective optimization and the competing goals within financial planning. (21:09:00) The role of dynamic programming in solving sequential financial decisions. (23:42:00) Evidence on whether financial planners improve client outcomes—and the limitations of existing data. (26:58:00) The architecture of the model: structural tensor, priority weights, and discount matrix. (30:31:00) Why financial planning is "non-smooth" and filled with constraints and trade-offs. (33:57:00) How changing strategies over time are captured through evolving "strategy spaces." (36:50:00) The six financial planning domains and their respective objective functions. (42:35:00) The priority matrix: quantifying what clients actually care about. (44:41:00) Discount rates and urgency—how priorities shift over time and with life events. (47:58:00) Why financial planning must account for uncertainty and changing preferences. (49:53:00) The role of financial planners in shaping and educating client priorities. (51:07:00) The four-tier architecture that combines structure, preferences, and urgency. (52:47:00) Capturing uncertainty: endogenous vs. exogenous risks and planning for shocks. (55:39:00) Theoretical results: integration premium and value loss from misaligned advice. (58:09:00) Practical takeaway: always consider cross-domain effects when giving advice. (1:02:24) Real-world example of value destruction from siloed expert advice. (1:06:34) Why the value of integration scales with complexity—not just wealth. (1:07:42) The enduring importance of human financial planners in navigating complexity.       Links: 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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Episode 406: When Massive Private Companies Go Public 23.04.2026 1j 10mnt

  In this episode, the Rational Reminder team unpacks the mechanics and implications of mega IPOs like SpaceX, OpenAI, and Anthropic potentially entering public indices. They explore how index funds handle IPO inclusion, why newly public stocks tend to underperform, and how structural features of indexing can lead to systematically buying high and selling low. The conversation dives into academic research on IPO returns, the role of free float in index construction, and how evolving market dynamics are forcing index providers to reconsider long-standing rules. They also examine alternative approaches from firms like Dimensional and Avantis, and whether investors are truly missing out by not accessing private markets. This episode blends market structure, empirical evidence, and investor behaviour into a nuanced look at one of the most talked-about investing topics today.   Key Points From This Episode: (0:00:04) Introduction to the Rational Reminder Podcast and hosts. (0:00:19) PWL Capital expands to Vancouver through partnership with Macdonald Shymko & Company. (0:03:45) Main topic: "Mega IPOs" and concerns about index fund exposure. (0:05:00) Why large private companies going public matters for index investors. (0:06:55) Index funds aim to represent markets—not optimize returns. (0:08:41) Massive scale of index funds and implications for IPO demand. (0:10:19) Why IPOs tend to have low expected returns. (0:12:39) How index inclusion rules differ (S&P 500 vs total market indices). (0:15:53) Research on "fast-track" IPO inclusion and front-running effects. (0:18:59) Why mega IPOs may amplify existing inefficiencies. (0:20:39) Important reminder: indexing trade-offs are small and structural—not fatal. (0:21:29) Potential solutions like pre-allocating IPO shares to index funds. (0:23:24) The role of free float in determining index weight. (0:25:00) NASDAQ rule changes and implications for low-float mega IPOs. (0:27:40) Conflict of interest concerns in index rule changes. (0:32:43) Why index providers may need to evolve with changing markets. (0:35:27) Historical changes to index methodology (e.g., float adjustment). (0:37:21) Why IPOs are historically poor investments ("new issues puzzle"). (0:40:28) Evidence from Dimensional on IPO underperformance. (0:41:14) IPOs behave like "junk" stocks (small, unprofitable, high growth). (0:43:04) Low-float IPOs and extreme underperformance data. (0:46:00) High valuations (price-to-sales) linked to worse IPO outcomes. (0:48:00) Index rebalancing as systematic "bad market timing." (0:50:03) Dimensional vs Avantis approaches to IPO inclusion. (0:52:56) Trade-offs and tracking error across different strategies. (0:54:16) Importance of investor discipline amid changing narratives. (0:56:00) Are investors missing out on private markets? (0:58:00) Risks and costs of accessing private shares (SPVs, fees, fraud). (1:00:15) Indirect exposure to private companies through public equities. (1:02:52) Final takeaway: index investing already captures most opportunities. (1:03:25) Wrap-up: IPOs are a known cost—not a reason to abandon indexing.   Links: 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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ 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 Ben Wilson on LinkedIn — https://ca.linkedin.com/in/ben-wilson   Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Episode 405: Timothy Edwards - Inside S&P DJ Indices 16.04.2026 1j 3mnt

  What if the decades-long debate between active and passive investing wasn't really a debate—but a data problem? In this episode, Ben Felix and Cameron Passmore are joined by Tim Edwards, Managing Director and Global Head of Index Investment Strategy at S&P Dow Jones Indices, for a deep dive into the SPIVA Scorecard—the industry's most enduring and data-driven comparison of active versus passive investing. Tim explains how SPIVA has evolved over 25 years, why survivorship bias matters more than most investors realize, and what the data consistently shows across markets: most active funds underperform their benchmarks—especially over longer time horizons. The conversation goes beyond the headline results, exploring persistence (or lack thereof) in manager performance, why bond funds don't escape the same fate, and whether combining active funds improves outcomes (spoiler: not really). They also tackle common critiques of indexing, including index rebalancing costs, IPO inclusion concerns, and the role of index funds in market concentration.     Key Points From This Episode: (0:00:17) Introduction to the SPIVA report and its long-standing role in the indexing vs. active debate (0:01:18) Overview of the episode: SPIVA, index behavior, IPOs, and market concentration (0:03:30) What SPIVA is and how it measures active fund performance versus benchmarks (0:04:14) Why SPIVA was created: to inform—not settle—the active vs. passive debate (0:05:20) How SPIVA has evolved across regions, asset classes, and research dimensions (0:06:59) Controlling for survivorship bias and why it materially affects results (0:08:57) Real-world survivorship rates: ~50–60% of funds survive over 10 years (0:10:12) Core finding: most active funds underperform, especially over longer horizons (0:10:57) Comparison of equity vs. bond funds: slightly better outcomes in bonds, but still mostly underperformance (0:13:44) Structural differences in equity vs. bond markets (e.g., skewness, dispersion) (0:15:06) Typical survivorship rates across markets and how crises affect fund closures (0:16:02) Persistence analysis: past winners rarely remain winners (0:18:16) Global variation: some markets (e.g., international small caps) show slightly better active results (0:20:41) "Better" doesn't mean good: even in stronger categories, most funds still underperform (0:21:31) Do active funds perform better in down markets? Not consistently (0:23:37) Multi-asset portfolios of active funds: 97% underperform over 10 years (0:25:10) Selecting top-quartile funds improves outcomes slightly—but not meaningfully (0:26:46) Surprising findings in SPIVA and how market dynamics shape results (0:27:45) Impact of SPIVA on industry behavior and investor education (0:29:03) Ben shares how SPIVA influenced his own career path toward indexing (0:30:08) The "index effect" and whether index rebalancing creates performance drag (0:31:30) Why the index effect has largely diminished due to market competition and liquidity (0:34:05) Research on IPO inclusion and whether index rules create systematic return drag (0:36:57) How S&P handles IPO inclusion (e.g., 12-month seasoning rule for S&P 500) (0:39:58) Whether index methodology could evolve due to larger modern IPOs (0:42:36) Addressing concerns about large IPOs entering index funds (0:43:52) Historical perspective on market concentration and today's top-heavy indices (0:45:29) What happened to past top-10 companies: many declined, but markets still thrived (0:47:10) Creative destruction: why markets can succeed even when leaders fail (0:49:15) Weak relationship between market concentration and future returns (0:50:55) None of today's top companies were top companies in the 1960s (0:52:16) Key takeaway: markets evolve, and cap-weighted indices adapt automatically (0:53:58) Concerns about index fund growth and its impact on market function (0:54:30) Benefits of indexing: lower fees and often better investor outcomes (0:56:15) Timing the market: why waiting for a bigger drop tends to hurt returns (0:58:52) "Time in the market" vs. "timing the market" (0:59:09) Tim's favorite index: the DSPX dispersion index (1:00:53) Defining success: why happiness is the ultimate metric     Links: 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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ 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 Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Episode 404: The Finance Paper that Changed Everything 09.04.2026 1j 3mnt

  What if the way we think about investing—and expected returns—was fundamentally incomplete? In this episode, Ben Felix and Dan Bortolotti take a deep dive into one of the most influential papers in financial economics: Fama and French (1993). With nearly 15,000 citations, this research reshaped how we understand asset pricing by showing that market beta alone isn't enough to explain returns. Instead, multiple factors—specifically size and value—play a critical role. Ben and Dan unpack how this paper challenged the dominance of CAPM, introduced the now-famous Three-Factor Model, and laid the foundation for decades of empirical asset pricing research. They explore how factor investing evolved, why anomalies may not be anomalies at all, and what this means for evaluating portfolios and active managers today. The conversation also connects theory to practice—highlighting how modern fund providers implement factor strategies and what it means for investors trying to improve expected returns without abandoning diversification.     Key Points From This Episode: (0:00:00)  Introduction to the episode and why this is a long-awaited deep dive into factor investing. (0:01:12) Overview of Fama and French (1993) and its massive impact on finance and portfolio management. (0:03:55) Origins of factor investing and how it connects to index investing and academic research. (0:04:46) Core premise: multiple factors drive expected returns and asset prices. (0:06:08) He explains why different assets can have different expected returns, and why that matters for investors. (0:07:24) Ben introduces the CAPM as the dominant model that linked expected return to market beta. (0:08:53) Dan reflects on how revolutionary CAPM and portfolio theory were when they were first introduced. (0:10:51) Ben describes today as a "golden age of investing," where theory and implementation tools are widely accessible. (0:11:17) He explains how anomalies emerged that CAPM could not explain. (0:12:10) Ben introduces the joint hypothesis problem: we cannot cleanly separate market efficiency from model accuracy. (0:13:47) He identifies the three big issues with CAPM: size, value, and the weak relationship between beta and returns. (0:15:29) Ben introduces the three-factor model: market, size (SMB), and value (HML). (0:17:37) He explains that these factors are built as long-short portfolios designed to capture systematic return variation. (0:18:02) Dan notes that the model did not really address the low-volatility anomaly. (0:18:36) Ben agrees and explains that later work, including the five-factor model, went further on that front. (0:19:03) Ben describes how Fama and French formed 25 portfolios sorted by size and book-to-market. (0:20:00) He explains their use of time-series regression to test how well the model explained portfolio returns. (0:21:12) Ben walks through factor loadings, alpha, and R-squared, and why those outputs matter. (0:23:31) He highlights the model's strong explanatory power, with average R-squared around 0.93 across test portfolios. (0:25:00) Dan clarifies that unexplained return could reflect skill, luck, or another missing factor. (0:25:27) Ben emphasizes how dramatic the jump was from CAPM's explanatory power to the three-factor model's. (0:26:11) He points to small-cap growth as the major area the model struggled to explain. (0:27:09) Ben explains how the model also absorbed dividend-to-price and earnings-to-price "anomalies." (0:28:01) Dan discusses why dividend strategies may simply act as rough value screens rather than offering something unique. (0:28:52) Ben expands on how later research, especially profitability, sharpened value investing implementation. (0:30:37) He notes the unresolved debate over whether factors are true risk exposures or persistent mispricing. (0:32:16) Ben explains how factor models changed the way investors evaluate active managers and fees. (0:33:16) Dan raises the possibility that some early active managers may have intuitively identified factor opportunities before the research formalized them. (0:34:09) Ben discusses whether factor premiums have shrunk after publication and why the evidence is still noisy. (0:34:59) He describes how the paper helped launch the boom in empirical asset pricing research. (0:35:35) Ben introduces the "factor zoo" problem and the explosion of published factors. (0:36:49) He explains the five-factor model and the addition of profitability and investment. (0:38:21) Dan asks about the intuition behind profitability and investment, especially why profitable firms might have higher expected returns. (0:39:38) Ben explains profitability through a multi-factor lens and inferred discount rates. (0:42:15) He argues that combining factors matters because single-factor portfolios can have offsetting exposures. (0:44:05) Dan points out that layering too many factors naively can just bring you back toward the market portfolio. (0:44:56) Ben discusses the tradeoff between diversified tilts and concentrated factor bets. (0:46:29) Dan describes factor tilting as a subtle adjustment around a diversified core portfolio. (0:46:47) Ben cites Fama's idea that investors need to "talk themselves out of the market portfolio." (0:47:16) He notes that there is still active debate over which factors and models truly make sense. (0:48:31) Dan explains why momentum is harder to implement in practice because of turnover, taxes, and trading costs. (0:49:23) Ben says even simple-sounding factors like value and profitability remain heavily debated in academia. (0:50:20) He brings the discussion back to practical relevance: how investors can access factor exposure through funds. (0:51:06) Ben explains Dimensional's roots in academic research and its long history of implementation. (0:52:48) He introduces Avantis as a newer competitor with similar academic foundations and newly launched Canadian ETFs. (0:53:42) Ben discloses that PWL uses Dimensional extensively, while noting they are not paid to mention Dimensional or Avantis. (0:54:09) He summarizes what factor investing means for investors seeking higher expected returns through systematic tilts. (0:55:47) Dan reflects on how early PWL's adoption of index and factor-based investing was in the Canadian market. (0:57:07) Ben invites listeners to learn more about how PWL applies this thinking in client portfolios. (0:57:41) The episode moves to the after show and review section. (0:58:21) Dan reads a listener review focused on evidence-based investing, planning, and disciplined saving. (1:00:23) Ben notes that they never actually named the paper during the main episode. (1:00:32) Dan closes with: the paper is Common Risk Factors in the Returns on Stocks and Bonds.     Links: Patrick Adams – MIT PhD Candidate: https://patrick-adams.com/  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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ 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 Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Episode 403: Patrick Adams - When Stock Crashes Matter for Long-Term Investors 02.04.2026 1j 4mnt

  What if your biggest investment risk isn't the stock market—but your own income? In this episode, we are joined by Patrick Adams, a PhD candidate at MIT, for a fascinating deep dive into how income risk, spending commitments, and liquidity constraints reshape what "optimal" investing actually looks like. Drawing on large-scale administrative tax data, Patrick challenges the conventional wisdom that young investors should be heavily—or even fully—invested in equities. We explore why stocks appear safe over long horizons but become risky when real-world constraints force investors to sell at the worst possible times. Patrick explains how high-income households behave during market downturns, why their income risk is closely tied to stock market performance, and how consumption commitments like mortgages and childcare create hidden financial leverage. The conversation also introduces a new life-cycle model that incorporates these frictions—leading to surprisingly conservative optimal equity allocations for working-age investors. This episode reframes asset allocation as a problem of liquidity and risk management, not just return maximization.     Key Points From This Episode: (0:00:00) Introduction to the podcast and overview of the episode's focus on asset allocation and new research. (0:01:18) Patrick Adams' background, MIT PhD research, and how the paper was discovered. (0:07:08) Why stocks are considered safe for long-term investors based on historical returns. (0:08:37) When the "stocks for the long run" logic breaks down—forced selling during downturns. (0:10:35) Evidence: High-income households sell stocks during crashes instead of buying. (0:12:24) Data source: Administrative U.S. tax return data and its advantages/limitations. (0:14:23) Investors shift into fixed income during crashes rather than staying invested. (0:16:52) Financial reality: High wealth, but low liquid assets relative to income. (0:18:00) Human capital: Income is risky and correlated with stock market downturns. (0:20:15) Typical allocation: About 25% of liquid wealth in stocks for working-age households. (0:22:36) Higher-income households have more volatile flows and greater exposure to stock risk. (0:23:42) Income shocks drive stock selling—not just panic or behavioral mistakes. (0:25:29) Why households draw down assets instead of cutting spending sharply. (0:27:26) Consumption commitments (mortgages, childcare) act like hidden leverage. (0:27:57) Key risk factors: Income volatility, low liquidity, and inflexible expenses. (0:31:31) Traditional models vs reality: People don't cut spending—they use savings. (0:35:25) New model incorporates income risk, market crashes, and spending frictions. (0:38:33) Core finding: Optimal equity allocation for working-age investors is only 10–40%. (0:40:55) Practical takeaway: Asset allocation is fundamentally about emergency funds. (0:42:35) Higher fixed expenses require larger safe asset buffers. (0:43:49) Counterintuitive result: Retirees may optimally hold more equities than workers. (0:46:56) Scenario analysis: Selling during downturns destroys long-term returns. (0:49:12) Key drivers of results: Income-stock correlation and spending rigidity. (0:51:11) Why this model differs from others suggesting 100% equity portfolios. (0:53:20) When 100% equity could make sense: low risk, high wealth, high risk tolerance. (0:56:28) Personal impact: Patrick rethinks his own savings, risk, and spending commitments. (0:57:34) Advice for listeners: Focus on liquidity, income risk, and fixed expenses. (0:59:58) Defining success: Impactful research, teaching, and meaningful personal relationships.     Links: Patrick Adams – MIT PhD Candidate: https://patrick-adams.com/  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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ 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 Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Episode 402: The Problem with Private Markets 26.03.2026 1j 2mnt

  In this episode, we unpack the growing tension in private markets—private equity, private credit, and private real estate—and examine whether their long-standing appeal holds up under scrutiny. With increasing pressure to bring these investments to retail investors, the discussion explores how illiquidity, valuation opacity, and complex fee structures may be masking risks rather than reducing them. We break down how private assets are marketed, why their "smooth" returns may be misleading, and what recent events—like gated funds and forced asset sales—reveal about their true risk profile.    Key Points From This Episode: (0:00:00) Introduction to the episode and overview of private markets as the main topic. (0:00:39) Clarifying PWL Capital's full-service wealth management approach beyond asset management. (0:03:24) Why private markets are under scrutiny and recent negative developments across asset classes. (0:06:36) The seductive sales pitch: higher returns, lower risk, and low correlation to public markets. (0:08:32) Private assets explained: what they are and why they appear less volatile. (0:10:06) "Volatility laundering" and the illusion of stability in private market valuations. (0:13:51) Retail investors entering private markets and the risk of adverse selection. (0:15:09) Liquidity challenges and the growing issue of gated funds. (0:18:33) Why illiquidity is especially problematic for retail investors with uncertain cash needs. (0:20:41) The debate over whether an illiquidity premium actually exists. (0:23:56) Trade-offs between liquidity and volatility in portfolio construction. (0:30:41) Evidence on private equity performance vs. public markets and the role of fees. (0:31:39) High dispersion in private equity returns and challenges of manager selection. (0:33:00) Continuation funds and evergreen structures raising valuation concerns. (0:36:00) Secondary market sales, NAV manipulation concerns, and "NAV squeezing." (0:40:00) Private credit risks, gating, and comparisons to publicly traded BDCs. (0:44:00) Insurance companies allocating to private credit and potential systemic risks. (0:45:02) Private real estate funds, liquidity issues, and IPO valuation shocks. (0:47:43) Public listings revealing large gaps between NAV and market prices. (0:49:34) Summary: private markets may be as risky as public ones, with added complexity. (0:49:44) Larry Swedroe's critique and the debate over private market outperformance. (0:52:00) Illiquidity premium vs. "smoothing as a service" debate. (0:54:00) Manager skill, persistence, and the challenge of accessing top-tier funds. (0:56:50) Final reflections on ongoing research and the importance of informed debate.   Links: 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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ 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   Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Episode 401: Eduardo Repetto & Caitlin Ebanks - Opening the Avantis CAGE 19.03.2026 55mnt

  What if factor investing in Canada became as simple—and affordable—as buying a single ETF? In this episode, we are joined by Eduardo Repetto, CIO of Avantis Investors, and Caitlin Ebanks, Director of ETF Strategy at CIBC, to unpack the long-awaited launch of Avantis ETFs in Canada. This conversation explores how a partnership built on client-first principles and fee discipline is bringing sophisticated, evidence-based investing strategies to Canadian investors in a dramatically more accessible way. We dive into the structure and philosophy behind the new ETF lineup, including how Avantis applies factor tilts, why implementation details like direct security ownership and low turnover matter, and how the new asset allocation ETF (CAGE) could simplify portfolio construction for DIY investors. Eduardo also shares insights into Avantis' research process, expected premiums, and the realities of tracking error, while Caitlin explains how CIBC is positioning these products within the Canadian ETF landscape. This episode is a deep dive into the evolution of factor investing—covering product design, pricing, portfolio construction, and the broader shift toward low-cost, transparent investment solutions.   Key Points From This Episode: (0:00:00) Introduction to the episode and the significance of Avantis launching ETFs in Canada. (0:00:42) Why this launch marks a major step forward in accessibility for Canadian factor investors. (0:02:52) Lower fees and simplified implementation remove key barriers to factor investing. (0:04:55) Background on Eduardo Repetto and Caitlin Ebanks. (0:08:12) Avantis surpasses $125B AUM and the drivers behind its rapid growth. (0:10:20) How the Avantis–CIBC partnership came together and aligned on client-first pricing. (0:13:04) CIBC's ETF strategy and rationale for partnering with Avantis. (0:14:49) Overview of the Avantis ETF lineup launching in Canada. (0:19:33) Fee structure, competitiveness, and expected MER approach. (0:21:25) Eliminating operational cost uncertainty from investor fees. (0:23:20) "Gas station sushi" and maintaining product quality. (0:25:08) Why ETFs were chosen over mutual funds as the primary vehicle. (0:28:29) Roles of Avantis and CIBC in managing and operating the ETFs. (0:29:32) Direct security ownership vs. ETF-of-ETF structures and tax implications. (0:31:23) Construction of the CAGE asset allocation ETF and its factor tilts. (0:33:46) Expected outperformance (1.5–2%) and tracking error (3–4%) ranges. (0:35:26) Transparency challenges and regulatory considerations in Canada. (0:37:26) How CACE differs from the TSX through profitability and valuation tilts. (0:40:13) Low turnover and tax efficiency considerations. (0:42:05) Long-term commitment to the ETF lineup and viability concerns. (0:43:44) Ongoing research and potential improvements to factor implementation. (0:46:07) Current research focus: improving profitability forecasting. (0:48:30) What excites Caitlin and Eduardo most about the launch. (0:50:41) Why CAGE could transform how Canadians implement factor investing.   Links: 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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ 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   Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Episode 400: The Evolution of Index Fund Investing 12.03.2026 1j 23mnt

  In this special 400th episode, the Rational Reminder hosts reflect on 50 years of index investing and the profound impact it has had on financial markets, investor behavior, and the cost of investing. The episode features a panel moderated by Ben Felix at the New York Stock Exchange—hosted by Vanguard and S&P Dow Jones Indices—bringing together leading voices in the indexing world to explore how passive investing evolved and what it means for the future of capital markets. Ben is joined on the panel by Tim Edwards (S&P Dow Jones Indices), Jim Rowley (Vanguard), and Shelly Antoniewicz (Investment Company Institute) to discuss the mechanics of indexing, the myths surrounding passive investing, and the evidence on how index funds affect markets. They unpack questions about market concentration, price discovery, and whether indexing is changing the structure of capital markets. Key Points From This Episode: (0:00:04) Introduction to the Rational Reminder podcast and the hosts from PWL Capital. (0:00:24) Celebrating the 400th episode and reflecting on nearly eight years of podcasting. (0:01:09) Dan Bortolotti discusses the early days of podcasting and the transition from the Couch Potato podcast. (0:02:11) The rise of podcasts and YouTube as major sources of financial education for investors. (0:02:49) How Rational Reminder grew after Dan ended his previous podcast and the demand for Canadian investing content. (0:03:47) The podcast reaches a record audience with over 384,000 views and downloads in January 2026. (0:04:19) Institutional investors—foundations, endowments, and unions—show increasing interest in PWL's low-cost index approach. (0:06:20) Why indexing can still be a difficult sell for institutional investment committees. (0:08:25) Peer effects in institutional investing: committees often hesitate to adopt strategies that seem unconventional. (0:09:11) 2026 marks 50 years since Vanguard launched the first retail index fund in 1976. (0:10:08) Ben moderates a panel at the New York Stock Exchange on the future of index investing. (0:11:55) Overview of the panel participants from Vanguard, S&P Dow Jones Indices, and the Investment Company Institute. (0:13:07) Discussion of research papers presented at the event examining index investing's market impact. (0:14:32) Historical context: the S&P 500 is currently as concentrated as it was in the mid-1960s. (0:15:36) The largest companies in 1965—AT&T, Kodak, GM, IBM—eventually faded from dominance. (0:17:43) A hidden advantage of cap-weighted indexing: investors automatically own future winners. (0:20:59) Debate about whether today's tech-heavy market concentration differs from past cycles. (0:23:30) The explosion of index funds and ETFs has created thousands of ways to implement passive strategies. (0:26:42) Technical improvements in ETF implementation, including lower tracking error and better hedging. (0:29:02) The "Vanguard Effect": index investing has driven massive reductions in investment fees. (0:29:38) Index funds account for about 23% of total U.S. market capitalization, not the commonly cited 50%. (0:32:48) Evidence suggesting index funds have not increased large-cap concentration in markets. (0:34:25) Passive funds represent only about 1–2% of daily trading activity. (0:36:16) Dispersion in stock returns remains high, meaning opportunities for active management still exist. (0:38:12) Panel begins: defining passive investing and why the term is more complex than it seems. (0:42:13) Who invests in index funds? Millions of households using them primarily for retirement savings. (0:45:22) How advisors and institutions use ETFs to build diversified long-term portfolios. (0:46:19) The surprising role of ETFs in trading and market liquidity. (0:48:30) The proliferation of niche ETFs raises questions about whether indexing has strayed from Bogle's vision. (0:49:49) Academic research offers conflicting views on indexing's effect on market efficiency. (0:52:27) Evidence suggests index fund growth has not increased market volatility. (0:54:25) Dispersion data shows indexing does not eliminate opportunities for stock picking. (0:57:15) Index funds own only about 30% of the U.S. stock market, leaving the majority in active hands. (0:59:42) Historical perspective: high market concentration has occurred before and eventually declined. (1:02:14) Research remains inconclusive about whether indexing harms markets. (1:05:25) Over 20 years, 94% of actively managed U.S. equity mutual funds underperformed the S&P 500. (1:06:20) Post-panel reflections and discussion with the Rational Reminder hosts. 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 on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ 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   Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
• Episode 399: James Choi - Portfolio Theory in a Spreadsheet 05.03.2026 1j 14mnt

  In this episode, we welcome back James Choi, Professor of Finance at the Yale School of Management, to unpack one of the most important—and misunderstood—questions in personal finance: How much of your portfolio should be in stocks? Drawing on his new paper, Practical Finance: An Approximate Solution to Lifecycle Portfolio Choice, James walks us through the classic portfolio choice problem first solved by Robert C. Merton, later extended by Francisco Gomes and co-authors, and now made dramatically more usable through a spreadsheet-based approximation. We explore how risk aversion, wealth, labor income risk, and expected returns shape optimal asset allocation, why simple rules like "100 minus your age" aren't terrible but still costly, and how James and his co-authors managed to approximate a complex dynamic optimization model with an error of less than 0.1% in lifetime welfare.   Key Points From This Episode: (0:04) Introduction and why this episode delivers on "mathy roots." (1:10) James Choi's new paper: Making lifecycle portfolio choice solvable in a spreadsheet. (5:15) The portfolio choice problem: How much should you allocate to stocks versus risk-free assets? (6:09) The classic Merton (1969, 1971) solution and the "Merton share." (8:00) The equity premium formula: Expected excess return ÷ (risk aversion × variance). (11:20) Extending the model to risky labor income (Cocco, Gomes, and Maenhout). (14:27) Why labor income behaves bond-like—even when it's risky. (16:33) How wealth, risk aversion, and labor income characteristics affect optimal equity allocation. (20:52) Transitory vs. permanent labor income risk—and why permanent risk matters more. (23:04) Solving thousands of parameter sets to approximate optimal lifecycle allocations. (27:09) How close is the approximation? ~3–4 percentage points on average, with